The rising level of investor of demand for commercial property was once again illustrated by the latest Acuitus auction which raised £22.3m at a success rate of 93% with an average lot size of £900,000.
Acuitus Chairman and Auctioneer, Richard Auterac, commented: “Wednesday’s result and the depth of investor interest clearly demonstrates the continuing strengthening of demand for commercial property assets across the sectors.
“The hotspots were industrials; ‘well-balanced’ shopping centres; and also semi-commercial assets that have asset management opportunities with a residential development kicker.”
The largest lot sold under the hammer was £3.2m for a freehold industrial investment in Bedford. It produces a current annual rent of £184,000 and is let to Terinex on a full repairing and insuring lease expiring in September 2034 (no breaks). The depth of demand generated a net initial yield of 5.4%. Investment Director, David Margolis commented: “The tenant was not in occupation which opens up the potential to take back the unit and refurbish to produce a higher rent”.
There was exceptional demand for a freehold industrial and events venue investment in County Durham sold on behalf of Receivers for £1.725m. It is let to Rainton Arena until 2034 on a full repairing an insuring lease and produces a current annual rent of £150,000. Investment Director, John Mehtab commented: “Following the gradual relaxation of the lockdown rules, the leisure sector is rapidly recovering, and this property has the added attraction of low site coverage and future redevelopment potential”.
Richard Auterac commented: “The pandemic has accentuated the already strong demand for industrial sector but this has not as yet led to an increase in the number assets that are being made available to the open market. Good quality and well-located single units or small industrial estates are always popular”.
Elsewhere in the sale, demonstrating a huge buyer market for Greater London assets, a freehold retail and residential investment in London’s Holloway Road sold for £2.21m at a yield of 5%. It is part let to a tenant trading as Sky Gym & Cafe until 2029 (subject to option) and produces a current annual rent of £117,500. Director, Charlie Powter, commented: “Small semi-commercial assets are in much demand. An asset class currently much favoured by lenders who like the commercial and residential combination, are making available to borrowers some highly competitive loan terms. Often achieving sub-5% yields, an example of this was 495 Seven Sisters Road, London N15, which sold for £480,000 at a net initial yield of 3.6%”.
A number of lots sold prior to auction including a substantial shopping centre investment in Sheffield which sold significantly above its guide price of £2.25m after strong competitive bidding. The Hillsborough Exchange Centre is 98% let to tenants including Boots, Superdrug, Wilko, Home Bargains, Holland & Barrett and Specsavers. It comprises 90,000 sq ft of trading space with current gross rents of £823,379. Peter Mayo, Investment Director commented: “Shopping centres such as this which are orientated to their local catchment are in high demand from experienced entrepreneurial investors – many of whom are new to the sector and see a variety of asset management opportunities”.
The next Acuitus auction will take place at 2pm on Wednesday June 16th and will provide online, telephone and proxy bidding.