Investor banks on Bankstown Westpac
June 25, 2012
A Bankstown shop leased to Westpac was sold by Colliers International at auction yesterday with the hammer falling at $6.433 million for a yield of 5.77 per cent.
Six parties registered 52 bids for the property at 38 Bankstown City Plaza. The property was marketed by Colliers International’s Harry Bui and Mario Diab.
Mr Bui said bidding started at $5 million and two overseas Asian investors went head-to-head in the end with a Taiwanese national the eventual buyer.
The property has a gross lettable area of 1,308sq m and generates a current net passing income of $371,314. The lease is in place until June 2020 with a fixed three per cent annual increase to rent.
“Continued uncertainty with the stock market, together with lower yields available from more traditional investments, and the relatively poor performance of multi-tenant retail, has seen investors turn to the ore predictable cash flow and returns associated with net-lease property,” Mr Bui said.
“Private individual investors are taking money out of other investments that are not getting the return that they can get in real estate.
“Many individuals are paying cash and financing after the close. Some are getting 50 per cent to 60 oer cent loan-to-values with 20 to 25-year amortizations and 5 to 10-year terms depending on the tenant and term of the lease.
“The investment A grade credit with long-term leases can still achieve to 70 per cent loan-to-values and have a positive spread between the low interest rates and the yield on the real estate. Some are using lines of credit with plans to refinance later.
“High net worth individuals is another large player in today's net lease market acquiring many corporately leased to national tenants like Bunnings, 7-Eleven and Caltex petrol stations, big four banks, and Woolworths / Coles / IGA supermarket leases.
“There is extremely strong demand from those investors who are tightening yields across major capital cities, like we have seen with this Bankstown property.”
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