12. INVESTMENT PROPERTIES (CONTINUED)
There are no restrictions on the realisability of investment properties or the remittance of income and proceeds from
disposal.
Other than Sarang Hospital, Siloam Hospitals Purwakarta and Siloam Sriwijaya, all the properties are mortgaged as
security for the bank facilities (Note 20).
Other details on the properties are disclosed in the statements of portfolio.
The two types of property titles in Indonesia are Hak Guna Bangunan (“HGB”) title and Strata title constructed on Build,
Operate and Transfer (“BOT”) scheme.
The HGB title gives the right to construct and own buildings on a plot of land. The right is transferable and may be
encumbered. Technically, HGB is a leasehold title which the State retains “ownership”. For practical purposes, there is
little difference from a freehold title. HGB title is granted for an initial period of up to 30 years and is extendable for a
subsequent 20-year period and another 30-year period. Upon the expiration of such extensions, new HGB title may be
granted on the same land. The cost of extension is determined based on a certain formula as stipulated by the National
Land Office (Badan Pertanahan Nasional) in Indonesia.
The Strata title gives the party who holds the property the ownership of common areas, common property and common
land proportionately with other strata title owners. The commencement date of each title varies. The BOT scheme is
a structure in Indonesia for the construction of commercial buildings where Indonesian government owns the relevant
land (“BOT land”). Under the BOT scheme, the Indonesian government which owns BOT land (“BOT grantor”) agrees to
grant certain rights over the BOT land to another party (“BOT grantee”). The BOT grantee can develop the site, subject
to the relevant approvals and then operate the buildings constructed on the BOT land for a particular period of time as
stipulated in the BOT agreement, including obtaining Strata title certificates on the BOT land. A BOT scheme is granted
for an initial period of 20 to 30 years and is extendable upon agreement of both the grantor and grantee. Upon expiration
of the term of the BOT agreement, the BOT grantee must return the land, together with any buildings and fixtures on
top of the land, without either party providing any form of compensation to the other.
The investment properties are leased out under operating leases (Notes 3 and 25).
Information about fair value measurements using significant unobservable inputs (Level 3)
All fair value measurements of investment properties are categorised within Level 3 of the fair value hierarchy, and a
description of the valuation techniques and the significant inputs used in the fair value measurement are as follows:
There were no significant inter-relationships between unobservable inputs.
NOTES TO THE
FINANCIAL STATEMENTS
31 DECEMBER 2014
Description
Fair value at
31 December
2014
(in S$’000)
Valuation
technique(s)
Key unobservable
inputs
Range of
unobservable
inputs (probability
-weighted
average)
Relationship of
unobservable inputs to fair
value
Investment
properties
1,163,690 Discounted cash
flow method
Discount rate
8.25% to 9.80%
(2013: 8.25% to
9.92%)
The higher the discount rate,
the lower the fair value.
Terminal
growth rate
6.00% to 11.00%
(2013: 6.00% to
11.00%)
The higher the terminal
growth rate, the lower the
fair value.
8,325 Direct capitalisation
method
Capitalisation rate 9.75%
(2013: 9.00%)
The higher the capitalisation
rate, the lower the fair value.
72
FIRST REIT
ANNUAL REPORT 2014
