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High yield shopping centre!

This is our valued client’s first purchase with Rethink Investing. One of their requirements was to get a 7% net yield or better, which is very difficult in this market. However, using our strong contacts in the industry we were able to secure this asset off-market for our client earlier this year.

It’s a proven successful centre with some A-grade tenants such as BWS, Domino’s and a range of other tenants who have been trading out of the centre for many years. After the due-diligence process went smoothly and this asset settled, our client is now on the hunt for their next commercial property.

Purchase Details
Asking Price
3800000
Purchase Price
3410000
Deposit (assuming
70
% debt)
1023000
Stamp Duty
188945
Building Report*
1300
Solicitor Cost*
8500
Valuation*
5000
Other Fees* (Depreciation
report, bank fees)
Total Cash Required
1226745
Purchase Price + Purchasing Cost
3613745
Net Annual Cash Flow Return
254000
Net Yield on Property
7.45
%
Net Yield Accounting for
Purchasing Costs
7.03
%
Cash-OnCash Returns
Deposit Needed =
% + Costs
1226745
Cost of Loan
(Assume
3
% pa on
70
% debt)
71610
Return of Equity
(Pure cash flow return)
14.87
%
Return of Equity with a
5% Capital Growth Rate:
28.77
%
Return of Equity with a
7% Capital Growth Rate:
34.33
%
Return of Equity
10% Capital Growth Rate:
42.66
%
*approximate number

Key Highlights

• Building Area: 826m2

• NLA: 3,077m2

• Location: Townsville

• Commercial Type: Freehold shopping centre with 11 tenants

• Total current net rent: $254,000 (after 100% of the outgoings)

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