There has been a good deal of stagnation in the private treaty market post-Brexit, but confidence was strong at this month’s major commercial auctions, writes John Townsend, head of the auction advisory service at Harold Benjamin.
A recent report by my old firm, Cushman & Wakefield, entitled The Brexit Tracker, indicated that there has been a good deal of stagnation in the private treaty market post-Brexit, with sales taking five to six months just to go under offer, compared with around three months before the referendum. This is the very area where auction wins over private treaty as the time it takes from initial instruction to completion can be as little as six to 10 weeks.
The two main commercial auction houses, Allsop and Acuitus, were both back in action this month and raised a total of £135m between them from the sale of 208 properties. Their average success rate was 83%, a marked increase from their sales in May.
What is encouraging is that they collectively sold under the hammer a total of 30 lots with a price tag in excess of £1m, with a further eight selling prior with guide prices exceeding that level and with some notable sales above £4m.
Allsop
Date of sale: 10 July 2017
Total raised: £82.5m
Largest lot: £7.1m
Allsop realised £82.5m from the sale of 141 properties. The largest lot was St Peter’s House in Victoria Street, St Albans, which it offered jointly with Ratcliffes on behalf of trustees and sold under the hammer for £7.1m off a guide of £5.75m-plus.
Let to care home charity the Abbeyfield Society until 2028, with a break in 2018, and the government, whose lease expires in December 2018, the investment produces £388,844 pa. With a total floor area of 22,089 sq ft and 52 car parking spaces, there is obvious potential to convert to residential, subject to planning. As it stands, the gross return achieved was 5.47%.
Also of note was a bank and residential investment on Wealdstone High Street, north-west London. This freehold property has Lloyds Bank on the ground, basement and rear first floors and a vacant three-room flat and a vacant five-room maisonette above. It is let until 2014 with a break in 2019 at a rent of £21,500 pa. After intense bidding, it sold for £1.11m from a guide price of £950,000 to £975,000.
Another London lot in St Ann’s Road, Harrow, also sold well. A modern freehold retail investment let to Vodafone and Hutchison 3G at a total income of £150,000 pa, it sold for £2.6m, a gross yield of 5.76%. The guide was £2.2m-£2.4m.
Acuitus
Date of sale: 13 July 2017
Total raised: £52.4m
Largest lot: £4.675m
At Acuitus, a total of £52.4m was raised. The largest lot was the Engineering Faculty in Gower Street, WC1. Let to University College London until 2028 at £513,000 pa, it was held leasehold from the University of London for a term expiring in 2018 at a fixed rent of £325 pa. There is a major rent review on the occupational lease in 2022 and the current rent equates to £25.79 per sq ft from a total floor area of 19,887 sq ft. The investment sold for £4.675m, a gross yield of 10.96%.
Another large lot to sell was Hunts Cross Retail Park in Speke Hall Road, Liverpool. Let to tenants including Poundstretcher, Next and Matalan, there was also a vacant unit comprising 2,300 sq ft. Producing a total income of £701,144, the virtual freehold investment sold for £3.7m from a revised guide of £4m-£4.25m, showing a very respectable gross return of 18.94%.
Lambert Smith Hampton
Date of sale: 17 July 2017
Total raised: £17.3m
Largest lot: £2.135m
At the other end of the scale, Lambert Smith Hampton also fared well on 17 July with one of its largest auctions by value, realising £17.3m under the hammer.
A nice freehold retail and residential investment on the High Street in Sunninghill, Berkshire, was let to two local traders on the ground floor, with five one-bedroom flats above, two of which were let on assured shorthold tenancies, two sold off and one vacant. Producing a total rent of £50,200 pa, it sold for £972,000, reflecting a gross return on the passing income of 5.16%. The guide was £925,000-£950,000.
A freehold retail parade comprising eight shops and nine flats with a total income of £108,500 pa sold for £2.14m, a gross yield of 5.08%, from a guide of £1.5m.
The real litmus test of market confidence will be the October sales following the summer break, although I suspect that, providing the auctioneers can continue to attract more attractively priced investments, there will be little change to investors’ appetites.
