The EBIDTAR (profits) method of valuation is a permissible methodology for determining current market rent under s 37(2) of the Retail Leases Act 2003 (Vic), provided the rental ratio applied is based on market norms and effectively 'cancels out' the value of the tenant's fixtures and fittings. No express capital cost adjustment or deduction from earnings is required. However, where the tenant's fixtures and fittings are above market norm (e.g., celebrity factor or enhanced fittings), the rental ratio must be adjusted downward to maintain compliance with s 37(2).
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