Commercial property auction update 16th March 2011ARAS –Auction Results Analysis System. Seven...
25
Commercial property auction update 16 th March 2011
Transcript of Commercial property auction update 16th March 2011ARAS –Auction Results Analysis System. Seven...
What did happen in 2010?
What’s selling
Where are we in the auction cycle?
Future issues and predictions
Welcome
The Importance of auction sales as a leading indicator as well as an
extremely effective market place for both buyers and sellers
www.acuitus.co.uk
Who we are
The former Jones Lang LaSalle Auction team for 25
years transferred to Acuitus in 2010
The leading specialist UK commercial property auction
and investment company in 2011 with intimate
knowledge of the private investor and private property
company market
Chairman and auctioneer of Acuitus
Former European Capital Markets Director and
auctioneer of Jones Lang LaSalle
Chairman of the UK RICS Real Estate Auction Group
www.acuitus.co.uk
Richard Auterac [email protected]
So what did happen in the auction market in 2010 (1)
ARAS – Auction Results Analysis System. Seven London-based auctioneers account for circa 80% of commercial property sales
Key results for 2010
Amount sold in the room £533,000,000
Numbers offered 1,638
Numbers sold 1,192
Buyer take-up rate 72.8%
Yields (4-qtr rolling average)
Prime 5.37%
Secondary 7.07%
High Yield 8.71%
www.acuitus.co.uk
So what did happen in 2010 (2)
The 2005-2007 market momentum pushed the market
through the 2008 collapse and into a recovery in 2009/10.
This false dawn evaporated in the second half of 2010 for
secondary assets.
The light seen at the end of the tunnel in 2009 is now the
light of the train receding into the distance for anything
thatisn’t prime or very good secondary!
www.acuitus.co.uk
A feel for what’s selling
Central London – City
Central London – West End
Office - Greater London
Office - outside Greater London
High Street retail (prime)
High Street retail (good secondary)
High Street retail (poor secondary)
Bank (prime)
Bank (secondary)
Supermarket
Licensed premises
Motor trade
Medical
Ground rent
Multi –let (secondary)
www.acuitus.co.uk
December 2010 sale – Central London (City)
37/38 Bow Lane, London, EC4M 9AY
Sale Price - £1.06m
Net Initial Yield – 5.97%
£680/sq ft capital value
Multi-let expiries in 2/3 years
Source: Acuitus
www.acuitus.co.uk
February 2011 sale – Central London (West End)
113 Crawford Street, London W1H 2JG
Sale Price - £940,000
Early expiry of shop lease and AST’s
Net Initial Yield – 4.35%
£735/sq ft capital value
Source: Acuitus
www.acuitus.co.uk
December 2010 – Office investment (Greater London)
Refuge House, 9-10 River Front, Enfield
Sale Price - £3.25m
Net Initial Yield – 9.61%
£135/sq ft capital value
25,132 sq ft
Multi let to 18 tenants on short leases
Source: Acuitus
www.acuitus.co.uk
February 2011 sale – Office investment (outside London)
2 Friars Bridge Road, Ipswich IP1 1AQ
Sale Price - £2.25m
Net Initial Yield – 14.04%
£105/sq ft capital value
22,602 sq ft
Let to L&G until 2015
Source: Acuitus
www.acuitus.co.uk
December 2010 sale – High street retail (prime)
219 High Street, Lewes, East Sussex
Sale Price - £1.7m
Net Initial Yield – 5.64%
W H Smith until 2024
Source: Acuitus
www.acuitus.co.uk
Sale Price - £1.00m
Net Initial Yield – 8.41%
Let to Greggs and Clinton Cards until 2014/2015
February 2011 sale – Retail investment (secondary)
76-78 Lumley Road, Skegness PE25 3NG
Source: Acuitus
www.acuitus.co.uk
Sale Price - £800,000m
Net Initial Yield – 17.22%
Let to Burton and Ethel Austin
Early expiries
Rental value 40% lower
LPA Receiver seller
February 2011 – Retail investment (poor secondary)
Vaughan Street, Llanelli SA15 3TY
Source: Acuitus
www.acuitus.co.uk
Sale Price - £1.1m
Net Initial Yield – 5.72%
Let to HSBC
10 years with 5 year break
LPA Receiver sale
Local Investor purchaser
2010 sale – Bank investment (prime)
18 North Street, Bishop’s Stortford, Hertfordshire, CM23 2LP
Source: Acuitus
www.acuitus.co.uk
Sale Price - £950,000m
Net Initial Yield – 7.38%
Let to HSBC
10 years unexpired with 2016 break
February 2011 sale – Bank investment (secondary)
1 Leeming Street, Market Place, Mansfield Notts. NG18 1LU
Source: Acuitus
www.acuitus.co.uk
Sale Price - £1.625m
Net Initial Yield – 6.10%
Let to JD Wetherspoon Plc
17 years to lease break
February 2011 sale – Public house investment
13 East Barnet Road, New Barnet, London EN4 8RR
Source: Acuitus
www.acuitus.co.uk
February 2011 sale – Tyre depot investment
85 Old Shoreham Road, Hove, East Sussex BN3 5TE
Sale Price - £1.08m
Net Initial Yield – 5.83%
Kwik Fit (GB) Ltd until 2029
Source: Acuitus
www.acuitus.co.uk
February 2011 sale – Medical investment
Devonshire House, 84-88 Pinner Road, Harrow HA1 4HZ
Sale Price - £1.20m
Net Initial Yield – 4.06%
£156/sq ft
Ground let to Harrow Health Care Centre until 2014
First floor vacant
Source: Acuitus
www.acuitus.co.uk
February 2011 sale – Industrial ground rent
Tyne Road, Middlefield Industrial Estate, Sandy, Bedfordshire
Sale Price - £3.06m
Net Initial Yield – 4.82%
Strong demand for Ground Rent Investments
Highly Secure income
Source: Acuitus
www.acuitus.co.uk
Sale Price - £2.810m
Net Initial Yield – 3.22%
Part vacant, residential upper floors and local
traders
Management intensive
LPA Receiver seller (CBRE)
Local entrepreneur buyer
October 2010 sale – retail and residential investment
334-342 Bath Road Hounslow West TW4 7HW
Source: Acuitus
www.acuitus.co.uk
Business Development
15 July 2010
The auction cycle since the 1980’s – where are we now?
1987-2010 2005-2010
0
200
400
600
800
1000
1200
1400
1600
1800
1987 1992 1997 2002 2007
£m
£ sold in room
0
100
200
300
400
500
600
700
2005 Q4 2006 Q4 2007 Q4 2008 Q4 2009 Q4 2010 Q4
£ Sold in room
Rolling Avg
Amount invested
Source: ARAS
www.acuitus.co.uk
The auction cycle since the 1980’s – where are we now?
3
4
5
6
7
8
9
10
11
12
13
14
1987 1990 1993 1996 1999 2002 2005 2008
Perc
ent (%
)
ARAS Average Yield ARAS Lower Average ARAS Upper Average 5 Year Swap
2010
www.acuitus.co.uk
Yields
High Yield 8.71%
Secondary 7.07%
Prime 5.37%
Future issues and predictions
Valuation adjustment for secondary stock
Rising inflation will help and hinder
Sufficient cash for the moment but for how long and at what price?
The widening prime/secondary yield gap will become manifest
Continuing good demand for prime properties
Demand for more secondary stock but only if all potential downsides are factored
into price
Good buying opportunities for those with the knowledge and skill
Owners without knowledge and skill will struggle and values may fall further
www.acuitus.co.uk
Acuitus – our expertise
Sales by auction and private treaty of primarily the smaller (sub €10m) prime
property and secondary stock and portfolios
Advising on asset management and marketing strategies for our sellers
Advising on acquisitions and identifying the opportunities and risks for our buying
clients
Auction dates for 2011
7th April
26th May
7th July
18th October
8th December
www.acuitus.co.uk
