Lease conditions / lease terms:
10 year lease; mid-term market review; new Landlord’s valuer failed to stress-test metrics for property acquisition;
Gross rent being paid:
$472,000 pa; Landlord’s agents sought to justify similar rent by presenting “untested” rental evidence aka effectively what is / was a “number”. This lease had caused technical insolvency of Tenant’s franchise business (as franchisor);
Ran software modelling: used industry benchmarks; similar premises with rental data from same business model across the country which supported circa $210,000 gross;
At determination Independent Expert determined current market rent at $253,000 pa
Inflated rents may significantly inflate the value of any property. Prior to acquiring a property, test the veracity of the leases and rent levels.