Investment properties are measured at fair value and revalued on a regular basis to ensure the carrying amount of each property does not differ materially from its fair value at the balance date. A full independent valuation of each property is carried out at least once every three years. The fair value of investment property is updated to reflect market conditions at the end of a reporting period, twice annually. This represents best estimates as at the balance sheet date, and if investment property is sold in the future, the price achieved may be higher or lower than the most recent valuation.
Each valuation assesses both capital and rental value on a mark to market basis. Rental and purchase markets exist for early learning centres on an existing use basis together with alternate uses from a capital value perspective. Management has a conservative valuation approach with a preference for assets that are leased at market levels rather than being reliant upon any measure of over renting to maintain distribution levels to investors. This guards against any shortfall in long term cashflow and underpins the capital values in the event that a centre falls vacant. Relative to other asset classes, research and past performance indicates that movements in value for early learning assets is more restricted than for the more traditional commercial/industrial sector, indicating a lower level of volatility for early learning asset values.