ARRICANO REAL ESTATE PLC Valuations reflect, when appropriate, the type of tenants actually in occupation or responsible for meeting lease commitments or likely to be in occupation after letting vacant accommodation, the allocation of maintenance and insurance responsibilities between the Company and the lessee, and the remaining economic life of the property. When rent reviews or lease renewals are pending with anticipated reversionary increases, it is assumed that all notices, and where appropriate counter-notices, have been served validly and within the appropriate time.
Land parcels are valued based on market prices for similar properties.
As at 31 December 2020, the estimation of fair value was made using a net present value calculation based on certain assumptions, the most important of which were as follows:
-- monthly weighted average rental rates per shopping centers, excluding turnover income, ranging from USD 9to USD 19 per sq.m., comprising minimum rental rate of USD 3 and maximum rental rate of USD 203 per sq.m., whichwere based on contractual and market rental rates, adjusted for discounts or fixation of rental rates in Ukrainianhryvnia at a pre-agreed exchange rate, occupancy rates ranging from 98.1% to 100%, capitalisation rates rangingfrom 12.5% to 16.5% p.a. which represented key unobservable inputs for determination of fair value; and
-- all relevant licences and permits, to the extent not yet received, will be obtained, in accordance withthe timetables set out in the investment project plans.
As at 30 June 2021, the fair value of investment property, denominated in the functional currency, amounted to UAH 5,440,695 thousand (unaudited) and RUB 3,314,651 thousand (unaudited) (31 December 2020: UAH 5,660,575 thousand and RUB 3,383,507 thousand). The decrease in fair value of investment property in Ukrainian Hryvnia and in Russian Rouble resulted from the change in the currency exchange rates.
Sensitivity at the date of valuation
The valuation model used to assess the fair value of investment property as at 31 December 2020 is particularly sensitive to unobservable inputs in the following areas:
-- If rental rates are 1% less than those used in valuation models, the fair value of investment propertieswould be USD 2,206 thousand lower. If rental rates are 1% higher, then the fair value of investment propertieswould USD 2,206 thousand higher.
-- If the capitalisation rate applied is 1% higher than that used in the valuation models, the fair value ofinvestment properties would be USD 15,294 thousand lower. If the capitalisation rate is 1% less, then the fairvalue of investment properties would USD 17,785 thousand higher.
-- If the occupancy rate is 1% higher than that used in the valuation model, the fair value of investmentproperties would be USD 1,997 thousand higher. If the occupancy rates are 1% less, then the fair value ofinvestment properties would be USD 1,998 thousand lower.
5 Loans and borrowings
This note provides information about the contractual terms of loans.
30 June
(in thousands of USD) 31 December
2021 2020
(unaudited)
Non-current
Secured bank loans 24,350 27,293
Unsecured loans from related parties 21,420 21,420
Unsecured loans from third parties 24,496 24,745
70,266 73,458
Current
Secured bank loans (current portion of secured long-term bank loans) 22,938 19,631
Unsecured loans from related parties (including current portion of long-term loans from 9,727 11,630
related parties)
Unsecured loans from third parties 2,652 1,099
35,317 32,360
105,583 105,818
Terms and debt repayment schedule
As at 30 June 2021, the terms and debt repayment schedule of bank loans are as follows (unaudited):
(in thousands of USD) Currency Nominal and effective interest Contractual year of Carrying
rate maturity value
Secured bank loans
Secured bank loans USD 6.5%-8.0% 2023-2026 39,377
Secured bank loans UAH 13.25% 2025 7,911
47,288
Unsecured loans from related
parties
Unsecured loans from related USD 10.50% 2021-2023 30,845
parties
Unsecured loans from related USD 10.0% on demand
parties 252
Unsecured loans from related UAH/USD 0-3.2% 2019
parties 50
31,147
Unsecured loans from third parties
Unsecured loan from third party USD 10.50% 2021-2023 26,946
Unsecured loans from third parties USD 3.0% 2022
202
27,148
105,583
As at 31 December 2020, the terms and debt repayment schedule of loans and borrowings are as follows:
(in thousands of USD) Currency Nominal and effective interest Contractual year of Carrying
rate maturity value
Secured bank loans
Secured bank loans USD 7.50%-11.25% 2023-2025 38,656
Secured bank loans UAH 13.25% 2025 8,268
46,924
Unsecured loans from related
parties
Unsecured loans from related USD 10.5% 2021-2023 32,788
parties
Unsecured loans from related USD 10.0% on demand 212
parties
Unsecured loans from related UAH/USD 0-3.2% 2019 50
parties
33,050
Unsecured loans from third parties
Unsecured loan from third party USD 10.50% 2023 25,645
Unsecured loans from third parties USD 3.0% 2022 199
25,844
105,818
For a description of assets pledged by the Group in connection with loans and borrowings refer to Note 13(a). a. Joint Stock Company "Taskombank"
During the 6 months period ended 30 June 2021, the Group signed an amendment to the loan agreement with Joint Stock Company "Taskombank" stipulating a decrease in the annual interest rate from 9.75% to 8.0%.
During the 6 months period ended 30 June 2021, the Group signed an amendment to the loan agreement with Joint Stock Company "Taskombank" stipulating a decrease in the annual interest rate from 11.25% to 8.0%. The loan is syndicated with PJSC "Universal Bank". b. Joint Stock Company "State Savings Bank of Ukraine"
During the 6 months period ended 30 June 2021, the Group received tranches on the existing loan facility with a bank in the amount of USD 3,192 thousand to finance the construction of the Lukianivka shopping and entertainment centre. The tranche facility expires on 25 July 2026.
Besides this, the Group signed an amendment to the loan agreement with Joint Stock Company "State Saving Bank of Ukraine" stipulating a decrease in the annual interest rate from 7.5% to 6.5%..
In accordance with the loan agreement, the lender may require early repayment of the loan facility amount. Respectively, the total loan amount of USD 17,020 thousand is presented within the current liabilities as at 30 June 2021.
During the 6 months period ended 30 June 2021 a number of covenants under loan agreements with banks were amended.
6 Trade and other payables
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