What Does EOI Mean in Commercial Real Estate?
The biggest difference between an EOI and an auction is how buyers compete for the property. At an auction, buyers bid publicly against each other. Prospective purchasers can see the level of competing bids and decide whether they want to continue bidding.
With an EOI, offers remain confidential. Buyers submit what they believe is their strongest offer without necessarily knowing what other interested purchasers are prepared to pay. This can be particularly useful in commercial real estate because transactions can involve considerably more than price.
For example, one buyer might offer a higher price subject to finance and an extended settlement, while another may offer slightly less but provide a larger deposit, shorter settlement and fewer conditions.
An EOI gives the vendor the opportunity to compare both proposals in their entirety.
EOI Versus Auction
The biggest difference between an EOI and an auction is how buyers compete for the property. At an auction, buyers bid publicly against each other. Prospective purchasers can see the level of competing bids and decide whether they want to continue bidding.
With an EOI, offers remain confidential. Buyers submit what they believe is their strongest offer without necessarily knowing what other interested purchasers are prepared to pay. This can be particularly useful in commercial real estate because transactions can involve considerably more than price.
For example, one buyer might offer a higher price subject to finance and an extended settlement, while another may offer slightly less but provide a larger deposit, shorter settlement and fewer conditions.
An EOI gives the vendor the opportunity to compare both proposals in their entirety.
Why Sellers Choose an EOI Campaign
- Creates competition
- Encourages buyers to put forward their strongest offer
- Allows comparison of price and terms
- Maintains confidentiality
- Particularly useful for unique assets
How Does a Buyer Submit an EOI?
A buyer interested in a commercial property being sold by EOI should first obtain the available property information and undertake appropriate due diligence.
Depending on the property, this might include inspecting the premises, reviewing an Information Memorandum, examining lease and tenancy information, arranging finance and seeking appropriate legal, financial or property advice. Our team are experts at commercial property evaluation and can provide professional advice.
The buyer then submits their Expression of Interest before the nominated closing date and time.
Commercial Property EOI Examples
Facey Property has successfully used Expression of Interest campaigns across a range of commercial and industrial properties throughout Melbourne’s South East.
At 453-455 Hammond Road, Dandenong South, Facey sold a major industrial investment for $17.5 million through an EOI campaign. The property was leased to Chobani and attracted interest from buyers ranging from family offices to institutional grade investors.
At 19-21 Nicole Way, Dandenong South, an EOI campaign generated 115 email enquiries before the 937m² industrial property sold for $2,951,550, representing $3,150 per square metre.
Facey Property also sold 113-119 Williams Road, Dandenong South for $3,618,000 through an EOI campaign, achieving a 4% yield. The campaign attracted interest from local, interstate and international purchasers.
More recently, 9 Nissan Drive, Dandenong South attracted six qualified Expressions of Interest, with several prospective buyers progressing to the final stage.
These examples demonstrate how EOI campaigns can be used for different categories and values of commercial and industrial property while creating competition between qualified purchasers.
Is an EOI Legally Binding?
An Expression of Interest is generally not itself a binding contract to purchase the property. Facey Property uses a two round EOI process for many campaigns. In the initial round, buyers submit their offers using a Facey EOI form by the closing date. The strongest offers can then be shortlisted.
In the final round, shortlisted purchasers may be invited to submit their best and final offer on a sales contract together with an initial deposit. The vendor can then accept their preferred offer by counter signing the contract, after which contracts are exchanged and the balance of the deposit is called for.
Buyers should therefore understand which stage of the process they are entering and obtain independent legal advice before signing contractual documents.
A Typical EOI Process and Timeline
Most Facey Property EOI campaigns run for approximately three to five weeks, although the timeframe can vary depending on the property’s complexity, market conditions, buyer interest and the vendor’s objectives.
During the campaign, the property is marketed to potential investors and owner occupiers. Interested buyers can inspect the property, review documentation, undertake due diligence and prepare their offer. Buyers then submit their Expressions of Interest before the nominated closing date.
Facey reviews the offers with the vendor and identifies the strongest proposals. With Facey’s two round approach, shortlisted buyers can then be invited to submit a final offer on a Contract of Sale.
The vendor doesn’t necessarily have to wait until the advertised closing date. Facey’s EOI guidance notes that in some circumstances a vendor may choose to accept a particularly compelling offer early.
Find Commercial Property for Sale by Expression of Interest
Thinking about selling a commercial or industrial property? Our team can help determine whether an Expression of Interest campaign, auction or private sale is likely to achieve the best result based on your property, location and target buyer market.
Contact Facey Property for a confidential discussion.