Project Overview
Client
Port Authority and Industrial Operator
Property Type
Strategic Port Infrastructure
Reason for Service
Independent rental determination and advisory
Preston Rowe Paterson was appointed as Determining Valuer to resolve a disputed market rent review for a strategically significant bulk liquids terminal at Port Botany, New South Wales.
The matter involved a long-term ground sub sub lease of specialised port land occupied by Vopak Terminals Sydney Pty Ltd, one of Australia’s largest independent bulk liquids storage operators.
The determination was required under the expert determination provisions of the lease and was final and binding on the parties.
The engagement involved acting as an expert valuer (not arbitrator) and determining the Current Market Rent, strictly in accordance with Clause 4.3 of the lease, including assumptions that:
- The land is vacant and available for immediate occupation
- Tenant improvements are to be disregarded
- No incentives, abatements or tenant goodwill are to be taken into account
- The rent cannot decrease below the existing passing rent
Summary of Scope of Services
Our engagement involved:
- Acting as independent expert valuer under lease determination provisions
- Determination of current market rent
- Interpretation and application of specific lease assumptions and constraints
- Detailed review of submissions from both landlord and tenant representatives
- Analysis of Port Botany ground rental evidence and relevant industrial benchmarks
- Independent assessment and delivery of a final and binding determination
Key Considerations
- Port Botany land is constrained, highly specialised infrastructure land with limited market depth
- Long lease terms and regulatory overlays limit direct comparability with standard industrial land
- Lease directions required strict disregard of tenant-installed infrastructure despite its operational significance
- Throughput history and commercial realities informed (but did not override) the hypothetical market assessment
The adopted rent sat between the parties’ positions and reflected a balanced application of precinct-specific evidence and lease requirements.
Asset Overview:
The subject property comprises a strategically located parcel of port land at 1-9 and 20 Friendship Road, Port Botany NSW, with a total site area of approximately 89,000 square metres. The land is zoned SP1 Special Activities Port Facilities and is utilised as a bulk liquid fuel storage terminal.
The site is improved with extensive tenant owned infrastructure, including 37 storage tanks, truck loading facilities and associated plant and equipment, which were expressly excluded from the valuation in accordance with the lease provisions
Valuation Methodology
Preston Rowe Paterson undertook a detailed and independent assessment, including:
- Comprehensive review of lease documentation and valuation directions
- Consideration of submissions from both parties’ valuers (JLL and Rawlinsons)
- Analysis of determined and agreed ground rents within the Port Botany precinct
- Contextual review of off port industrial hardstand evidence (adjusted for port-specific attributes)
- Qualitative assessment of land configuration, access, berth proximity and precinct positioning
Given the scarcity of open market port transactions, primary weight was placed on recent agreed and determined rents within Port Botany, consistent with market practice.
This engagement demonstrates Preston Rowe Paterson’s expertise in:
- Expert determinations and complex disputed rent reviews;
- Port, infrastructure and special purpose land assets;
- Complex lease interpretation and valuation under defined assumptions;
- High stakes advisory matters requiring independence and defensibility; and
- Providing independent, balanced and defensible valuation outcomes.
Outcome
The determination was issued as a final and binding expert determination under the lease. The matter was resolved without litigation, providing commercial certainty for both landlord and tenant on a critical piece of port infrastructure.
A total of
89,000m²
specialised port land holding at Port Botany
A total of
37
tenant owned storage tanks
Zoning
SP1
Special Activities (Port Facilities)
We Deal with the Mainstream & Specialise in the Complex for all asset classes
