Supermarket investment via bayleys

Anyone looked at this. Countdown 20 year lease , Tauranga,countdown, 9% returns estimated. min invest $50,000 . Debt maybe re 30%?. WWW.supermarketinvestment.co.nz

Interesting. Probing it at the mo. Be interested to hear other peoples views

I Would not touch with a Barge Pole read the fine print very carefully

My understanding is most of these syndication deals are just set up to earn fees for the managers.

This is how DNZ started out wasn't it. A collection of single building syndication that weren't doing well that had to be combined, and management bought out to make it a good investment.

I was stick to the listed property investments if you want to get into commercial/industrial/retail but cant afford to go it alone. Very transperent, highly liquid. Most are PIE's I think so also tax efficient.

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Originally Posted by POSSUM THE CAT

I Would not touch with a Barge Pole read the fine print very carefully

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Spent the morning trolling through it all then went back again with open comb in afternoon. Theres some interesting lines in the fine print that make you go 'huh?' and 'hmmmm' and scratch your chin

Mr Monkey did you come to thesame conclusion that I did that the only one guaranteed to make money from these syndicates is Bayleys

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Originally Posted by CJ

My understanding is most of these syndication deals are just set up to earn fees for the managers.

This is how DNZ started out wasn't it. A collection of single building syndication that weren't doing well that had to be combined, and management bought out to make it a good investment.

I was stick to the listed property investments if you want to get into commercial/industrial/retail but cant afford to go it alone. Very transperent, highly liquid. Most are PIE's I think so also tax efficient.

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You are absolutely right if you refer to the syndicate properties promoted and managed by SPI Capital (www.nzspi.com). Majority of its syndicates have performed poorly. Two have already been sold with a big loss.
Another one (Hunua Syndicate) would be voted by shareholders for its fate. It stopped paying interest about 2 years ago.

It is easy to get into property syndicate, but difficult to exit. In Hunua's case it is not possible to exit.

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Originally Posted by POSSUM THE CAT

Mr Monkey did you come to thesame conclusion that I did that the only one guaranteed to make money from these syndicates is Bayleys

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Yes.


PS I get nervous when I see 'projected pre-tax return paid monthly' bandied about with an asterisks in front. Its like saying, yeah...you probably won't get this much but theres a sweetener at the end of all you blind mum and dad investors, its paid monthly so its like free money coming at you every month, from us! See its easy just give us 50K NOW.

After years of receiving leaflets afer an enquiry in 2004 I finally bought a 100K share in the Lincoln Rd Mitre10 building last November. 9.2% return. With Oyster. They've been paying me $766 per month since then. Have to say its a heck of a lot easier than chasing tenants around and cleaning up after them after you've kicked them out. Oyster do regular projects and I'll look at getting involved with other ones based on this experience sofar.

The fact that they're clipping the ticket on the way doesn't bother me. You can't really expect them to do it for free, and there's nothing wrong with people naking a dollar.

cloggs what happens when the lease runs out. They are trying to get planning permission for an even bigger one in the same area.

Yeah "Bias concealedin the fake vinyl white cloak of truth"

This top grade newish building leased to telecom also sounds great .$50,000 min investment , great location rent reviews etc etc., 8% yield PREDICTED. Other than the liquidity issues when selling , whats hidden in small print?

Augusta opens door to Telecom's home

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Originally Posted by Joshuatree

This top grade newish building leased to telecom also sounds great .$50,000 min investment , great location rent reviews etc etc., 8% yield PREDICTED. Other than the liquidity issues when selling , whats hidden in small print?

Augusta opens door to Telecom's home

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Is this the same Joshua who won the piefunds comp? Hell, you can do a lot better than 8%.

How long will it be 8%? Not long if interest rates keep on rising.

I need more income in my port. Appreciate an opinion from anyone who has read the article prospectus. The liquidity is a big issue. The five star green rated newish building,location and client are pluses as is 3% fixed annual rent increases for first 10 years. Syndication scheme has no fixed term and would be wound up if a min of 75% shareholders voted for it. Comparing it to what else pays 8% at the mo.? Don't personally like these structures and the devil is in the detail.

Sorry I haven't got time to read the full prospectus mate but one thing that leaps out at me, (apart from the fact that its managed by Augusta), is the high gearing (47% is high for commercial property) and the fact that the initial debt facility is only for three years. They will have done this to get the cheapest interest rate and put the maximum gloss on the deal. What will interest rates be in 3 years and how will that affect you net return in the future ? That and the way Augusta manage this are your two key medium term risks from a very brief look. Long term its not exactly a vanilla style commercial building so what happens if Telecom vacate after their 10 year lease and they can't re-tenant the building ? Will that unusual styled building be in demand in 10 years ?

Yes my biggest concern with commercial property ....at the mercy of the tenant unless it's bluechip location...looking at property investments currently in the lower south

Thanks Roger et al for putting time in here..So its just another short term too good to be true, highly geared single building tarted up spruik.:)

My only pure play prop holding is TIX on ASX holding a bunch of ind buildings in great locations with diff tenants, then AOG retirement village operator . cheers jt

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Originally Posted by Joshuatree

This top grade newish building leased to telecom also sounds great .$50,000 min investment , great location rent reviews etc etc., 8% yield PREDICTED. Other than the liquidity issues when selling , whats hidden in small print?

Augusta opens door to Telecom's home

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8% is not the property's yield. That is the cash return to investors. I reckon the LPTs are better, especially to high tax payers as they are all PIEs. Better return and liquidity which just doesn't exist with proportional titles. And risk spread over a range of buildings. Very tricky things these proportional titles.

Contract rent well above market levels should get alarm bells ringing

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Originally Posted by Joshuatree

Thanks Roger et al for putting time in here..So its just another short term too good to be true, highly geared single building tarted up spruik.:)

My only pure play prop holding is TIX on ASX holding a bunch of ind buildings in great locations with diff tenants, then AOG retirement village operator . cheers jt

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Everyone is just being a teeny bit negative here. It reminds me of some people who talk about 1987 when you mention shares. After buying the share in the Lincoln Rd Mitre10 I also bought a share with Maat Consulting in The Hub shopping centre in Whakatane, and am looking at getting a couple of shares in an industrial building near the airport with a 15 year lease in place and yield of 8.2%, again with Oyster. Been very happy with the regular payments that I keep receiving. This last one I've borrowed the money by topping up the mortgage on a rental property, fixed the loan for 5 years, and I'll pay it off over 5 years using the income of the new building as well as the first 2. I don't need the income (yet) so I'm happy to acquire a share in another building this way. As far as I'm concerned it is just another way to invest with its own risks and rewards.