Post a Great Commercial Deal

i.e. when rates were higher. Rates are heading higher now, so all else being equal, I think cap rates will rise as well. in general This does really make me question whether now is the best time to get into Commercial. It is great when rates are flat or going down but there is a global movement (i.e. the US) towards higher rates.

Impact of Interest Rates on Cap Rates

 

Around $2.5m

 

If you are looking for yield then check anything medical - pharmacy, medical centres etc. But they are the new 'in' thing for SMSF and property funds so they aren't cheap.

 

This is our local... what should it be "worth"?

Woolworths Highton, 12 Belle Vue Ave, Geelong, Vic 3220 - Retail for Sale #502332798 - realcommercial.com.au

"- Income: $581,000* p.a. net - all outgoings including land tax paid by Woolworths"

 

Do you remember Perth guy who purchased a medical center? Can't recall user name?
This was a cash cow

 

Ha. I looked at this last night
I think this regional center is growing, lots gov spending, infrastructure
Going to auction I think will push price north, blue chip tenant

 

Was it ozdoc?
One of the reasons why I think the pharmacy was ready to pay over and above comparable rates as it was the slot next to the medical centre (yield 11%) and every pharmacist wants that spot for the easy script fill from the GP.
We are creating this complex from scratch and it's been very educational to me. I profess I'm not a commercial expert but I've been learning heaps over the last year with this project. The ability to group tenancies according to type which makes it very attractive to Lessees. The childcare centre is opposite the medical centre which is next to the pharmacist which is next to the coffee shop and gym. Childcare (hello germ outbreak) + coffee + chemist + GPs + gym = happy Lessees who's businesses feed of each other.

 

Brilliant
No, not ozdoc?

 

I just did some digging on SS, it was hi equity, but could not find the thread I was after.
Found some gems on SS though.

 

Brisbane Industrial the same - 5.5% - 6% yield depending on where you look. The rental market is flat, but purchasing market is hot due to low interest rates.

 

Is it still possible to get cost of funds under 5% ?

It doesn't sound right that so much commercial is in the 4-6% yield range unless cost of funds is low enough to make it work, surely there aren't that many cash investors?

 

I just checked and Suncorp has an offer of 4.44% right now, the trade off is that it is for loans up to $1m. Are the there investors out there getting great rates with commercial RE as security?

 

My commercial rate is approximately 4.15% (Leverage 50%, loan amount around $3.5 M)

 

2/6-12 Serich Lane, Northbridge, WA 6003 - Offices for Sale #502297374 - realcommercial.com.au

6.9% Net Yield in Northbridge?

Anyone local that can give their opinion on something like this?

 

Not an expert on commercial property.

Location is OK. 50 sqm will limit your market I guess?

This deal would not attract me personally as I would prefer something where I could add value and 6.9% is not worth the risk when I can make 10%+ net yields buying in Atlanta which is also a rising market.

I personally would want at least 8%

 

That's a good deal, I guess when the LVR is low, comm. property can be seen by banks as being as "safe as houses"...

 

Commercial loan rates are fluid and depend on many factors:
- LVR
- location
- purpose of site
- strength of lease
- bank's exposure in that area/suburb
- sometimes the strength of the rest of the lender porfolio

Based on all those things the bank will determine their risk appetite and put a rate on it.

It's very different to resi where rates are more published and known.

 

Security type is the biggie. Lenders love Pharmacies, medical suites and child care centres and are going to price those securities more aggressively than say petrol stations.

 

Hey MTR, how long have you been looking at commercial for? Have you heard of any decent 8%+ capital city deals in the last 12 months (not just limited to Perth)?

I had a look the other day and also found Perth yields to be unattractive despite the flat economy.

 

So I came across this deal on the Sunshine Coast would love some opinions.

The property is a strata retail/office at the bottom of an apartment building.

Net Rental $29K
Purchase Price $340K - $362K, agent said the price would represent 8% -8.5% Net Return

The outgoings total $27K, this feels like a lot. $21K of this is the Body Corporate Admin & Sinking Fund.

Is this a concern? Doesn't feel right to me.