Abacus Property Group – Annual Financial Report 2017

NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2017
ABACUS PROPERTY GROUP
16. PROPERTY, PLANT AND EQUIPMENT (continued)
The property, plant and equipment 1 has been disclosed as held for sale which are measured at the lower of their
carrying amount and fair value less costs to sell.
Sensitivity Information
Significant input
Fair value measurement sensitivity to
significant increase in input
Fair value measurement sensitivity to
significant decrease in input
Net market EBITDA Increase Decrease
Optimal occupancy Increase Decrease
Adopted capitalisation rate Decrease Increase
The adopted capitalisation rate forms part of the income capitalisation approach.
When calculating the income capitalisation approach, the EBITDA has a strong interrelationship with the adopted
capitalisation rate given the methodology involves assessing the total EBITDA generated from the property and
capitalising this in perpetuity to derive a capital value. In theory, an increase in the EBITDA and an increase
(softening) in the adopted capitalisation rate could potentially offset the impact to the fair value. The same can be
said for a decrease in the EBITDA and a decrease (tightening) in the adopted capitalisation rate. A directionally
opposite change in the EBITDA and the adopted capitalisation rate could potentially magnify the impact to the fair
value.
Hotel Properties
- The weighted average capitalisation rate is 7.00% (2016: 7.83%)
- The current weighted average occupancy rate is 79% (2016: 77%)
Storage Properties
- The weighted average capitalisation rate is 7.72% (2016: 7.98%)
- The current weighted average occupancy rate is 88% (2016: 86%)
External valuations are conducted by qualified independent valuers who are appointed by the Director of Property
who is also responsible for the Group’s internal valuation process. He is assisted by two employees both of
whom hold relevant recognised professional qualifications and are experienced in valuing the types of properties
in the applicable locations.
1. Other than corporate property, plant and equipment
71