As queues for fuel formed across the UK last week, investors at Acuitus’s latest commercial property auction showed similar persistence for a petrol filling station investment. The freehold asset in Willesden, London NW10, sold for £4.575m at a net initial yield of 3.6%. It was the largest lot sold under the hammer at a sale which raised £23.57m in total.
Let on a new 30-year lease to Euro Garages with no breaks and fixed rental increases throughout the term, the filling station is close to London’s North Circular; produces annual income of £180,000; and includes a Spar convenience store with Starbucks and Subway concessions.
Acuitus Investment Director, David Margolis, commented: “It was perhaps apt that there was concerted bidding for this asset just as so many motorists were heading for a petrol station. However, it illustrates once again the attraction of long-term income underpinned by a strong covenant”.
The auction – which saw 88% of the properties offered find buyers – also showed the appetite for retail properties which offer active asset management opportunities.
The listed 32,000-sq ft Royal Arcade shopping centre in Norwich was guided at £1.25m and eventually sold for £3.375m. Comprising 20 retail units with gross rental income of £267,300, the unique nature of the asset and its strong location prompted bidding from a wide range of investors.
On behalf of a major publicly-quoted Real Estate Investment Trust, the St Elli shopping centre in Llanelli – which is let to occupiers including Sports Direct, Wilkinson’s, Greggs, Card Factory, Poundland and Principality Building Society with gross rental income of £632,677 – sold for £2.25m above its guide price of £2m.
Acuitus Director, Charlie Powter, commented: “Shopping centres and retail arcades with substantial town centre footprints are attractive to private investors and property companies for the potential to increase net income by reletting to new occupiers at rents that are affordable. Asset re-pricing is allowing new owners to re-set rents to sustainable levels. Reducing voids not only increases the rents received but also has an immediate impact on net income by eradicating rates and service charge shortfalls
Other retail lots which sold at the sale included 452 Holloway Road in London N7 – a 2,495 sq ft shop let to Holland & Barrett until 2025 at a current annual rent of £60,000. It sold for £1.38m at a yield of 4.1%, and underlined the fact that London still provides the most investable stock and the largest concentration of investors who will bid for assets let on sustainable rents in strong locations such as this.
A portfolio of dental surgery investments offered across locations including Wareham, New Milton and Bournemouth sold for prices ranging from £204,000 to £614,000 at yields starting below 5%.
They are all let on new 15-year leases (subject to options) at re-based rents and produce annual income ranging from £12,500 to £30,000. Acuitus Investment Director, Peter Mayo commented: “The essential nature of healthcare provision in all its forms – combined with properties let at today’s rents – give investors confidence that these are sustainable sources of income”.
Elsewhere in the sale, a property on London Road in North Cheam, Surrey, with a ground floor shop which is let on a new 15-year lease and has a recently refurbished three-bedroom maisonette above, sold for £465,000 at a yield of 5.57%. In Farnham, a retail asset with potential for residential redevelopment was bought for £645,000 at a yield of 6.63%.
Acuitus Investment director, John Mehtab, commented: “As these sales of retail properties showed, assets with an existing or potential residential element are hugely popular with investors as they offer either stable present income or a longer-term opportunity to enhance value”.
The next Acuitus auction will take place on Thursday, November 4th and will be broadcast via livestream on the Acuitus website with bidding online, by telephone and by proxy. There are further details here
Acuitus Chairman, Richard Auterac, commented: “The easing of the pandemic; a positive recovery in economic activity; and the steady improvement in the understanding of how the High Street is evolving are contributing to an upturn in commercial property activity.
“We expect this to continue for a foreseeable future as investors look for long-term secure income return together with capital growth.”
