Service Station
PropPay Rent in Advance for major repairs
The situation
A service station operator is currently leasing their property for $14,000 a month, net. There are two years remaining on the current lease. The property is owned by the landlord in their self-managed super fund.
Two of the storage tanks need to be replaced at a cost of $200,000.
If the tanks are replaced the operator will sign a new 5 + 5 lease starting at $14,500 a month (net), being the current market rental, with biennial reviews to market.
The property is currently ungeared, and the owner does not want to mortgage the property to a traditional lender.
The owner needs at least $4,000 a month to meet costs relating to the property
PropPay solution
Through the leasing agent, PropPay agrees to pay the owner Rent in Advance of $200,000 plus monthly rent of $14,500, based on the following terms:
Term: 24 months
Rent in Advance: $200,000
Onboarding Fee: $349
Admin Fee: 0.65% per month
From the monthly rent, PropPay receives $8,333.33 per month plus the admin fee of $1,300 per month leaving the landlord $4,866.67 which is more than they need to meet their monthly operating costs.
PropPay’s total admin fees of $31,549 over 24 months represent 9.1% of the total rent received of $348,000 during the term.
The landlord has the funds to install the new tanks and a new, longer lease.
*Subject to approval. Terms and conditions apply. Differences due to rounding.
