Retail Investment | $2,025,000 | Net Yield: 6.31% | NZ

This New Zealand retail investment presents an opportunity to secure a brand-new, purpose-built commercial asset leased to an established national financial services institution. Completed in 2025, the property combines long-term income security, structured annual rental growth and a strong tenant covenant within an established regional commercial precinct.

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Acquired at a Rethink negotiated purchase price of $2,025,000, the property generates approximately $127,720 in annual passing rental income, delivering a 6.31% yield before non-recoverable management expenses. After allowing for estimated management expenses, net annual income equates to approximately $121,334, representing a net yield of approximately 5.99% on the purchase price.

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The property is secured by an initial seven-year lease commencing in March 2025, with two further five-year renewal options providing potential tenure through to 2042. The lease incorporates fixed annual rental increases of 3%, supporting predictable contractual income growth, alongside market rental reviews upon renewal.

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The asset comprises approximately 248 square metres of modern commercial accommodation on a freehold landholding of approximately 708 square metres. Purpose-built in 2025, the property features contemporary design, high-quality finishes and dedicated onsite parking, providing a functional commercial environment suited to customer-facing professional and financial services operations.

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As a newly constructed asset, the property offers potential depreciation benefits and minimal anticipated capital expenditure requirements during the initial holding period. Its modern construction and purpose-built configuration also provide flexibility for alternative commercial or retail uses in the future, subject to planning requirements and market demand.

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A key feature of the investment is the established tenant covenant. The property is occupied by a major financial services institution with a longstanding presence across Australia and New Zealand. The tenant relocated to the purpose-built premises as part of a strategic upgrade to its regional operations, demonstrating a commitment to maintaining a modern customer-facing presence within the surrounding community.

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The lease structure provides investors with a combination of income visibility and contractual growth. Fixed annual rental increases of 3% support consistent income escalation throughout the initial term, while the two five-year renewal options offer the potential for an extended investment horizon.

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The property also benefits from an independent market valuation of approximately $2,212,500, compared with the Rethink negotiated purchase price of $2,025,000. This represents an acquisition approximately $187,500, or 8.5%, below the assessed market value, providing an additional investment consideration alongside the property's income profile and long-term lease structure.

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Positioned within an established regional commercial centre, the property benefits from surrounding retail, professional services and community infrastructure. Its accessible location within an established commercial precinct supports ongoing demand for customer-facing accommodation and provides flexibility for future tenant uses.

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The broader regional economy continues to benefit from residential development, infrastructure investment and demand for essential commercial services. Population growth and improved regional connectivity provide a foundation for ongoing commercial activity, particularly within established service centres supporting surrounding residential and rural communities.

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At a purchase price of $2,025,000, the investment generates approximately $127,720 in annual passing rental income, equivalent to a 6.31% yield before non-recoverable management expenses. Accounting for estimated management expenses, the net income is approximately $121,334 per annum, representing a net yield of approximately 5.99%.

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Based on the acquisition modelling, which assumes a 65% loan-to-value ratio and a 6.5% annual interest rate, the property is projected to generate approximately $42,164 in annual cash flow after mortgage interest expenses. This represents an estimated 5.54% cash-on-cash return on the total cash contribution of approximately $760,475, subject to financing terms and investor-specific costs.

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The property's fixed annual rental increases, potential renewal periods and modern construction provide a foundation for ongoing income growth, while its acquisition below independent valuation offers an additional consideration for long-term investors.

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With a nationally established tenant, purpose-built 2025 construction, long-term lease security, structured rental growth and a purchase price below independent valuation, this investment reflects the calibre of commercial property opportunities Rethink Investing continues to secure for clients across New Zealand.

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About Rethink Investing
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