Treasurer reverses FIRB property leases red tape

by John Kehoe & Matthew Crantson-Wagner (afr.com – 3 September, 2020)

Treasurer Josh Frydenberg will no longer force all commercial property leases with a foreign investor to receive approval from the Foreign Investment Review Board during the COVID-19 economic crisis. The change of heart follows hundreds of commercial property lease renewals facing red tape delays and many real estate investors being caught unaware of the temporary change originally due to run to the end of the year.

The FIRB announced on Thursday night it was restoring the regular monetary thresholds for renewed or rolled-over leases for non-sensitive developed commercial land.

Property Council of Australia chief executive Ken Morrison said reinstating the original screening thresholds was “a very sensible measure”.

“One of the unintended consequences of the zero-dollar threshold was that fit-outs and lease extensions were all getting caught up in the backlog and there is no reason why these should be caught up in FIRB,” he said.

Commercial property leases such as roll-overs for non-sensitive developed land will only require FIRB screening if they are worth $275 million or $1.2 billion from non-government investors hailing from free-trade agreement countries.

In March Mr Frydenberg forced all foreign investments, such as commercial property leases over five years (including any option for a lease extension), to receive FIRB approval.

It also hit mergers and acquisitions and equity capital raisings.

The temporary change was rushed through at the peak of panic about COVID-19 to stop opportunistic foreign buyers — from China and elsewhere — seizing on financially distressed local assets and to safeguard the national interest.

Shaun Bonett, the billionaire owner of shopping centre landlord Precision Group, said Thursday’s decision would “enable day-to-day business processes to flow more efficiently.”

“I also take this as a reflection of the government’s confidence to return to pre-COVID conditions.”

04 Sep 2020