The client behind Allsop’s inaugural online commercial property sale is Principal Real Estate Europe, formerly known as Internos Global, EG can reveal, suggesting major sellers are increasingly comfortable with putting stock under the virtual hammer. The eight retail assets are all owned by the Local Shopping REIT, which appointed Internos to liquidate its portfolio in July 2013, in order to repay debt and return remaining capital to shareholders.
Allsop has been closely involved in that process, advising on the sale of a portfolio of 235 properties to Värde Partners in 2014. It was then appointed to advise on the sale of the remaining 387 UK assets. In 2016, the REIT said it would pursue single-asset and small portfolio sales if a single buyer could not be found.
Commenting on the auction, Rupert Wallman, fund manager at Principal Real Estate Europe, said: “Historically, the UK has been behind the curve compared with other major real estate markets like the US, where online commercial real estate auctions are fairly mainstream.
“While this is going to be the first such commercial auction run by Allsop in the UK, we felt that it was an appropriate platform for us to auction some of the Local Shopping REIT portfolio, and that it would help us lower transaction costs, particularly for smaller lots. In time, we believe online auctions will grow into an important market place for UK commercial property.”
Patrick Kerr, head of Allsop’s commercial auction team, said: “There is more interest in online auctions. It is developing. I think as the market leader we need to broaden our offering as much as possible and this is part of that process. We will see what works and what doesn’t.”
Allsop approached the vendor with the idea of an online auction. “They are innovative and were happy to support it,” said Kerr. “We felt it was a good way to extend our offering with a range of properties and they agreed. The marketing is the same – that has always been key.”
The eight lots, all with reserves below £500,000, will be offered on 26 April using Essential Information Group’s online auction platform. They include a shop and residential ground rent investment in Southampton, Hampshire, part let to a Paddy Power bookmakers, listed at £460,000 and producing just under £46,000 per annum, and a Betfred bookmakers and residential ground rent investment in Lewes, East Sussex, listed at £235,000 and producing £21,100 per annum.
Allsop has no current plans to hold multi-vendor online sales, but Kerr said that new and improving technology was clearly changing the market.
“Many more properties are sold in the ballroom currently than online. Online auctions haven’t gained massive traction but maybe their time is starting,” he said. “It is much easier for people to work remotely now.”
The sale will take place on the same date as Irish online auctioneer and former Allsop partner BidX1 hosts its second UK auction. It will offer 40 lots from multiple vendors made up largely of private equity firms and hedge funds, including its first London lots (see panel).
BidX1, which has developed its own online auction platform, bought UK ballroom auctioneer Andrews & Robertson in January to gain a foothold in the UK and is now in talks with other UK firms about joining the group. BidX1 founder and managing director Stephen McCarthy said he welcomed Allsop’s decision to hold its first UK online commercial sale.
“The fact that online auctions have been given the stamp of approval by the biggest player in the market helps my conversations,” he said. “If you asked the major players last year how quickly online auctions would become a relevant part of the market, they might have said it was four or five years away. Now they might think it is closer than that. The big clients are pushing for this. They want the transparency and the data.”
Also on 26 April, online auction pioneer Lambert Smith Hampton will close its online sale of the Angelgate development site in Manchester on behalf of receivers. The site on Dantzic Street has a guide price of £5m.
LSH head of auctions Oliver Childs, who began using regular online auctions with client Severn Trent Water in 2015, said he has noticed a growing acceptance of online auctions over the past six to nine months.
“Companies want to adapt and look at new ways of doing business,” he said. LSH recently won a two-year online auction contract with the Ministry of Defence to dispose of surplus assets.
Buyer confidence in online auctions was also growing, he said, pointing to a recent £2m purchase by a major UK fund.
“Online is now part of our business, just like ballroom auctions, phone bidding and proxy bidding. Ultimately, we are just the agent and we want to give choice and flexibility.”
With this in mind, LSH, which uses the EIG platform, is also developing its online offer further to create a “hybrid” tender approach tailored to vendors who want the final say in selecting the successful bidder.
This has grown out of the online auction of a 6.7-acre former nurseries site in Jesmond Dene, Newcastle, on behalf of Newcastle City Council last year. The process was adapted so the council was able to select the most appropriate buyer from the five bids received, based not only on capital receipt but also key factors including their plans for the site and financial strength.
The hybrid model will add another revenue stream to the LSH auction team, Childs said. “It will come under the auction banner, so people will still see the client as a motivated seller.
“We are looking to grow our market, rather than take business away from the ballroom.”
Housing association jumps on BidX1 sale
BidX1’s second UK auction will offer 40 properties, including its first London lots.
A housing association has instructed the firm to sell a mid-terrace house on Bromar Road, Camberwell, SE5, which is split into a one-bedroom flat and a three-bedroom flat. The vacant property is guided at £825-855,000, making it the largest lot in the catalogue.
The second London property is a vacant two-bedroom flat in New Providence Wharf, E14, guided at £595,000-£635,000.
The rest of the largely residential catalogue is made up of 16 properties in Northern Ireland, 12 in Yorkshire, seven in Scotland, two in the North West and one in the West Midlands.
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