Allsop held their inaugural online commercial auction on the 26th April 2018 with an 86% success rate. This was an impressive first step into online commercial auctions.
There were 8 lots in the auction, and 6 sold, 1 withdrawn and 1 unsold. The sale raised a total of £1,057,000 for Allsop’s clients with 210 individual bids placed on the day of the auction, an average of 30 bids per lot.
Here we have summed up the commercial properties from the Allsop Online Auction, which also includes Blue Alpine’s proprietary scoring guide.
At Blue Alpine, we consider many aspects of a property before investing. Therefore, we have created a proprietary scoring system for property investment opportunities. To name a few categories we consider for our proprietary scoring system, but this is not the exhaustive list: planning, property condition, occupier, surrounding properties, location, yield, the lease, rent versus rateable value, etc. The total score possible for any property is 40 points. Please find below the score ranges and their respective buying signal.
Lot #: 1
Town: Glastonbury
Address: 27 High Street, Glastonbury, Somerset, BA6 9DP
Investment Opportunity: Freehold Shop and Ground Rent Investment
Tenant: Part let on a new 15-year lease to an Individual
Blue Alpine’s Pre-Auction Snapshot of Property:
Blue Alpine’s Proprietary Scoring: Post-Auction
Blue Alpine’s After Auction Review (AAR):
Lot withdrawn from auction.
Guide Price: £140,000
Yield: 10.80%
Lot #: 2
Town: Lewes
Address: 195 High Street, Lewes, East Sussex, BN7 2NS
Investment Opportunity: Freehold Betting Office and Residential Ground Rent Investment
Tenant: Done Brothers (Cash Betting) Ltd – Betfred
Blue Alpine’s Pre-Auction Snapshot of Property:
Blue Alpine’s Proprietary Scoring: Post-Auction
Locational Analysis:
Lewes has a population of 101,400 and is a town in the county of East Sussex. The GDHI (gross disposable household income) per head is £20,258 for East Sussex. For Lewes, from January 2017 to January 2018, the total value of property sales was approx. £624 million and the total number of property sales 1,599 transactions.
Blue Alpine’s After Auction Review (AAR):
Sold Price: £277,000
Yield: 7.62%
This Grade II listed property is part let to Done Brothers (Cash Betting) Ltd t/a Betfred, so this is a blue-chip covenant with a further 5 years on the lease. Important to note that there is a break-clause option for 2020. The nearby occupiers include Barclays Bank, White Stuff, Mountain Warehouse and Crew Clothing.
With a pre-auction yield of 9.00%, and when the hammer dropped the yield was 7.62%. The property sold £42,000 or 17.9% higher than the Guide price. Given the pre-auction yield and the strength of the covenant, we are not surprised this property sold for £42,000 more than the Guide price.
This is a desirable market town and has a thriving high street. The break option is not seen as an issue as the property would be easily re-lettable at the current or even higher rate. Therefore the property offers assets management opportunities and a rare opportunity to buy a freehold building in Lewes.
Blue Alpine’s Proprietary scoring for the property dropped by 1 point to 26 out of 40 points compared to the pre-auction score of 27 points. Our proprietary score decreased by 1 point due to the drop in the yield post auction. Therefore, the property remains a neutral buy.
Lot #: 3
Town: Southampton
Address: 10/12 Pound Tree Road, Southampton, Hampshire, SO14 1NA
Investment Opportunity: Freehold Shop and Residential Ground Rent Investment
Tenant: Power Leisure Bookmakers Ltd
Blue Alpine’s Pre-Auction Snapshot of Property:
Blue Alpine’s Proprietary Scoring: Post-Auction
Blue Alpine’s Pre-Auction Commentary (PAC):
Lot unsold during auction.
Guide Price: £460,000
Yield: 10.00%
This property is showing a healthy yield and may offer an opportunity for an investor that is willing to take a bit more risk and willing to work the asset. If you are interested in this property, please contact us to discuss further.
Lot #: 4
Town: Salford
Address: 195 Eccles Old Road, Salford, Lancashire, M6 8HA
Investment Opportunity: Freehold Shop and Residential Investment
Tenant: Part let until 2020. No. 195 let to EMA Abdulwali
Blue Alpine’s Pre-Auction Snapshot of Property:
Blue Alpine’s Proprietary Scoring: Post-Auction
Blue Alpine’s After Auction Review (AAR):
Sold Price: £211,000
Yield: 8.09%
This property is let to an Individual, with 2 years remaining on the lease and a rent review in 2019. The property is arranged on basement, ground and two upper floors to provide a ground floor shop with basement ancillary accommodation and a self-contained 2-bedroom maisonette above (holding over).
With a pre-auction yield of 11.40%, and when the hammer dropped the yield was 8.09%. The property sold £61,000 or 40.7% higher than the Guide price. Given the slightly higher than average pre-auction yield for the Lancashire area, we expected for the property to sell above the guide price. The post auction yield compares to the average yields we see in the area.
This lot proved to be very popular and sold well above guide. It shows investors desire for mixed use assets which offer a stable income and future management opportunities.
This property has a break-up opportunity, in that, the residential could be sold off separately from the commercial unit. In a hypothetical scenario that the residential is sold off for £110,000, that means the investor would have £101,000 investment remaining in the property. The current rent is £12,000 per annum, therefore the new yield on the commercial unit would be 11.88%.
Blue Alpine’s Proprietary scoring for the property dropped by 1 point to 19 out of 40 points compared to the pre-auction score of 20 points. Our proprietary score decreased by 1 point due to the drop in the yield post auction. Therefore, according to Blue Alpine’s propriety scoring system, we consider the post auction score to be a weak signal.
Lot #: 5
Town: Swadlincote
Address: 91 Market Street, Swadlincote, Derbyshire, DE11 9DN
Investment Opportunity: Freehold Shop, Office and Residential Investment
Tenant: No. 87 let to Intrinsic Facilities Services Ltd, No. 89/91 let to an Individual, R/o 89/91 let to an individual and 89a and 91a let to Individuals.
Blue Alpine’s Pre-Auction Snapshot of Property:
Blue Alpine’s Proprietary Scoring: Post-Auction
Blue Alpine’s After Auction Review (AAR):
This property is part let to Intrinsic Facilities Services Ltd and the other two parts let to Individuals. The strength of the covenant is not equivalent to blue-ship, however the remaining lease for the company is 9 years and the Individual 5 years with rent reviews in 2022 and 2021, respectively. The other Individual renting the commercial space is holding over. Nearby occupiers include Coral (adjacent) and Tesco Express amongst other local occupiers.
With a pre-auction yield of 11.30%, and when the hammer dropped the yield was 10.05%. The property sold £30,000 or 12.5% higher than the Guide price.
This property has a break-up opportunity, in that, both of residential could be sold off separately from the commercial units. In a hypothetical scenario that both residential units are sold off for a total of £140,000 (£70,000 per unit), that means the investor would have £130,000 investment remaining in the property. The current rent is £17,694 per annum, therefore the new yield on the commercial unit would be 13.61%.
Blue Alpine’s Proprietary scoring for the property dropped by 1 point to 23 out of 40 points compared to the pre-auction score of 22 points. Our proprietary score decreased by 1 point due to the drop in the yield post auction. Therefore, the property remains a neutral buy.
Lot #: 6
Town: Grays
Address: 7 Crammavill Street, Grays, Essex, RM16 2AP
Investment Opportunity: Leasehold Shop Investment
Tenant: Let to an Individual
Blue Alpine’s Pre-Auction Snapshot of Property:
Blue Alpine’s Proprietary Scoring: Post-Auction
Blue Alpine’s After Auction Review (AAR):
Sold Price: £115,000
Yield: 8.68%
This property is a leasehold (169 years unexpired) and is let to an Individual, although the covenant is not blue-chip, there is still 18 years remaining on the lease with a rent review in 2021. The property is arranged on ground floor only to provide a lock up shop. The property forms part of a larger building, not included in the sale. To the front of the property, the parade benefits from unallocated customer car parking.
With a pre-auction yield of 10.50%, and when the hammer dropped the yield was 8.68%. The property sold £20,000 or 21.1% higher than the Guide price. With a slightly higher than average pre-action yield for the Essex area, we are not surprised this property sold for £20,000 more than the Guide price.
Blue Alpine’s Proprietary scoring for the property stayed the same for pre-auction and post-auction with a score of 26 out of 40 points, therefore the signal remains neutral.
Lot #: 7
Town: Macclesfield
Address: 17, 17A Church Street, Macclesfield, Cheshire, SK11 6LB
Investment Opportunity: Freehold Town Centre Vacant Shop and Flat
Tenant: Vacant
Blue Alpine’s Pre-Auction Snapshot of Property:
Blue Alpine’s Proprietary Scoring: Post-Auction
Blue Alpine’s After Auction Review (AAR):
Property currently vacant.
Sold Price: £130,000
Potential Yield (based on rateable value and compared residential rent): 10.46%
This property is a Grade II listed building and is vacant (both the commercial unit and residential). No. 17 is currently occupied by a charity on a temporary basis at Nil fees, subject to a two-week notice period. The upper floors comprise a self-contained maisonette of four rooms, kitchen and bathroom. Nearby occupiers include Martin & Co Estate Agents, Salt Bar, Max Spielmann and other local occupiers.
With a pre-auction potential yield of 15.11%, and when the hammer dropped the yield was 10.46%. The property sold £40,000 or 44.4% higher than the Guide price.
This property has a break-up opportunity, in that, the residential could be sold off separately from the commercial unit. In a hypothetical scenario that the residential is sold off for £115,000, that means the investor would have £15,000 investment remaining in the property. The potential rent based on the Current Rateable Value is £6,400 per annum, therefore the new yield on the commercial unit would be 42.7%.
Blue Alpine’s Proprietary scoring for the property dropped by 2 points to 21 out of 40 points compared to the pre-auction score of 23 points. Our proprietary score decreased by 2 points due to the drop in the yield post auction. Therefore, the property remains a neutral buy.
Lot #: 8
Town: Eastbourne
Address: 13/14 The Broadway, Eastbourne, East Sussex, BN22 0AS
Investment Opportunity: Freehold Vacant Shop and Residential Ground Rent Investment
Tenant: Vacant
Blue Alpine’s Pre-Auction Snapshot of Property:
Blue Alpine’s Proprietary Scoring: Pre-Auction
Blue Alpine’s After Auction Review (AAR):
Property currently vacant.
Sold Price: £54,000
Potential Yield (based on rateable value and compared residential rent): 11.57%
This commercial property is vacant, and the flat (upper) is sold off on long lease. Nearby occupiers are predominantly local companies/individuals and a newly opened Co-Operative food store.
With a pre-auction potential yield of 24.40%, and when the hammer dropped the yield was 11.57%. The property sold £29,000 more than the Guide price. With a healthy potential yield, we are not surprised this property sold for £29,000 more than the Guide price.
This was again a very popular lot and offered a rare opportunity to buy a freehold building for a relatively small price tag. A good entry level property for the investor who is willing to take more risk and has cash funds to invest.
Blue Alpine’s Proprietary scoring for the property dropped by 1 point to 21 out of 40 points compared to the pre-auction score of 22 points. Our proprietary score decreased by 1 point due to the drop in the yield post auction. Therefore, the property remains a neutral buy.
References:
Disclaimer: All views expressed in this article are Blue Alpine’s and do not represent the opinions of any other agency, organisation, employer or company whatsoever. Assumptions made in the analysis are not reflective of the position of any entity other than Blue Alpine’s – and, since we are critically-thinking human beings, these views are always subject to change, revision, and rethinking at any time. Please do not hold us to them in perpetuity.
The authors and Blue Alpine are not to be held responsible for misuse, reuse, recycled and cited and/or uncited copies of content within this article by others.
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