Pandox rely on both internal valuations and valuations by professional external property appraisers.

Internal valuations

Pandox performs internal valuations of its hotel property portfolio and Investment properties are recognized at fair value in accordance with accounting standard IAS 40. Operating properties are recognized at cost less accumulated depreciation and any accumulated impairment losses. The market value of Operating properties is reported for information purposes only.

In addition, all properties are valued by external professional property appraisers who are independent of Pandox, and these assumptions and values form an important element in the assessment of the internal valuations.

Valuation model

The valuation model consists of an accepted and proven cash flow model where future cash flows that the hotel properties are expected to generate are discounted. The valuation is based on the business plan for the hotel concerned, which is updated at least twice a year and takes into consideration, among other things, developments in the underlying operator activities, market developments, the contract situation, operating and maintenance issues and investments aimed at maximizing the hotel property’s cash flow and return in the long term.

External valuations

External valuations of all properties are carried out annually by independent property appraisers. The external appraisers complete a more in-depth inspection at least every three years or in conjunction with major changes to the properties. The external valuations provide an important reference point for Pandox’s internal valuations.