Newcastle Set & Forget LFR Passive Investment leased until 2025 to 19y long-standing National Tenant

Client MandateOur client is a family office with a clear and disciplined acquisition brief: a passive, set-and-forget commercial investment in the Newcastle region, yielding a minimum of 5.5% net, with a long lease and a tenant whose covenant could withstand economic uncertainty. They were not interested in active management, vacancy risk, or assets requiring attention. They engaged us to find the right asset and structure the acquisition on their behalf.
‍ResultWorking mainly off-market, we investigated eight opportunities across the Newcastle region, shortlisted three against the client's brief, and made one offer. Due diligence on the selected property - a 892m² large format retail and car servicing facility at Kotara, occupied by Motorserve Pty Ltd - identified material issues with the roof, plumbing, and electrical. Rather than walk away, we negotiated every rectification item onto the vendor's scope, to be completed at the vendor's cost based on a builder's quote. Our client acquired an as-new building. The total value of those works: up to $200,000. We negotiated the purchase price from $4,844,000 down to $4,500,000 - a saving of $344,000. Combined with the vendor-funded rectification works, the total value delivered to the client was up to $544,000.

The tenant - Motorserve Pty Ltd, backed by a major Australian insurance group - has occupied this site for 19 years. They hold a 5-year lease to 2030 with a further 5-year option to 2035, pay 100% of outgoings including land tax and management fees and deliver fixed annual income growth of 3%. Net income is $266,440 per annum, reflecting a net yield of 5.92% - above the client's minimum threshold. At $5,050/m² GLA, the acquisition rate sits in line with comparable LFR and industrial sales recorded in the Kotara precinct over the last 12 months. The asset also carries rental upside on future repositioning, given its LFR classification. This is what a genuinely passive commercial investment looks like.