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10.4 Reconciliation of the balance of recurring fair value measurement categorized within Level III of the fair value hierarchy

Reconciliation of the balance of recurring fair value measurement categorized within Level III of the fair value hierarchy1 January 2014 - 31 December 20141 January 2013 - 31 December 2013
Investment propertyAssets held for saleInvestment propertyAssets held for sale
Opening balance 1,312,329 51,435 451,607 4,461
Acquisition 667,058 - 65,560 -
Reclassification from own property 33,964 789 24,767 21,943
Reclassification from investment property - 10,786 - 62,313
Profits or losses disclosed in profit or loss as: 76,391 -1,358 -92,546 -37,282
- net profit/loss on realisation and impairment loss on investments -693 359 4,430 -
- net change in the fair value of assets and liabilities measured at fair value 77,084 -1,717 -96,976 -37,282
Profits or losses recognized in other comprehensive income as “Reclassification of real property from property, plant and equipment to investment property” 8,725 - 6,308 -
Reclassification to own property - - -24,153 -
Reclassification to assets held for sale -10,786 - -62,313 -
Disposal -15,307 -1,651 -9,561 -
Reclassification to Level II - - -118,214 -
Change in group composition 3,481 - 1,070,945 -
Exchange differences -885 - -71 -
Closing balance 2,074,970 60,001 1,312,329 51,435

Property classified to Level III of the fair value

NoName of the propertyFair value as at 31 December 2014Measurement approachUnobservable dataRanges of unobservable data
1. Office complex, Wrocław 276,220 Income approach using the investment method and the simple capitalisation technique Monthly rental rate per 1 m2 (office space) EUR 14.50 - 15.50
Capitalisation rate 1)
2. Warehouse and office building, Łódź 220,990 Income approach using the investment method and the simple capitalisation technique Monthly rental rate per 1 m2 (office space) EUR 7.50 - 9.00
Monthly rental rate per 1 m2 (warehouse space) EUR 2.60 - 3.60
Capitalisation rate 1)
3. Office complex, Gdańsk 168,910 Income approach using the investment method and the simple capitalisation technique Monthly rental rate per 1 m2 (office space) EUR 12.00 - 16.00
Capitalisation rate 1)
4. Office building, Warsaw 156,000 Income approach using the investment method and the income stream discounting technique Monthly rental rate per 1 m2 (office space) EUR 12.00 - 15.00
Monthly rental rate per one parking spot (parking lot) EUR 70.00 - 150.00
Capitalisation rate 1)
5. Office building, Warsaw 140,240 Income approach using the investment method and the simple capitalisation technique Monthly rental rate per 1 m2 (office space) EUR 7.98 - 22.00
Monthly rental rate per one parking spot (parking lot) EUR 23.46 - 150.00
Capitalisation rate 1)
6. Warehouses, Czeladź 129,500 Income approach using the investment method and the simple capitalisation technique Monthly rental rate per 1 m2 (office space) in warehouse parks EUR 8.00 - 9.00
Monthly rental rate per 1 m2 (warehouse space) EUR 3.00 - 4.40
Capitalisation rate 1)
7. Warehouse and office building, Nowa Wieś Wrocławska 124,370 Income approach using the investment method and the simple capitalisation technique Monthly rental rate per 1 m2 (office space) EUR 8.00 - 9.00
Monthly rental rate per 1 m2 (warehouse space) EUR 2.40 - 4.20
Capitalisation rate 1)
8. Office building, Warsaw 115,330 Income approach using the investment method and the simple capitalisation technique Monthly rental rate per 1 m2 (office space) EUR 11.50 - 14.50
Monthly rental rate per one parking spot (parking lot) EUR 55.00 - 85.00
Capitalisation rate 1)
9. Warehouse and office building (under construction), Komorniki 101,190 Mixed approach with the use of the residual method Monthly rental rate per 1 m2 (office space) EUR 8.50 - 9.00
Monthly rental rate per 1 m2 (warehouse space) EUR 2.30 - 4.00
Capitalisation rate 1)
Construction costs 2)
10. Shopping centre, Pabianice 97,250 Income approach using the investment method and the simple capitalisation technique Monthly rental rate per 1 m2 of retail space depending on the surface size rented 3)
Capitalisation rate 1)
11. Warehouse and office building, Bielany Wrocławskie 88,830 The income approach for the part of the property constituting Hall A and mixed approach using the residual method for the part of property allocated for the construction of Hall B Monthly rental rate per 1 m2 (office space) in warehouse parks EUR 8.00 - 9.00
Monthly rental rate per 1 m2 (warehouse space) EUR 2.40 - 4.20
Capitalisation rate 1)
Construction costs 4)
12. Warehouse and office building, Gdańsk 85,070 Income approach using the investment method and the simple capitalisation technique Monthly rental rate per 1 m2 (office space) in warehouse parks EUR 8.00 - 9.00
Monthly rental rate per 1 m2 (warehouse space) EUR 2.60 - 3,.60 5)
Capitalisation rate 1)
13. Retail park, Iława 69,100 Income approach using the investment method and the simple capitalisation technique Monthly rental rate per 1 m2 of retail space depending on the surface size rented 3)
Capitalisation rate 1)
14. Warehouse and office building, Łódź 62,780 Income approach using the investment method and the simple capitalisation technique Monthly rental rate per 1 m2 (office space) in warehouse parks EUR 7.50 - 9.00
Monthly rental rate per 1 m2 (warehouse space) EUR 2.60 - 3.60
Capitalisation rate 1)
15. Warehouse and office building, Nowa Wieś Wrocławska 60,050 Income approach using the investment method and the simple capitalisation technique Monthly rental rate per 1 m2 (office space ) in warehouse parks EUR 8.00 - 9.00
Monthly rental rate per 1 m2 (warehouse space) EUR 2.40 - 4.20
Capitalisation rate 1)
16. Warehouse and office building, Błonie 44,180 Income approach using the investment method and the simple capitalisation technique Monthly rental rate per 1 m2 (office space) in warehouse parks EUR 7.00 - 8.00
Monthly rental rate per 1 m2 (warehouse space) EUR 2.10 - 3.00
Capitalisation rate 1)
17. Retail building, Nowy Targ 39,040 Income approach using the investment method and the simple capitalisation technique Monthly rental rate per 1 m2 of retail space depending on the surface size rented 3)
Capitalisation rate 1)
18. Retail park, Lublin 38,650 Income approach using the investment method and the simple capitalisation technique Monthly rental rate per 1 m2 of retail space depending on the surface size rented 3)
Capitalisation rate 1)
19. Other 57,270 n/a n/a n/a
Total 2,074,970

1) the capitalisation rate was determined based on the base rate determined for the selected market transaction (the choice depends on the location and nature of the property which is being measured) and the base rate adjustments resulting from the following factors which characterising the property: general location, immediate neighbourhood, specification of the building, the characteristics of the building, the rent condition, the remaining duration of lease contracts, the transaction value, turnover, average rents, the age and type of building, distance from communication routes.
2) the value of construction costs was determined based on the investment budget.
3) the market rent for the property was determined based on a market analysis of retail space in similarly located buildings with similar characteristics to the property which is being measured, in particular is was based on rental rates in contracts signed for the shopping centre in question.
4) the value of construction costs was determined based on market cost of building construction.
5) the market rent was determined based on rates included in recently concluded contracts for the park.
6) the value of construction costs was determined based on market cost of office building construction minus costs incurred as at the measurement date.

Measurement of Level III real property is sensitive to changes in parameters used for measurement purposes and the aforesaid parameters depend on the macroeconomic environment (e.g. economic growth, inflation rate, interest rates), supply and demand on individual local property markets (taking into account both the lease market and the demand for complete items of real property, expressed by financial investors). The parameters used for measurement purposes may be interrelated, whereas the dependence is not fixed and may change depending on the market conditions.