Commercial property yield

Interesting point I hadn’t considered and will take specific note of any such obstacles if I inspect.

 

As in they could change the loan terms?
(it'd be SMSF leasing to company)

 

Walk into the bank being sold and ask the manager for a loan to buy the property - they might just say "I wouldn't do that".

 

When the CBA portfolio was sold off initially, they were offering themselves as a preferred lender.

If your own business was a prospective tenant for the space, it'd make the deal much more palatable as you're not going suffer years of vacancy.

 

Yes, you say it as a test to check if they intend to remain.

A 1+1+1 is obviously very short and would tell me they are about to leave. A 5+5+5 is better at least on the surface.

On a positive, traditionally banks were the best located property within a commercial strip second only to the post office.

 

Nowadays it is a function of when the business has set up all of it's alternative channels and provided notification of closure/alternative locations etc to all business partners/clients (lessor isn't one of those as the option date is only 3 months out from expiry)!.

 

thats right, the vacancy part isn't the concern. item ore trying to figure out what that status of lease means for the market value.

The current asking price range puts it at 6-6.5% return. What percentage would you think they'd reasonably be expecting all things considered because im sure its not going to be 6-6.5%. My gut tells me that around 8% would be be a reasonable amount but is that even too low or am I off the mark completely?

 

As I posted before - you need to check what other properties have sold for, vacancy rates, time to release, incentives current market rent, what yields are being achieved on sales of occupied premises. This rent may be way above or below market which will then be reflected in the price.

Who is the vendor ie CBA or investor?

Who is your competition? What yield are they willing to accept?

 

Vendor appears to be an investor not the bank itself.

local real estate agent I trust said the rental expectations in the area are $200/m2 and that pretty much is what this is leased at. There are very limited comparable sales (the closest is a 2 storey office block that was sold for 1,000,050 and that was 500m2 of floor space and had "periodic" lease, this one is just over 200m2)

Hard to know the competition but since theres a sign on the front saying offers close May 2019 id suggest not much! (also the timing of that original closing date- a coincidence thats about 6 months after the bank said they'd be closing more branches in small towns over the next 2 years? unlikely!) Real estate agent said it was agreed to be sold for something in the 800s but it fell through, but I cant say I believe him

 

I've seen a bank building - I don't know if the building itself was initially purposely built for the bank's needs but I doubt it..it had 2 levels. Building sold for a ripper of a price, bank finished the lease and moved on (sort of)..into the larger shopping centre next door at a much smaller footprint (sign of the times really) and occupying a much quieter end of the SC so I'd assume a much lower rental rate.

Anyway the bank building sold off had somehow converted itself into 3 tenancies. Up top is a gym with access via a narrow staircase. Bottom floor was some sort of tuition centre and they somehow fit a third tenancy with a small Chinese postal service - I think the milk formula sort.

 

It's impossible to tell

Different towns go for different rates. Could be 6%, could be 15%, depends on rentability, future use, population of town, future infrastructure projects, is there a Coles or Woolies nearby, any other major ternants adjoining, adjacent or close by, whats the foot traffic like etc etc. There are soooooooo many questions

There are so many factors. There a difference of 1% alone between the Sydney CBD and North Sydney CBD