6% yield is too low for something like Mitre. I would need 8% net to even remotely consider it. Even then it's not an asset I would want to hold.
It's purely a cashflow play; there's no value add, and you have tenancy risk. If the Mitre people breached your lease/moved on, very few people could run that place successfully and you could be vacant for a long time, very time time, as Bank Place is difficult to operate. My folks have been involved in over 50 restaurants/bars in their younger days, and I'd suspect they'd share that view.
Put it this way. I bought into something else on the other side of the CBD at the same time Mitre was selling (it was an off market deal). It had development potential, had 3 frontages, was a corner spot, not heritage listed, opposite two major CBD developments, on a famous street (think very central locations of Swanston, Bourke etc), I had a queue of people wanting to lease it from me before I even settled including 20% of the major Australian franchises you can think of. I am getting ~6% net yield (which would be like people getting 7.5% gross yield on residential).
State Trustee (which I also looked at), sold for 7.5% net yield. That's on Exhibition St, could be converted to a 10-storey hotel.
It's purely a cashflow play; there's no value add, and you have tenancy risk. If the Mitre people breached your lease/moved on, very few people could run that place successfully and you could be vacant for a long time, very time time, as Bank Place is difficult to operate. My folks have been involved in over 50 restaurants/bars in their younger days, and I'd suspect they'd share that view.
Put it this way. I bought into something else on the other side of the CBD at the same time Mitre was selling (it was an off market deal). It had development potential, had 3 frontages, was a corner spot, not heritage listed, opposite two major CBD developments, on a famous street (think very central locations of Swanston, Bourke etc), I had a queue of people wanting to lease it from me before I even settled including 20% of the major Australian franchises you can think of. I am getting ~6% net yield (which would be like people getting 7.5% gross yield on residential).
State Trustee (which I also looked at), sold for 7.5% net yield. That's on Exhibition St, could be converted to a 10-storey hotel.