Fair Value

Fair value or market value, the value at which knowledgeable and willing parties would be prepared to exchange an asset at normal market conditions or to settle a liability.

Calculation of the market value of HAMBORNER’s properties

We have our property portfolio appraised by an external expert as at 31 December of each year.

The portfolio is measured on the basis of the generally recognised International Valuation Standards (IVS) and the guidelines of the Royal Institution of Chartered Surveyors (RICS). These state that market value “is the estimated value for which a property is exchanged between a willing buyer and a willing seller on the valuation date, whereby each of the parties has acted independently after proper marketing, knowledgeably, prudently and without obligation”. The above definition is the same as that of the “fair value model” as found in the International Financial Reporting Standards under IAS 40 in conjunction with IFRS 13.

The valuation is performed on the basis of a discounted cash flow (DCF) method. In the DCF method, the forecast cash flows were calculated for a standard analysis period of ten years. A capitalised residual value is forecast on the basis of the respective long-term net proceeds for the end of the ten-year planning horizon. The market value of a property is derived from the total of the discounted cash flows of the overall planning period plus the residual value also discounted to the measurement date.

More information on the calculation of fair value and net asset value can be found in the economic report section of our annual report.