Astute stock selection by private investors was evident at the latest Acuitus sale, which raised £34.9m from the sale of 59 lots.
The sale reflected an 80% success rate and takes the firm’s total for the year to just under £240m.
Investors closed in on the best-quality high street assets amid ongoing concern about the sector.
A 1,227 sq ft shop on Stamford High Street, Lincolnshire, which has recently been let on a new 10-year lease to Hotel Chocolat (pictured) at a current rent of £47,000pa, sold at a 4.2% yield. The price paid was £962,000, against a guide of £900,000-£950,000.
In Northallerton, a Clintons store at 191-192 High Street that was recently subject to a five-year lease renewal at a rent of £100,000pa sold for £1.5m, a yield of 6.2%.
Chairman and auctioneer Richard Auterac said: “There are many examples of investors backing the UK high street – if the location, the retailer and the lease terms are right.
“Yes, high streets are under pressure – as indeed is all retailing – but there are many investments which offer solid fundamentals.”
High street lots without those solid fundamentals proved more difficult.
A Monsoon and Accessorize store in Hereford sold at a 17.89% yield as the market priced in various risks. The chain has been closing stores in a bid to return to profit after three years of losses. Its lease on the Hereford store has only three years left to run and would-be landlords may expect it to try to renegotiate prior to that. It pays £170,000pa but the store is likley to command a rent closer to £100,000 if relet.
“This sort of situation plays out in every town and city outside of the prime locations,” Auterac said. “Buyers are hard to find.”
Strong appetite for alternatives to retail was clearly evident: a McDonald’s drive-thru restaurant in Bradford let until 2047 at a current rent of £64,950pa sold for £1.3m, a yield of 4.71%, while a Travelodge hotel investment in Barnsley sold for £1.5m, a yield of 4.7%. In Pudsey, a 20,979 sq ft Job Centre producing an income of £121,800 sold for £1.7m, a 6.7% yield.
Auterac said: “This is a market which requires us to have a meticulous approach and deep knowledge of the investment requirements of a wide range of national and international investors.
“There may be much that investors cannot influence – particularly in the domain of geo-political turmoil – but they remain confident that astute stock selection and an attention to the inherent security of an asset’s income can generate superior returns.”
A 140,000 sq ft vacant office complex in Aberdeen sold to a regular auction buyer for £1m against a guide of £1.25m. The offices were previously occupied by oil field services company Baker Hughes, which was bought by GE in 2017. The takeover prompted occupational consolidation.
The sale took place on 5 December at the Radisson Blu Portman Hotel, W1.
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