Banks in favour as Acuitus auction achieves 96% success rate

12th February 2021

The first Acuitus multi-asset auction of 2021 raised £10.51m with a success rate of 96%.

Acuitus Chairman and auctioneer, Richard Auterac, commented: “The first auction of the year is always an important test of sentiment, and this year it was even more important because of the third lockdown and the exit from the EU, both of which occurred since the last sales in mid-December.

“The market felt more confident in major part to the declining Covid cases, the resilience of the NHS and the rapid roll out of the vaccine. If the February auction is a leading indicator of the market, then we should see greater confidence amongst private investors as the year progresses”.

Among the 21 lots that sold on the day were four High Street bank investments let to Santander which were offered with new five-year leases with no tenant break options. They sold for prices ranging from £379,000 to £485,000 at yields of 4.8%-5.5%.

“This type of asset with a good covenant and a new lease at today’s rents are hugely popular with private investors. They generate initial returns of around 5.5% and demonstrate that there is still appetite for High Street investments, particularly in strong neighbourhood locations. In this instance, the residential alternative use on the upper floors acted as an additional draw to buyers”.

A freehold industrial investment at Wisbech in Cambridgeshire sold for £755,000. It comprises a 21,365 sq ft self-contained unit which is part of a larger parade let to the same tenant. It produces current annual rent of £60,000 and was sold at a yield of 7.5%.

“Private investors are increasingly looking at industrial, not only because it hasn’t suffered the same uncertainty of high street retail, but because the list of tenants diversifies the risk. There’s a scarcity of stock on the market due in part to this”.

Elsewhere in the sale, land at Saltcoats Station in North Ayrshire sold for £642,000 at a net initial yield of 2.7%. The land is part of the Scotrail station at the popular coastal town, and produces a current annual ground rent of £18,475.

Amongst the lots which sold prior to the sale were was a medical centre in Knowsley which sold above the guide price of £950,000, and four High Street retail lots in Farnham Common, Buckinghamshire, which sold significantly above their guide price at yields in the region of 5%. All units comprise mixed-use ground floor retail and split-level maisonettes on floors above. The properties produce annual income of £22,500-£27,000.

Richard Auterac comments: “Retail property still forms the majority of assets flowing through the auction room and – as the Covid vaccination programme gains momentum – investors are beginning to see a return to some semblance of normal trading. Consequently, the demand for retail-based assets is steadily increasing especially where returns which far exceed other investment types can be achieved”.

The next Acuitus livestream auction will take place at 2pm on March 25th and will provide online, telephone and proxy bidding.