Ascendas REIT - Annual Report 2021

Notes to the Financial Statements YEAR ENDED AT 31 DECEMBER 2021 29. FAIR VALUE MEASUREMENT (continued) (d) Level 3 fair value measurements (continued) (i) Information about significant unobservable inputs used in Level 3 fair value measurement (continued) Investment properties and investment properties under development (continued) The following table shows the key unobservable inputs used in the valuation models (continued): Valuation technique Key unobservable inputs Inter–relationship between key unobservable inputs and fair value measurements Trust Capitalisation Approach • Capitalisation rates of 5.00% to 7.00% (31 December 2020: 5.25% to 7.25%) The estimated fair value would increase if the capitalisation rate, discount rate and terminal yield decreased. The estimated fair value would increase if the price psm increased. Discounted Cash Flow Method • Discount rates of 7.00% to 7.75% (31 December 2020: 7.25% to 8.00%) • Terminal yields of 5.25% to 7.50% (31 December 2020: 5.50% to 7.75%) Direct Comparison Method • Adjusted price (psm) of $1,205 to $5,139 (31 December 2020: $1,450 to $9,152) Right-of-use assets The right-of-use assets are stated at fair value approximate the value of lease liabilities at each balance sheet date. The Group discounted lease payments using the applicable incremental borrowing rates to measure the value of lease liabilities. The weighted average incremental borrowing rates applied are 4.22% (31 December 2020: 4.22%) for 15 years’ leases, 4.55% (31 December 2020: 4.55%) for 20 years’ leases and 5.05% (31 December 2020: 5.05%) for 30 years leases. The fair value of right-of-use assets of the Group and the Trust was $604.6million (31 December 2020: $610.0 million) and $584.9 million respectively (31 December 2020: $610.0 million) as at 31 December 2021. (ii) Movements in Level 3 assets and liabilities measured at fair value The reconciliation for investment properties, investment properties under development and right-of-use assets measured at fair value based on significant unobservable inputs (Level 3) is disclosed in Note 4, Note 5 and Note 7 respectively. Ascendas Reit 252