Logistics Depot Property Loans Australia

Valuers usually approach a depot in two ways and reconcile the results. The first is direct comparison: land rate per square metre from recent industrial land and depot sales, plus the added value of buildings, hardstand, fencing, lighting and drainage. The second is capitalisation of net rent, where the yard and the buildings are given separate rental rates per square metre. On a leased depot the income method carries more weight. On an owner occupied or vacant site, direct comparison dominates. Because building coverage is low, the land component often makes up most of the figure, which is why location and site shape matter so much.

Hardstand is not all equal. Reinforced concrete designed for container stacking and loaded forklifts sits at the top. Heavy duty asphalt over an engineered base is next. Crushed rock or gravel is treated as a basic improvement with limited value, and it raises dust and stormwater questions with council. Lenders do not inspect pavement themselves, but they read the valuer's comments closely. A report that notes cracking, ponding or failed sections will reduce added value. Stormwater treatment, interceptor pits and a lawful trade waste connection for the wash bay also support the figure.

Access and consent decide who the next buyer or tenant could be. A site with frontage to an approved B-double or road train route, dual crossovers and drive through circulation suits most carriers. A battleaxe block at the end of a narrow street does not. Approved routes are set by road managers, so check the current heavy vehicle network maps for the state. The development consent should permit a transport depot or freight terminal, and ideally 24 hour operation. Conditions that limit truck movements, night work or container stacking height reduce utility and will be picked up in the valuation.

Contamination is the main credit risk that is specific to depots. Underground or above ground diesel tanks, refuelling aprons, workshops, parts washers and wash bays are all recognised sources. Most lenders ask for a preliminary site investigation, which is a desktop and walkover review of site history by an environmental consultant. If that raises concerns, a detailed site investigation with soil and groundwater sampling follows. Clean up liability can attach to the owner, so lenders want to know the cost before they lend. Some will not accept a site with known contamination at all, while others will lend at a lower LVR with a remediation plan in place.

Owner occupiers are assessed on the trading business. Lenders review two years of financials, add back the rent the business currently pays, and test whether profit covers the new repayments along with existing truck and trailer finance. Fleet debt is often large, so a clear schedule of equipment loans helps. Customer concentration and contract terms are also reviewed. The guide on how lenders assess an owner occupier buying business premises covers the serviceability tests in more detail. Trucks, trailers and forklifts are financed separately under equipment finance, not added to the property loan.

Investors are assessed on the lease first and their own position second. Lenders commonly want net rent to cover interest by around 1.5 times, and prefer at least three to five years remaining on a lease to a tenant with sound financials. National logistics groups often sign five to ten year terms with options, while small carriers tend to sign three years or less. The lease should deal clearly with make good of the hardstand and responsibility for contamination caused by the tenant. A depot leased on a short term to a small operator is often assessed as if it were vacant.

Major banks, non-bank lenders and private lenders all fund depots, with terms commonly between 15 and 25 years and interest only periods of up to five years. Shorter facility terms with periodic review are still common at the banks. Buying through a self managed super fund is possible where the property meets the business real property rules, but super borrowing rules are strict, so get licensed advice first and read the SMSF commercial property loans page. GST usually applies to a commercial purchase, so ask your accountant how it affects the funds needed at settlement.