Financial Statements
11Property
| Investment £m |
Development £m |
Owner- occupied £m |
Total £m |
||
|---|---|---|---|---|---|
| Carrying value at 1 April 2008 | 9,389 | 1,062 | 53 | 10,504 | |
| Additions | - property purchases | 126 | 126 | ||
| - other capital expenditure | 168 | 271 | 439 | ||
| 294 | 271 | 565 | |||
| Disposals | (2,068) | (107) | (2,175) | ||
| Reclassifications | 579 | (579) | |||
| Revaluations: | |||||
| included in income statement | (2,729) | (245) | (20) | (2,994) | |
| included in statement of recognised income and expense | (44) | (3) | (47) | ||
| Movement in tenant incentives and contracted rent uplift balances | (29) | (29) | |||
| Carrying value at 31 March 2009 | 5,436 | 358 | 30 | 5,824 | |
| Head lease liabilities (note 16) | (14) | ||||
| Total Group property portfolio valuation 31 March 2009 | 5,810 | ||||
At 31 March 2009, the Group book value of properties of £5,810m (2008: £10,469m) comprises freeholds of £5,189m (2008: £9,357m); virtual freeholds of £182m (2008: £303m); long leaseholds of £436m (2008: £802m) and short leaseholds of £3m (2008: £7m). The historical cost of properties was £6,000m (2008: £7,315m).
At 31 March 2009, the book value of owner-occupied property is £30m (2008: £53m) after charging £1m (2008: £nil) depreciation to the income statement for the year.
The property valuation does not include any investment properties held under operating leases (2008: nil).
Properties valued at £3,665m (2008: £7,162m) were subject to a security interest and other properties of non-recourse companies amounted to £1m (2008: £2m).
Included within the property valuation is £67m (2008: £58m) in respect of accrued contracted rental uplift debtors, against which the Group holds a provision of £25m (2008: £8m). The balance arises through the IFRS treatment of leases containing such arrangements, which requires the recognition of rental income on a straight line basis over the lease term, with the difference between this and the cash receipt changing the carrying value of the property against which revaluations are measured.
Cumulative interest capitalised against investment and development properties amounts to £51m and £51m (2008: £33m and £84m) respectively.
The prior year movement is shown below:
| Investment £m |
Development £m |
Owner- occupied £m |
Total £m |
||
|---|---|---|---|---|---|
| Carrying value at 1 April 2007 | 12,891 | 1,106 | 50 | 14,047 | |
| Additions | - property purchases | 115 | 115 | ||
| - other capital expenditure | 253 | 292 | 545 | ||
| 368 | 292 | 660 | |||
| Disposals | (2,694) | (24) | (2,718) | ||
| Reclassifications | 360 | (360) | |||
| Revaluations: | |||||
| in income statement | (1,569) | (19) | (1,588) | ||
| in statement of recognised income and expense | 57 | 3 | 60 | ||
| Increase in tenant incentives and guaranteed rent uplift balances | 33 | 10 | 43 | ||
| Carrying value at 31 March 2008 | 9,389 | 1,062 | 53 | 10,504 | |
| Head lease liabilities (note 16) | (35) | ||||
| Total Group property portfolio valuation 31 March 2008 | 10,469 | ||||
The Group's total property portfolio was valued by external valuers on the basis of Market Value, by reference to recent market evidence of transactions for similar properties, in accordance with the Appraisal and Valuation Standards, Sixth Edition, published by The Royal Institution of Chartered Surveyors. A breakdown of valuations split between the Group and its share of joint ventures and funds is shown below:
| Group £m |
2009 JV/Funds £m |
Total £m |
Group £m |
2008 JV/Funds £m |
Total £m |
|
|---|---|---|---|---|---|---|
| Knight Frank LLP | 5,793 | 787 | 6,580 | 10,466 | 1,067 | 11,533 |
| CBRE | 17 | 1,721 | 1,738 | 3 | 1,935 | 1,938 |
| Directors' valuations | 307 | 307 | ||||
| 5,810 | 2,815 | 8,625 | 10,469 | 3,002 | 13,471 |