211
Overview
Sustainability
Business
Review
Portfolio
Details
Corporate
Governance &
Transparency
Financials &
Additional
Information
Ascott Residence Trust
Annual Report 2015
33 Fair value of assets and liabilities
(continued)
(c) Level 3 fair value measurements
(continued)
(ii) Valuation techniques and significant unobservable inputs
The following table shows the valuation techniques used in measuring Level 2 and Level 3
fair values, as well as the significant unobservable inputs used.
Type
Valuation
technique
Significant
unobservable inputs
Inter-relationship
between key
unobservable
inputs and fair value
measurement
Serviced residence
properties
Discounted cash flow:
The valuation model
considers the present
value of net cash flows
to be generated from
the property, taking
into account expected
rental growth rate and
occupancy rate.
The expected net cash
flows are discounted
using risk-adjusted
discount rates.
Among other factors,
the discount rate
estimation considers
the quality of a building
and its location,
tenant credit quality
and lease terms.
Group
• Discount rate:
South East Asia and
Australia:
6.75% - 13.75%
(2014: 5.75% - 15.00%)
North Asia:
3.90% - 7.50%
(2014: 4.60% - 8.25%)
Europe and
United States of America:
8.25% - 10.50%
(2014: 7.70% - 10.65%)
• Terminal capitalisation rate:
South East Asia and
Australia:
4.00% - 9.50%
(2014: 3.25% - 9.50%)
North Asia:
4.13% - 6.10%
(2014: 4.00% - 7.00%)
Europe and
United States of America:
5.00% - 7.50%
(2014: 4.50% - 9.00%)
Trust
• Discount rate:
Singapore:
6.75% - 7.50%
(2014: 5.75% - 8.00%)
• Terminal capitalisation rate:
Singapore:
4.00% - 4.50%
(2014: 3.25% - 5.50%)
The estimated fair
value would increase
(decrease) if:
• the discount rate
were lower (higher);
or
• the terminal
capitalisation rate
were lower (higher).
