<p class="mb-4">Wagga Wagga stands as the largest retail and commercial centre in NSW's Riverina region, serving a catchment of over 190,000 people. Situated along the banks of the Murrumbidgee River, Wagga Wagga's <strong>gross regional product was $5.4 billion in FY23</strong>. The growth of Wagga Wagga's economy since FY21 has outpaced NSW as whole growing by 13.25% compard to 8.65%.</p><p class="mb-4"></p><p class="mb-4">The city enjoys a <strong>strategic location</strong> positioned almost halfway between Sydney and Melbourne on the Sturt Highway, passing through the city connecting Adelaide to Sydney. This prime position on the Sydney-Melbourne route, combined with the Hume Highway, creates exceptional logistics advantages.</p><p class="mb-4">Wagga Wagga is also very accessible by air with a local airport and frequent flights to Sydney, Melbourne and Adelaide.</p><p class="mb-4"></p><p class="mb-4">Wagga Wagga serves as an important <strong>agricultural, education, military, and transport hub</strong> for Australia with major employers including Kapooka Army Training Base, RAAF Base at Forest Hill, Charles Sturt University, Tafe NSW, and the newly completed $434M Wagga Wagga Rural Referral Hospital.</p><p class="mb-4"></p><p class="mb-4">The region benefits from <strong>significant infrastructure investment</strong> including:</p><ul class="bullet-list"><li><p class="mb-4">TransGrid electricity transmission upgrade ($2.3 billion)</p></li><li><p class="mb-4">Energy Connect electricity interconnect to South Australia ($2 billion)</p></li><li><p class="mb-4">Snowy 2.0 Snowy Connect hydro generation &amp; transmission upgrade ($4 billion)</p></li><li><p class="mb-4">Defence estates upgrade at RAAF &amp; Kapooka Army base ($700 million)</p></li><li><p class="mb-4">Bomen Special Activation Precinct with the Riverina Intermodal Freight &amp; Logistics hub ($200 million)</p></li><li><p class="mb-4">Regional telecommunications upgrades ($181 million+)</p></li></ul><p class="mb-4"></p><p class="mb-4">The city's economic strength is evident in its <strong>low unemployment rate of just 2.9%</strong> (September 2024), significantly below national averages, underpinned by a strong rural base and growing infrastructure across the region.</p>

<p class="mb-4">The tenant is Dayco Australia and it has occupied these warehouses since 2012. Dayco is aware that it is currently paying under market rent per sqm and it has indicated its preference is to exercise its option following a market rent review on 30/09/2028 (3 years, 5 months time).</p><p class="mb-4"></p><p class="mb-4">Dayco Australia is a subsidiary of its parent Dayco based in the United States. <strong>Dayco was founded in 1905</strong> and specialises in the manufacture of engine drive systems for automotive, construction, agriculture and industrial applications. Some of their product range includes drive belts, belt tensioners, vaccum generation systems and hybrid electric vehicle systems.</p><p class="mb-4"></p><p class="mb-4">Dayco were acquired by Hidden Harbour Capital Partners, a private equity firm in August 2022 with assets under managemet of $1.9 billion. <strong>With over 100 years of operating history and institutional investment, this tenant is blue-chip</strong> offering:</p><ul class="bullet-list"><li><p class="mb-4">a stable rental income stream</p></li><li><p class="mb-4">capacity to fund maintenance and minor capital works,</p></li><li><p class="mb-4">and reduced vacancy risk.</p></li></ul><p class="mb-4"></p><p class="mb-4">Dayco conducts business in <strong>more than 50 warehouses in 25 countries</strong> with more than 4,500 associates worldwide, Dayco offers the scale and resources of a global enterprise with the commitment of a long-established business.</p><p class="mb-4"></p><p class="mb-4">Dayco's contributions are integral to how people travel, goods are transported, food is harvested, and infrastructure is built, making them a <strong>vital participant in essential industries</strong> and a strong, reliable tenant for this industrial facility.</p><p class="mb-4"></p><p class="mb-4">Tenant website: https://dayco.com.au/about.aspx</p>

<p class="mb-4"><strong>The opportunity (Upside)</strong></p><p class="mb-4">This property is currently renting below the market by around $20-$30 / m² presenting <strong>a great opportunity for investors</strong>. A market rent review will occur on 30/09/2028 should the tenant exercise their option (3 years, 5 months time). A $20-$30 increase in net rent / m² for this property is reasonable compared to market rents in April 2025 (see rental comparables for more detail). A $20-$30 increase in net rent / m² would increase total net rent by a range of $108-162k, increasing an investor's equity in the range of $1.8-$2.7 million based on the purchase capitalisation rate of 5.90%. This equity uplift reflects a 89-134% return on equity (ie, starting purchase funds including transaction costs).</p><p class="mb-4"></p><p class="mb-4">If the tenant does not exercise its option, it is expected an investor could still achieve a similar uplift in rents by leasing each warehouse on a standalone basis. An expected vacancy period in this scenario is 3-6 months.</p><p class="mb-4"></p><p class="mb-4">This premium industrial investment offers <strong>strong, secure returns</strong> backed by a blue-chip global tenant.</p><p class="mb-4"></p><p class="mb-4"><strong>Key financial highlights include:</strong></p><ul class="bullet-list"><li><p class="mb-4">An opportunity to raise rents to market in October 2028 and realise an <strong>equity uplift in the range of $1.8-$2.7 million.</strong></p></li><li><p class="mb-4">A projected 10-year average net yield of <strong>7.5% p.a. </strong>(year 1 net yield 5.9%)</p></li><li><p class="mb-4">A projected 10-year average annual return on equity (cash flow + capital growth) of <strong>23.5% p.a.</strong></p></li><li><p class="mb-4"><strong>Purchased well below a replacement cost of around $14-$15 million</strong>. This creates a competitive advantage for this asset compared to new supply as it does not need to charge above market rents to provide a return on development costs.</p></li><li><p class="mb-4">Triple net lease net of outgoings, land tax and property management expenses</p></li><li><p class="mb-4">All outgoings estimated at $95,000 annually paid by tenant</p></li><li><p class="mb-4">Year 1 net annual income of $324,543 + outgoings &amp; GST</p></li><li><p class="mb-4">Annual rent reviews: Greater of 3% or CPI</p></li><li><p class="mb-4">Ratchet clause in lease stating rental income cannot be less than the year immediately prior</p></li><li><p class="mb-4">3 years, 5 months remaining on fixed term lease expiring 29/09/2028</p></li><li><p class="mb-4">1 x 5-year option providing long-term security to 29/09/2033 (tenant has indicated its preference is to stay)</p></li></ul>

<p class="mb-4"><strong>Subject property: 3-7 Say St:</strong> 5,418m² <strong>at $60/m²</strong></p><p class="mb-4"></p><p class="mb-4">Comparable properties:</p><p class="mb-4">9 Say St (neighbour): 1,050m² at $108/m²</p><p class="mb-4">34 Schiller St: 746m² at $114/m²</p><p class="mb-4">8 Saxson St: 920m² at $104/m²</p><p class="mb-4">10 Saxson St: 792m² at $72/m²</p><p class="mb-4">30 Pearson St: 950m² at $99/m²</p><p class="mb-4">32 Pearson St: 1,132m² at $109/m²</p><p class="mb-4">3 Blaxland Rd: 990m² at $131/m²</p><p class="mb-4">115-117 Hammond Ave: 1,000m² at $80/m²</p><p class="mb-4">137 Fernliegh Road: 720m² at $95/m²</p><p class="mb-4">281 Copeland St: 900m² at $132/m²</p><p class="mb-4">20 Stuart Rd: 853m² at $114/m²</p><p class="mb-4">1 Sutton St: 910m² at $119/m²</p><p class="mb-4">1/297 Copland St: 1,400m² at $109/m²</p><p class="mb-4"></p><p class="mb-4"><strong>Average:</strong> $108/m²</p>

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