A portfolio of Boots stores sold at Allsop’s sale last week stands out as a poster child for private investor demand for well-located high street retail with a twist.
There were plenty of residential angles for the private investor to explore and the allure of a tenant with a pharmaceutical licence and the footfall that creates.
Twelve Boots stores sold separately for more than £16m in the 20 July online sale, at yields ranging from 2.9% to 6.5%.
All sold at or ahead of guide, a stellar 15% overage overall. Just two of the portfolio of 14 went unsold and may well have changed hands by the time of publication. The results vindicate a decision by John Maddison, partner at asset manager Quadrant Estates, not to accept private treaty offers on the properties and to pursue an auction exit instead.
“The private investor market is quite incredible,” Maddison told EG in an interview ahead of the auction. “They don’t have anywhere to put their money and I guess a commodity like this still feels very reliable to those who understand it, and that list of people is growing.”
Speaking afterwards, Allsop head of commercial auctions George Walker said: “The private investor was just on fire.
“Lot 33 in Southgate stands out, the guide of 4.5% was quite aggressive, and the market took it up by over £500,000.
“The reason they were happy to pay such a big price, I’m sure, is that they see the opportunity to turn the ‘uppers’ into four or six flats.”
Quadrant’s auctions journey
The sales were the latest in an auctions journey for Quadrant, which teamed up with CarVal Investors when it bought a highly sought-after £250m portfolio of more than 300 shops from BMO Real Estate in 2017. The bulk of the portfolio was tenanted by Boots, with around a quarter located in London and the South East. The retailer had agreed a 15-year leaseback on the properties in 2006 with Leo Noe’s F&C Asset Management, which merged with BMO in 2008.
Since 2017, Quadrant has overseen a vast programme of lease regears and auto-renewals, with Boots remaining committed to the bulk of the portfolio.
There were some early sales of non-core properties, not occupied by Boots, via auctioneer Acuitus shortly after the acquisition, which Maddison recalls were “received very well by the market”.
Quadrant also began looking at selling some of the Boots-tenanted stores on a selective basis, capitalising on high levels of private investor interest.
However, it was once the Walgreens Boots Alliance-owned chain took a decision to make use of the moratorium on evictions during the pandemic to withhold rents from its larger landlords that the “pendulum swung” in favour of a more concerted programme of sales. Boots’ temporary withholding of rent met with particularly fierce criticism from landlords because it was able to continue trading throughout the pandemic, but the retailer defended the move on the grounds that its footfall was severely impacted.
Having regeared so many leases on its Boots portfolio, Quadrant was not under the same pressure as some landlords to re-do deals. However, Maddison describes the experience as “tough” and “disappointing”. The “whole equation” encouraged Quadrant to go further down the auction sales route.
As a result, Quadrant has now sold a total of 66 stores through Allsop for a combined sum of £50.5m.
Attraction for private investors
Notwithstanding the recent bad press around withholding of rent, a huge part of the attraction for private investors is the pharmaceutical licence attached to the tenant.
“That creates an added dimension to each property,” says Maddison. “A typical fashion or discount retailer could pick their shop up and move it somewhere else but, for Boots, not only does it have, virtually without exception, the best shop in each high street location, but the size and format is not quite as flexible and so the licence can’t really be moved that easily. And if it is, it’s open to challenge.”
Data on monthly prescription rates is publicly available and this is something Maddison has shared with would-be purchasers through Allsop’s marketing material.
Walker says there is much more to these stores than meets the eye – not only are they supplying individual customers who may come in for a prescription and leave with their medication and a basket load of hair and beauty products, they are also packing drugs and carrying out deliveries to nursing homes.
“They may look like just a big shop, but actually they are effectively a warehouse providing last-mile delivery for the nursing homes,” says Walker. “They may have seven people packing drugs for nursing homes in a room at the back and three people plus a pharmacist serving customers at the front. It’s another little twist to the pharmacy story as an alternative asset class.”
Boots stores offered at Allsop’s July sale
| Lot | Address | Guide price | Price achieved | NIY |
| 2 | 11 Maxwell Road, Northwood | £950,000-plus | £1,255,000 | 3.8% |
| 3 | 40-42 The Broadway, Greenford, | £1.2m-plus | £1,390,000 | 4.7% |
| 4 | 221 Banbury Road, Summertown | £950,000-plus | £1,005,000 | 5.0% |
| 5 | 25-27 High Street, Weybridge | £1.9m-£2m | Unsold | – |
| 6 | 18 Sycamore Road, Amersham | £1.45m-plus | £1,835,000 | 4.5% |
| 31 | 788 High Road, North Finchley | £1.3m-£1.4m | £1,625,000 | 4.3% |
| 32 | 69 Packhorse Road, Gerrards Cross | £725,000-plus | £865,000 | 4.7% |
| 33 | 78 Chase Side, Southgate | £1.2m-plus | £1,765,000 | 2.9% |
| 34 | 4-5 High Street, Thame | £1.16m-plus | £1,250,000 | 5.9% |
| 43 | 49-51 South Road, Haywards Heath | £1.45m-plus | £1,550,000 | 5.6% |
| 44 | 203-204 High Street, Northallerton | £1.5m-plus | £1,500,000 | 6.3% |
| 45 | 66 High Street, Stamford | £1.6m-plus | £1,625,000 | 6.4% |
| 83 | 22-24 West Street, Havant | £710,000-plus | £800,000 | 6.5% |
| 84 | 15 Bank Street, Newquay | £685,000-plus | Unsold | – |
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