22. Investment properties

Investment properties are recognised at depreciated cost. As of 30 September 2015, investment properties totalling €170 million (30/9/2014: €223 million) were recognised. The development of property, plant and equipment is shown in the following table.

The decline of €53 million was mainly the result of the reclassification of sites owned by METRO PROPERTIES from investment properties to assets held for sale. In addition, an overcompensation of investing activities in financial year 2014/15 by depreciation and impairment losses contributed to this decline. Offsetting effects essentially resulted from the reclassification of a Russian site owned by METRO PROPERTIES from assets held for sale to investment properties.

The fair values of these investment properties total €243 million (30/9/2014: €311 million, including €1 million related to discontinued operations). They cannot 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]), 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 the respective country and location risk as well as the property-specific real estate risk. In addition, project developments are being considered in the context of determining the best possible use.

Rental income from these properties amounts to €34 million, with finance leases accounting for €11 million of this total (2013/14: €40 million, thereof €11 million from finance leases). The related expenses amount to €20 million, with finance leases accounting for €7 million (2013/14: €25 million, thereof €8 million from finance leases). Expenses of €1 million (2013/14: €1 million) resulted from properties without rental income and did not relate to finance leases.

Restrictions on titles in the form of liens and encumbrances amounted to €19 million (30/9/2014: €19 million, including €0 million related to discontinued operations). As in the previous year, no contractual commitments for the acquisition of investment properties were made.