Soaring 11% yield tipped for Mount Hotham spa retreat
Commercial property yields of more than 10% have been almost unheard of this year, but a spa retreat near Mount Hotham in the Victorian snowfields could be about to enter rare territory.
Agents are expecting “an exceptionally high yield, well in excess of 11%” when the Onsen Retreat and Spa at Dinner Plain goes under the hammer at a Burgess Rawson portfolio auction on Wednesday, September 11.
The property is leased to mountain ski lift and airport operator Mount Hotham Skiing Company for almost $800,000 per annum, on a 15-year term plus options.
The 1136sqm retreat sits on a 2040sqm land parcel and features indoor and outdoor spa facilities, as well as gym, massage, lap pool and other facilities.
Burgess Rawson director Graeme Watson and agent Doug Doyle say the spa retreat is tipped to record a yield rarely seen in the current commercial property climate.
“Onsen Retreat and Spa located in Dinner Plain, 10 minutes from the ski fields of Mount Hotham and Hotham Airport, has so much to offer as an investment,” Watson says.
“The property is expected to offer an astute investor, a higher return than they would normally expect from other property”, Doyle adds.
Co-agent John Castran says that with depreciation benefits estimated to provide $984,100 in tax-free income over the first 3 years, the property represents a sound financial play.
“On a 15-year term plus options, the lease offers income growth via fixed annual 4% increases plus market reviews,” he says.
“In addition. the tenant pays all usual outgoings including insurance and land tax.”