Cash-rich investors showed their confidence in the market by snapping up almost £85m of commercial property in sales held last week by the two major commercial auction houses.
Despite the announcement of the lockdown extension at the start of the week, Allsop raised its second-highest total since the pandemic began at £61.5m. Some 86 lots in the 15 June sale found buyers, a 78% success rate, while 15 assets sold at £1m-plus.
Allsop’s half-year total now stands at £228m from 337 assets, an overall success rate of 88%.
George Walker, partner and auctioneer at Allsop, said: “On the day, there was plenty of competitive bidding, with mixed-use and industrial properties keenly competed for, as were value-add opportunities and assets offering long income. Investors demonstrated that confidence and liquidity in the retail sector remains, with retail investments making up a total of £47.4m of all assets sold.”
The largest investment sold on the day was a parade of four shops and 10 flats with development potential in Haywards Heath, West Sussex (lot 23, pictured). It sold at £3.3m (5.3% NIY). Also sought-after, was a multi-let industrial estate in Knaresborough, Yorkshire, part-let to Myers Building Supplies (lot 46). It sold for £2.86m (7.2% NIY).
A portfolio of six regional banks located across the country and all let to Santander, sold for a total of £4.32m.
The Acuitus sale the following day coincided with the government’s extension to the eviction moratorium, but nevertheless saw £22.8m raised with a success rate of 95%.
Acuitus chairman and auctioneer Richard Auterac said the returns offered by strong commercial property investments looked increasingly attractive as investors anticipate an inflationary environment.
He added: “The news of the extension to the eviction moratorium may have been met with dismay by some landlords faced with delinquent tenants but private investors remain focused on the improving economic outlook and buying assets that offer stable income from robust occupiers who are paying their rent”.
A pizza shop with three flats above in Whitecross Street, EC1 (lot 8), sold for £1.35m (NIY 5%), while a retail parade in Wanstead, east London (lot 11), sold for £1.5m (NIY 5.3%).
A freehold medical centre in Uxbridge (lot 9) was the largest lot sold under the hammer, raising £1.69m – a 6.13% NIY. It is let to an NHS Foundation Trust on a 25-year lease expiring March 2026 (with no breaks).
Investment director David Margolis said: “Medical investments let on long leases to occupiers such as the NHS are in high demand. New types of healthcare and treatment are seeing a proliferation of facilities and these are creating highly investable opportunities”.
Two freehold assisted living investments in Clapham, SW12 and SW4 (lots 10 and 13), were offered on behalf of an investment fund and sold for £1.62m and £1.54m – net initial yields of 4.78% and 5.01% respectively. Let to a UK charity for 16.5 years, they produce annual income of £82,222 with RPI rental uplifts.
Pharmacy portfolios garner strong interest
Pharmacy freeholds remain high up the wish list for private investors.
Quadrant Estates continued the disposal strategy for the Boots sale-and-leaseback portfolio it manages, with 13 of 16 properties offered through Allsop selling for a total of £6.32m, an average of 6.1% NIY. Yields ranged from 4.6% in Market Drayton to 7.5% in Penzance.
The bulk of the properties are offered with new five-year leases to Boots, owned by US holding company Walgreens Boots Alliance.
Fourteen properties trading as Sheppards pharmacies across Wales sold through Acuitus. After strong competition, private investors bought the properties for prices ranging from £83,000 to £572,000 and for yields as low as 5.25%.
They are all let on new 15-year leases to Avicenna, which bought the Sheppards pharmacy business in April. The majority of the properties sold for 15-20% ahead of their initial guide prices.
Charlie Powter, director of Acuitus, said the Sheppards pharmacies attracted a mixture of local and national interest.
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