Can single-vendor auctions work?

The reason many private investors turn to auctions in search of potential new acquisitions is simple – it’s a well-established way to access a pool of property assets across a range of locations and types.

It is thanks to the diversity and the amount of choice offered by the auction model that many of our buyers have successfully built balanced portfolios over the years.

When our long-standing client William Hill asked us to look into organising a standalone auction in April, we had to pause and think. Would it be as beneficial for them as the last three sales, whereby their assets were marketed and sold among dozens of other investments, ultimately raising £10m at an average yield of 7.5% with all 74 lots sold?

Thanks to the ease of trading offered by the virtual auction model. We can fix a time and date with great ease, and with a willing client, a standard form of lease, excellent records and a professional team in place we knew that the logistics would fall in to place, but will the market?

Looking back through Allsop’s history, our first single-vendor auction was in 1996 with a portfolio of Lloyds banks that our client had recently bought and was trading on. Another example was in December 2007 – in a similar way, our client had bought a portfolio of sale and leasebacks from Speedy Hire Plc and wanted to trade them on to the private investor, as quickly and efficiently as possible.

These auctions worked well – we sold nearly all the lots offered and both our clients made good profits.

Those experiences proved that even prior to virtual auctions becoming the norm, a package of similarly let assets, on new leases to good covenants in sufficient numbers would create its own collective demand and generate competition within the market.

These new William Hill sale and leasebacks tick those boxes, with standard 15-year leases, a strong covenant and a client who has seen the effect that competitive pricing can have on delivering overage on the day.

A difference today is digitisation which works well for the buyers and us as auctioneers. Our buyers can immediately access any necessary asset-related information the moment the auction goes live.

As auctioneers, rather than simply relying on a mailing list as we used to, we can focus our marketing activity on the data trail that the recent 74 sales have created, along with our wider sales which refreshes the buyer base every auction. We know that we had 568 bidders for these 74 lots, leaving several hundred buyers disappointed and on the lookout for future opportunities.

So, with a willing vendor offering compelling pricing, a strong product and a well-functioning website and data room, we believe we are set to deliver the result our client is looking for on 20 April.