In our blog on 31 March 2020, we discussed the temporary measures introduced by the Australian Government which apply during the COVID-19 pandemic – including that the threshold amount which determines whether particular foreign investments are subject to official review has been reduced to $0.
With effect from 4 September 2020, the foreign investment regulations have been amended to re-introduce the monetary threshold (A$1,192 million for investors from agreement countries; A$275 million for other investors) for the renewal or material variation of an existing lease which meets the following criteria:
- The existing lease was in existence as at 10:30pm Canberra time on 29 March 2020.
- The interest to be held under the proposed renewed or amended lease is substantially the same as the interest held under the existing lease as at 10:30pm Canberra time on 29 March 2020, with no change of tenant.
- The lease is for developed commercial land.
- The property being leased is not “low threshold developed commercial land” (ie, it is non-sensitive developed commercial land).
- The tenant is not a “foreign government investor” for FIRB purposes.
This latest change should help alleviate some of the capacity constraints at FIRB. We are now at a critical juncture where FIRB continues to receive a high volume of applications; there is pressure to finalise processing in the lead up to the Christmas holidays; and FIRB is also having to allow additional time for final decision making given the Australian Treasurer is due to present the Federal Budget on 6 October 2020.
For foreign investor tenants, it is important to double check:
- if this amendment reduces the number of leases for which you would otherwise require FIRB approval under the COVID-19 temporary measures announced in March 2020;
- if you can now proceed with those leasing transactions which fit the above criteria – ie, those that had been held back until after the COVID-19 temporary measures are lifted; and/or
- (if you are considering applying for an Exemption Certificate for commercial leases) whether this change impacts the cost/benefit analysis in applying for such an Exemption Certificate.
For further information, please contact a member of our national M&A team.
Helen Jin | Special Counsel | Thomson Geer | +61 2 8248 5883 | [email protected]