Fund manager OLIM Property has made its first sale through an online auction, selling a Prezzo restaurant at a 5% net yield to a private investor.
The property (pictured), in Sudbury, Suffolk, was sold for £1m through investment agent Singer Vielle, using a real-time online auction.
The freehold restaurant, let until 2045 to Prezzo Limited at a rent of £55,000 pa, was owned by ASDA Pension Fund Trustees, a discretionary fund management client of OLIM Property.
Singer Vielle has pioneered online commercial property sales to private investors using the clicktopurchase platform, which allows exchange of contracts (digitally signed) to be conducted electronically. The platform can also be used to invite online binding “best offers” or to conduct a real time auction online – as in this case.
Unlike eBay-style auctions, clicktopurchase uses a live auctioneer who interacts with a bidding audience to emulate an in-room sale.
Jo Seth-Smith, investment manager at OLIM Property, said the company chose to trial the online auction process as a convenient way to reach the private investor audience for the property.
“There’s not an awful lot of long income available at the moment. Retail and leisure is a sector that private investors are very comfortable with, so when you’re looking at a long income property like this, you’re aware that your likely buyer is a private investor – and they are likley to buy at auction,” she said.
“We were happy with the 5% yield. You don’t see an awful lot going for sub-5% outside London.”
Seth-Smith said the the online process lacked the atmosphere of the fast-moving ballroom sales, where investors eagerly read the room to assess the competition. But she said there were advantages too.
“An online auction is extremely convenient for potential buyers,” she said.
For sellers, conducting a bespoke sale at a time they choose – instead of waiting for the next in-room auction – is another attraction. It took around a week to gather the necessary information, followed by around two weeks of marketing before the auction.
The bidder registration process also provides the opportunity to assess the level of interest and adjust pricing accordingly, she said.
Shepherd & Wedderburn acted for the fund on the transaction.
David Callaghan
