212
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
(continued)
Type
Valuation
technique
Significant
unobservable inputs
Inter-relationship
between key
unobservable
inputs and fair value
measurement
Assets held for sale
Direct comparison and
income capitalisation
approaches:
The direct comparison
approach is used by
making reference to
comparable sales
and asking prices of
similar properties in
the relevant market,
with adjustments made
to differentiate the
comparables in terms
of location, area,
quality and other
relevant matters.
The income
capitalisation approach
is used by capitalising
the income potential.
Group
•
Capitalisation rate:
3.50% (2014: 4.25%)
• Direct comparison –
price/sqm:
$9,069/sqm
(2014: $8,656/sqm)
The estimated fair
value would increase
(decrease) if:
• the capitalisation
rate were lower
(higher).
Cross currency
swaps, forward
exchange
contracts and
interest rate
swaps
Market comparison
technique:
The fair values are
based on broker
quotes. Similar
contracts are traded in
an active market and
the quotes reflect the
actual transactions in
similar instruments.
Not applicable
Not applicable
Financial instruments not measured at fair value for which fair values are disclosed
Type
Valuation technique
Significant unobservable inputs
Medium term notes
Discounted cashflows
Not applicable
Sensitivity analysis for key unobservable inputs
The significant unobservable inputs used in the fair value measurement of the Group’s serviced
residence properties and assets held for sale are discount rate, terminal capitalisation rate and
capitalisation rate. Significant decreases in the discount rate, terminal capitalisation rate and
capitalisation rate in isolation would result in a significantly higher fair value measurement. Conversely,
a significant increase would result in a significantly lower fair value measurement.
Notes to the Financial Statements
Year ended 31 December 2015
