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Newt’s News – August 2016

Newt’s News – August 2016

True Investment Yields vs “Land Rich” Prices

The property investment market is strong in the low interest rate and low inflation environment. But don’t be misled by the extremely low investment yields achieved for “land rich” properties i.e. those which enjoy very high underlying land values.

Newtons recently sold Shell Coles Express Keilor Park at auction for $7.7m (5% yield). It was a new lease for 15+5+5+5+5 years at $385,000 pa plus GST and outgoings, with annual CPI increases.

We also sold Woolworths Petrol Clayton at auction for $4.44m (4.95% yield) and, before that, sold Woolworths Petrol Coburg at auction for $4.5m (5.6% yield), with a 7 year remaining lease term plus options.

BP Seaford, which we sold at auction for $5.05m (7.5% yield) has been resold off-market for $5.45m (7.4% yield), with 7 years remaining lease term plus options, while Shell Lancefield sold for $4.0m at a 7% yield.

These are clearly classic investment properties and, while there has been considerable yield compression in recent years, they should not be confused with properties having very high underlying land values, i.e. “land rich” properties.

For examples of land rich sale prices, “7 Eleven” St Kilda sold for $10.2m at 2.73%, while “7 Eleven” Box Hill sold for $8.0m at 2.14%. Both had long remaining lease terms, with fixed 4% annual increases, but effectively sold at their underlying land values. Also, Liberty Fitzroy sold for $9.6m on a 1.53% yield, reflecting the more immediate redevelopment potential with a short remaining lease term, as opposed to a typical long term investment yield.

The key point is that you can still buy perfectly sound long term investment properties in a yield range of say 4.5 to 7 percent, if you are not wanting to buy “land rich” properties.

We are selling a truly remarkable investment property at 522-528 Pacific Highway, Wyoming (Gosford) NSW. Featuring long term leases to Woolworths (Petrol and BWS Liquor), plus Bridgestone and Hunter Regional Tyres and returning approx. $528,530 pa net. With an extremely busy Pacific Highway frontage at Wyoming (Gosford), just some 80km north of Sydney CBD, in the heart of the Central Coast, it is a large corner site of 5,101sqm, with B2 (Local Business) zoning, being opposite the Wyoming Shopping Centre (full line Coles Supermarket, speciality shops etc. and Hungry Jack’s) and having Development Consent for a five lot Strata Subdivision, as well as holding a separate liquor licence.

This remarkable investment property should also appeal to Victorian and Queensland based investors, who do not want to increase their multiple holding land tax costs in their home state.

Please see the attached details and remember, whether buying or selling petrol stations or related properties, Newtons should always be your first point of call… just ask anyone in the industry!

private-sale-522-528-pacific-hwy-wyoming-nsw newts-news-august-2016

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Newt’s News June 2016

Opportunity Strikes for Commercial Property Investors

According to recent AFR newspaper reports, the May 2016 interest rate cut, to a record low of 1.75 percent, had an immediate impact on the appetite for commercial property and had put investors on notice that the market wouldn’t weaken, but would tighten up.

Under the heading “Property investments thrash shares”,  …”The average annual return (for) commercial property was 14 percent in the year ended March 31. The result even beat the 9.2 percent return on property shares and thrashed the 1.6 percent return on bonds. Balanced share portfolios went backwards 11.3 percent.”Also…”AMP chief economist Shane Oliver has constantly noted that the low interest rates favour commercial property”.

Newtons have specialised in Petrol Stations and related properties since 1981 and are well aware of the compression in yields for investment properties over recent years. For example, in the early 2000’s, we struggled to achieve yields as low as 8% for investments with new 15 year leases to Woolworths Petrol. But, that was in a period of higher interest rates and higher inflation. Such properties are now selling on sub 5% yields, but there is virtually zero inflation and interest rates are historically low.

We recently sold Woolworths Petrol Clayton at auction for $4.44m, at a 4.95% yield. However, higher returns are still available, particularly for regional properties, or where there are shorter lease terms certain, older improvements, lower underlying land values, etc. These can still be very sound investments with secure cash flows providing much better returns over the long term.

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Newts News – June 2016

Wodonga Bowl

 

 

 

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Newt’s News March 2016 – Auctions 6th of April 2016

At long last there are some very promising signs for the economy, in particular with the sharp increase in iron ore prices signalling greater optimism for our commodity exports. Fuel prices at the bowser remain low, especially if motorists can manage to buy at the bottom of the regular cycles. This has been keeping more money in the pockets of motorists and possibly helping the recent revival in consumer/retail spending. Building construction remains at very high levels. But, how many more apartments do we need?

The retail/commercial property investment market remains strong, due to the continuing historical low interest rates, as investors seek secure rental returns.

The following schedule of auction results for petrol station sales in the Melbourne market in 2015, are set out to assist both buyers and sellers in understanding the wide range of prices and yields achieved…

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Newt’s News – March 2016 Auctions 6th of April 2016

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Newt’s News – November 2015

Latest News on Inflation and Reserve Bank Interest Rates

The Reserve Bank left interest rates on hold at its Melbourne Cup Day meeting, reportedly due to positive signs in the economy, but said that there is scope for easing.

Inflation is benign, the latest annual increase to end of September 2015 being just above 1% (Weighted Average Eight Capital Cities), reportedly driven down to a large extent by low petrol prices.

Investment Special (Just Listed) – $2 Million Bracket

This outstanding freehold carwash investment property features first class improvements and excellent presentation and adjoins a very busy Shell Coles Express petrol station on the outbound side of the Maroondah Highway at Lilydale. Land area is 2,315m², with Commercial 2 zoning. There is a new 10+5+5+5+5 year lease to EcoWash, at $120,000 pa. plus outgoings (except land tax).

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Newts News (November) & EcoWash Lilydale

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Newt’s News – October 2015

Just how is the property investment market performing?

 “Auction clearance rate plummets due to the over ambitious expectations of vendors and investor caution… as reported by a national newspaper in September.

Only five days earlier, six service stations sold at auction for a total price of $39.92m and were reported by the same newspaper to have sold at more than twice their reserve …and provided… a clear indication of the continuing strength of the commercial property market.

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Newts News – October 2015

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Newt’s News – September 2015

Many investors, including those with self-managed super funds, continue to struggle to obtain sufficient returns to maintain their former lifestyles. However, many property investors who have held property portfolios for a number of years continue to receive double digit returns based on the original purchase prices and regular rent reviews. Even in today’s historically low interest rate environment, where initial property yields have been compressed over recent years, gearing provides yields well above the rate of inflation.

Investment Opportunity – Liberty Baxter

We are auctioning a substantial modern style petrol station at Baxter, which certainly ticks all the boxes for investors! For more details, please see our full newsletter here:

Newts News – September 2015

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Newt’s News – March 2015

Outstanding Investment Opportunities Now on the Market

Property is the logical investment choice in today’s historically low interest rate environment. Investors are targeting secure leases to AAA grade companies, and/or prime positions with high underlying land values. So what’s new?
Investment yields have continued to firm but there is still a relatively wide gap between government bond yields and property investment returns, enabling savvy investors to capitalise on strong returns and strong capital gains, especially where rental growth and long term increases in underlying land values are apparent.
We believe that petrol stations generally provide both AAA grade tenants and high underlying land values and long term investors typically report that they are hassle free investments.

Current Auctions – 15 April 2015 (in conjunction with Burgess Rawson)

We are offering three outstanding petrol station investments. Two are leased to Woolworths Limited, at Coburg and Drysdale, the third being BP Seaford. (Refer to details on the reverse side of this newsletter)
Additionally, we are to auction a Medical Centre at 441 Bay Street, Brighton. This outstanding investment property is likely to sell for little more than underlying land value, despite the impressive improvements. Leased to a long established tenant at what appears to be a very conservative rental, with the next market review due in Dec 2019, there are fixed 3% annual increases and the tenant pays all outgoings except Land Tax. Passing rent is $143,402 (approx.) per annum net. Don’t miss this rare opportunity. For the record, Newtons have sold every property put to auction with Burgess Rawson over recent years, both in Victoria and interstate. High clearance rates at recent auctions have given Vendors confidence to go to market.

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Newts News – March 2015

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Newt’s News – December 2014

Much Cheaper Petrol For All
World oil prices have plummeted, heralding a new era of low oil prices. Press reports indicate that Opec is virtually powerless to halt the fall, due to the surge in North American supplies of crude oil. “We are now entering a new era in world oil and will have lower prices for some time to come” according to a recent Age report. Great news indeed and probably better than a large interest rate cut. Does this mean that motorists will have significant savings on fuel, which will be spent elsewhere, thereby boosting our economy? Only time will tell!

Outstanding Auction Success
If you haven’t seen the news, our recent auction of Shell East Doncaster saw competitive bidding (well over 100 bids) and a knock down price of $9,055,000, showing a strong 4.6% yield.

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Newts News – December 2014

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Newt’s News – Christmas 2014

Commercial Property News
The commercial property market is the most active it has been for many years, with significant numbers of both off market and auction sales, as well as advertised expressions of interest and private sales. Investment yields are continuing to firm, in the historically low interest rate environment, while development sites, sale by sale, are setting new record land prices.

Petroleum News
The dynamic Petroleum Industry, in which we have specialised for over thirty years, continues to evolve at a rapid rate, with Viva Energy and Puma Energy, two of the world’s largest oil/petroleum traders, making their marks in the Australian market.
The industry has enjoyed strong profits, while hundreds of millions of dollars have and are being spent on import terminals, supply chains and new retail developments.

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Newts News – Christmas 2014

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Newt’s News – October 2014

A Trophy Investment Opportunity Not To Be Missed

Truly outstanding investment properties, those that tick all the boxes and more, are indeed a rarity in the market place. A blue chip single tenancy, prime position, high underlying land value, impressive modern improvements and a brand new lease, with outstanding cash flow fundamentals, are all sought after attributes to provide a long term hassle free investment.

 It is readily apparent that Shell East Doncaster ticks all the boxes.

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Newts News – October 2014

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