Barclays 2013 Annual Report Download - page 316

Note 18: Fair value of assets and liabilities continued
Investment Property
Description: Investment property consists of commercial real estate property including most of the major property types retail, office, industrial
and multi-family properties.
Valuation: Investment property is valued using competitive asset specific market bids. When bids are unavailable, valuations are determined by
independent third party appraiser through a discounted cash flow analysis. The key inputs to the discounted cash flow valuation are capitalisation
rates, yields, growth rate, and loss given default.
Observability: Since each investment property is unique in nature and the commercial real estate market is illiquid, valuation inputs are largely
unobservable.
Level 3 sensitivity: For investment property, sensitivity is determined by a range of asset specific market bids or by stressing the inputs to the
discounted cash flow analysis.
Other
Description: The receivables resulting from the acquisition of the North American businesses of Lehman Brothers is also included within ‘Other’.
For more details, refer to Note 30 Legal, competition and regulatory matters.
Level 3 sensitivity: No stress has been applied to the receivables relating to the Lehman acquisition (Note 16). The sensitivity inherent in the
measurement of the receivables is akin to a litigation provision. Due to this, an upside and downside stress on a basis comparable with the other
assets cannot be applied.
Complex Derivative Instruments
Valuation estimates made by counterparties with respect to complex derivative instruments, for the purpose of determining the amount of
collateral to be posted, often differ, sometimes significantly, from Barclays own estimates. In almost all cases, Barclays has been able to
successfully resolve such differences or otherwise reach an accommodation with respect to collateral posting levels, including in certain cases by
entering into compromise collateral arrangements. Due to the ongoing nature of collateral calls, Barclays will often be engaged in discussion with
one or more counterparties in respect of such differences at any given time. Valuation estimates made by counterparties for collateral purposes
are, like any other third-party valuation, considered when determining Barclays fair value estimates.
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314 Barclays PLC Annual Report 2013
Notes to the financial statements
For the year ended 31 December 2013 continued