21. Investment properties

Investment properties are recognised at depreciated cost. As of 30 September 2014, investment properties totalling €223 million (30/9/2013: €156 million) were recognised. The increase of €67 million was mainly the result of the reclassification of the Turkish sites owned by METRO PROPERTIES from property, plant and equipment to “investment properties”. The overcompensation of investing activities in the current financial year by depreciation and impairment losses constituted offsetting effects.

The fair values of these real estate properties total €311 million (30/9/2013: €236 million). They can be determined on the basis of observable market prices. As a result, the fair values are determined on the basis of internationally recognised measurement methods, particularly the comparative value procedure and the discounted cash flow method (level 3 of the three-level valuation hierarchy of IFRS 13 [Fair Value Measurement]). This measurement is based on a detailed planning period of ten years. Aside from headline rents, market-based discount rates were used as key valuation parameters. The discount rates are determined on the basis of analyses of relevant real estate markets as well as evaluations of comparable transactions and market publications issued by international consulting firms. The resulting discount rates reflect both the respective country and location risk as well as the property-specific real estate risk.

Rental income from these properties amounts to €40 million (12M 2012/13: €33 million; 9M 2013: €24 million). The related expenses amount to €25 million (12M 2012/13: €18 million; 9M 2013: €14 million). Expenses of €1 million (12M 2012/13: €1 million; 9M 2013: €0 million) resulted from properties without rental income.

Restrictions on titles in the form of liens and encumbrances amounted to €19 million (30/9/2013: €25 million). As in the previous year, no contractual commitments for the acquisition of investment properties were made.