104 LV= Annual Report 2012
Notes to the financial statements continued
31 December 2012
28. Investment properties
Accounting for investment properties
Investment properties are freehold and leasehold land and buildings held for long-term rental yields and capital growth. They are held at
fair value and changes in fair value are recorded as fair value gains or losses in the Statement of Comprehensive Income. Fair value is
determined annually by independent professional valuers based on market conditions.
Group Society
2012 2011 2012 2011
£m £m £m £m
Freeholds 129.1 183.8 96.1 115.3
Long leaseholds 35.6 36.1 35.6 36.1
164.7 219.9 131.7 151.4
All investment properties held by the Group and the Society are occupied by third party tenants. All properties occupied by Group
undertakings are shown separately within Note 27.
The market value movements in the year on land and buildings were:
Group Society
2012 2011 2012 2011
£m £m £m £m
Balance at 1 January 219.9 315.4 151.4 246.6
Additions 0.2 12.5 0.2 2.9
Disposals (49.1) (89.2) (16.4) (89.2)
Net fair value adjustment (6.3) (18.8) (3.5) (8.9)
Balance at 31 December 164.7 219.9 131.7 151.4
Due within one year 47.5 - 14.5 -
Over one year 117.2 219.9 117.2 151.4
164.7 219.9 131.7 151.4
Investment properties due within one year represent £33m of properties held within the Threadneedle UK Property Fund II ICVC that is in
the process of being wound up (refer Note 45) and an additional property held directly by the Society that is in the process of being sold.
All investment properties are valued annually at fair value. They were valued as at 31 December 2012 by qualified professional valuers
working for Colliers International (UK) Plc who are professional, third party, independent Chartered Surveyors. All valuations were carried
out in accordance with the RICS Appraisal and Valuation Standards.
The Group and Society enter into operating leases for all investment properties. All rents are payable in advance and the rental income
arising during the year amounted to £8.1m (2011: £8.9m) for the Group and the Society, which is included in investment income.
Non recoverable expenses are deducted from rental income for investment properties and amounted to £2.0m (2011: £1.8m) for the
Group and the Society.