/ 1 4 7
NOTES TO THE FINANCIAL STATEMENTS
C A M B R I D G E I N D U S T R I A L T R U S T
A N N U A L R E P O R T 2 0 1 5
20.
Equity issue costs
The equity issue costs of $295,000 (2014: $259,000) incurred in relation to the distribution reinvestment plan are
deducted directly against Unitholders’ funds.
21.
Determination of fair values of investment properties
A number of the Group’s accounting policies and disclosures require the determination of fair value, for both
financial and non-financial assets and liabilities. Fair values have been determined for measurement and/or
disclosure purposes based on the following methods. When applicable, further information about the assumptions
made in determining fair values is disclosed in the notes specific to that asset or liability.
Investment properties
Investment properties are stated at fair value based on valuations as at 31 December 2015 performed by
independent professional valuers, having appropriate recognised professional qualifications and experience
in the location and category of property being valued. Independent valuations are obtained annually for all
investment properties. Any change in the fair value is recorded in the Statement of Total Return.
In determining the fair value, the valuers have used valuation methods which involve certain estimates. The
Manager has exercised its judgment and is satisfied that the valuation methods and estimates are reflective of
the current market conditions.
The independent professional valuers have considered valuation techniques including direct comparison
method, capitalisation approach and/or discounted cash flow analysis in arriving at the open market value as
at the reporting date. The key assumptions used to determine the fair value of investment properties include
market-corroborated capitalisation yield, terminal yield, discount rate and average growth rate.
The direct comparison method involves the analysis of comparable sales of similar properties and adjusting the
sale prices to that reflective of the investment properties. The capitalisation approach capitalises an income
stream into a present value using revenue multipliers or single-year capitalisation rates. The discounted cash flow
method involves the estimation and projection of an income stream over a period and discounting the income
stream with an expected rate of return.
Valuation processes applied by the Group
The Group has an established control framework with respect to the measurement of fair values. This framework
includes a real estate team that reports directly to the Chief Executive Officer of the Manager, and has an overall
responsibility for all significant fair value measurements, including Level 3 fair values.
The valuation team regularly reviews significant unobservable inputs and valuation adjustments. If third party
information is used to measure fair value, then the valuation team assesses and documents the evidence obtained
from the third parties to support the conclusion that such valuations meet the requirements of FRS, including the
level in the fair value hierarchy the resulting fair value estimate should be classified.
Significant valuation issues are reported to the Manager’s Board.
