183 ANNUAL REPORT 2025 Notes to the Financial Statements For the financial year ended 31 December 2025 7 INVESTMENT PROPERTIES AND INVESTMENT PROPERTY HELD FOR DIVESTMENT (CONT’D) Fair value hierarchy The fair value measurement for investment properties has been categorised as Level 3 of the fair value hierarchy based on inputs to the valuation techniques used. Group 2025 2024 US$’000 US$’000 Fair value of investment properties (based on valuation reports) 774,250 729,060 Add: carrying amount of right-of-use asset (Note 14) 19,838 20,812 Add: Investment property held for divestment (1) – 23,800 Investment properties and investment property held for divestment as at 31 December 794,088 773,672 The investment properties were stated at fair value based on independent valuation undertaken by Cushman & Wakefield, Inc. and Newmark Valuation & Advisory, LLC (2024: CBRE, Inc. and Newmark Valuation & Advisory, LLC). The independent valuers have the appropriate professional qualifications and recent experience in the location and category of the properties being valued. The fair values are based on market values, being the estimated amount for which a property could be exchanged on the date of the valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion. The fair values were calculated using the Income Approach. The two primary income approaches that may be used are the Discounted Cash Flow (“DCF”) and the Direct Capitalisation Method (“DCM”). DCF calculates the present values of future cash flows over a specified time period, including the potential proceeds of a deemed disposal, to determine the fair value. DCM determines value by applying a capitalisation rate to the property’s stabilised net operating income, normally at the first year. Both the DCF and DCM approaches convert the earnings of a property into an estimate of value. The Market of Direct Comparison approach may also be used, which is based on sound considerations for similarity and comparability between properties that have recently been sold. Considerations may include geographic location, physical, legal, and revenue generating characteristics, market conditions and financing terms and conditions. The final step in the valuation process involves the reconciliation of the individual valuation techniques in relationship to their substantiation by market data, and the reliability and applicability of each valuation technique to the subject property. The valuation methods used in determining the fair value involve certain estimates including those relating to discount rate, terminal capitalisation rate and capitalisation rate, which are unobservable. In relying on the valuation reports, the Manager has exercised its judgment and is satisfied that the valuation methods and estimates used are reflective of the current market conditions. In estimating the fair value of the properties, the highest and best use of the properties is their current use.
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