27 Derivative financial instruments

The derivatives financial instruments are made up as follows:

 

2016

2015

As at 1 January

23

48

Fair value gain

(4)

(11)

Unwind transaction

-

(14)

As at 31 December

19

23

Derivatives

Ref.

Instrument type

Notional amount

Fixed rate

Effective date

Termination date

Fair value 2016

1)

IRS

340

1.999%

27.10.2015

20.07.2020

19

  

340

   

19

Hedging of Loan Portfolio

Vesteda Finance BV held a long-term interest rate swap contract with Rabobank at a rate of 1.99% for an original notional amount of € 625 million, decreasing in 2017 to € 500 million, to hedge interest rate exposure on the remaining loan portfolio of VRF with floating interest exposure, comprising the corporate credit facility and mortgage loans.

In September 2014 € 135 million of notional of the IRS was unwound for a total consideration of € 12 million and in October 2015 € 150 million of notional of the IRS was unwound for a total consideration of € 14 million.

As a result the notional amounted to € 340 million during 2016, decreasing to € 215 million in 2017. The Vesteda Finance IRS has a weighted remaining term of 2.45 years.

According to the VRF Terms and Conditions, Vesteda is required to hedge a minimum of 70% of existing interest rate exposure. At 31 December 2016 92% of interest rate exposure was either hedged through derivatives or through fixed rate interest loans.

As a result of a further decrease of Euribor Interest rates, a lower interest curve in 2016 and reducing remaining maturity, fair value of financial instruments decreased by € 4 million and amounted to € 19 million negative.