Forum Archive Index - June 2001

["hugh webber" <hugh.webber@clear.net.nz>]

hi Michgore,

Overrenting is when a property is rented out on a fixed long term
contract for a rent substantially higher than equivalent properties
in the same area.
It happens when a party seeks space at a time of growth and 
high demand or simply miscalculates and locks themself into
a rent contract while the property market then goes the other
way because of a change in market conditions, extra space
being built or maybe other tenants emigrating.

At first you can pretend it doesn't exist as Cap Props has for
a while but eventually you have to front up, lower valuations,
sell if you can or find replacement tenants at a lower rent.

At that point the shareholders become rather angry that the
truth wasn't told all the way through.....
I wonder if we have any comeback against the NZ Govt for
concealing it in the float prospectus and against Cap Props
for concealing it in the Shortland Takeover prospectus....
Intriguing thought.

cheers,
Hugh 


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