Friday 23 August 2013

Lower Start-up Rents At Chadstone

CFS Retail Fund is the retail landlord for Chadstone Shopping Centre and a range of high profile centres around Australia including Northland and various DFO stores.

The trust has announced a 29.7% fall in net profit following a tough trading year and property revaluations. Modest rental growth for existing tenants was offset by a 7.5% reduction in new lease rents (The Age). The trust has reported the continuation of its 5% automatic yearly rent increase for specialty stores that were re-leased. Including replacements, the overall re-leasing spread for the year was -1.1%.

Other features of the trust's report included a decision to cut back on Chadstones next expansion phase due to softer trading in apparel and discretionary items, and a remix of tenants in the portfolio with fashion making way for technology and retail services. Retail sales performance included a healthy 7.8% rise for food, 3.9% for mobile phones, 5.8% for retail services, and a 1.1% fall for apparel. DFO stores showed 9.4% growth.

Have Your Say - click here

26/8/2013  10:02  Rents  "Automatic yearly rent increases need to be seriously questioned. They are nothing more than a rent increase that should be negotiated at the commencement of a lease and if necessary adjusted for CPI variations (up or down). Landlords want their cake and eat it too. They want to tie tenants into a lease, which is designed to protect both parties, but then up the rent on a random basis during the leases currency without any consideration of business conditions. It is a rip-off and no more obvious than at QVM where PE Traders experience annual rent increases based (loosely) on market conditions whilst their SL counterparts pay automatic increases which cannot be justified by current market conditions. This means that SL Traders are now paying more rent than PE Traders. If there are to be automatic increases for SL licences it is time they were tied to CPI."  - Greg Smith