I thought the property mentioned was Perth CBD office space?
Asset said:
Really...welcome to the CIP sub-forum!
Have you got any direct commercial property investments at present?
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Market Rental Review
- Thread starter Dazz
- Start date
I thought the property mentioned was Perth CBD office space?
Really...welcome to the CIP sub-forum!
Have you got any direct commercial property investments at present?
Actually a ratchet clause is a clause where usually the annual rent review is either CPI or % which ever is the greater. At Market review is at lease option to renew for a further lease term specified within the lease contract. The ratchet clause does not apply. So you are incorrect, as market reviews are at options usually. Market Review = Current Market Rent per sq metre at that date. So if the market has declined then the rent will go down.
Asset
I would hate to be a tenant of yours with only a market review clause in a declining market.
You would try to stiff me by waiving the market review(no cut) or worse try to apply a CPI review which still may be an increase in a falling rental market
or let the rents stay at the current status.
I would be screaming blue murder to get my market review and rent cut.
No wonder you had empty units
Pete
Then there's other commercial landlords who are quite happy to leave a building sitting there for a year without a tenant until someone finally ponies up the dough they are asking for. Everyone's different.
Very true. There is one example in Sth Melbourne here that has been on the market and for lease for approaching two years.
I guess that depends a lot on the landlords LVR. Don't you think so? If the landlord has big loan repayments then they would not want to keep their building vacant for too long. Even if that means to lease at a reduced rent!
But if the landlord have little or no loan to pay, it gives them the flexibility to negotiate the lease on their terms most of the time.
Cheers,
Oracle.
The optimal word in all of that is "usually". It may be usual for your Leases, but it is certainly not in ours.
Our Lease alternates every year between fixed and 'at market'. We have multiple 'at market' reviews during the term of the Lease.
Also, don't know what your ratchet clause states, but ours is very clear. Once the rent is at a certain level, it never goes down. The very worst scenario is the rent rises 5% every year.
For example, if the 'at market' review takes place, and the rental market is deemed to have tanked, and say is evaluated to have gone down 20%, it automatically rises 5%.
If on the other hand it is deemed to have risen 220%, like for instance now
.....then of course the ratchet clause is not necessary and it increases 220%.As with everything, it all boils down to the very specific and minutae wording and phrases within both the specific contract and over-riding governing laws.
Words like 'generally' and 'usually' and 'normally' and my personal favourite 'standard' have no bearing whatsoever.
Interesting.....there are always other who will have a crack!
My take on this is very short term thinking in the current market. Perth is going down like a lead balloon....as times get more desperate....people get more desperate.
Having a commercial property vacant now in Perth is going to be suicide. Particularly, if you can service the debt!
Dazz....I have said this before I do not share your philosophies of business....I for one will look to Perth in the next 6-12 mths. Will be some fabulous buying if what I am reading is correct. Already mining has been hit....the flow on to other areas will follow shortly. Already some organisations are going into voluntary administration...Dazz I trust you have a 1 year bond (surety) to mitigate this??
Time will tell.....
My take on this is very short term thinking in the current market. Perth is going down like a lead balloon....as times get more desperate....people get more desperate.
Having a commercial property vacant now in Perth is going to be suicide. Particularly, if you can service the debt!
Dazz....I have said this before I do not share your philosophies of business....I for one will look to Perth in the next 6-12 mths. Will be some fabulous buying if what I am reading is correct. Already mining has been hit....the flow on to other areas will follow shortly. Already some organisations are going into voluntary administration...Dazz I trust you have a 1 year bond (surety) to mitigate this??
Time will tell.....
Oh Cr*p I read the post and then saw this......If i now hit the turps and get drunk and forget everything am I okay
I'm starting to see how this can happen.
Nevermind, I'm very interested to see what eventuates here and it seems so are alot of others.
748 views in 6 days
Indeed madam. You are quite correct.
Why start the clock now ?? You have been applying a different business philosophy for quite some time now.
Quite correct....."viva la difference"....isn't it great that we live in a free country!
......looking forward to the next year....it see opportunities everywhere in the low end residential market...
Lets hope your assumptions on commercial property proves correct....Valad just layed off more people and they have one of the larger commercial portfolios in OZ....
lease dates
TPFKAD,
Agree with your approach re adhering to the lease - it's the only objective interface between 2 engaging parties (albeit never quite as unambiguous as we'd all like, excepting lawyers who derive their income from the ambiguity)
We inherited a mediocre lease on our CIP also - no ratchet and no deposit. First 5yr term expires in the next while, and the tenant needs to exercise the option by notice at least 6 months before the term expiry. We'll be watching that date like a hawk. I'm ofcourse happy to keep them in the building, but the new contract will be quite a bit superior....
Sure, there's a chance the tenant will walk, but I'm a firm believer in 'own the building, and the tenant will come' - and it always helps to carry contingencies with you on the journey for the odd rental gap, so that you're never forced to sell.
Best of luck with bringing forward the retirement.
CE
TPFKAD,
Agree with your approach re adhering to the lease - it's the only objective interface between 2 engaging parties (albeit never quite as unambiguous as we'd all like, excepting lawyers who derive their income from the ambiguity)
We inherited a mediocre lease on our CIP also - no ratchet and no deposit. First 5yr term expires in the next while, and the tenant needs to exercise the option by notice at least 6 months before the term expiry. We'll be watching that date like a hawk. I'm ofcourse happy to keep them in the building, but the new contract will be quite a bit superior....
Sure, there's a chance the tenant will walk, but I'm a firm believer in 'own the building, and the tenant will come' - and it always helps to carry contingencies with you on the journey for the odd rental gap, so that you're never forced to sell.
Best of luck with bringing forward the retirement.
CE
Not much else you can do. No point making it up and stumbling along as you go, shooting from the hip. Takes about 2 minutes to get shot down in flames going down that path.
Agreed - dates are critical. No room for error.
What type of CIP's are there in the Gamma quadrant ??
Commercial reality
Give me commercial and retail tenants thank you
Having initially started with residential Sashi I can vouch that it sucks..... You can continue if you like to play with state governments who have your hands tied behind your back, with the residential tenancy acts while they pick your pockets via land tax if you like.
From viewing your past posts you may have 12 properties but as it has been said before, "one good ASX 150 tenant in a commercial property who pays the single unit land holding land tax component plus all outgoings beats you hands down every time".
Yes the risks are greater but so are the rewards. If your comfort level is bottom fishing so be it that is the beauty with property we can each fly our own kite. It certainly is better than sucking lemons with an investment advisor who has put you into a diversified portfolio of managed shares
Give me commercial and retail tenants thank you
Having initially started with residential Sashi I can vouch that it sucks..... You can continue if you like to play with state governments who have your hands tied behind your back, with the residential tenancy acts while they pick your pockets via land tax if you like.
From viewing your past posts you may have 12 properties but as it has been said before, "one good ASX 150 tenant in a commercial property who pays the single unit land holding land tax component plus all outgoings beats you hands down every time".
Yes the risks are greater but so are the rewards. If your comfort level is bottom fishing so be it that is the beauty with property we can each fly our own kite. It certainly is better than sucking lemons with an investment advisor who has put you into a diversified portfolio of managed shares
This thread makes me map out how the market bursts --- greed and canning nature of some people, such as lawyer. Politicans such as Alan Carpentor chose to go to the poll 1 month after Barnett was put in the liberal leadership. People chooses Chritmas time to pray for other people's ignorance. Does not matter how I am desperate to succeed, I would not choose down this road to succedd on greed or other people's suffering. A win should be on a fair ground.
