Complete annual report 2010-11 - Land - NSW Government

State Property Authority
Notes to and Forming Part of the Financial Statements
For the Year Ended 30 June 2011
(b) Property Head Lease Expense 2011 2010
$'000 $'000
Minimum Lease Payments (i) 231,241 138,778
Rental Expenses Arising from Sub-Leases (ii) 40,447 24,468
Contingent Rentals (iii) 11,174 11,572
282,862 174,818
Less Amortisation of Lessor Lease Incentives (Note 12(a)) (2,146) (1,409)
280,716 173,409
(i) The majority of head leased office accommodation properties are sub-leased to government agencies. The terms of the
operating head leases generally range from 3 to 10 years with the option of renewal of further terms. The lease
agreements allow Lessors the right to review rents on specified dates.
The net increase in property head lease expense over 2009-10 has resulted mainly from the Authority's program of
vesting owned and leased properties from other government agencies during 2010-11 pursuant to Premier's
Memorandum M2008-06 "State Property Authority and Government Property Principles" (Note 17(b)).
(ii) The expenditure for recurrent outgoings (including repairs and maintenance, electricity, cleaning, expenses for common
areas and public risk insurance), subject to exclusion of repairs and maintenance of a structural or capital nature, is the
responsibility of the Authority as lessee.
(iii) Contingent rentals are variations due to market reviews and changes to the Consumer Price Index between the actual
lease and the amounts of minimum lease payments determined at the inception of the lease.
(c) Other Property Related Expenses 2011 2010
$'000 $'000
Property Expenses (i) 24,385 23,231
Management Fees 6,354 3,817
Interest Expense (Note 15(b)(i)) - 967
Bad Debts 26 532
30,765 28,547
(i) Items classified as property expenses include minor maintenance of buildings, electricity, telephone, security, cleaning,
gardening and sundry charges incurred in multiple occupancy buildings owned by the Authority. These expenses are
recoverable from the tenants and as such, are also reflected in Property Rental Income.
(d) Finance Costs 2011 2010
$'000 $'000
Finance Lease Interest Charges (Note 14(d)) 3,687 3,857
Unwinding of Discount Rate on
Land Remediation Provision (Note 11(b)) 5,270 4,396
8,957 8,253
(e) Depreciation and Amortisation 2011 2010
$'000 $'000
Depreciation of Property, Plant and Equipment (Note 7) 21,136 19,697
Amortisation of Assets (Note 7 & 9) 5,909 5,616
27,045 25,313
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State Property Authority