9% yield guaranteed...

Hi there,

What do people think of this commercial investment property:

http://www.realcommercial.com.au/cg...t=&header=&cc=&c=81184567&s=vic&tm=1252289215

The property is leased to an ASX listed company, Lend Lease Prime Life, running a nursing home.

9% guaranteed yield, passing rent $369,161 p.a., 20 + 10 year lease commencing from October 2001...

The downside from the ad. could be...

"Business revert back to freehold owner at the end of lease."

I wouldn't really want to have to own this "business"... ie. a nursing home.

Also, presumably the 20 years started in 2001, so half-way through the first lease term so far (or could it be the second 10 year option started in 2001... so then it could be near the end of the lease!).

There's half a dozen or more of these for sale at present from the same company.

What do you think?
 
There's half a dozen or more of these for sale at present from the same company.

What do you think?

No one sells the good deals. Nursing homes are like serviced apartments, carparks, child care centres, etc.. you are at the mercy of the operator on payments and providing a tenant.

Peter
 
I had a friend stay there 3 or 4 years ago and it was well run, as seen from our side of the fence, with good care provided.

They have another one further out that has had some delays getting established, but I think it's a goer now.
 
No one sells the good deals. Nursing homes are like serviced apartments, carparks, child care centres, etc.. you are at the mercy of the operator on payments and providing a tenant.

Peter are you saying you have to 'make' your own good deals in commercial (i.e. value add)?
 
Peter are you saying you have to 'make' your own good deals in commercial (i.e. value add)?

No but often any deals with leasebacks that are sold are sold for a reason. Banks did it and then moved out. S/Stations do it and then close. You can do well.

I am more worried about control. Being a small owner with big tenant you can be "legal fee-ed" out of business before thier bottom line is even dented.

Peter
 
JIT, i remember on that epic 26 page thread on invested to help boatboy invest his $325k, a member on there (crc_error) suggested a Cromwell property trust as a method to get exposure to commerical property and provide an income.

This is the latest trust from Cromwell, open until Dec 2009 and providing monthly distributions 8.25%pa over 7 years. The asset is a $173m commercial building in Brisbane that is 93% let to Energex until 2025.
Looks good to me, what do you think? Min investment is $10k and much cheaper than going direct into commercial.

http://www.investsmart.com.au/distributions/documents/Cromwell_RiverparkTrust_Flyer.pdf
 
9% guaranteed yield,
What do you think?[/QUOTE]

Is this considered to be an average, or a good yield for commercial property?
 
JIT, i remember on that epic 26 page thread on invested to help boatboy invest his $325k, a member on there (crc_error) suggested a Cromwell property trust as a method to get exposure to commerical property and provide an income.

This is the latest trust from Cromwell, open until Dec 2009 and providing monthly distributions 8.25%pa over 7 years. The asset is a $173m commercial building in Brisbane that is 93% let to Energex until 2025.
Looks good to me, what do you think? Min investment is $10k and much cheaper than going direct into commercial.

http://www.investsmart.com.au/distributions/documents/Cromwell_RiverparkTrust_Flyer.pdf

Hi shuggy,

This is an unlisted property trust/fund or like a public property syndicate.

Fundamentally I think they can be quite good investments, especially if the trust's strategy is in alignment with your own.

The main issues can be lack of control and liquidity.

I prefer smaller private property syndicates over these though.

Listed property trusts are another alternative, but I don't like the volatility here.
 
hi jit
I love the term
guaranteed
there is one one
guaranteed
and thats you will die.
as for the return 9% is on the lower end of returns in this market
if you want a return like 9% buy a pub
now there heaps of them and you will get alot of people wanting to run it.
would I buy a pub
no
would I get involved in a deal as you are looking at.
no
its dead money
and yes it was a pun
 
hi jit
I love the term
guaranteed
there is one one
guaranteed
and thats you will die.
as for the return 9% is on the lower end of returns in this market
if you want a return like 9% buy a pub
now there heaps of them and you will get alot of people wanting to run it.
would I buy a pub
no
would I get involved in a deal as you are looking at.
no
its dead money
and yes it was a pun

Thanks for your comments GR, I didn't really think it was such a good deal.
 
Hi shuggy,

This is an unlisted property trust/fund or like a public property syndicate.

Fundamentally I think they can be quite good investments, especially if the trust's strategy is in alignment with your own.

The main issues can be lack of control and liquidity.

I prefer smaller private property syndicates over these though.

Listed property trusts are another alternative, but I don't like the volatility here.

Thanks for the feedback JIT and i especially agree with your point about lack of liquidity.
 
I am more worried about control. Being a small owner with big tenant you can be "legal fee-ed" out of business before thier bottom line is even dented.


.....assuming of course, you don't have a clause in the Lease where the Tenant is responsible for paying for all of the Landlord's legal and other professional fees.

If you have that clause in your Lease, well then, one has a little more comfort Peter. :)
 
Hey TPFKAD,

I know you have managed to get your tenants into iron clad (or is it iron shackles) type leases. However how likely is that for the majority of tenants. I cant imagine any lawyer, or tenant with half a brain would commit to such a clause, unless they were absolutely desperate to get into the type of commercial you were offering, due to limited availability or suitability and they had no other choices, i.e. it means that their primary business will stop functioning / expanding.
 
.....assuming of course, you don't have a clause in the Lease where the Tenant is responsible for paying for all of the Landlord's legal and other professional fees.

If you have that clause in your Lease, well then, one has a little more comfort Peter. :)

Book book book :)
 
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