Following a tumultuous few weeks in the press for the UK retail sector, investors at the Acuitus auction on May 24th exercised extreme caution. The auction raised £30.716m from the sale of 46 lots.
Acuitus auctioneer, Richard Auterac, commented: “This week’s Marks & Spencer store closure announcement and the continued debate about CVAs has generated a lot of uncertainty around the retail sector.
“This undoubtedly impacted on investor sentiment at the auction. It feels like we are reaching an inflexion point for the retail sector and the property market that underpins it.
“A great deal has been achieved in terms of re-basing retail rents to sustainable levels but clearly the increased amount of vacant space which will be released onto the market by CVAs and store network restructuring will have an effect.”
Although there was more caution in the room, there was still strong bidding for assets with the right credentials. A 15,220 sq ft Aldi store near Sheffield sold for the highest price of the sale – £3.275m – and at a yield of 5.21%.
Other asset types also performed well in the sale. The Willow Tree public house in Torquay which is let on a lease expiring in 2036 and produces current income of £83,250pax sold for £1.54m at a yield of 5.09%.
A 14,298 sq ft freehold office investment in Coventry let to Coventry University Enterprises and with potential for residential conversion was sold for £1.52m at a yield of 3.72%.
Richard Auterac comments: “This auction produced a great deal of food for thought. Some sellers need to reflect on their pricing expectations whilst investors would do well to remember that when sentiment changes there are inevitably opportunities.
“The equity market tells us that when sentiment shifts – either positively or negatively – it tends to go too far. Not all assets can – or should – be tarred with the same brush.”
The next Acuitus auction will take place on July 11th at the Radisson Blu Portman Hotel, 22 Portman Square, London W1H 7BG.