Continuing great auction results - Allsop Report 22.05.2009

Author: David Whittaker Posted on: 22 May 2009

ALLSOP COMMERCIAL AUCTION 18th MAY 2009

We are delighted to report the success of our third commercial auction of 2009 which took place on Monday 18th May at The Park Lane Hotel on Piccadilly. We offered 91 lots and again witnessed a busy room with some very spirited bidding. At the time of writing we have raised £52.6 million, reflecting a success rate of 80%.

Allsop are the only major commercial auction house to have held three commercial auctions this year, the total sale proceeds of which are in excess of £176 million, reflecting an average success rate of 84.3%. These auctions have provided us with an unrivalled knowledge of prices being paid and buyers currently in the market.

Some notable highlights from our May auction include:

* Average Lot size £721,000 (£842,000 in March and £1m in February)
* Lots sold under the hammer achieved an average of 10% above reserve
* 17 Lots sold over £1 million, 4 of which were over £2 million
* 28 lots achieved yields below 6%
* Average Retail Yield Single Lets - 6.78% ( 6.59% March 6.65 % February ) although this masks the difference between long and short income where the spread between the two has widened from 0.93% last year to nearly 2.5% in May 09
* 10 years plus income average retail yield May 09 - 5.75% (March - 5.67% February 6.35%)
* Under 10 years income average retail yield May 09 - 8.22% (March - 7.8% February 6.94%)

It should be noted that other factors such as location and covenant strength will have a bearing on the yields achieved.

* 12 Bank Investments sold reflecting an average lot size and NIY of £836,000 (5.6%). The average guide price was 6.5%.

* Largest lot sold under the hammer Lot 60 Locksbottom £3.93m (8.9%). Guide Price £3.5m plus (10%)

Lot 15
Sawbridgeworth let to Barclays Bank Plc sold £575,000 (4.11%).
Previously sold in March 2007 for £545,000 (4.34%)

Lot 22
Bishops Stortford let to Oxfam sold £362,500 (5%).
Previously sold February 2009 for £330,000 (5.5%).

Lot 52
Shepherds Bush let to Tesco Stores Ltd until 2024.
Guide price £1m to £1.1m (6.35%). Sold £1.17m (5.4%)

Lot 55
A McDonald's in Ruislip let at £105,000 p.a.
Guide price £1.6m plus. (6.21%). Sold £1.8m (5.5%)

Lots 2, 5 and 21
Three petrol stations let to Shell on ground rents. All sold reflecting an average NIY of 4.39%

Lots 8, 29, 64, 68 and 74
Petrol stations with convenience stores, four let to Co-Op and one let to Somerfield. All sold reflecting an average lot size and NIY of £1.6m (6.14%).

With interest rates remaining at historically lows for both borrowers and savers the current market conditions provide an excellent opportunity for anyone thinking of selling good quality income. Competitive bidding between cash rich private investors has, in some cases, led to better prices than those achieved in 2007 (see lot 15 Sawbridgeworth) and with a limited supply there remains a lot of unsatisfied demand. We would however comment that the gap between the average yield for A and B grade income continues to widen and is now approaching 2.5% as mentioned above.

View the results here, or for details of the unsold lots which are still available view here.

We are currently taking instructions for our next auction to be held on 7th July 2009. If you have something to sell and would like us to give you our view as to what can be achieved, please contact Philip Parsons or Gregor Campbell.

Further details about Allsop and the auction are available at www.allsop.co.uk

Author: David Whittaker