The two largest commercial auctioneers raised more than £85m on consecutive days last week, with strong depth of demand signalling that the bottom of the retail market may now have been reached as investor confidence grows.
Allsop raised £63m from its online sale on 6 May, recording a success rate of 82%. It sold all three shopping centres offered, accounting for £7.4m, or 12%, of the total. This means Allsop has raised £15m from shopping centres across six sales so far this year.
The largest investment sold on the day was in Kidderminster, a 102,000 sq ft shopping centre with a 370-space car park (lot 33, pictured), for which there was strong competition. Guided at £2.75m-£3m, the Swan Centre sold at £3.8m (20.2% NIY).
George Walker, partner and auctioneer, said shopping centres were continuing to attract “interest from non-retail investors, drawn to the diversified yield and the value-add opportunities this asset type is able to offer”.
The latest sale also marked Allsop’s first shopping centre sale to an overseas buyer this year. “This continued depth of demand may herald the bottom of the retail market as businesses and high streets open up and investors regain confidence,” Walker added.
“Overall, this was a strong auction – buyers clearly indicated their intention to put the pandemic behind them and move on.”
The next biggest lot was a trade counter and office investment sold on behalf of a fund. Lot 32 in Salisbury, which generates a total rent of £191,600 pa and includes a vacant unit, achieved in excess of £3m (5.9% NIY).
Acuitus raised £22.3m at its live-streamed sale the previous day, recording a success rate of 93% with an average lot size of £900,000.
Acuitus chairman and auctioneer Richard Auterac said the hot spots were industrial, “well-balanced” shopping centres, semi-commercial assets including asset management opportunities with a residential development kicker.
The largest lot sold under the hammer was a freehold industrial investment in Bedford (lot 8), which went for £3.2m. It produces £184,000 pa and is let to Terinex on a full repairing and insuring lease expiring in September 2034 (no breaks). The depth of demand generated an NIY of 5.4%. The tenant is not in occupation, which opens up the potential to take back the unit and refurbish to produce a higher rent.
A freehold industrial and events venue in County Durham (lot 36) sold on behalf of receivers for £1.7m after competitive bidding. It is let to Rainton Arena until 2034 on a full repairing and insuring lease and produces £150,000 pa. As well as the potential to benefit from the relaxation of lockdown rules, the site offers low site coverage and future redevelopment potential.
A shopping centre in Sheffield (lot 14) sold significantly above its initial guide price of £2.25m after strong competitive bidding prior to auction. The 90,000 sq ft Hillsborough Exchange Centre is 98% let to tenants including Boots, Superdrug, Wilko, Home Bargains, Holland & Barrett and Specsavers. It produces current gross rents of £823,379 pa.
Peter Mayo, investment director at Acuitus, said: “Shopping centres like this that are orientated to their local catchment are in high demand from experienced entrepreneurial investors – many of whom are new to the sector and see a variety of asset management opportunities.”
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