The Brief

The client had recently sold their business and was holding a significant cash position. The objective was diversification into commercial property — real assets, real income, and a holding they would not need to actively manage.

The Pressure That Comes With Exit Capital

Post-exit capital behaves differently from accumulated capital. It arrives all at once, it sits visibly in an account, and the feeling that it should be working creates a pressure to transact that has nothing to do with whether the right asset is available.

That pressure is the most expensive thing in the process. It shortens due diligence, it widens the brief when nothing suitable appears, and it converts a disciplined buyer into a motivated one. Vendors and selling agents can identify a motivated buyer within a single conversation.

The first thing we did on this mandate was agree that we would not buy something merely because the capital was ready.

How We Assessed the Covenant

An ASX-listed tenant is a genuine comfort and a poor strategy on its own. Listed retailers rationalise store networks. They consolidate after acquisitions, they exit underperforming catchments, and a strong balance sheet tells you the rent will be paid for the term — it tells you nothing about whether the lease gets renewed.

So we underwrote the site rather than the logo. Traffic exposure on a main arterial road. Corner position with access from two frontages. The role the site plays in the tenant’s own network, and the depth of alternative occupier demand for that building at that rent if the tenant ever left. The six-year term was assessed as a floor under the income, not as the reason to buy.

The Outcome

A prime corner site on a main arterial road with an ASX-listed tenant and six years remaining on the lease, acquired at circa $5m on a 5.6% net yield.

The income is durable. More importantly, the site is re-lettable, which is the part that matters in year seven.