Investors make steady start to year as auction raises £27.57m

15th February 2018

At its first auction of the year, Acuitus raised £27.57m from the sale of 43 properties.

Picking up on last year’s trend, private investors continued to target lots of around £1m and remain keen on prime retail assets on strong High Streets.

A 5,949 sq ft shop at 45 High Street, Broadway in the Cotswolds which produces a current rent of £108,600pa was guided at £1.45m and sold in the room for £1.79m. The sale reflected a yield of 5.71%. It was bought by a high net-worth investor.

In Weybridge High Street, a 1,948 sq ft shop let to Holland & Barrett until 2021 with two flats above sold for £930,000 at a yield of 5.4%.

The highest price achieved in the room was £1.81m for Mintel House at Playhouse Yard in London EC4. The 17,656 sq ft reversionary short leasehold investment is let to Mintel Group at a current rent of £241,900pax until December 2027 with a 2025 rent review.

Acuitus auctioneer, Richard Auterac, commented: “As we transition from one year to the next, our first auction of a new year is always an early indicator of investor sentiment.

“The high quality, investment-grade lots continue to be highly sought after. For high net-worth investors, location is a dominant factor followed by strength of tenant covenant and length of lease. For the private property company the same factors apply but they have the skills to shift up the risk curve and take on change of use, conversions and re-letting opportunities providing there is a demonstrable upside.

“For properties where there is uncertainty, investors are cautious and prices have experienced some minor volatility. Careful pricing will be the pre-requisite for successful sales this year as one size definitely does not fit all, and having completed 43 sales already this year demonstrates our ability in this respect.”

Assets which combine a good present income stream plus scope for active management also remain popular. The 10,763 sq ft 17 Church Street, Sheffield is part-let to Tesco Stores until January 2034 with a tenant break in 2024 at a current rent of £65,000 but also provides 6,700 sq ft of vacant self-contained accommodation. It sold for £1.11m at a yield of 5.5%.

Richard Auterac reports: “This is a striking Grade II-listed property so there is no empty rates liability on the vacant space which could be suitable for restaurant or bar use. It’s an example of an asset with good, secure present income and a possible upside if the owner can make that vacant space work”.

Internet bidding into the room continues to grow in popularity with two £1m+ lots receiving bids online one of which was successful.

Other sales at the auction included:

  • Station Lane, Hornchurch: restaurant investment let to Prezzo. Current rent: £73,500pax sold for £1.052m at a yield of 6.6%
  • Lansdown Drive, Northampton: a freehold housing association care home recently let on a 35-year lease with annual CPI-linked rent reviews and producing current income of £40,560 sq ft sold for £735,000 at a yield of 5.2%

The next Acuitus auction will take place on March 28th at the Radisson Blu Portman Hotel, 22 Portman Square, London W1H 7BG.