A tenant is not required to provide its turnover figures to a
valuer, unless specifically stated in the lease agreement. However,
if a lease requires that a tenant provide such figures to a valuer,
then the tenant should comply with that lease requirement. It's
a matter for the valuer to determine how much weight should be
given to those figures in carrying out a rent valuation.
What you need to know:
If you are conducting a rent review, you are not obliged to ask
for turnover figures, even if the premises you are valuing is a
hotel or supermarket
If the lease requires that the tenant provide turnover figures
to a valuer, then the tenant should provide such figures. However,
the question remains for the valuer to determine how much weight is
given to those figures in determining the rent.
Recently we were requested to advise on a lease, which specified
that the tenant must provide its turnover figures, if reasonably
requested by a valuer. With the absence of such a requirement in a
lease, we are of the view that a tenant is not obliged to provide
turnover figures to a valuer, and the decision in Epping Hotels
Pty Ltd v Serene Hotels Pty Ltd (2015) does not specify that a
tenant must provide such figures.In this particular lease we
advised on, the tenant was only obliged to provide turnover figures
if reasonably requested by a valuer based on a lease obligation.
The lease did not state that the tenant must provide audited
figures or provide any evidence of what turnover was declared in
its tax return. As such, how can a determining valuer know that it
is receiving accurate figures? A determining valuer needs to
exercise his or her judgement as to how much weight should be given
to such figures.
Furthermore, the lease we were asked to review did not require
the determining valuer to determine a rent based upon the turnover
figures but only to take them into account. In our view, the valuer
is free to assign as much weight to the figures as the valuer
A tenant is not obliged to provide its turnover figures, unless
the lease mandates that the tenant do so. Further, a valuer is not
obliged to request, or take into account turnover figures, even
where the premises are a hotel or supermarket. A valuer will only
be obliged to determine the rent based upon the turnover figures
where the lease demands that the valuer do so.
In our experience, we are yet to see a retail lease that demands
that the rent is determined based upon turnover of the tenant. Of
course, leases to Woolworths and Coles are not retail leases, and
often such leases do specify that the rent is determined based upon
the turnover of the supermarket operator.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.Madgwicks is a member
of Meritas, one of the world's largest law firm
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