Manulife US REIT - Annual Report 2021

MANULIFE US REIT 188 For the year ended 31 December 2021 Notes to the Financial Statements 22 FAIR VALUES OF ASSETS AND LIABILITIES (CONT'D) (b) Measurement of fair values The following is a description of the valuation techniques and inputs used in the measuring Level 2 and Level 3 fair values. Financial instruments measured at fair value Financial derivatives The fair value of interest rate swaps are based on valuations provided by the financial institutions that are the counterparties of the transactions. Similar contracts are traded in an active market and the quotes reflect the actual transactions in similar instruments. Financial instruments not measured at fair value Loans and borrowings The fair values of loans and borrowings are calculated using the discounted cash flow technique based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the measurement date. 23 COMMITMENTS (a) Operating lease commitments – as lessor Non-cancellable operating lease rentals are receivable as follows: Group 2021 2020 US$’000 US$’000 Within 1 year 150,195 142,556 After 1 year but within 5 years 494,755 439,641 After 5 years 264,313 293,672 909,263 875,869 The above operating lease receivables are based on the rent receivable under the lease agreements, adjusted for increases in rent where such increases have been provided for under the lease agreements. (b) Capital commitments Capital expenditure contracted for as at the end of the reporting period but not recognised in the financial statements are as follows: Group 2021 2020 US$’000 US$’000 Capital commitments in respect of investment properties 10,721 5,385