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Is it me or does seem like a pretty good deal?

Discussion in 'Commercial Property' started by Chabs, 26th May, 2016.

  1. Chabs

    Chabs Well-Known Member

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    Location:
    Sydney
    Gold Coast home of Hooters sold for $2 million

    The block is in a great location, not far from high rise, the yield looks very attractive, and I can see long term development value. Finally it is tenanted (albeit article doesnt do a good job of detailing how long is left on it). Am I perhaps missing something critical?
     
  2. Jamie_

    Jamie_ Well-Known Member

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    Would definetely want to manager this property myself!
     
  3. Luke T

    Luke T Well-Known Member

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    Location:
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    About 7.5% return is fair but not huge .They (hooters)are a big company but I would want to look at there turnover and P & L ,and supply and demand in the spot. I saw the founder(s son) on undercover boss a while back -seemed like a great guy but i believe hooters maybe hasnt dont as well in oz??

    There are some smaller opportunites available in the heart of cavil ave also which may give higher returns and opportunity for devo and less risk-worth a look
     
  4. Scott No Mates

    Scott No Mates Well-Known Member

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    • How does the rent compare to other sites on the strip?
    • Who's selling - investors or Hooters?
     
    Corey Batt likes this.
  5. Corey Batt

    Corey Batt Finance Strategist Business Plus Member

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    Adelaide, SA
    This.

    It's important not to review commercial properties in isolation, but the greater area and the more peripheral information regarding the sale. It's not all that uncommon for owner occupiers to load up the lease and terms to provide an attractive initial investment, ride it out and then exit at the first possible point, leaving the owner with a potentially overpriced property based on an inflated cap rate.
     
  6. Player

    Player Well-Known Member

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    Pertinent points SCM. The article mentions it was sold on behalf of a local investor however that does not preclude the situation that the vendor is running the franchise there and actually selling a leaseback.

    The yield (if net as indicated) is actually pretty good. Commercial properties are red hot on the Gold Coast at present. These are industrial asset yields here right now. :(

    @Chabs I doubt there would be any development potential here. Wings (Mantra) is onsite and the Hooters area is actually part of the old Pink Poodle motel site. The poodle is round the corner (it is heritage protected as a sign of significance). It was moved with the widening works necessary when the light rail was installed.

    Location is good as far as passing traffic on the highway, however is really off the beaten track for foot traffic. That said, if this was in Cavill mall and precinct the rents would be multiples of this and ergo the price also. The people that will go there know that it's there so will make the effort. If this tenant vacates, the rent could fall somewhat.