Burgess Rawson’s advisory service increases value in Fast Food asset

Commercial,Property ManagementMonday 21 May 2018
Property-Blog

Burgess Rawson Victoria’s extensive management portfolio includes a number of fast food assets.

With any commercial property asset understanding the lease structure, the rent and all terms and conditions is imperative.

Opportunities to increase value can be missed without quality, professional and responsible advice and up to date market knowledge.

A case in point is Hungry Jacks Armidale NSW.

With Burgess Rawson’s advisory service the purchaser acquired the property with only 3 short years to run but saw the long term property benefits of a large regional area, significant population catchment and a strong university town.

Key aspects of the decision included; major retailer in town indicating commercial standing of the region.

Retailers such as Kmart, Dan Murphy’s Big W, Coles and Woolworths and other fast food all signified a stable economic centre.

Understanding the locality and the benefits of the site gave them a level of certainty that the lease would be renewed.

The property was purchased for $1.3m at a yield of 6.6%.

The site location, opposite Coles, next to BP and integrated with the tourist information centre car park is on 1,714sqm.

In 2018 the time for the option exercise was due, rather than simply accept the exercise Burgess Rawson used their market knowledge of other fast food sites under management and recent deals done to renegotiate the lease.

With a small contribution to the tenants planned fitout Burgess Rawson negotiated a 10 year term, at a rental increase of 19.76% and changed the CPI increases to the certainty 3.5% annually.

The fit out also translated to additional income tax saving depreciation benefits to the landlord.

The longer lease not only gives surety but underpins value, compressing the yield of the property.

Together with market movement the transaction garnered an additional $800,000 in value based on a realistic market cap rate of 5%.

It is Burgess Rawson’s understanding of value, market trends coupled with key lease negotiation skills that benefited this owner with an increase of over 60% in property value.

Upon advising the outcome the Landlord said : ”it is like winning tattslotto, just more certain!”

Download your FREE copy of the Fast Food Investment Report here.

To find out more about the properties in our portfolio, and how we can help you with sales, leasing and property management services, please contact us.

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