A workspace with a bed in it, for the all nighters. 2 builders in residence to a room.
The arrangement
6 points, in order
01
What you buy
1 room at a research institute, yours outright
A room at 51-57 Cubitt Street, Cremorne, 1 of 200 in the building, with 2 builders in residence. The room is a chattel, a module you own outright, and you hold a registered 25 year lease of the space, on the title, with the mortgagee’s consent. Think student accommodation, except they’re not students. They’re builders in residence.
A room at 51-57 Cubitt Street, Cremorne, 1 of 200 in the building, with 2 builders in residence. The room is a chattel, a module you own outright, and you hold a registered 25 year lease of the space, on the title, with the mortgagee’s consent. Think student accommodation, except they’re not students. They’re builders in residence.
02
What it costs
$1,500,000 a room
Bought through a company, a trust or a self managed fund. Ad Astra leases it from you the day you settle, for 25 years.
Bought through a company, a trust or a self managed fund. Ad Astra leases it from you the day you settle, for 25 years.
03
What you are paid
12 per cent of the price a year, $180,000
Ad Astra pays you $180,000 a year on a $1,500,000 room, paid annually. A 12 per cent return, hedged against inflation: the price tracks the Consumer Price Index, so the rent holds its value for 25 years. It does not move with occupancy or the market. $4,500,000 of rent over the term, in today’s money.
Ad Astra pays you $180,000 a year on a $1,500,000 room, paid annually. A 12 per cent return, hedged against inflation: the price tracks the Consumer Price Index, so the rent holds its value for 25 years. It does not move with occupancy or the market. $4,500,000 of rent over the term, in today’s money.
04
Where it comes from
Ad Astra, your tenant
Ad Astra runs the building and charges the research companies for the labs. Each company claims the research and development tax incentive on what it spends, and the fee is ruled eligible. $217,500 of every $500,000 fee is paid from the refund, and Accelerate Industries settles the rest for a convertible note. Government research funding, one step removed. Your rent is Ad Astra’s obligation under the lease.
Ad Astra runs the building and charges the research companies for the labs. Each company claims the research and development tax incentive on what it spends, and the fee is ruled eligible. $217,500 of every $500,000 fee is paid from the refund, and Accelerate Industries settles the rest for a convertible note. Government research funding, one step removed. Your rent is Ad Astra’s obligation under the lease.
05
What you have to do
Nothing
Ad Astra occupies it, maintains it and hands it back. You own 1 room with 1 tenant. Nothing to run.
Ad Astra occupies it, maintains it and hands it back. You own 1 room with 1 tenant. Nothing to run.
06
What is left
1 tenant, 25 years
Ad Astra pays you full or empty, so the occupancy risk is Ad Astra’s. What is left is the tenant. The covenant is only as strong as Ad Astra, and there is no way out for 25 years. Read the lease.
Ad Astra pays you full or empty, so the occupancy risk is Ad Astra’s. What is left is the tenant. The covenant is only as strong as Ad Astra, and there is no way out for 25 years. Read the lease.
How it compares
Against what the same $100,000 buys elsewhere
Rough market levels, cash rate about 4.35 per cent. Not advice. It’s the comparison your adviser will run, so we run it first.
| On $100,000 of your own money | Cash a year | Getting out | Who carries the risk |
|---|---|---|---|
| Term deposit | $4,500, 4.5 per cent | Any time | Government guarantee to $250,000 |
| Australian shares, index fund | $4,000 in dividends plus growth, 8 to 10 per cent a year over time | Same day | The market |
| Private credit fund | $9,000 to $11,000 | Quarterly, if the fund allows it | The borrowers and the manager |
| Investment apartment, 80 per cent geared | Usually negative after interest | Months, with selling costs | The market and the tenant |
| Commercial property syndicate | $6,000 to $8,000 | A 5 to 7 year lock | The tenants and the manager |
| Serviced apartment with a rent guarantee | $6,000 to $8,000 gross | A thin secondary market | 1 operator |
| Ad Astra room | $15,850, 15.9 per cent, the rent rising with inflation, plus the module at 2051 | None for 25 years | 1 tenant, an uncapped guarantee |
Term deposit
Cash a year
$4,500, 4.5 per cent
Getting out
Any time
Who carries the risk
Government guarantee to $250,000
Australian shares, index fund
Cash a year
$4,000 in dividends plus growth, 8 to 10 per cent a year over time
Getting out
Same day
Who carries the risk
The market
Private credit fund
Cash a year
$9,000 to $11,000
Getting out
Quarterly, if the fund allows it
Who carries the risk
The borrowers and the manager
Investment apartment, 80 per cent geared
Cash a year
Usually negative after interest
Getting out
Months, with selling costs
Who carries the risk
The market and the tenant
Commercial property syndicate
Cash a year
$6,000 to $8,000
Getting out
A 5 to 7 year lock
Who carries the risk
The tenants and the manager
Serviced apartment with a rent guarantee
Cash a year
$6,000 to $8,000 gross
Getting out
A thin secondary market
Who carries the risk
1 operator
Ad Astra room
Cash a year
$15,850, 15.9 per cent, the rent rising with inflation, plus the module at 2051
Getting out
None for 25 years
Who carries the risk
1 tenant, an uncapped guarantee
Nothing on that list pays $15,850 a year on $100,000 in cash. The extra comes from 93 per cent gearing on 1 tenant’s covenant, and the lease does the work: Ad Astra pays you full or empty, and the research companies pay part of every fee from their government research refunds. Venture style return, wrapped in a lease. Want a term deposit, this is the wrong product. Want 15 per cent cash on cash for 25 years, indexed to inflation, read on.
Rooms are sold to companies, trusts and self managed funds, not to individuals in their own name. It is a sale of a room and a lease to Ad Astra at 12 per cent of the price a year, hedged against inflation, so there is no fund and no unit, your entity owns the thing. Self managed funds have their own borrowing rules, ask your adviser. Every number, every term and every risk is in the contract pack, which goes to you and your adviser before you exchange.
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