Caution in Spirit auction
Only four of the 10 Spirit freeholds auctioned last week on behalf of British Land were sold, raising just over £6.1m.
Three out of four pubs achieved the guide price or more, but yields varied wildly between 6.1% and 13%.
The firm had hoped to raise between £15m and £16m from the sale, held by Allsop Commercial in London last week, but prior to the sale two lots were withdrawn: the Bay Horse in Bristol, and the Talbot Hotel in Worcester.
A commercial property expert said: "With only four pubs selling, it shows extreme wariness in the market. Also, a yield of 13% is so high that it indicates a degree of wariness about the Punch and Spirit covenant."
Duncan Moir, partner at Allsop Commercial, said: "I think the message from the sale is that the market for investment property is still a healthy one, driven by people who want to improve returns.
"People are looking at fundamentals right now — good location, good product and realistic rent."
At a December auction, British Land sold three out of four pubs — raising £4.65m — while the remaining pub sold afterwards for an undisclosed sum off a guide price of £979,000 to £990,000.
British Land acquired 65 freehold pubs from Spirit on a sale and leaseback when Spirit was under private equity ownership in 2003.
It paid £174m, reflecting an initial yield of about 6.1%. The properties are occupied by Spirit until 2034 without a break, and with annual rental uplifts reverting to open-market rents from year 15.
