Office Investment | $4,150,000 | Net Yield: 5.78% | VIC

120 Nixon Street represents a rare opportunity to acquire what many local sources consider one of the highest quality office buildings in Shepparton. Completed in 2022 and leased to leading accounting firm MB&M, Maxwell Brown & Mountjoy, on a ten-year lease to 2033 plus two further five-year options, this off-market acquisition reflects the calibre of near-new, covenant-backed office assets Rethink Investing continues to identify for clients across regional Victoria.

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The near-new asset combines secure income with significant rental reversion potential. The property currently achieves approximately $250 per square metre, adjusted for parking, while comparable offices with similar fit-outs in Shepparton are leasing above $300 per square metre and up to around $350 per square metre, indicating potential rental uplift of up to 40%. A mid-term market review is scheduled for January 2028, less than two years away, providing a clear near-term mechanism to capture this upside. Based on conservative assumptions, the yield could increase to approximately 7.5%, potentially creating close to $1 million in capital value uplift at a 6% capitalisation rate.

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The property presents as a high-end A-grade office building, rarely seen in regional markets, featuring curved internal walls, polished concrete floors, premium lighting and high-quality bathrooms with floor-to-ceiling tiling. The building provides 20 secure undercroft car parks, a highly valuable feature in the Shepparton office market, estimated locally at approximately $1,500 per space annually.

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MB&M is a highly regarded and well-established accounting and professional services firm servicing the Shepparton region, occupying the building since its completion in 2022 under a ten-year lease with annual CPI rent reviews. The property occupies a strategic position between Shepparton's CBD and the Golden Mile commercial precinct, in close proximity to Goulburn Valley Health and the city's established medical infrastructure, an area considered strategically important for healthcare expansion and a location that would likely attract strong demand from government and medical tenants should the tenancy ever become available.

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With a purchase price of $4,150,000 and total cash required of $1,670,725 (including a 35% deposit and purchasing costs), the investment delivers a net annual cash flow return of $239,857, a net yield of 5.78%, and a net yield of 5.49% accounting for purchasing costs. Against a cost of loan of $175,337.50, the cash flow after mortgage costs sits at $64,519.50, translating to a return on equity of 3.86% in pure cash flow terms. Accounting for conservative capital growth of 5%, 7% and 10%, the return on equity increases to 16.28%, 21.25% and 28.70% respectively. Investors also benefit from a 50% stamp duty concession, further improving the effective acquisition outcome, and as a near-new building the property is expected to offer significant depreciation benefits, further enhancing after-tax returns.

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With a near-new A-grade building, a well-established tenant covenant, clearly identifiable rental reversion, a favourable stamp duty concession, and positioning near Shepparton's key medical and commercial infrastructure, this acquisition reflects the calibre of office assets that Rethink Investing continues to secure for clients.

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