20 Marriott St — Investment Presentation

STRONG BUY — Compelling Entry Price with Significant Value-Add Runway

Base NCF

Combined Upgrade NCF

Break-Even Buffer

Investment Thesis

📍

Prime St Kilda Location

Inner-Melbourne residential, heritage overlay supply constraint, 2km from CBD, walking distance to beach and Chapel St. St Kilda has delivered ~5.5% p.a. capital growth over 10 years. Structural demand floor from lifestyle precinct.

💰

Immediate Cash Flow Positive

Cash flow positive from Day 1 at the base case. NOI of covers interest with a interest coverage ratio — strong debt serviceability at current rates. Break-even price of provides ~$970k of downside buffer above asking.

🔧

Two Clear Value-Add Levers

Common area upgrade ($30k) delivers 50%+ yield on cost with 2-year payback. Apartment renovations ($60k/unit) reposition to premium $720–$750/wk rents, adding significant yield uplift and capital value. Both executable without vacant possession.

Property Snapshot

Address	1–12/20 Marriott St, St Kilda VIC 3182
Asset Type	12-unit residential block
Asking Range	$4.5M – $5.0M
Agent	Buxton Real Estate
Current Occupancy	8/12 units (managed by Hybrid RE)
Current Avg Rent	$633/wk per unit
Market Rent Range	$650–$780/wk (post-upgrade)
Land Zoning	General Residential (R1Z)
Heritage Overlay	Yes — limits new competing supply
Suburb Vacancy Rate	~2.1% (vs model 3.5%)

Deal Economics at a Glance

Base case purchase price
Loan (80% LVR)
Equity required
Stamp duty ⓘ
Total cash required ⓘ
Gross yield (base) ⓘ
Net Cash Yield ⓘ
Net cash flow (base) ⓘ
Break-even price ⓘ
NCF — combined upgrade ⓘ
Gross yield — combined upgrade ⓘ

Value-Add Journey — NCF Progression

Net Cash Flow by Scenario (p.a.)

Key Risks — Summary

Risk	Assessment	Mitigation	Rating
Price risk	Break-even ~$5.72M — $720k above top of asking range	Wide buffer; every $250k below asking = $12,500/yr extra NCF	Low
Interest rate risk	Deal remains CF positive at 7.5% — break-even drops to ~$4.77M	Consider fixing 50% of loan; stress-tested in sensitivity tab	Medium
LVR classification	Some lenders cap 12-unit blocks at 65–70% (commercial)	Use specialist investment broker; model 70% LVR scenario on inputs	Medium
Vacancy risk	Model uses 3.5%; suburb avg 2.1%; Hybrid manages 8/12 already	Existing tenancy relationships reduce transition vacancy to near-zero	Low
Renovation execution	$60k/unit renovation upside assumes market absorbs $720–$750/wk	Market data supports; current $633/wk already below market without reno	Low

Model Assumptions

Purchase Price $ $4.5M–$5.0M asking

Loan-to-Value Ratio (LVR) % Check 12-unit LVR policy

Interest Rate (p.a.) % Variable avg 6.72%

Avg Rent (Base, no upgrades) $/wk Current actual avg

Vacancy Rate % Suburb avg: 2.1%

Capital Growth (est. p.a.) % St Kilda 10yr: 5.5%

Operating Costs (edit as needed)

Land Tax (SRO confirmed)$/yr

Council Rates (confirmed)$/yr

Water Rates (confirmed)$/yr

Insurance$/yr

Admin Fees (no OC)$/yr

Maintenance & Repairs$/yr

Contingency$/yr

Annual P&L — Base Case (12 Units)

Gross Rent (12 × /wk × 52)
Vacancy Allow ()
Effective Gross Income
Land Tax
Council + Water Rates
Insurance
OC Admin + Maintenance + Contingency
Net Operating Income (NOI)
Interest on Loan ( @ )
Net Cash Flow (p.a.)
Capital Growth ( est.)
Total Estimated Annual Return

Gross Yield ⓘ

Gross rent / price

Net Cash Yield ⓘ

NCF / purchase price

ICR ⓘ

NOI / interest

Break-Even ⓘ

At current rate

Upfront Capital Stack

Deposit (% equity)
Stamp Duty (VIC investment rate)
Legal / Conveyancing	$20,000
Total Cash Required
Loan Amount (% LVR)

Income Composition

🏢 Scenario 1 — Common Area Upgrade

Total Capex $

Revenue Uplift / Unit / Wk $/wk Range: $20–$30

🏠 Scenario 2 — Apartment Upgrades

Capex / Unit $

Rent Increase / Unit / Wk $/wk Extra above base (+$50–$150)

BASE CASE

No Upgrade

$0 additional capex

Net Cash Flow p.a.

Gross Yield

Avg Rent/wk

Gross Rent p.a.

NOI

Yield on Capex—

Payback—

VALUE-ADD 1

Common Area Upgrade

Net Cash Flow p.a.

Gross Yield

Extra Income p.a.

NCF Uplift

Yield on Capex

Payback Period

NOI

VALUE-ADD 2

Apartment Upgrades

Net Cash Flow p.a.

Gross Yield

Rent Increase/wk

Extra Income p.a.

Yield on Capex

Payback Period

NOI

BEST CASE

COMBINED

Both Upgrades

Net Cash Flow p.a.

Gross Yield

Total Capex

Extra Income p.a.

Blended Yield on Capex

Blended Payback

NOI

NCF Comparison by Scenario

Gross Yield by Scenario

Scenario Comparison — Detailed Metrics

Metric	Base (No Upgrade)	Common Areas ($30k)	Apt Upgrades (/unit)	Combined
Avg Rent / unit / wk
Gross Rent p.a. ⓘ
Gross Yield ⓘ
NOI ⓘ
Net Cash Flow ⓘ
Additional Capex Required	$0
Incremental Income p.a. ⓘ	—
Yield on Capex ⓘ	—
Payback Period ⓘ	—
Total Return ⓘ

Combined Upgrade — Full Value-Add Thesis

Total Extra Capex ⓘ

Extra Income p.a. ⓘ

New Annual NCF ⓘ

Combined Gross Yield ⓘ

On purchase price

Combined Net Cash Yield ⓘ

NCF / purchase price

Blended Yield on Capex ⓘ

Extra income / total capex

Blended Payback ⓘ

Total capex / extra income

ICR Post-Upgrade ⓘ

NOI covers interest

Implied Cap Rate ⓘ

NOI / purchase price

Year-by-Year Cash Flow — All Scenarios

Cumulative Capex Payback

Renovation Roll-Out — Staged Approach (Recommended)

Execute on natural tenancy turnover — no forced vacant possession required. Common area upgrade done once; unit upgrades staged as leases expire.

Phase	Timing	Scope	Capex	Extra Income p.a.	Cumulative NCF	Risk

Implied Asset Value Post-Upgrade

Capitalising the upgraded NOI at different market cap rates shows the implied increase in asset value from the renovation program.

Cap Rate	Implied Value (Base NOI)	Implied Value (Upgraded NOI)	Value Uplift

Total Project Cost Summary

Purchase Price
Stamp Duty
Legal / Conveyancing	$20,000
Common Area Upgrade
Apartment Upgrades (12 units)
Total All-In Project Cost
Loan (LVR on purchase only)
Total Equity Required (All-In)
NOI post-upgrade / total project cost

Break-Even @ Current Rate ⓘ

NCF Range (Asking Range) ⓘ

$4.5M to $5.0M at current rate

Rate to Break Even at $4.75M ⓘ

Rate at which NCF = $0

Base Case NCF — Price × Interest Rate Matrix

NOI: · LVR: · ■ >$20k ■ $0–$20k ■ ($20k)–$0 ■ ($40k)–($20k) ■ <($40k)

Combined Upgrade NCF — Price × Interest Rate Matrix

Shows NCF after both upgrades applied. NOI used:

Break-Even Price by Scenario & Interest Rate

Interest Rate	Base Break-Even	Common Area Break-Even	Apt Upgrade Break-Even	Combined Break-Even	Deal at $4.75M?

CBA FINANCE MODEL

Adjust CBA terms below — property inputs live in the left panel

CBA Rate (%)

CBA LVR (%)

Setup Fee ($)

Commercial finance · Interest only
Subject to serviceability — net rent > $300k

CBA Loan

—

Monthly

—

Ann. Interest

—

Net Op. Income

—

Net Cash Flow

—

Property Assumptions

Purchase Price $ $4.5M–$5.0M asking

Avg Rent / Unit / Week $/wk Current actual avg

Vacancy Rate % Suburb avg: 2.1%

Capital Growth (est. p.a.) % St Kilda 10yr: 5.5%

Operating Costs (edit as needed)

Land Tax (SRO confirmed)$/yr

Council Rates (confirmed)$/yr

Water Rates (confirmed)$/yr

Insurance$/yr

Admin Fees (no OC)$/yr

Maintenance & Repairs$/yr

Contingency$/yr

Annual P&L — CBA Financed (12 Units)

Gross Rent (12 × /wk × 52)
Vacancy Allow ()
Effective Gross Income
Land Tax
Council + Water Rates
Insurance
OC Admin + Maintenance + Contingency
Net Operating Income (NOI)
CBA Interest ( @ )
Net Cash Flow (CBA)
Capital Growth ( est.)
Total Estimated Annual Return

Gross Yield

Gross rent / price

Net Cash Yield

NCF / purchase price

ICR

NOI / CBA interest

Break-Even Price

At CBA rate + LVR

CBA Capital Stack

CBA LVR	—
CBA Loan Amount
Deposit Required (% equity)
Stamp Duty (VIC investment rate)
Legal / Conveyancing	$20,000
Total Cash Required (all-in)
CBA Monthly Repayment
Annual Interest Cost
CBA Setup Fee
Year 1 Total Finance Cost
Serviceability (net rent vs $300k)

Income vs Cost Breakdown

Sale Settings

Unit Sale Price ($)

Slide: $500k – $800k

Reno Cost / Unit ($)

Number of Units

Selling Costs (%)

Agent + marketing + legal

Title Splitting Cost ($)

See breakdown below

Hold / Reno Period (yrs)

Gross Proceeds

—

Total Costs

—

Gross Profit

—

Profit per Unit

—

Profit Waterfall

Item	Amount
Purchase Price	—
Reno (12 × $60k)	—
Title Splitting	—
Holding Costs (interest)	—
Gross Sale Proceeds	—
Selling Costs	—
NET PROFIT	—
Return on Cost	—

Cost vs Profit Breakdown

⚠ Title Splitting — Ask Olivia for Final Figures

The $90,000 estimate covers typical costs to strata-title or individually lot 12 units in Queensland. Costs vary materially depending on council requirements, existing survey plans, and body corporate setup.

Typical cost components (QLD):

Item	Estimate	Range
Surveyor / re-survey of lots	$20,000	$12k–$30k
Body corporate establishment	$8,000	$5k–$15k
Council application / contributions	$25,000	$10k–$50k
Legal (strata titles + contracts)	$15,000	$10k–$25k
Engineering / infrastructure cert.	$12,000	$8k–$20k
Miscellaneous / contingency (10%)	$10,000	—
Total estimate	$90,000	$45k–$140k

→ Confirm actual quote with Olivia before committing to this strategy.

Sensitivity — Net Profit by Unit Price × Reno Cost

All figures show total net profit (12 units). Green = profit, red = loss.

HYBRID RE IMPACT

Arbitrage model · Partnership contribution · Payback perspective

Hybrid operates the building under a head lease — the spread between what they charge tenants and what they pay the investor is their margin. This page shows how that flows and contributes back to the partnership.

Rent Model Assumptions

Open Market Rent ($/wk per unit)

$/wk

Head Lease Rate — Hybrid pays investor ($/wk per unit)

$/wk

Hybrid Sublease Rate — charged to tenants ($/wk per unit)

$/wk

Number of Units units

Partnership Profit Share — Hybrid → Investor % of Hybrid net

Hold Period (years) yrs

Annual Income Flow

Investor
Open Market Rent (benchmark)	—
Head Lease Income (guaranteed)	—
Premium for security vs open market	—
Hybrid RE
Sublease Revenue (gross)	—
Less: Head Lease Cost	—
Hybrid Net Margin	—
Partnership
Hybrid Contribution (% of net)	—
Investor Head Lease Income	—
Total Annual Partnership Cash	—

Investor Annual

—

head lease

Hybrid Spread

—

gross / yr

Hybrid Net

—

spread / yr

Partnership Contribution

—

from Hybrid / yr

Total Partnership

—

incl. head lease

Annual Income Split

Breakdown of where sublease revenue flows each year.

Cumulative Partnership Returns

Head lease income + Hybrid profit share over the hold period. Excludes capital growth.

Partnership Perspective

Investor gives up (vs market)

—

per year for guaranteed income

Hybrid's margin (skin in game)

—

annual operating profit

Cumulative partnership flow

—

over hold period

DRAFT

CONTRACT OF SALE

⚠ DRAFT — Not Executed

Prepared by Maddocks · Ref: CCB:TIBO:10154619

Property

20 Marriott Street, St Kilda VIC 3182

Lot 15 · TP635902D · Vol 8436 Fol 979

Vendor

Marriott 20 Pty Ltd

as trustee for the Marriott 20 Trust · ACN 639 877 802

Vendor's Agent

Gary Peer & Associates

Daniel Micmacher · danielm@garypeer.com.au · 03 9066 4688

Critical Flags

🔴 No Finance Condition

GC14 marked Not Applicable. The contract is unconditional as to finance from the day of signing. If funding falls through, purchaser is in default and risks losing the 10% deposit (~$475k on a $4.75M price).

p.3 · GC14

🔴 GC7 Deleted — PPSR Waiver

Special Condition 2.3.2 deletes General Condition 7 entirely. The vendor is not required to provide PPSR releases, statements or corrections for any personal property. Purchaser should conduct independent PPSR searches before signing.

p.18 · SC 2.3.2

🟡 Settlement 30/60 Days — Ambiguous

Settlement is stated as "30/60 days" after the day of sale. This needs to be confirmed to a single period before execution. If 60 days, there is more time to arrange finance; if 30 days, the timeline is tight for a deal of this size.

p.2 · GC10

🟡 Subject to Lease — Part Only

The property is sold "Subject to Lease as to part". Purchaser inherits existing residential rental agreements (Schedule 3). The balance of the property passes with vacant possession. Review Schedule 3 tenancies carefully — lease terms, bond amounts, expiry dates.

p.2 · GC1.1

🟡 Trust Structure — Vendor

Vendor is a corporate trustee (Marriott 20 Pty Ltd as trustee for the Marriott 20 Trust). Confirm trustee has power to sell under the trust deed, and that the trust is not subject to any encumbrances or obligations that would affect the sale. Standard due diligence for trustee vendors.

p.3 · Particulars

🟡 Cooling-Off May Not Apply

The standard 3-day cooling-off period (s.31 Sale of Land Act 1962) does not apply if the purchaser is a corporate body. Given the partnership is likely purchasing via a company or trust, cooling-off rights are likely absent. Confirm purchaser entity structure before signing.

p.2 · s.31

🔵 GST Position — Needs Clarification

The "Plus GST", "Going Concern" and "Margin Scheme" boxes are all blank. Price currently stated as GST-inclusive. If the property qualifies as a going concern (ongoing tenancies transferring), the sale may be GST-free — confirm with vendor's lawyers. Could affect final price calculation.

p.2 · GC13

🔵 Director Personal Liability

GC19 states any signatory for a proprietary limited company purchaser is personally liable for the purchaser's obligations as if they were the purchaser themselves. GC20 further allows the vendor to require director guarantees. Structure the purchasing entity and sign-off carefully.

p.11 · GC19–20

Contract Terms at a Glance

Purchase Price	TBD — blank in draft	p.2
Deposit	10% of purchase price, on signing	p.2
Settlement	30/60 days from day of sale	p.2
Finance Clause	Not applicable	p.3
Terms Contract	Not applicable	p.3
GST	Included — Going Concern TBC	p.2
Possession	Subject to Lease (part) + vacant balance	p.2
Special Conditions	Yes — attached (pp. 14–18+)	p.3
Encumbrances	Easements + existing leases (Sched 3)	p.3
Default Interest	2% p.a. above Penalty Interest Rate	p.12
Cooling-Off	3 days (may not apply to corp body)	p.2
Pre-settlement Inspection	7 days preceding settlement	p.11

Cost Implications from Contract

Deposit (10% of PP)	~$475,000 on $4.75M	p.2
Stamp Duty (VIC)	~$261,070 est. on $4.75M	p.5 · GC6
Land Tax (adjustment)	Adjusted at settlement	p.10 · GC15
Council Rates	Adjusted at settlement	p.10 · GC15
Water Rates	Adjusted at settlement	p.10 · GC15
Legal Costs (purchaser)	Budget ~$15–25k	p.5 · GC6
Rent at Settlement	Credited to purchaser (prorated)	p.10 · GC15

Key Contacts

Vendor's Lawyer	Clare Batrouney, Maddocks
Vendor's Email	clare.batrouney@maddocks.com.au
Vendor's Phone	03 9258 3555
Agent	Daniel Micmacher, Gary Peer
Agent Phone	03 9066 4688
Planning Authority	Port Phillip City Council

⚠ Ask Olivia to review this contract before execution. Purchaser details and legal practitioner fields are still blank in this draft.

Special Conditions Summary

SC 1 · Definitions pp.14–17

Extensive glossary covering all contract defined terms. Relevant Authority includes Port Phillip Council, Heritage Victoria and EPA — relevant if any planning approvals or heritage overlays exist.

SC 2 · GC Amendments pp.18+

4 amendments to General Conditions. Most significant: GC7 deleted (PPSR waiver). Also GC5 amended to require vendor approvals before settlement, GC10 title obligations strengthened.

Schedule 3 · Tenancies Not in draft

Schedule 3 (tenancy schedule) is referenced but not included in this draft. Must obtain and review before signing. Contains all existing lease details the purchaser inherits.

Outstanding Items Before Execution

☐ Purchase price — confirm and insert before execution

☐ Settlement period — confirm 30 or 60 days with vendor

☐ Purchaser details — name, address, entity structure

☐ Purchaser's lawyer — appoint and insert conveyancer details

☐ Schedule 3 — obtain and review all tenancy agreements

☐ Section 32 statement — obtain and review Vendor's Statement

☐ GST position — confirm going concern classification with Maddocks

☐ PPSR search — conduct independently (GC7 deleted by vendor)

☐ FIRB clearance — confirm if any foreign purchaser involved

☐ Finance arranged — no finance clause; must be unconditional before signing

This analysis is for informational purposes only and is not legal advice. Engage a qualified property solicitor (e.g., Olivia) to review the contract before execution.

✅ Confirmed Figures from Section 32 Documents 3 documents reviewed

📄 Land Information Certificate

Issued by Port Phillip City Council. Confirmed 12 assessments at $1,114.45/qtr each. Annual total: $13,373/yr. Site value: $2,300,000. Capital improved value: $4,560,000.

💧 South East Water Statement

12 unit accounts confirmed. Annual service charges: $2,354/yr (base fixed charges only). Usage billed separately per reading — estimated ~$95/yr additional. Total confirmed: ~$2,450/yr.

🏛 SRO Land Tax Clearance Certificate

Taxable value: $2,400,000 (site value). Standard land tax: $21,750/yr ($11,850 + $600k × 1.65%). Also shows vacant residential rate: $45,600/yr if property left vacant.

✅ No OC — Single Title: This property is held as a single title, meaning there is no Owners Corporation and therefore no OC levy. The model previously assumed $8,000/yr for body corporate; this has been updated to a nominal $2,000/yr admin allowance to cover routine building management tasks (insurance admin, council liaison, etc.). This is a $6,000/yr saving vs the prior assumption.

🚨 Vacant Residential Land Tax Risk — $45,600/yr

The SRO clearance certificate discloses a Vacant Residential Land Tax applicable if the property is left without a residential occupant. Rate: 1.0% of CIV ($4,560,000) = $45,600/yr — more than double the standard land tax of $21,750.

This is a critical acquisition risk: any period of vacancy between tenancies — or delays in re-leasing during a renovation — could trigger the vacant land tax. The model does not include this exposure. Ensure tenancy continuity is maintained or seek legal advice on any applicable exemptions.

Source: SRO Land Tax Clearance Certificate — back page schedule. CIV: $4,560,000. Taxable value: $4,560,000 × 1.000% = $45,600.