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  1. #1
    Join Date
    Jun 2004

    Default Only small or no rent increase

    Retail properties are facing tough times.

    This year, rents on stages one and two of the 70,818sq m property are up for review and contractually, owner Kiwi Income Property Trust is entitled to raise those by 8 per cent, the analysts said.

    "However we believe KIP is more likely to settle for 3-5 per cent and so share some of the pain of a weak trading environment with tenants and earn their long-term goodwill," they said.

    "If sales remain weak, we believe rents will eventually come under pressure. Most retail rent ratchet clauses are currently based on CPI plus 1 per cent or plus 2 per cent. In upcoming lease renewals, we believe that the premium of rent increases over CPI will reduce, possibly to zero."

    The quality of Sylvia Park's sales mix has also declined. Supermarkets, paying much cheaper rents per square metre, enjoyed some growth but the speciality shops suffered despite major chains deciding to hold their sales early to boost revenue at the expense of profit margins.
    Details: http://www.nzherald.co.nz/property/n...ectid=10557266


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