Retail Investment | $4,450,000 | Net Yield: 5.38% | VIC

This Victorian retail investment secures a brand-new, freestanding Starbucks drive-thru within Waurn Ponds Village, a convenience retail precinct on the Princes Highway around 10 km south-west of the Geelong CBD. Completed in 2025, the property pairs a 12-year lease to a global tenant with fixed annual rental growth and a prominent 1,314 sqm corner landholding.

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At a purchase price of $4,450,000, the investment generates approximately $239,218 in net annual income, delivering a 5.38% net yield. Passing rent is approximately $252,350 per annum plus GST, with land tax, management fees and outgoings above the tenant's cap accounted for in the stated net income.

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The lease to Starbucks Coffee Company (Australia) Pty Ltd commenced in April 2025 for an initial 12-year term, with four further five-year options. Rent increases by a fixed 3% each year. Over five consecutive annual increases, this equates to approximately 15.9% cumulative rental growth, assuming the increases apply as scheduled.

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The strength of the tenant is a central feature of the investment. Starbucks Corporation is listed on NASDAQ and operates more than 35,000 stores across 80 markets, with annual revenue above US$30 billion. The tenant has also funded a substantial, capital-intensive fit-out, which reflects a significant commitment to the site. Six months' rent is held as security under the lease.

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The asset comprises a modern 180 sqm building constructed to Starbucks' current global design specifications, with a drive-thru lane and seven on-site car spaces. The lease is structured on a net basis, with the tenant meeting most property outgoings. Recoverable outgoings are capped at $20,000 in the first year and indexed at 3% annually. The cap is removed in year six, after which the tenant meets a greater share of outgoings, providing potential for the net income to improve.

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Stamp duty was payable at 50% on this purchase, at $134,625, reducing the upfront cost of entry.

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Waurn Ponds sits within the City of Greater Geelong, the largest regional economy in Victoria. The broader city's population is forecast to grow by around 47% to more than 440,000 residents by 2046. The property has direct frontage to the Princes Highway, which carries approximately 238,000 vehicles past the site each week, and immediate access to the Princes Freeway (M1) linking Geelong and Melbourne.

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Deakin University's Waurn Ponds campus and Epworth Geelong Hospital are close by, as are Waurn Ponds Shopping Centre and the Waurn Ponds Homemaker Centre. Within the village itself, Starbucks trades alongside 7-Eleven, KFC, Guzman y Gomez, a childcare centre and a Club Lime gym. This mix draws daily trade from both commuters and local residents.

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Recent sales provide useful context for the yield secured here. The neighbouring Guzman y Gomez and KFC sites sold at yields of 4.99% and 3.54% respectively, and Starbucks investments at St Albans in Victoria and at Caboolture and Deagon in Queensland have sold at yields between 4.58% and 4.85%.

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Accounting for estimated purchasing costs, the net yield equates to approximately 5.10%. Based on an assumed 65% loan-to-value ratio and 6.5% annual interest rate, the property is projected to generate approximately $51,206 in annual cash flow after mortgage interest expenses, representing an estimated 2.85% cash-on-cash return on the total cash contribution of $1,795,975.

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These figures reflect acquisition modelling assumptions and are not guaranteed returns.

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With a global tenant, a 12-year lease with fixed 3% increases and a new building on a corner site in one of Geelong's main growth corridors, this investment reflects the calibre of commercial property Rethink Investing continues to secure for clients across Australia.

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