Inflation outlook spurs on auction buyers as Acuitus raises £22.8m

18th June 2021

Despite a background of projected higher UK inflation and also the extension of the commercial eviction moratorium, Acuitus raised £22.8m with a success rate of 95% at its June auction.

Acuitus Chairman and Auctioneer, Richard Auterac, commented: “Investors have been increasingly reappraising their investments in anticipation of an inflationary environment and are rightly worried that the 0.1 per cent they receive from their banks will be woefully inadequate.

“By comparison, the returns from strong commercial property investments look increasingly attractive.

“The news of the extension to the eviction moratorium may have been met with dismay by some landlords faced with delinquent tenants, but private investors remain focused on the improving economic outlook and buying assets that offer stable income from robust occupiers who are paying their rent”.

At the live-streamed auction, a freehold retail and residential investment in London’s Whitecross Street EC1 sold for £1.35m at a net initial yield of 5.06%. It comprises a shop let to a tenant trading as Barbican Pizza until October 2033 (no breaks) plus three flats let on a separate lease.  

Investor focus on Greater London investments remains strong: an unbroken retail parade in Wanstead sold for £1.525m at a net initial yield of 5.3%.

Acuitus Investment Director, John Mehtab, commented: “There is an insatiable demand for good retail assets outside central London particularly those that have good transport links and strong residential catchment areas such as Wanstead”.

The largest lot sold under the hammer was £1.69m for a freehold medical centre investment in Uxbridge, London. Let to NHS Foundation Trust on a 25-year lease expiring March 2026 (with no breaks), the asset produces a current annual rent of £110,000, and the sale price reflected a net initial yield of 6.13%.

Acuitus Investment Director, David Margolis, commented: “Medical investments let on long leases to occupiers such as the NHS are in high demand. New types of healthcare and treatment are seeing a proliferation of facilities and these are creating highly investable opportunities”.

Acting on behalf of a major investment fund, Acuitus sold two freehold assisted living investments in Clapham, London for £1.62m and £1.54m at net initial yields of 4.78% and 5.01% respectively. The properties at 6 Lynette Avenue and 16 Cavendish Road are both let to a UK Charity for 16.5 years and produce an annual income of £82,222 with RPI rental uplifts.

A group of 14 properties trading as Sheppards pharmacies across Wales also sold.

After some strong competition, private investors bought the properties for prices ranging from £83,000 to £572,000 and for yields as low as 5.25%. They are all let on new 15-year leases to Avicenna, which in April, acquired the entire Sheppards pharmacy business. The majority of the properties sold for 15-20% ahead of their initial guide prices.

Charlie Powter, Director of Acuitus commented: “Wednesday’s results have reaffirmed that pharmacy freeholds are very much on the radar of private investors who see them as being underpinned by sustainable businesses which – in this instance – are also well-let to a strong covenant in the form of Avicenna. Whilst some of the properties were sold to local buyers these investments attracted much national interest too “.

The ongoing pharmacy businesses at all of the locations are retained by Avicenna and are unaffected by the sale of the underlying property investments.

The next Acuitus auction will take place on Wednesday July 21st and will provide online, telephone and proxy bidding.