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High yielding freehold investment with global tenants

This was our valued client’s first of three properties that we’ve helped them purchase. We introduced them to the concept of purchasing quality industrial properties as a great long term investment for both cash-flow, low maintenance and capital growth. This investment didn’t disappoint as it came with four tenants (two of them being multinationals). We purchased this at a 8.21% yield where the market average was 7%. This represented a 17.28% below market value purchase. When we completed our due-diligence on this asset, we found there was actually $23,000 more income being achieved by the asset than was advertised.

This was a big win for our clients’ return figures. This 2,731sqm building comes with four separate tenancies that spread the income risk for our client. Two of these tenants are global logistics businesses. Importantly for logistics type properties, it also has drive thru capability from street to street which a lot of other buildings do not have. Rethink Investing specialises in industrial properties as they represent a good long term capital growth option as the e-commerce and logistics markets continue their growth in a post/current COVID world.

Purchase Details
Asking Price
4650000
Purchase Price
4200000
Deposit (assuming
70
% debt)
1260000
Stamp Duty
237289
Building Report*
800
Solicitor Cost*
1200
Valuation*
3500
Other Fees* (Depreciation
report, bank fees)
Total Cash Required
1507489
Purchase Price + Purchasing Cost
4447489
Net Annual Cash Flow Return
344000
Net Yield on Property
8.19
%
Net Yield Accounting for
Purchasing Costs
7.73
%
Cash-OnCash Returns
Deposit Needed =
% + Costs
1507489
Cost of Loan
(Assume
3
% pa on
70
% debt)
88200
Return of Equity
(Pure cash flow return)
16.97
%
Return of Equity with a
5% Capital Growth Rate:
30.9
%
Return of Equity with a
7% Capital Growth Rate:
36.47
%
Return of Equity
10% Capital Growth Rate:
44.83
%
*approximate number

Key Highlights

• Building Area: 2,731sqm

• Land Area: 4600m2

• 8.21% net income + growth

• Multi-tenanted

• Potential to raise the rent

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