Melbourne dispute canned by rent agreement

05 Aug 2015
A solution for the rent for the West Swanson Terminal at Melbourne has been reached

A solution for the rent for the West Swanson Terminal at Melbourne has been reached

A new lease has been granted to DP World Australia by the Port of Melbourne Corporation (PoMC) for the port’s West Swanson Terminal, putting an end to months of disagreements between the two parties.

The new lease will grant 50-year tenure to DP World Australia to 2065 under a lease with “key performance indicators, efficiency incentives, and most importantly, known fixed escalations for the next 13 years” – making it a mutually beneficial outcome.

“Everyone wins — our customers, service providers and the Victorian freight industry will benefit from long-term lease and price certainty, which comes with DP World Australia's commitment to operating in the Port of Melbourne,” said Nick Easy, CEO, PoMC.

This comes after the port announced a 750% rental increase for DP World’s Melbourne terminal, with rental costs expected to rise from AUS$15 per sq metre to AUS$120 per sq metre.  

DP World Australia Managing Director and CEO, Paul Scurrah, said the new lease arrangements will provide long term certainty to port users, including modern lease terms and acceptable rent levels to both parties.

The agreed rent includes incremental rent increases over the course of the 50-year tenure starting with CPI increments in 2015 and 2016 to nominally AUS$45 in 2023 with agreed escalations to 2028. The first market rent review will then take place in 2028 and occur every five years thereafter. 

“The longevity of the lease tenure represents a strong vote of confidence in the Port of Melbourne by an important tenant and ensures it remains competitive with respect to estimated rent costs at other Australian ports,” Mr Easy concluded.

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