Bunnings/Mitre 10

I don't structure anything or develop anything
I am just a ordinary investor who reads the lease and owns the odd property
But the way I read it if any of the above occurs the receivers or official assignee would sell the lessee interest...if it had no value then yes I would gain the building
If you are interested I can send you the IM on this one or any of the 29 of the ones I have purchased
Being ground leases the lease is registered on the title ...everything is available to view by the public
This one is different as it is a terminating lease .

 

Drop me your email and will send you the IM

 

Having a think about it I believe a 150 yr old Mitre 10 shop will be a liability to the land owner ...and should be removed by the tenant on the termination
(I will confirm this in 2167 if I am still around!)

 

By 2167 l would think that sufficent profit should have been made to remove the building several times over.
Also, l expect with medical advances and the ability to afford the treatments, then yes, @Beano should still be around by 2167 to report this ventures progress
(assuming @Simon Hampel still has this site running )

 

That is a great observation
I think with all the people interested in this property we could have a meetup to discuss this
Are you free 7th of April 2167 1230 Brisbane ...the actual location TBA?
(My diary says I am free on that day)

 

The biggest risk is diminishing returns ie what is the long term inflation Vs annual increases? If the gap is negative then your return won't keep up with inflation over time.

 

@Beano , it was nice to chat to you again the other day!

Could you IM me the info memo, I'm also v interested in ground leases but wasn't expecting them to be so long term.

 

Am also free that afternoon.
Should be able to "teleport" there in time for a meetup ok

 

Something to consider is that mitre10 and bunnings have very different ownership structures.

Most mitre10's are privately owned and dont have the financial backing of a larger company in the same way bunnings/westfarmers does.

 

Hi Scott yes that could well be so
There is a market review every ten years however

 

Yes that is true
That is why you need to insure the lessee has invested a large enough amount so
1 they do not abandon the site
2 we would have a building that adds value to the land

 

The lessee can and pretty well always mortgages their interest
If they do then in the event of a default (assuming the building has a suitable market value ) the bank will pay the rent

 

Actually thought all Bunnings were leaded by About Us BWP Trust | Must not be all of them.

Whatever the case, I am following the tread with interest.

 

Over a period of 75 years i dare say the buildings wont be worth much.

 

But the underlying asset may be.

A market review that far out will have very little effect on the market value of the property unless it is dramatically underrented at present.

 

Perhaps we should set up the PC-Trust ...if we all chip in a few bob we could buy it!

 

What do you think Scott (as you are probably the most experienced PC contributor) the yield should be (and the resulting sale price) ?

 

Interesting question @Beano - the starting rent is $40/m2, which appears quite high (by Australian Standards for industrial land - hardstand is generally $20-30/m2). A 5% return on the land wouldn't be ridiculous but getting anything above that would be a bonus. If the rent is overstated by 50% (this is a developer led deal), then you would be overpaying unless you work with a 10-15% rate of return.

I would be seriously questioning what the real rent for the area should be (sounds a little misleading to be working on the return of this site without doing due diligence on land values, construction costs and rentals for bulk land deals).

 

Yeah ..you can now see why I started this thread ...trying to work out if this is a market rental ...hoping there will be a bit of knowledge and experience on PC
This is a Sale and Leaseback so the rental may not be true market.

 

I'd be factoring in at least a 20% rent reduction at yr 10 on market review, this would knock the figures for six (about $5m)