Mount Isa retail complex expected to sell on 10% yield at auction

Beneath the smoke-stacks and giant mining pits, a Mount Isa retail complex in the centre of the mining town featuring a Blockbuster, Subway and Pizza Hut is expected to fetch around $3 million when it goes to auction on December 12.

A sale at this price would represent a yield to investors of around 10%

Mount Isa is a remote north-west investment hotspot with rents having risen 22% over the past two years driven by demand for temporary accommodation from mining employees, according to a recent report by PRDnationwide.

There are five properties up for sale in one line on a site measuring 2,250 square metres at 17-19 Simpson Street in the centre of Mount Isa.

The other two premises are tenanted by lunch and juice bar Something Zesty and four-wheel drive accessory business, TJM.

The retail complex is being marketed by Raoul Holderhead and Pat Kelly of Burgess Rawson alongside Nellie Smithurst from Jays Real Estate and will be auctioned at Crown Casino Melbourne on December 12.

Holderhead tells Property Observer likely buyers include Melbourne investors, local Mount Isa investors and far North Queensland investors.

All five properties are leased for five years with fixed 3% annual rent increases plus renewal options.

Combined the five leases bring in annual net rent of $328,000.

Mount Isa is around 900 kilometres inland from Townsville and 1,800 north west of Brisbane. The main mine operator and the town’s biggest employer is Xstrata which operates an underground copper mine and underground zinc-lead-silver mine – among the biggest underground mines in the world.

The population of Mount Isa is 33,000.