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Notes to Consolidated Financial Statements - 75 escalation rate beginning on the third year of the lease term, in which the monthly rent is calculated with reference to a fixed sum per square meter of leased area, and/or pay rent on a percentage rental basis, which comprises a percentage of gross sales. Commencement of the lease term started upon completion of construction of the mall spaces November 2013. The Group’s customers’ deposits on lease contracts are as follows: Current Noncurrent

2013 P =26,366,314 73,768,914 P =100,135,228

2012 =13,745,480 P 77,839,279 =91,584,759 P

Customers’ deposits on lease contracts are generally equivalent to six months rental and refundable at the end of the lease term. Current portion pertains to one year operating lease agreements while noncurrent portion pertains to two to five years operating lease agreements. The terms of the lease agreements also provide for an increase in the rent generally at the rate of 5%, 7% and 10% starting on the second year and annually thereafter, as applicable. Rent income and common utilities, services and maintenance charges from Alphaland Southgate Tower amounted to P =568.1 million, P =528.6 million and = P412.8 million in 2013, 2012 and 2011, respectively. Direct costs related to rent income amounted to P =126.7 million, P =121.1 million and = P75.2 million in 2013, 2012 and 2011, respectively, which mainly comprised of utilities and commissary costs. Rent income earned from Alphaland Makati Place amounted to P =0.7 million in 2013. The Group recognizes the customers’ deposits at fair value. The fair value of the deposit is determined based on the prevailing market rate of interest for a similar loan. The excess of the principal amount of the deposit over its fair value is accounted for as deferred lease income and amortized on a straight-line basis. The deferred lease income amounted to = P6.0 million and = P9.1 million as of December 31, 2013 and 2012, respectively, and is included under “Other noncurrent liabilities” account in the consolidated balance sheets. Aside from customers’ deposits paid by tenants, advance rentals generally equivalent to two months rental are also paid and included in the initial billing to tenants, which shall be applied to the monthly rental at the end of the lease term. Advance rental amounted to P =69.7 million and = P69.8 million as of December 31, 2013 and 2012, respectively, and is included under “Other noncurrent liabilities” account in the consolidated balance sheets. Estimated minimum future rental receivable under the lease agreements are as follows: Within one year After one year but not more than five years

=298,141,636 P 357,438,831 =655,580,467 P

In 2011, ADI also entered into a long-term foreshore lease agreement with the Department of Environment and Natural Resources (DENR or lessor) for a period of 25 years, effective upon issuance thereof, renewable for another period of 25 years at the option of the lessor. The leased property represents a portion of foreshore with a total area of 241,017 square meters (inclusive of the portion covered by water), more or less, located at the Manila Reclamation 120

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Alphaland Annual Report 2013  

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