The Offer Summary
- Term is 10 years
- Profit share - 50% profit share of your proportion of rental pool1
- Unit owner outgoings are limited to strata levies & any capex on replacements greater than $100
- The owner or owners can terminate the agreement with CHG for any or no reason giving 90 days notice
When presented with a commercial tenant and a 10 year term, there is a tendency for some potential buyers to spend hours in spreadsheets analysing the offer.
If you are considering any other apartment, house or townhouse as an investment, you are usually presented with a vacant property or an existing tenancy with little or no time left on a lease. The future income, rent increases, rate costs, vacancy rates and management costs are difficult, if not possible to predict let alone manage. Often you are faced with making a decision based solely on the location and current return.
This offer is different from the others in that it offers both the certainty and the strength of the construction hotel group with the Chifley branding over 10 years while maintaining the option to occupy and manage yourself.
As the Manager is running a commercial business, the rent return is already potentially higher than you would receive in similar properties close by. The commercial use also provides a higher depreciation and level of borrowing, it is quite possible to hold one of these apartments at a zero cash cost after tax.2 We encourage you and your accountant/advisor to analyse this offer in comparison to other investments, rather than in isolation from other investment offerings.
1Refer to letting agreement for details.
2Potential purchasers should only consider this offer in conjunction with advice from your accountant and/or financial advisor