What does the Market Inflation Rate relate to in terms of leases?

The Market Inflation Rate is closely linked to rollover leases because it significantly impacts the rental rates established at the time of lease renewal. Rollover leases typically have provisions that allow the lease terms and conditions, including rental rates, to adapt according to prevailing market conditions when the lease is renewed.

When inflation rises, it often leads to an increase in market rental rates, reflecting the need for property owners to maintain their returns in relation to the increased costs of living and operating expenses. Therefore, understanding the Market Inflation Rate helps both landlords and tenants anticipate changes in lease terms during renewals associated with rollover leases. This concept is critical for ensuring that the lease reflects current market conditions and maintains economic viability over time.

In contrast, investment returns, long-term contracts, and fixed interest rates do not directly relate to how lease rates are adjusted during the renewal process, making those options less relevant in the context of rollover leases and their responsiveness to market inflation changes.