It is perhaps little surprise that the saga of Brexit continues to rumble on with the latest round of political manoeuvring. One might have thought that the timing of both major auction houses in holding their commercial auctions days after the latest parliamentary vote might have put on hold investors’ appetite to invest but both sales showed the exact opposite.
Both Allsop and Acuitus, collectively raised £105m from the sale of 171 lots out of 233 offered, showing a combined success rate of 74%. This was similar to their combined July sales when they both realised £105.7m from the sale of 134 lots and an 80% success rate, but a fall in comparison to their respective October sales a year ago when they realised £168.2m from 303 lots sold and an 83% success rate.
Slow start
Investors might have been excused for thinking that Brexit worries had started to take effect. Neither auction started particularly well with Allsop having five unsold lots on the first 11 to be offered in the morning with eight unsold in the first 11 offered in the afternoon. And the first lot offered by Acuitus, failed to sell under the hammer but, of their first 11, nine were snapped up.
Allsop sold 100 lots under the hammer with 16 having sold prior, which gave it a 65% success rate but it sold a further 10 lots immediately after, which brought its total sales to 126 and a 71% success rate and total receipts of £70.6m.
One might have thought that the timing of both major auction houses in holding their commercial auctions days after the latest parliamentary vote might have put on hold investors’ appetite to invest but both sales showed the exact opposite
One lot that I particularly liked was Allsop’s second lot of the afternoon on Godalming High Street, which failed to sell under the hammer but sold immediately afterwards. It was a very attractive looking freehold retail investment let to WH Smith for a term of years expiring in 2024 at a rent of £115,000 pa. WH Smith has been in occupation since 1929. It had been previously offered on the private treaty market at a quoting price of £1.67m. It was offered by Allsop with a quoting price of “£1.4m plus” and was sold after the sale for £1.37m, which will show the purchaser an attractive gross return of 8.36%.
There were 32 properties in the sale offered with a price tag of over £1m and of these, nine sold under the hammer, three were sold prior and three were sold afterwards.
The biggest lot to sell on the day was Lot 43 – a freehold car park investment in Lincoln, let to National Car Parks until 2044 at a total rent of £83,750pa with annual rental increases. It was guided at £1.55m and sold for £1.73m, a gross return of 4.84%.
Back on the market
Two old friends appeared from my days at Cushman & Wakefield. Lot 149 was a freehold former bank in Bank Street, Newquay, Cornwall. We offered it in July 2007 in the HSBC round of sale and leasebacks. It was offered then on a new 15-year lease at a rent of £42,500pa and sold for £810,000, a net yield of 4.96%. This time round, at Allsop’s sale, it was offered with full vacant possession at an asking price of just £250,000-£300,000 and, sadly, failed to sell.
We also offered Lot 141, also in Newquay, back in May 2009. Then it was let to First Quench Retailing and sold for £960,000. This time it was divided up and part sold for £230,000.
Spirited bidding
Acuitus’s sale followed the next day and a further four properties, located in Kennington Lane, SE11, were offered, which made up the rest of the parade we had offered for the same vendors back in November 2011 when we were at CBRE. All four comprised freehold retail and residential investments and all sold after some spirited bidding.
The first to be offered was let at a total rent of £46,360pa and while it failed to sell under the hammer, it sold immediately afterwards at a price under-stood to be around the guide price of £825,000, which would have shown a gross return of 5.61%. The other three all sold under the hammer for prices around their guides at £800,000 and two at £925,000 at respective gross yields of 5.6%, 6% and 5.5%.
Acuitus offered 12 lots with a price guide in excess of £1m, of which three sold prior and five failed to sell. Lot 7, did not sell under the hammer, but did sell immediately afterwards at a price I understand to be near the top end of the guide of £1.75m. It was a prime freehold restaurant investment on Canterbury High Street, let to Azzurri Restaurants with a guarantee, for a term expiring in 2031 at a rent of £96,750pa and the gross return would have been circa 5.5%.
High demand
But it was the final lot of the day, the smallest, that sparked the most interest. Small freehold plots of land in Matisse Road, Hounslow, which are being used for car parking by local occupiers were offered on behalf of Legal & General. Guided at a very modest £3,000 to £5,000, they sold after intense bidding for £130,000.
The final sales of the year fall in the second week of December, prior to Boris Johnson’s planned general election. Both auction houses now have the unenviable task of persuading their vendor clients to sell this side of Christmas to satisfy the current level of demand, which so far has shown no signs of abating.
John Townsend is head of auction advisory service at Harold Benjamin
