Further evidence of the strengthening buying power at commercial property auctions was provided by the latest Acuitus sale which raised £29.45m.
Acuitus auctioneer Richard Auterac commented: “Buyers with private equity were out in force at this auction. They are not constrained by the shortage of debt financing and in several instances drove prices well above their guides. Of the 35 lots sold, more than a third achieved prices over £1m, and the average sale price was above £840,000”.
A prime retail investment with three self-contained flats let on assured shorthold tenancies at 51 Petty France in London’s Victoria was the subject of sustained bidding. Currently producing £93,500pax and guided at £1.4m, the investment eventually sold for £1.92m at a yield of 4.5%.
A drive-thru restaurant in Cardiff let entirely to McDonalds Restaurants until 2031 with no breaks at a current rent of £64,800pax sold for £1.17m at a yield of 5.2%.
Investors once again showed their enthusiasm for substantial, multi-let regional office buildings which have some future potential for redevelopment or residential conversion.
The 11,900-sq ft Meridian House in Slough currently produces short term income of £154,752pax and sold for £1.46m (£122 per sq ft capital value) at a yield of just under 10%. Theale Court in Theale – a 15,400 sq ft modern office building with redevelopment potential and currently producing £278,228pax on short leases – was sold out of receivership for £1.81m (£117 per sq ft capital value).
Richard Auterac commented: “These assets are attracting experienced investors with equity who have asset management expertise and believe in their ability to work with the properties to unlock future value.
“We’re clearly now seeing a more fully functioning market where the expectations of buyers and sellers are being met. An average sale rate in excess of 80% at our auctions this year plus the fact that all the assets offered by receivers today sold, are evidence of this. We have the skills and access to the UK’s private equity to turn non-performing loans into the hard cash.”
For those investors who do require debt finance, there is definitely a more receptive – and responsive – funding environment. Stuart Buchanan of Acuitus Finance reports: “We arranged finance for three successful purchases at today’s auction with one finance offer arranged for an investor just 10 minutes before the sale started which enabled him to bid and buy.
“Whilst lenders are still particular about their criteria, the sentiment towards the sector is more positive than it has been since the financial crash, and loan margins are at their lowest for two years”.
Other sales at the auction included:
Acuitus has sold almost £80m of assets at auction this year – a rise of 20% on the same period last year – and is now taking instructions for its fourth sale of the year which will be on July 11th at the Millennium Hotel, Grosvenor Square, London W1.