With the latest sales held by the two principle commercial auctioneers, Allsop and Acuitus, falling either side of the day the UK officially announced its intention to leave the European Union, one might have expected two very different results.
But that was not the case, and the pair raised a total of £134.4m from the sale of 204 properties.
Both auctioneers continue to offer a greater number of the larger lots, showing that auction is a viable and successful alternative to private treaty.
Investor confidence was as strong as ever, with the firms selling a combined total of 37 lots with a capital value in excess of £1m – 12 of which were in excess of £2m.
While the larger lots have fared marginally less well than this time last year (see table), the rise in the number of £1m-plus lots is significant.
The biggest lot sold by Allsop was a freehold town centre bank investment in Swindon let to Barclays Bank until 2027 at £210,500 pa. It was guided at £2.6m-£2.7m and sold after strong bidding for £2.96m – a gross return of 7.11%.
The lease had a break in 2022, but the break was removed in exchange for a half-rent period from September 2016 to May 2018. The vendor agreed to “top up” the rent from completion to the end of the half-rent period in about 12 months’ time.
Auction results: March 2017 v March 2016
| Allsop (2017) | Allsop (2016) | Acuitus (2017) | Acuitus (2016) | |
|---|---|---|---|---|
| Total raised on the day | £87m | £97.6m | £43.7m | £53.3m |
| Success rate | 84% | 87% | 86% | 85% |
| Lots sold | 131 | 128 | 74 | 67 |
| Average lot size | £670,000 | £763,000 | £640,000 | £795,000 |
The second largest lot sold in Norwich for £2.9m from a guide of £2.4m-£2.6m. The freehold health centre and pharmacy investment – let to various doctors, the NHS Trust and Boots UK for a total of £159,896 pa – generated a gross return of 5.51%.
Among the other five £2m-plus lots that sold under the hammer, was The George Shopping Centre in Grantham, Lincolnshire.
Sold in October 2015 by Acuitus for £1.9m with an income of £353,927 pa, fast-forward 17 months and Allsop offered it again, this time with an income of £367,000 pa. It sold for £2.7m, not a bad profit off the back of some active estate management, which shows how worthwhile it can be investing in large multi-let investments.
Allsop’s largest lot to sell prior was a virtual freehold industrial investment in Holmfield, near Halifax. Let to Gower Furniture until 2031 and producing £485,000 pa, it was offered on behalf of receivers and was guided pre-auction at £3.7m-£3.9m, which at the top end of the guide would have shown a gross return of 12.4%.
The property which would have been the largest lot failed to sell – a freehold leisure investment in Greek Street, W1. Let on the ground floor and basement to Pizza Express at £175,000 pa until 2020, it is still available at £4.7m – a gross return of 3.7%.
At the Acuitus sale, the largest lot to be sold under the hammer was a freehold restaurant investment in High Street, Guildford, Surrey, let to Jackson & Rye Restaurants with a guarantee from Cote Restaurants until 2036 without break, at a rent of £130,000 pa. It was guided at £2.3m and sold for £2.5m – a gross return of 5.3%.
The firms also failed to sell what would have been its largest lot, but did find a buyer immediately after. The freehold retail investment in Duke Street, Barrow-in-Furness (pictured above), offered on behalf of receivers and let to Wilko Retail until 2030 at a rent of £242,256 pa with fixed rental increases in 2020 and 2025, was guided at £2.7m.
However, as always, it was the bank investments that were most keenly contested.
A freehold investment in Market Place, Retford, let to Bank of Scotland and trading as Halifax for £36,400 pa until 2026 on a new 15-year lease without break, was guided at £625,000 and sold for £776,000 – a gross return of 4.69%.
These recent sales have clearly demonstrated the absence of any jitters in confidence around Brexit. There seems to be no let up in enthusiasm for UK commercial investments and, providing auctioneers continue to attract vendors to the room, the market will continue to prosper.
John Townsend is a consultant at Harold Benjamin Solicitors
