Summary
ASIF was established in 2000 to acquire a portfolio of childcare
centres. The Fund's portfolio has been expanded to include a self
storage facility, a medical centre and interests in a listed
property trust and unlisted wholesale unit trust. A high proportion
of the fund's investments are represented by properties that
provide education, health, welfare and transport services to the
community.
In December 2008 ASIF acquired a portfolio of listed and
unlisted securities. The securities were acquired on a yield
of circa 13% which will enhance ASIF's future earnings.
Acquisition of the securities by ASIF also provides the advantage
of diversifying ASIF's income and asset base and positions ASIF to
benefit from any recovery in the price of the securities in the
medium to long term.
Valuation Policy
The Fund's direct property assets are valued on a two year
rolling basis.
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. Consistent with the requirement to
independently value each property on a regular basis each property
is independently valued every two years. The valuations are
undertaken on an annual rolling basis. Independent valuations are
prepared using both the capitalisation of net income method and/or
the discounting of future net cash flows to their present
value.
Fair value of investment property is the price
at which the property could be exchanged between knowledgeable,
willing parties in an arm’s length transaction. A “willing seller”
is not a forced seller prepared to sell at any price. The best
evidence of fair value is given by current prices in an active
market for similar property in the same location and condition.
The fair value of investment property has been
updated to reflect financial market conditions at the end of the
reporting period. While this represents best estimates as at
balance sheet date, if the investment property is sold in future
the price achieved may be higher or lower than the most recent
valuation.
The Directors have determined to maintain the
value of the operating investment property portfolio as at 31
December 2009 consistent with the value as at 30 June 2009.
In making this decision, the Directors gave consideration to a
number of factors including:
(a) the Receivers of ABC have announced
that they have signed a sales contract with the GoodStart syndicate
to purchase the ABC business completing no later than 31 March
2010.
(b) recent market sales evidence for
operating properties.
(c) stabilisation of market conditions
and property yields.
(d) the leases are long term and not
subject to any substantial market fluctuations in rent as found in
more traditional commercial markets.
(e) the average carrying value per
property is around $1.4 million and ASIF operates within a market
place that remains relatively liquid with continued sales
activity.
Following the ABC1 assignment process which is anticipated to be
complete during the second half of this financial year, independent
valuations will be conducted on approximately 20 childcare
properties.
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