85 / 136
83
a) Amounts recognised in the income statement
for investment properties
2016
2015
$’000
$’000
Rental income
4,768
1,676
Direct operating expenses from property that generated rental income
2,652
1,344
Direct operating expenses from property that did not generate income
–
55
Operating expenses for property that generated income includes finance costs of $644,000 (2015: $597,000).
b) Measuring investment properties at fair value
The basis of valuations for investment properties is fair value, being the amounts for which the assets could be
exchanged between knowledgeable willing parties in an arm’s length transaction, based on current prices in an
active market for similar properties in the same location and condition and subject to similar leases.
Castle Hill industrial property
For the year ended 31 July 2016, Industrial property represents land and buildings (including 15,000 square metres
of warehouse and 5,000 square metres of office space) located in the Castle Hill industrial zone. This property
was purchased in April 2014. In August 2014, this was announced as an Urban Activation Precinct (now known
as Priority Precinct) by the New South Wales Department of Planning. The Group is continuing to investigate
the potential rezoning of this property and have therefore determined that at balance date, there has been no
material change in its fair value and hence continue to carry the property at cost.
Pennant Hills commercial properties
In October 2015 and December 2015, the Group acquired two commercial buildings in Pennant Hills for a total
cost of $71.603 million. Since acquisition, there has been no material changes in the fair values of these properties.
The fair value hierarchy, as discussed in note 21 to this report, provides an indication about the reliability of the
inputs used in determining fair value. The fair value estimates for Investment properties are included in level 3 of
the fair value hierarchy.
c) Non-current assets pledged as security
As at 31 July 2016, $45.520 million of the Group’s investment property was pledged as security.
Refer to note 23 for information on non-current assets pledged as security by the Group.
d) Leasing arrangements
2016
2015
$’000
$’000
The Group is entitled to receive rental income from non-cancellable
operating leases on investment properties. The amounts have not been
recognised in the financial statements and are receivable as follows:
Within one year
5,125
–
Later than one year but not later than five years
8,805
–
Later than five years
524
–
14,454
–