Page 110 - Continental Reinsurance 2022 Annual Report

108 Notes to the consolidated and separate financial statements - continued

All the title documents on the investment properties are in the name of the Group

The Group enters into operating leases for all of its investment properties. The rental income arising during the period ended 31
December 2022 amounted to =N=99.6 million (year ended 31 December 2021: =N=127.86 million) which is included in other
income. Direct operating expenses arising in respect of such properties during the year are included in administrative expenses.

There are no restrictions on the realisability of investment property or the remittance of income and proceeds of disposal. The Group
has no contractual obligations to purchase, construct or develop investment property or for repairs or enhancement.

Rental Income derived from investment properties Group Group Company Company
Gain (loss) on disposal of investment properties Dec. 2022 Dec. 2021 Dec. 2022 Dec. 2021
Direct operating expenses (including repairs & maintenance) =N='000 =N='000 =N='000 =N='000
Profit arising from investment properties carried at fair value
99,573 127,864 26,372 49,333
- 48,580 - 48,580
(7,586) (1,045)
(7,375) (2,721) 96,868
92,198 168,857 23,651

There was no disposal of investment properties during the year (2021: N403m). The book value of the disposed asset in 2021 was
N331m. Disposal expense of N23m was incurred resulting to a gain of N49m in 2021.

Fair value measurement using

Date of valuation - 31 December 2022 Quoted Significant Significant Total
Investment properties prices in observable unobservable =N='000

active inputs inputs 5,201,836
market Level 2 Level 3
Level 1 =N='000 =N='000
=N='000
- 5,201,836
-

The fair value disclosure on investment properties is as follows: Fair value measurement using

Date of valuation - 31 December 2022 Quoted Significant Significant Total
Investment properties prices in observable unobservable =N='000

active inputs inputs 4,925,062
market Level 2 Level 3
Level 1 =N='000 =N='000
=N='000
- 4,925,062
-

During the year, there were no transfers between level 1 and level 2 and in and out of level 3.

Description of valuation techniques used and key inputs to valuation on investment properties

Olosa Property Signicant unobservable inputs Range (weighted average)
Valuation technique

Income capitalization using DCF Analysis Estimated rental per Square meters per annum N110,000/sqm
Total Square meters 1386 sqm
Average annual growth 4.69%
Average annual probable vacancy rate 8.2%
Capitalisation rate (equated yield) 11.92%

Three bedroom ats Signicant unobservable inputs Range (weighted average)
Valuation technique
Estimated rental per wing per annum =N=750,000
Income capitalization using DCF Analysis Average annual growth 6.19%
Average annual probable vacancy rate 2.78%
Capitalisation rate (equated yield) 11.09%