Tenanted Industrial Unit, Wiri

The material supplied consists of an agent's information memorandum, a two-page lease summary and a rates notice. The premises are presented as a fully leased industrial unit with a stated net annual rent of $148,500 and an asking price of $2,650,000. The lease summary indicates a term that has approximately 2.1 years remaining with one right of renewal, which is shorter than the marketing material implies. No full lease document, no financial confirmation of outgoings recovery and no seismic assessment were supplied, so the income quality behind the headline yield cannot be confirmed. Several figures in the memorandum are marketing assertions rather than verified positions.

Address

Unit 3, Industrial Estate, Wiri, Auckland

As stated in the memorandum

Asking Price

$2,650,000 plus GST (if any)

Stated Net Annual Rent

$148,500 + GST

Indicative Yield

5.61%

Calculated from the two figures above only

Tenant

Not named in the material supplied

Lease Term Remaining

Approximately 2.1 years

From the lease summary

Rights Of Renewal

One further term of three years

Building Area

1,040 sqm

Land Area

1,480 sqm

Seismic Rating

Not stated

• The memorandum describes the property as having a 'secure long-term lease', while the lease summary shows approximately 2.1 years remaining before the first renewal date. These two statements are not consistent.

  Information memorandum vs lease summary, page 1

• The complete executed lease and any variations

  The two-page summary omits assignment, reinstatement, default and outgoings clauses, which determine the real quality of the income.

• Tenant identity, trading history and financial position

  The yield is only as reliable as the tenant paying it. An unnamed tenant means the covenant is entirely unassessed.

• Detailed outgoings schedule and recovery history

  'Fully recoverable' is a claim. If any outgoings are irrecoverable, the net rent and the yield both fall.

• Seismic assessment (Detailed or Initial)

  A rating below 67% NBS affects lending, insurance, tenant retention and future capital expenditure.

• LIM report and consent history

  Unconsented works or outstanding council requisitions become the buyer's problem on settlement.

• The property is currently income-producing

  Rent is being received from day one, which supports servicing costs while further due diligence continues.

• Rates are documented and modest relative to the stated rent

  This is one of the few verified outgoings figures in the material, and it does not appear to threaten the net income.

• Land-to-building ratio leaves usable yard area

  Yard and parking are typically valued by industrial tenants and support re-letting if the current tenant departs.

• A right of renewal exists

  If exercised, it extends the income term without a new letting campaign or incentive cost.

• The lease term is materially shorter than the marketing suggests

  With roughly two years remaining, re-letting risk, incentives and agent fees may arrive well inside a typical hold period, and lenders may treat the income as less secure.

  How to checkRead the full executed lease and confirm the commencement date, expiry, renewal notice periods and any early termination rights.

• The tenant is not identified anywhere in the material

  Two identical rent rolls can carry entirely different risk depending on who is paying. Without the tenant's identity, the income cannot be assessed at all.

  How to checkAsk the agent for the tenant name and request permission to review trading history, guarantees and any bank bond.

• The yield figure is derived, not verified

  The stated yield relies on both the asking price and the claimed net rent being accurate and on outgoings genuinely being recoverable.

  How to checkReconcile the rent against the lease and the last twelve months of rent receipts, and confirm the outgoings recovery clause.

• No seismic information was provided

  Seismic strengthening can cost hundreds of thousands of dollars and can block finance or insurance entirely.

  How to checkRequest any existing seismic assessment and, if none exists, commission an Initial Seismic Assessment before going unconditional.

• Condition claims are unsupported

  Deferred maintenance on roofing, hardstand and services is common in industrial stock of this age and is usually the buyer's cost.

  How to checkCommission a building inspection covering roof, cladding, hardstand, drainage and services.

• A short lease term changes what you are actually buying

  With around two years remaining, this is closer to a vacant-possession purchase with an income buffer than a long-term passive investment. Price it accordingly.

• Renewal rights sit with the tenant, not with you

  A right of renewal is an option the tenant may or may not take. It is not a commitment, and treating it as one overstates the income term.

• Market review only at renewal caps your income growth

  With no annual or fixed reviews, the rent is static until the renewal date, so inflation erodes the real return over the term.

• Outgoings recovery is where stated yields quietly leak

  Management fees, capital repairs and some insurance costs are frequently irrecoverable even under a 'net' lease. A one per cent leak matters at this yield.

• Lenders will assess this differently to the marketing

  A short WALE and an unrated seismic position often result in lower loan-to-value ratios or shorter loan terms, which changes your equity requirement.