Join Australia's most dynamic and respected property investment community

Care to share your commercial holdings?

Discussion in 'Commercial Property' started by Ace in the Hole, 12th Jul, 2015.

  1. Ace in the Hole

    Ace in the Hole Well-Known Member Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    1,521
    Location:
    Sydney
    I've been contemplating my next move for about the past 12 months and still not sure which way to go, but considering making a play for a passive commercial property buy and hold to keep things simple.

    If you hold commercial now, are you happy with what you've got?
    Would you have done anything differently?

    If you had a 3-4mil budget to invest in a commercial property, is there any specific industry or category of commercial property you would target primarily for cash flow.

    Thanks.
     
  2. Be Developer

    Be Developer Property Developer Business Member

    Joined:
    19th Jun, 2015
    Posts:
    1,085
    Location:
    Australia
    Few good ones were sold recently in Western Sydney.

    Not sure if it was good buy or not...but location was excellent and primed for CG.
     
  3. Reindeer

    Reindeer Member

    Joined:
    18th Jun, 2015
    Posts:
    18
    Location:
    Sydney
    My family owns a block of retail shops and we are happy with the growth. We've got an offer of about 10 times what my parents paid about 20 years ago. However the total rent has only gone up about 4 times and the land tax has increased to around 100K. It reduces the net income and as result we decided to demolish the block and build a mixed commercial and residential building to increase the revenue.
     
    charttv likes this.
  4. Ace in the Hole

    Ace in the Hole Well-Known Member Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    1,521
    Location:
    Sydney
    Good gains there.
    Can you share the location?
     
  5. RPI

    RPI Property Lawyer, Town Planner Business Member

    Joined:
    19th Jun, 2015
    Posts:
    716
    Location:
    Brisbane
    A lot of people don't like specific uses, I do, especially Pubs. You can take over the business and keep the cashflow going if the tenant goes bad. You can then resell the business to a new tenant (even for a token). Well located retail complex (6-8 shops with a convenience store anchoring it and bakery or newsagency. I have had industrial sheds and storage sheds but the industrial sheds hurt in the GFC (Gold Coast). In an estate it can quickly go from full to large vacancies in something like the GFC. Values can dive and I had to vendor finance out of a development down there because although the contract was unconditional completion was post GFC and no banks would lend on the purchase price.
     
    RetireRich101 and charttv like this.
  6. Reindeer

    Reindeer Member

    Joined:
    18th Jun, 2015
    Posts:
    18
    Location:
    Sydney
    It's in one of the Sydney's Eastern suburbs.
     
  7. Reindeer

    Reindeer Member

    Joined:
    18th Jun, 2015
    Posts:
    18
    Location:
    Sydney
    Forgot to mention that the offer was after I've managed to get a DA approval which probably increased the value by 10-20%
     
  8. Toastie

    Toastie New Member

    Joined:
    10th Aug, 2015
    Posts:
    2
    Location:
    Sydney
    Hi Guys
    I have commercial office on the Northern Beaches, Sydney returning approximately 11-12%.. happy with returns but looking to offload in near term...
     
  9. BurnettGroup

    BurnettGroup Well-Known Member

    Joined:
    4th Sep, 2015
    Posts:
    217
    Location:
    Gunnamatta Bay, Sydney, NSW
     
  10. hobo

    hobo Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    425
    Location:
    FNQ
    Why, @Toastie? If the yields are reasonable why are you planning to sell? Just curious...
     
  11. Scott No Mates

    Scott No Mates Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    5,593
    Location:
    Sydney or NSW or Australia
    Very low WALE, functional obsolescence, needs major capital works, outlived its usefullness, etc - there are plenty of reasons
     
  12. hobo

    hobo Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    425
    Location:
    FNQ
    Yes, it definitely could be one of those. Hadn't considered functional obsolescence, either. Cheers
     
  13. Westminster

    Westminster Tigress at Tiger Developments Business Member

    Joined:
    13th Jun, 2015
    Posts:
    2,963
    Location:
    Perth
    Bought a slightly risky one.
    $1m for 3000sqm that had interest from a fuel company. Will cost maybe $200k to rezone to commercial, arrange services/infrastructure to edge of plot
    After purchase secured a MOU (Memorandum of Understanding) with a fuel company for a ground lease at $150k + GST + all CIP regular stuff + CPI increases up to 4% for 15 yrs + 5 + 5 + 5yr options
    Fuel company will build their fuel station at their own cost.
    That is a 12.5% yield.
     
    Cactus, RetireRich101, Redom and 2 others like this.
  14. Beelzebub

    Beelzebub Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    576
    Location:
    Lost
    What's a WALE and why is having a low one bad?
     
  15. Scott No Mates

    Scott No Mates Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    5,593
    Location:
    Sydney or NSW or Australia
    Weighted average lease expiry - a measure of what exposure to lease expiries on the asset. This is a function of the number of tenants, length of leases remaining and area occupied by the expiring lessees. A low WALE indicates a high level of risk/exposure to vacancies.
     
    House, leon brown and Beelzebub like this.
  16. HiEquity

    HiEquity Member

    Joined:
    7th Sep, 2015
    Posts:
    9
    Location:
    Perth
    Bought a medical centre on a circa 11% yield just post GFC. Thread is on Somersoft... the tenants are still paying their rent so all is good.
     
    GOU, Westminster and Aaron Sice like this.
  17. chindonly

    chindonly Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    341
    Location:
    Brisbane
    Looks like a great yield. What does the fuel company have to do at the end of lease? Leave as is?
     
  18. Westminster

    Westminster Tigress at Tiger Developments Business Member

    Joined:
    13th Jun, 2015
    Posts:
    2,963
    Location:
    Perth
    We could choose 2 options
    - revert the site back to vacant land including decontamination of the site
    - leave as is and try and get another fuel company to come in and take over.

    I am leaning towards revert the site back to vacant land including any necessary decontamination necessary. Then we can choose to do something that is in tune with the current needs of the area. In 30yrs time who knows what the area may need?
     
  19. D.T.

    D.T. Adelaide Property Manager Business Member

    Joined:
    13th Jun, 2015
    Posts:
    5,604
    Location:
    Adelaide, SA
    Electric station for cars
     
    MACC and Westminster like this.
  20. Scott No Mates

    Scott No Mates Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    5,593
    Location:
    Sydney or NSW or Australia
    Recharge station for hovva boreds (hover boards for bogans).
     
    Last edited: 8th Sep, 2015
    Westminster likes this.