Buying tenanted retail, commercial and industrial property
Commercial property is bought on income, and income is only as good as the lease and the entity behind it. A sharp looking yield on a marketing brochure can hide a short term, a weak covenant, an under-rented tenancy or a make-good liability nobody has priced.
We act for investors acquiring retail, office, industrial and large format assets. Buy-side only. We hold no listings, take no commission from sellers and hold no interest in the assets we recommend.
The lease is the asset
Before the building, we read the lease. Term remaining and options, review mechanism and whether it is fixed, CPI or market, outgoings recovery and whether the deal is net or gross, incentives already amortised, bank guarantee and personal guarantees, and make-good at expiry.
That work decides what the income is actually worth. Two assets with the same passing yield can be very different investments once the lease is properly read.
- WALE, expiry profile and option structure
- Passing rent tested against market, over-rented or under-rented
- Outgoings recovery and what the net position really is
- Incentives, guarantees and make-good obligations
Tenant covenant and income durability
A long lease is only as strong as the entity bound by it. We look at who the tenant actually is, whether the lease sits with a trading entity or a two dollar company, how the site performs for that business, and what the cost of relocation would be if they wanted to leave.
Uses where fit-out capital, licensing or a customer base is tied to the premises tend to renew. Uses that can move down the road in a weekend tend to negotiate.
Sector by sector
Each sector carries a different risk shape, and pricing should reflect it.
- Industrial and logistics: clear height, hardstand, access, power, land content and replacement cost
- Retail and large format: trade area, anchor strength, turnover rent and exposure to online
- Office: floor plate efficiency, building services, incentives required to re-let and capex profile
- Fuel, convenience and medical: long leases, strong covenants and relocation cost as a defence
Underwriting and due diligence
Every asset we recommend is underwritten before an offer goes in. Net income after non-recoverable outgoings, land tax in the correct entity, capex reserved for roof, services and car park, vacancy assumption at expiry and the letting up cost that comes with it.
Due diligence runs alongside your solicitor and consultants: zoning and approved use, contamination and asbestos, fire and essential services compliance, structural condition, body corporate and sinking fund position, and GST or going concern treatment.
Exit and hold strategy
We buy with the sale in mind. Who the next buyer is, what they will pay for, and what the lease profile will look like when you want to move on.
Where there is upside in a rent review, a re-let, a subdivision or a change of use, we identify it going in rather than hoping for it later.
Off market and agent relationships
A large share of commercial and industrial stock trades quietly, between owners, agents and private capital. We approach owners directly and work with commercial agents across Brisbane and South East Queensland who bring us assets before they are marketed.
Asset Strategy Call
A 20 minute call on what you are trying to buy, what the income has to do, and where value currently sits across the sectors. No pitch and no obligation.
- 01Capital available, structure and gearing position
- 02Income, growth and hold period objectives
- 03Sectors we would look at now, and what we would avoid
- 04How the mandate would run from brief to settlement
- What size assets do you buy?
- Typically from around $1M through to institutional grade holdings, across industrial, retail, office, large format, fuel and convenience, and medical.
- Can you buy inside an SMSF, trust or company?
- Yes. We work alongside your accountant and adviser on structure and land tax position, and buy to the requirements that apply to the entity.
- How do you assess a yield that looks too good?
- By reading the lease and the covenant. A high yield is usually the market pricing a short term, a weak tenant, an over-rented tenancy or a capex problem. We identify which one it is before you offer.
- What does it cost?
- Commercial, industrial and development purchases carry a 2.5% + GST success fee on the purchase price, with an initial engagement fee at the start of the mandate. We are paid by you only.
- Will you review an asset I have already found?
- Yes. We underwrite and negotiate single assets on a scoped basis where you have already identified the property.
Healthcare, FIFO, Mining, Oil & Gas
For people on swing rosters with strong income and no time. We do the searching, inspecting and negotiating while you are on site.
Business Owners & Operators
For owners who are tired of paying rent and want the building on their own balance sheet, including SMSF purchase and lease back.
Home Buyers & Families
For first home buyers, upsizers and families who are working full time and losing weekends to open homes.
Residential Investors
For investors buying houses, units and land in Queensland who want the numbers checked before they buy, not after.
Property Developers
For developers sourcing sites, from single infill blocks through to englobo land, with feasibility tested before you commit.