A case study of the investment yields of high street banks
| Published date | 01 August 2016 |
| DOI | https://doi.org/10.1108/JPIF-03-2016-0019 |
| Date | 01 August 2016 |
| Pages | 521-534 |
| Author | Terence Y.M. Lam,Malvern Tipping |
| Subject Matter | Property management & built environment,Real estate & property,Property valuation & finance |
A case study of the investment
yields of high street banks
Terence Lam
Faculty of Science and Technology,
Technological and Higher Education Institute of Hong Kong, Tsing Yi,
Hong Kong, and
Malvern Tipping
Department of Engineering and the Built Environment,
Anglia Ruskin University, Chelmsford, UK
Abstract
Purpose –Sale-and-leaseback has become an increasingly common approach during the last two
decades in the investment of high street banks (banking-halls) in the UK. One measure commonly used
in making property investment decisions is the all risks yield (ARY) which is associated with the level
of rental income. Investors and their advisors need to know which factors are likely to result in the
highest ARY when assembling investment portfolios of such properties. The purpose of this paper is to
identify those yield influences.
Design/methodology/approach –A qualitative multiple-case study was adopted. A literature review
generated a hypothesis which was tested by a qualitative study, based upon semi-structured interviews
and a questionnaire, to establish the influencing factors. Expert interviews were held with the heads of
those three major auction-houses dealing with auctions of all retail bank premises in the Great Britain
market, whilst the questionnaire survey involved investment professionals from within the auction-houses.
Findings –The study confirmedthat the four factors influencingyields and investors’decision-making
when purchasingretail banking premiseswere tenant banking company (brandnames), regional location
(north and south super-regions), lot size (hammer price), and tenure (freehold or leasehold).
Research limitations/implications –This investigation focuses on Great Britain’s geographical
and political area which includes England, Scotland and Wales, but excludes Northern Ireland. This
research focuses on banking-halls as a sub-class of retail property investment. The findings form a
baseline upon which further research can be conducted on other sub-types of retail property such as
high street shops and retail parks. The results will also underpin the development of a quantitative
yield predictive model based on regression analysis.
Practical implications –To maximize the returns on property investments, investors and their
professional advisors can use those factors having the greatest influence on yields to make informed
investment decisions for the building of property portfolios.
Originality/value –As a sub-sector, bank premises do not necessarily correlate to the generic retail
sector. This research consolidates the broad systematic drivers of retail yields into specific factors
influencing the ARY of banking-halls. The findings provide better understanding of an active but
sparsely analysed sub-market of banking hall investments, and by so-doing help investors to maximize
their investment returns.
Keywords Investment, Great Britain, Influencing factors, Yields, Banking-halls, Portfolio building
Paper type Research paper
1. Introduction
During the past two decades, many of the UK’s leading companies have released value
from their operational property through the process of sale-and-leaseback. Much of the
wealth of these companies has traditionally been held in real estate. Prevailing theory has
been that they should release capital from their real estate holdings. The British retail
banks have been one of the pre-eminent types of company adopting the sale-and-leaseback
Journal of Property Investment &
Finance
Vol. 34 No. 5, 2016
pp. 521-534
©Emerald Group Publis hing Limited
1463-578X
DOI 10.1108/JPIF-03-2016-0019
Received 23 March 2016
Revised 27 May 2016
Accepted 29 May 2016
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/1463-578X.htm
521
Investment
yields of high
street banks
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