Investors target food as October sale raises £29m

18th October 2013

Commercial property investors showed a particular appetite for food outlets at the Acuitus October auction which saw a total of £29.08m of assets being sold.

A drive-through McDonald’s in Romford sold for £1.635m at a yield of 4.77%. The 2,344-sq ft unit is let on a 25-year lease until 2025 at a current rent of £82,500pa. A Starbucks coffee shop at Wisley North service station in Surrey sold for £1.05m at a yield of 6.75% while Burger King-occupied properties in Erdington near Birmingham and Hillington Retail Park near Glasgow sold for sold for £995,000 and £755,000 at respective yields of 6.3% of 8.2%. Also in the West Midlands, the interest in two units let to McDonald’s and Chiquito Mexican restaurant sold for £1.05m.

There was also demand for in-town, food-related investments: a 2,976-sq ft Café Rouge in the centre of Leamington Spa sold for £1.36m at a yield of 6.05% while a 2,359-sq ft unit occupied by Caffé Uno on Brentwood High Street in Essex sold for £850,000.

Acuitus auctioneer Richard Auterac commented: “Whatever question marks there may be against some areas of mainstream retailing, investors can see that restaurant, café and grab-and-go food offers are flourishing across the country. Buyers are trusting the covenant of the operators and queuing up to get a bite of this part of the market. Many of these investments are let on long leases to household names which are so sought by high net-worth investors.”

Elsewhere in the sale there was proof that well-located, well-let high street shops will still attract strong buyer interest. A 1,912-sq ft store at Camden Walk in London’s Islington let to Ben Sherman sold for £1.66m at a yield of 5.1% while a shop in Bournemouth let to Betfred bookmakers sold for £457,000 at a yield of 5.7%.

Regional office buildings also remain popular as investors look for properties with asset management potential. Park Plaza in Cannock, Staffordshire is a 44,398 sq ft multi-let business park investment which is part vacant and part let as serviced offices. It sold for £2.03m.

In London’s Tottenham, a 13,626 sq ft unit on the Fontayne Business Park which could have residential redevelopment potential sold for £1.4m.

Richard Auterac commented: “The range of investments that attracted buyers once again demonstrated the highly selective nature of the current market. From well-let retail investments through to high yielding properties with asset management potential, buyers are being very focused in what they want.

“The market is continuing on its long journey of readjustment. All the lots offered in this sale by receivers and administrators found buyers which is further evidence of the auction room working to realign assets with the right owners at the right price.”

Other sales at the auction included:

  • 6 St Ann’s Square, Manchester: freehold retail and office investment comprising a 1,389 sq ft ground floor shop let to Choxbox at a current rent of £95,000pax with four floors of vacant offices above sold for £1.49m at a yield of 6%
  • Unit 16, Lumina Park, Enfield: a 3,500-sq ft motor trade investment let to Halfords Autocentres and currently producing £47,700pax on a lease expiring in 2028 sold for £835,000 at a yield of 5.4%
  • Queens House, Ramsgate: a part-vacant 32,518-sq ft freehold office investment let to occupiers including Trillium and Inventive Health Clinical at a current rent of £146,250pax and with possible redevelopment/conversion potential sold for £910,000
  • Fiveways Petrol Filling Station, Bury St Edmunds: a freehold petrol station investment let to Rontec Service Station until 2038 at a current rent of £35,000pax sold for £555,000 at  yield of 5.9%

Full results from the auction can be viewed here

Acuitus has sold over £140m of assets at auction this year and is now taking sale instructions for its final sale of the year which will take place on December 5th at the Millennium Hotel, London W1.