Aviva 2007 Annual Report Download - page 170
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21 – Investment property
This note gives details of the properties we hold for long-term rental yields or capital appreciation.
Freehold Leasehold Total
£m £m £m
Carrying value
At 1 January 2006 10,765 2,510 13,275
Additions 1,373 342 1,715
Capitalised expenditure on existing properties 125 48 173
Acquisitions of subsidiaries 35 – 35
Fair value gains 1,227 280 1,507
Disposals (1,494) (47) (1,541)
Transfers from property and equipment 6 – 6
Foreign exchange rate movements (41) (6) (47)
At 31 December 2006 11,996 3,127 15,123
Additions 1,413 109 1,522
Capitalised expenditure on existing properties 138 11 149
Acquisitions of subsidiaries 4 – 4
Disposals of subsidiaries (3) – (3)
Fair value losses (648) (97) (745)
Disposals (831) (432) (1,263)
Transfers from property and equipment 10 31 41
Foreign exchange rate movements 210 39 249
At 31 December 2007 12,289 2,788 15,077
Investment properties are stated at their market values as assessed by qualified external valuers or by local qualified staff
of the Group in overseas operations, all with recent relevant experience. Values are calculated using a discounted cash
flow approach and are based on current rental income plus anticipated uplifts at the next rent review, assuming no future
growth in rental income. This uplift and the discount rate are derived from rates implied by recent market transactions on
similar properties.
The fair value of investment properties leased to third-parties under operating leases was as follows:
2007 2006
£m £m
Freeholds 11,925 10,423
Leaseholds 2,691 3,039
14,616 13,462
Future contractual aggregate minimum lease rentals receivable under the non-cancellable portion of the above leases are
given in note 51(b)(i).
Aviva plc
Annual Report and
Accounts 2007
166
Financial
statements
Notes to the consolidated financial statements continued