The operators of Queensland’s biggest fruit and vegetable market have rejected a proposal to give their struggling tenants about $15 million in free rent.
The operators of Queensland’s biggest fruit and vegetable market have rejected a proposal to give their struggling tenants about $15 million in free rent.

Markets rejects plan for 6-month rent holiday

THE operators of Queensland's biggest fruit and veg market have refused to embrace a proposal from their largest independent shareholder to give struggling tenants six months of free rent worth about $15 million.

Brisbane Markets boss Andrew Young said on Wednesday his firm "will be working with those impacted tenants to find ways to support their businesses in line with the principles outlined by the Federal Government''.

But he declined to endorse a plan put forward by Sydney-based hedge fund VGI Partners to give all 170 or so tenants in the Rocklea complex blanket rent relief for half a year to cope with the massive downturn in business brought on by the coronavirus crisis.

Andrew Young
Andrew Young

Indeed, Young even claimed that some of the operators have seen a recent boost in turnover.

"The impact has not been uniform throughout our industry, with those businesses servicing government institutions and agencies, nursing homes, hospitals, takeaway food businesses, prisons and the armed forces still doing good business,'' he said.

Young added that tenants supplying home meal delivery businesses, independent retailers and supermarkets have also seen increased demand.

RAISING CAPITAL

That upbeat assessment doesn't square with the view of VGI chairman Bob Luciano, who said trade was rapidly drying up as plenty of customers either closed shop or sharply curtailed purchases.

He also alleged that tenants "have received no meaningful response" when they contacted market management about rental assistance.

VGI, which controls a 15.7 per cent stake in the markets following a failed takeover attempt in 2015, vowed to participate in any capital raising to cover the cost of the rent holiday.

"If Brisbane Markets needs to raise equity in order to accommodate the proposed rental relief, VGI Partners will subscribe for its full entitlement in a successful raising,'' Luciano said.

Robert Luciano
Robert Luciano

"We also stand ready to underwrite an entitlement offering to all shareholders if it would accelerate your offer of a rental relief proposal to market agents and tenants.''

But, given the fact there is no love lost between the two camps, Young viewed the offer rather cynically.

Young said his firm "questions the motives behind VGI's suggestion, which could well be seen to be an opportunistic attempt to force a situation that will enable VGI to increase its interest in Brisbane Markets''.

That prompted Luciano to fire back that Young's "unhealthy obsession with our motivations is simply missing the point".

"All we want is for Brisbane Markets and all of its tenants to emerge from the current downturn in a strong position,'' he said.

"If Brisbane Markets can provide six months' rent relief without raising capital they should do this. However, if more capital is required, we will be willing to help out."

To put that potential $15 million hit to the bottom line in perspective, it's about a third of the operating revenue generated in the last financial year. Net profit in that period fell to $6.5 million, less than half the amount in 2018.

MOVING BUREAUCRATS

The Queensland Government has tapped an out-of-state "disruptive talent acquisition'' firm to help it redeploy more than 15,000 bureaucrats in its battle against coronavirus.

Melbourne-based LiveHire, which uses cloud-based software for a simplified one-stop recruiting process, announced this week that it had snared the contract, believed to be worth about $200,000.

The Queensland Public Service Commission will use the technology to scour 48 government agencies, profiling staff to identify those best suited to shift into "critical areas of need''.

Founded in 2011 and floated six years later, LiveHire has worked with a number of heavy hitters, including Vodafone, Dulux Group, FlyBuys, FujiXerox, Grill'd, Nissan and Hitachi.

But it's still doing it tough financially.

The company suffered a $9 million net loss in the half-year to December and a $13.8 million puddle of red ink in the last financial year.

Originally published as Brisbane Markets rejects plan for 6-month rent holiday

Headlines