The Brief

A family office holding a substantial Victorian portfolio, looking to deploy outside the state.

This is a brief we see less often than we should. Most private portfolios are concentrated in the state the family lives in, because that is where the relationships are and where the market feels legible. The concentration builds up quietly over two decades and is rarely examined as a position — but a portfolio exposed to one state’s land tax regime, one planning system and one economic cycle is a single bet with several titles attached to it.

This client had already worked that out. The mandate was to reduce it.

Why the Yield Was Higher

Our first job on any asset priced above the market average is to establish what the market is worried about, because it is usually worried about something real.

Here, part of the pricing reflected genuine risk. A growth corridor asset depends on population arriving broadly as forecast — retail demand in an outer corridor is a function of households, and if the corridor fills more slowly than projected, the tenant mix feels it. That risk is legitimate and it is why the asset yields what it yields.

But part of the pricing was simply geography. Eastern states capital consistently underweights Perth, not because of any analysis, but because buyers transact where they can inspect on a weekday. Thinner buyer competition produces higher yields for identical asset quality. That portion of the yield is not compensation for risk — it is compensation for effort.

How We Tested It

We assessed the corridor’s actual delivery record rather than its projections, the surrounding trade infrastructure, and the tenant mix’s resilience. The asset sits on a main road, anchored by a national retailer, surrounded by major fast food operators and close to a large shopping centre. That surrounding cluster matters: fast food and major retail conduct their own site selection on traffic and catchment data, and their presence is independent corroboration of a location that a single tenancy schedule cannot provide.

We also underwrote the multi-tenancy structure — several income streams with staggered expiries, so no single departure is a solvency event for the asset.

The Outcome

A multi-tenanted main road asset in Perth’s southern growth corridor, acquired at circa $3m on a 7.3% net yield. The client’s Victorian concentration is reduced and the portfolio now earns across two states and two cycles.