the facts

PUBLIC HOUSE

433 - 435 CHURCH STREET

RICHMOND

Sold 433-435 Church Street Richmond 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 renovation and building extension with the highest quality finishes featuring
- Two level extension with rooftop bar and seating
- Total area 746m²
- Circa $3m total cost
Security of long term lease to well known sitting tenant – combined with the recent works meant it was highly unlikely the tenant would vacate anytime soon
Located on the corner of Church & Swan Street – arguably the best location Melbourne has to offer
This is 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
Expected price in comparison to land size was high
Expected price in comparison to return was low i.e. a lower return than expected
The proposed sale began in early to mid 2021, in between Melbourne’s longest lockdown periods – there was a general lack in confidence about the specific use i.e. pubs and bars being able to recover quickly, with social distancing restrictions etc…
Given the above and expected price, it was likely the Tenant would be the best potential Purchaser

The Facts Sale Public House 433-435 Church Street Richmond Real Estate Richmond Retail Richmond Investment Commercial Real Estate TCI

Sale Public House 433-435 Church Street Richmond Real Estate Richmond Retail Richmond Investment Commercial Real Estate TCI

THE CHALLENGES

TCI marketed the property for Sale at the end of 2017 – this was prior to the renovations/extensions, however we had knowledge of the approved works and marketed outlined these and the higher rent potential. The best offers the campaign received were
- $5.8m from the open market
- $6.15m from the Tenant
As the Tenant was likely to be the best Purchaser, it was challenging to convince the Tenant to pay for their renovations twice – once during the build and a second time, in the purchase price
A fresh negotiation commenced in mid 2021 and was put on hold due to Melbourne’s 2021 lockdown – there was uncertainty and fear, especially in the food and drinks sector, combined with patron restrictions, that we would enter another extended lockdown, while trying to finalise this sale

THE REVEAL

After an extensive 6 month negotiation process, TCI sold the property to the Tenant, for $8,100,000 – which equated to a land rate of $20,454 per m² or a 2.8% return
Market expectation was circa $12,000 per m² or a 3.5% return
Final result being 67% and 20% respectively above market expectations

the facts

market expectation

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PER M²

RESULT

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PER M²

difference

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%

higher

Campaign performance

PER M²

PERCENTAGE

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RATE

percentage

RETURN

market average

RESULT

the facts

PUBLIC HOUSE

433 - 435 CHURCH STREET

RICHMOND

THE PROS

THE CONS

THE CHALLENGES

THE REVEAL

the facts

market expectation

PER M²

PER M²

higher

Campaign performance

PER M²

PERCENTAGE

PER M²

RATE

percentage

RETURN

market average

Sold 433-435 Church Street

Sold 433-435 Church Street

Sold 433-435 Church Street

Sold 433-435 Church Street

Sold 433-435 Church Street

Sold 433-435 Church Street

Sold 433-435 Church Street

Sold 433-435 Church Street

Sold 433-435 Church Street

Sold 433-435 Church Street

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