2021-09-07 Services & Organisation Committee Meeting Agenda

SERVICES & ORGANISATION COMMITTEE MEETING AGENDA                                7 SEPTEMBER 2021


 Lease Provision                 Proposal
 Lessee Name:                    Tro Management Australia Pty Ltd
 Premises:                       Part of Lot 8 RP901384
 Annual Rent:                    $130,000 plus GST
 Nett Lettable Area:             Approximately 500m2
 Indicative Commencement Date:   1 October 2022
 Rent Free Period:               12 months
 Initial Lease Terms:            10 years
 Options to Extend:              5 x 3 years
 Market Rent Reviews:            At the commencement of each option.
 Outgoings:                      Lessee is responsible for their proportionate share of outgoings for the
                                 centre.
 Permitted Use:                  Supermarket
Previous Council Consideration
Ordinary Meeting, 15 April 2021, Item 3, Page 8
That Council note the report by the Property Advisor – Commercial Property to the General
Committee Meeting dated 12 April 2021 regarding the lease of Shop 8, Sunrise Neighbourhood
Shopping Centre and:
A. Agree to enter a commercial lease of the premises to Tanglewood Company Pty Ltd, for a five
   (5) year term, as generally outlined in the report;
B. Agree to an initial rent-free period of 6 months; and
C. Authorise the CEO to award up to 4 subsequent lease extensions each of 5 years, subject to
   the lessee complying with the terms of the lease.
Finance
The annual financial return posed by the new lease commencing in October 2022 is as detailed
above. The lease will however require the expansion of the Shop 8 footprint from 305m 2 to
approximately 500m2, with Council proposed to fund the expansion works at an estimated cost of
between $650,000 and $700,000. Should Council endorse the recommendations in this report the
cost of the works will need to be considered for inclusion in budget review 2 or 3.
Comprehensive financial viability analysis has been undertaken to determine the value of Council’s
investment into expanding Shop 8. The analysis has been reviewed by the Director Corporate
Services and demonstrates positive returns for Council, with a positive net present value within 10
years and a payback period on investment of 6 years for ratepayers (applying a discount rate of
7.5%).
Tro Management Australia Pty Ltd will undertake substantial fit out works to the premises. The
proposed twelve (12) month rent free period is intended to help offset the lessee’s establishment
costs, with lease revenue to be recognised in the 2023/24 budget (i.e. from October 2023).
Risks & Opportunities
Risks
The proposed lease poses minimal risk because it seeks to re-establish an anchor commercial
tenant in the centre.
Opportunities
The lessee’s proposal demonstrates a commitment to the Centre and identifies new business and
employment opportunities. The new lease proposal will help activate the Centre and meet the
needs of the community.




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