Been doing some quick numbers on the purchase of the Barnawartha NDC. Will depend on whether or not they want to sell it for $10M @ 6.6% yield.
Purchase Barnawartha NDC for $10M with $660k pa rental return.
Borrow $6.5M interest only @ 3.5% pa = $227.5k pa.
Surplus gross income of $432.5k pa. (Outgoings are paid by the tenant)
7,252 sqm warehouse + adjoining vacant site rent of $660k pa - $60k for vacant site = $600k / 7,252 sqm = $82.73 per sqm.
1,470 sqm + 9,300 sqm = 10,770 sqm new warehouse x $82.73 sqm = $891k pa rent.
Cost to develop 10,770 sqm x $1,000 sqm = $10.77M.
Purchase price of $10.5M incl. duties/legals + $10.8M development cost = $21.3M total cost.
Rent at $1.55M pa @ 5% yield = $31M gross realisation value (GRV).
$31M GRV x 65% max. loan = $20.15M - $6.5M existing loan = $13.65M for development versus $10.8M cost thus loan surplus of $2.85M.
Aim for $31.3M sale price - $21.3M cost = $10M profit.
Will require $4M or 4 x $1M investors with capacity to borrow $1.625M each & will return $108k pa income to each investor = 10.8% ROCI upon purchase.
When development is sold for $31.3M - $17.3M loan ( $10.8M development + $6.5M existing) = $14M / 4 = $3.5M each & a ROCI of 250% in about 2-3 years with nil holding costs. Worst case the rent will be $1.65M in 2 years with 3% pa increase x 5.5% yield = $30M sale price.
I have been in touch with the agent & $11M will buy it = 6% yield.
Will achieve a lower yield when developed & large customers are on board as more secure.
(20min delay)