Single-tenant Crows Nest retail on a fresh 7-year lease at $1,180/sqm net. Strong covenant against a Metro-priced strip, but three doc-level issues need resolving before exchange.
| Asset | Single-tenant retail premises, ground floor + mezzanine |
| Lettable area (NLA) | 162 sqm |
| Passing rent | $191,000 pa + GST + outgoings |
| Lease term remaining | 6.4 yrs to first expiry, 2 × 5 yr options |
| Dimension | Score / 10 | Comment |
|---|---|---|
| Tenant covenant | 7 | Established national operator; ASIC current; no adverse notices. |
| Lease quality | 7 | Net rent, CPI reviews, market review at option, standard make-good. |
| Pricing vs comps | 6 | Asking $3.55m sits at 5.38% yield. Crows Nest 12-mo strip comps cluster 5.0–6.2%. Mid-pack. |
| Planning / use | 8 | B2 Local Centre zoning; retail use fully compliant; no current DAs. |
| Physical condition | 6 | Building survey pending; vendor disclosure flags one make-good obligation. |
| Contract risk | 5 | Three HIGH-impact contract issues flagged below — see Section 1 for redline. |
| Target net yield | Implied price | Zone & commentary |
|---|---|---|
| 5.00% | $3.82M | walk above — Above this level the strip's recent prints don't support the price. |
| 5.50% | $3.47M | stretch — Justifiable only if HIGH flag #1 is fully resolved in writing. |
| 5.75% | $3.32M | target — Mid-market for Crows Nest 2065 retail strip, 12-mo window. |
| 6.25% | $3.06M | opportunistic — Reflects unresolved incentive-deed exposure carried by Buyer. |
The following are unresolved deltas between the contract / disclosure and independent evidence. Each must be closed out before exchange.
The Incentive Deed (v1, signed 2024) records a $48,000 fit-out contribution payable to the Tenant on each option exercise.
Reference Schedule of the sale contract is silent on whether this obligation transfers with title at settlement.
Without an explicit assignment, the Tenant could legitimately invoke the deed against the Buyer post-settlement while the Vendor retains the cash benefit of the sale.
Action: Insert a special condition assigning all Vendor obligations under the Incentive Deed dated 14/03/2024 to the Buyer, with the deed annexed.
Lease cl. 4.1 permits use only as 'a licensed café and ancillary retail'.
Vendor's Disclosure Statement describes the tenancy as 'café, takeaway and small-bar use'.
If the Tenant later seeks to expand into the small-bar use described to the Buyer, the lease as drafted would require a deed of variation — and may trigger a market review.
Action: Require Vendor to procure a deed of variation widening cl. 4.1 to match the disclosed use before exchange, or accept a price adjustment.
Schedule 3 of the lease specifies a bank guarantee equal to 6 months gross rent ($95,500).
Leases Schedule attached to the contract records the guarantee as 'to be provided on settlement of sale'.
Buyer accepts settlement risk if no guarantee exists at completion.
Action: Require Vendor to lodge the bank guarantee in escrow at exchange.
The contract's Adjustments clause omits whether land tax is adjusted on a single-holding or multi-holding basis.
For a Crows Nest commercial property, single-holding is materially lower (~$8.4k pa vs ~$31k pa multi-holding).
Action: Insert single-holding basis as a special condition or accept multi-holding adjustment with eyes open.
Vendor's claim against independent finding. 6 facts checked; only non-match rows shown by default.
| Fact | Vendor's claim | Independent finding | Status |
|---|---|---|---|
| Permitted useLease — use | café, takeaway, small-barDisclosure Statement item 12 | licensed café + ancillary retail onlyLease cl. 4.1 | MISMATCH — Flag 2 |
| Incentive obligationContract — special conditions | (silent)Sale Contract Schedule 2 | $48k payable to Tenant on each option exerciseIncentive Deed cl. 3.2 | MISMATCH — Flag 1 |
| Bank guaranteeLease — security | $95,500 (6 months gross)Lease Schedule 3 | 'to be provided on settlement'Leases Schedule (Sale Contract) | MISMATCH — Flag 3 |
| Land tax basisContract — adjustments | (not stated)Sale Contract cl. 14.5 | default = multi-holding under standard formConveyancing (Sale of Land) Regulation 2017 (NSW) | OPEN |
| Outgoing | Annual | Recoverable? | Risk |
|---|---|---|---|
| Council rates | $4,820 | YES | |
| Water rates | $1,940 | YES | |
| Land tax (single-holding) | $8,400 | NO | Retail Leases Act 1994 (NSW) s.23 prevents pass-through. |
| Insurance | $3,620 | YES | |
| Repairs / capex | $2,200 | NO | Landlord obligation under cl. 12. |
Standard make-good on lease expiry; one obligation flagged in Vendor Disclosure (worn flooring in trade area).
Retail Leases Act 1994 (NSW) applies — lease was registered as retail; protections apply throughout.
| Item | Detail |
|---|---|
| Lease AN749204 | Whole of land, registered 18/03/2024 |
| Easement for services | 1.5m strip along southern boundary, in favour of Lot 11 |
Multi-holding default applies absent special condition — see flag #4.
| Going-concern test | Status |
|---|---|
| Property tenanted at settlement? | YES |
| Vendor and Buyer both registered for GST? | Vendor YES, Buyer PENDING |
| Written agreement that supply is going concern? | YES (Schedule 2) |
No active development applications. One historical DA (2019) for shopfront refit — approved and completed. Section 10.7(2) certificate clean.
Six 12-month comparables on the Crows Nest / St Leonards retail strip cluster between $19,800–$23,400/sqm and 5.0%–6.2% yields. The subject's $21,914/sqm and 5.38% yield sit mid-pack. The nearest sale (65 Willoughby Rd, 4 mo old) anchors the cluster at $13,125/sqm but is materially smaller (320 sqm) and lower rent.
Recent sales near 2065 · subject: retail · up to 25 sales · last 12 mo
| Address | Sold | $ | m² | $/m² | Type | Distance | Links |
|---|---|---|---|---|---|---|---|
| 65 Willoughby Rd, Crows Nest NSW 2065 | 2026-01-15 | $4,200,000 | 320 | $13,125 | retail | 0.0 km | D 📍 |
| 50 Falcon St, Crows Nest NSW 2065 | 2025-09-02 | $3,650,000 | 175 | $20,857 | retail | 0.2 km | D 📍 |
| 14 Atchison St, St Leonards NSW 2065 | 2025-04-19 | $2,900,000 | 140 | $20,714 | retail | 0.6 km | D 📍 |
| 212 Pacific Hwy, St Leonards NSW 2065 | 2025-11-08 | $5,200,000 | 220 | $23,636 | retail | 1.4 km | D 📍 |
| 8 Albany St, Crows Nest NSW 2065 | 2025-07-21 | $3,100,000 | 158 | $19,620 | retail | 1.8 km | D 📍 |
| Item | $ pa | Notes |
|---|---|---|
| Gross face rent | $191,000 | Per Leases Schedule |
| Outgoings recovery (recoverable items) | $10,380 | Council, water, insurance — passed through under cl. 11 |
| Item | $ pa | Notes / Risk |
|---|---|---|
| Land tax (single-holding basis) | $8,400 | If basis specified pre-exchange (flag #4) |
| Repairs / capex reserve | $2,200 | Landlord obligation, cl. 12 |
| Vacancy reserve (3% of rent) | $5,730 | Conservative, single-tenant |
| Net yield | Implied price | Comment |
|---|
| Implied price | Standard | AFAD (foreign) | Total if foreign |
|---|
NSW commercial land tax computed on land value (not improved value). Single-holding basis assumes Buyer owns no other NSW land — confirm Buyer's existing portfolio.
Going concern — supply between two GST-registered entities at settlement, no GST on the consideration.
| Item | $ | Notes |
|---|---|---|
| Land tax | $8,400 | |
| Repairs / capex reserve | $2,200 | |
| Vacancy reserve | $5,730 | |
| Insurance shortfall (Vendor cover only) | $0 |
Vendor does not warrant the absence of asbestos. Buyer-side hazardous-materials report recommended for the 1962 sub-floor and original ceiling cavity.
| Cover | Sum insured / status |
|---|---|
| Building | $2,460,000 (replacement value) |
| Public liability | $20m (landlord) |
| Loss of rent | 12 months ($191k cap) |
Willoughby Road is a primary retail spine through Crows Nest, anchored at the south by the new Sydney Metro (opened 2024). Pedestrian counts on this block were ranked 4th-highest in Crows Nest by the City Council's 2025 retail audit.
| Search | Source | Result |
|---|---|---|
| EPA contaminated land record | NSW EPA | Not on register |
| Section 10.7(2) planning certificate | North Sydney Council | No flood, no contamination overlay |
| Section 149 — heritage | North Sydney Council | Not heritage-listed |
| Document | Status | Date |
|---|---|---|
| Title search 12/735289 | PROVIDED | 28/04/2026 |
| Lease AN749204 | PROVIDED | 14/03/2024 |
| Vendor Disclosure Statement | PROVIDED | 02/05/2026 |
| Incentive Deed v1 (signed) | PROVIDED | 14/03/2024 |
| Section 10.7(2) certificate | REQUEST | (pending) |
| Phase 1 ESA report | COMMISSION | (pending) |
Contract clause · Special condition 14.3
“The vendor reserves the right to remediate any soil contamination identified between exchange and settlement at the purchaser’s expense, capped at $25,000.”
Deluxe analysis: favours seller. Recommend negotiating: cap indemnity at $0 unless vendor declares known contamination at exchange.