DP World Fights Off 750% Rent Hike Proposal at Port of Melbourne
Dubai-based port operator DP World has managed to negotiate a new 50-year tenure deal at the Port of Melbourne at a fraction of the previously proposed 750% rent hike.
The new lease arrangements for DP World Australia’s West Swanson Terminal include incremental rent increases over the course of the fifty year tenure commencing with CPI increments in 2015 and 2016 to nominally AUD 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. Up to now, DP World Australia paid between AUD 16 and AUD 18 per square meter used.
Had the Port of Melbourne’s 750% rate increase proposal been accepted, DP World Australia would pay AUD 120 for every square meter used.
Nick Easy, CEO at Port of Melbourne Corporation, said: ”The new lease will grant fifty-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.”
Back in May, the Victorian Government announced plans to lease out the Port of Melbourne for a period of fifty years, a deal expected to fetch between AUD 5 and 6 billion.