the facts

builders arms hotel

211 gertrude street

fitzroy

Sold 211 Gertrude Street Fitzroy TCI - An in depth look behind the scenes of the campaign. We'll explain the pros, the cons, the challenges and the reveal!

THE PROS

Brand new fitout and renovation
Food and lifestyle tenancies were in a market strong point – potentially the strongest
Security of long term lease to renowned sitting tenant Andrew McConnell – combined with the recent works meant it is unlikely the tenant would vacate anytime soon
Located on the corner of Gertrude & Gore Street – Gertrude Street arguably one of the strongest food and lifestyle locations in Melbourne
This was a buy and sit – with no concern for the following
- Maintenance
- Loss of tenant
- Loss of rent

THE CONS

Highly unlikely any development potential could be realised during the current Lease term or Options
The Lease was long term with Options circa 25 years left at the time
The Lease was also not reviewed on Option to a traditional Market Review – the mechanism was a Pub Market Review, which factors in the trade of the Tenant
Expected price in comparison to return was low i.e. a lower return than expected
The rent for the property was low – however the next Market Review is circa 5 years away

Sale 211 Gertrude Street Fitzroy Real Estate Fitzroy Retail Fitzroy Investment Commercial Real Estate TCI Builders Arms Hotel

THE CHALLENGES

Property was marketed two years prior for the same price, the highest offer received was circa $5,000,000
There was market knowledge of this campaign and outcome
Despite being a ‘perfect’ investment i.e. great location, fully renovated property, great Tenant, long term lease – it was difficult for a Purchaser to pay a price today, based on what the market rental could be, in 5 years time, should all things remain equal
To reinforce this, the marketing included a renegotiation of another pub TCI had just completed, which reinforced the increased rent potential

THE REVEAL

After a short time on market, TCI sold the property for $5,700,000 – which equated to a 2.5% return
Market expectation was circa a 3.5% return
Final result being 40% above market expectations

the facts

market expectation

0

%

return

RESULT

0

%

return

difference

0

%

higher

Campaign performance

PERCENTAGE (%)

PER M²

RETURN

market average

RESULT

the facts

builders arms hotel

211 gertrude street

fitzroy

THE PROS

THE CONS

THE CHALLENGES

THE REVEAL

the facts

market expectation

return

return

higher

Campaign performance

PERCENTAGE (%)

PER M²

RETURN

market average

sold 211 gertrude street

sold 211 gertrude street

sold 211 gertrude street

sold 211 gertrude street

sold 211 gertrude street

sold 211 gertrude street

sold 211 gertrude street

sold 211 gertrude street

sold 211 gertrude street

sold 211 gertrude street

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