The ‘Other changes’ in 2016 concern the transfer from other asset categories to ‘investment property’.

In view of the nature, diversity and locations (station areas), the fair value of the investment property portfolio is not determined on a regular basis, unless impairment applies. The fair value is expected to be greater than the carrying amount of the investment property.

In addition to business premises, the investment property also consists of property let to third parties or held as strategic property. The rental agreements generally include a period of several years during which cancellation is not possible. Renewal of the agreement after this is negotiated with the tenant. The overall contractual rent up to the end of the rental contracts was around €121 million in 2017. No contingent rent is charged.

The direct rental income was €32 million (2016: €33 million). The direct rental costs comprise maintenance costs, property taxes and direct management costs, totalling €9 million (€9 million in 2016).

Accounting policies

Investment property includes property held in order to earn rental income or an appreciation in value, or both. Investment property is measured at cost, less cumulative depreciation and cumulative impairment losses. The cost of self-produced assets includes the cost of materials, direct labour costs, a reasonable portion of the indirect production costs, and financing costs. Where relevant, the estimated costs of dismantling and removing the asset and the costs of restoring the site where the asset was located are added to the total cost.

The following accounting policies apply to investment property.

Components

If investment property consists of components with differing useful lives, these components are listed as separate items under the investment property.

The carrying amount of an investment property is adjusted for the cost of replacing all or part of that asset when such costs are incurred and if it is likely that the replacement will deliver future economic benefits. All other costs of maintaining the asset are charged to the income statement as and when they are incurred.

Depreciation

Depreciation of investment property is on a straight-line basis, after deducting the residual value and based on the estimated useful life of each individual item of investment property. Depreciation is charged to the income statement.

The estimated useful life (depreciation term) for different types of investment property is as follows.

Asset type	Depreciation terms
Foundations and underlying land	100 years
Structure and core	50 years
Facades and outer walls	33 years
Roofing	15 years
Interior finish	15 years
Technical equipment	15 years

The specified useful life is an average for the assets concerned and for any components of those assets. The depreciation method, remaining useful life and residual value are reviewed each year.