Académique Documents
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88-282A
TO
SUBJECT:
1.2
appropriation against which the contract shall create a charge, and the
contract shall be subject to approval by the head of the agency
concerned.
2.
2.2
2.2.2
b.
c.
b.
c.
d.
agreement.
2.2.3
2.2.4
3.
b.
b.
c.
Except for causes expressly stipulated in the contract, neither party shall have the
authority to unilaterally terminate the contract.
Termination not due to causes
provided in the contract shall be mutually agreed upon.
4.
4.2
DEPRECIATION - Value loss due to physical deterioration (water & tear) and Obsolescence.
Common type of determining depreciation:
1.
2.
REPRODUCTION COST - the estimated total cost of replacing the building new same utility.
(Sometimes called "Replacement Cost".)
CAPITALIZATION RATE - the anticipated rate of return. The two (2) elements involved are: 1)
Interest on the cost or value of the property, and 2) Recovery or Recapture of the Capital
or principal invested in the (wasting asset) property.
FACTOR VALUE - the rating factor where locations and site conditions, neighborhood data
and building structural condition, functionality, facilities and other requirements, including
free services and facilities offered by the LESSOR are considered.
RENTAL - amount paid by the National Government Agency (LESSEE) for the use and/or
occupancy of the privately owned building lot to their LESSOR, where payment is usually
on monthly basis.
MONTHLY RENTAL - Floor Area (Rentable) x Rate (per sq.m. per month.)
AREA - the total rentable area of the building in square meters being occupied by the
LESSEE.
Rentable Area implies that area of floor spaces less common areas like lobby, stairwall,
elevator hall, common comfort machine room for aircon and other area of common use
by the public or upper floor occupants.
EXAMPLE
OFFICE BUILDING "A"
Estimated Unit Construction Cost
Depreciation (new Building
Capitalization Rate
Factor Value
Reproduction Cost
Formula Rate
Rental Rate
=
=
=
1,900 x 1
1,900 x .015
28.50 x .98
say
Area Rentable
Monthly Rental
P1,900/sq.m.
=
0070
=
18%
=
98%
=
=
=
=
=
=
P1,900/sq.m.
28.50/sq.m.
P27.93/sq.m.
P27.93/sq.m.
200 sq.m.
200 x P27.90
NOTE:
Above computed rental rate applies to the regular floors, however, ground floor areas
have higher rates it being a premier floor of a building.
OUR METHODS
A.
Cost land (Market Value) - the lot where the building will be erected. This includes
the open areas.
Cost of building and/or Equipment/money invested.
Recovery period of the Principal/or Machineries and other improvements.
Income derived from the rate of interest stabilize rate of the money invested in the
property being appraised.
Administrative and /or General Operating Services Expenses.
Real Estate Taxes.
Others
Appraised value of building for rent are more often treated on a Case to Case Basis
and at times depend on the building amenities and/or facilities provided free by the
LESSOR.
1.
2.
3.
4.
5.
6.
7.
8.
Appraised value of buildings for rent is determine by comparative rentals of space in the
vicinity of the same building condition and/or classification. More often this method is use
to check the computed rental rate (above).
ATTACHMENT: POINTERS IN DETERMINING THE FACTOR VALUE.
I
II
III
IV
V
VI