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Distance is no barrier to dealmaking when “clean, well-prepared leases” are on the cards, according to a St Kilda director.
Benjamin Klein, a commercial director with Barry Plant, has shared with REB how he nabbed a deal across the Bass Strait through diligence and database leveraging.
Having originally picked up the property in Devonport in mid-2022, Mr Klein took on the property’s management from a Melbourne-based investor client.
At that point in time, the lease of the property by The Reject Shop was about to come to an end, with the next three months spent creating a new lease, which Mr Klein has admitted “was a bit of a process” for him and his team.
“But, we ended up with a clean lease that not only improved the position of the landlord and was acceptable to the tenant but also would appeal to potential investors if the property ever went to market.”
As part of that new lease, the time period was extended from three years to five, and the contract was changed to a net lease, meaning all outgoings were paid for by the tenant.
According to Mr Klein, when the lease was finalised, the owner made an “offhand” comment that if he could find a buyer with no advertising, he would do a deal.
This was all the motivation Mr Klein needed. He proactively offered the property to a number of groups comprised of investors known to him, which led to the putting forward of an offer.
While that purchaser did make a quick trip across the sea to Devonport, spending a total of two-and-a-half hours in Tasmania to inspect the property, Mr Klein acknowledged that “there’s a lot less emotion about commercial sales.”
Instead, “it’s about returns.”
“The fact that it was a national tenant really appealed to the buyer,” he quipped, before noting that the property eventually sold for $3,025,000.
That equates to a yield of 6.7 per cent.
From Mr Klein’s perspective, “there’s no doubt that clean, well-prepared leases are key to commercial sales success.”
The Devonport deal is just the latest story of success for the St Kilda-based commercial agent, who also took over the management of four shops in Melbourne’s Burwood last year.
When he took on the properties, the lease expiries didn’t line up and had different terms. He outlined how his team spent two months working on getting new leases in place.
He was then able to sell all four of them to a buyer who “appreciated the logic and clarity around the leases” and netted a strong result for the investor.
ABOUT THE AUTHOR
Grace Ormsby
Grace is a journalist across Momentum property and investment brands. Grace joined Momentum Media in 2018, bringing with her a Bachelor of Laws and a Bachelor of Communication (Journalism) from the University of Newcastle. She’s passionate about delivering easy to digest information and content relevant to her key audiences and stakeholders.
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