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May 25, 2010
Commercial Investors Look For Safe Bets At Auction
Recent auctions have shown the high demand for safe investments in the commercial property market. At last week’s Allsop auction, Enterprise Inns’s properties sold quickly and much higher than expected. Of the nine public houses Enterprise sold last week, only two were sold within the guide price. The other seven were sold over what auctioneers were expecting to get from them, some for significant levels. The pubs were sold for an average of around 6.2% yield each, well below the levels that individually owned pubs were sold for.
The results show investors’ desire to trade certainty for profitability in these difficult times. Enterprise is unlikely to default on its commitment to these pubs, giving investors a reliable long term investment. With buyers significantly outnumbering sellers, investors were willing to sacrifice higher yields to acquire reliable investments.