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Starting Net Yield 9.31% on large land holding in Sydney

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

  1. Beano

    Beano Well-Known Member

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    Did anyone (or one of our readers) try to buy 1 Menai Road Sydney (A large 9,017m2 Caravan Site fully leased with 3br managers residents and 67 sites) 20 min from Sydney Airport ?
    It sold on a starting NET yield of 9.31% !
    Reported page 40 AFR Thursday 26th of May 2016
     
  2. D.T.

    D.T. Adelaide Property Manager Business Member

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    Yes, i threw in an attempt.
     
  3. Player

    Player Well-Known Member

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    My offer was rejected. I wanted it on a cap of 15 %. :D

    @Beano was that NET yield reported actually net of land tax as well?
    If not, land tax on two and a bit acres would certainly bite into the return.
     
    Beano and D.T. like this.
  4. Beano

    Beano Well-Known Member

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    Good Question : The news paper article does not say so but if any one knows or deals with Andrew Jackson CBRE real estate he did the sale we could ask him!
     
  5. DaveM

    DaveM Adelaide Buyers Agent & KFC Strategist Business Member

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    I offered them a KFC Ultimate Burger Meal and 2 x 3 piece feeds but alas they wanted more so I chickened out
     
  6. Scott No Mates

    Scott No Mates Well-Known Member

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    Down by the Woronora River - prolly under Fire Zone - restrictions on building, environmental protection zone & flood prone - so a few land tax exemptions may apply but getting rights to build dwellings on the land won't be easy.

    Ref: bewsher.com.au/pdf/cnf33p_1.pdf
     
  7. sanj

    sanj Well-Known Member

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    Actually it sold on a starting net yield of zero since it was sold with vacant possession.

    the figure you're referring to is based on the income generated from the business last year, they've managed to package up the sale of a vacant property, managed to use operating profit as some kind of apparent yield and get away with it. did it come with the previous business and so the new owner could just step in? if not they're having to start from scratch too. the level of DD would be pretty significant and you would want a greater yield than this to justify having to own and operate a business vs anothrr property at similar price point just being leased out with no hassle for say 2% less yield.
     
  8. Player

    Player Well-Known Member

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    @sanj good point. It isn't clear if the business is part of the deal. One might presume that to report that yield it was selling with the goodwill/leasehold as well.
    Who knows?

    Here's the advert:

    1 Menai Road, Woronora, NSW 2232 - Hotel/Leisure for Sale #501867662 - realcommercial.com.au

    It sold for 1.7 Mill in May 2007 according to rp data and now sold for 6.75 M. Whether or not that has the business stapled to it's still significant upside assuming the 2007 sale price was straight forward and didn't include any other asset swap. I couldn't manage to get a current land value. I'd be interested in the land tax figure :cool: