So buying a freehold Pub

[Good Plan Ted]

So approximate cost £650k in a busy city centre location with huge foot fall in tourist area and always rammed with day night trade, been advised by another publican that rent should be £45k PA is this the normal return as sounds like a great investment ?

[nnyfxela]

7% pa return, which is similar, if not lower, to many commercial property REITS that would likely be a lower risk alternative?

Potentially if the site has potential to add value, add in say flats above etc, could well be a good investment.

Are you adding to a large portfolio or is this a starter investment?

[Countdown]

Good Plan Ted said:

So approximate cost £650k in a busy city centre location with huge foot fall in tourist area and always rammed with day night trade, been advised by another publican that rent should be £45k PA is this the normal return as sounds like a great investment ?

I always think "if it's that good an investment I wonder why somebody is selling it"

It's only £45k if it stays tenanted. 7% gross is not great IMO given the risks.

[skyebear]

Countdown said:

I always think "if it's that good an investment I wonder why somebody is selling it"

It's only £45k if it stays tenanted. 7% gross is not great IMO given the risks.

Diversification and balancing of risks possibly. But, yes, if it's such a good investment you'd think it might have been sold off market.

[StevieBee]

Not a certain music pub on Maryland Point, East London, is it?

[Chrisgr31]

Rent of £45k sounds low for a well performing pub in a popular area. However no idea where it is etc.

I’d guess that it will go for more than £650k and it’s priced low to attract interest.

[wattsm666]

StevieBee said:

Not a certain music pub on Maryland Point, East London, is it?

Believe that one is £800k

[Castrol for a knave]

Depends on the tenant, lease and term unexpired.

Typical initial yields on a pub co lease in London, 10 plus years unexpired are around 7%, moving closer to 6% if it is reversionary.

If it is a private covenant, then may be out to 9%.

Depending on location and strength of circuit you could add another 50bps

Alternatives market yields are pretty static at the moment, not much being traded.

[Good Plan Ted]

Thanks for your help, not my first commercial investment bu first PH, I’m going for it as owner is retiring and upsticks overseas, needless to say can’t divulge location until legals finished.