Eyebrows may be raised at our story this week about a couple of property portfolios which are on the market and maybe a ripe investment for anyone with a few million going spare.

You can’t beat bricks and mortar, so the conventional wisdom goes, and it is hard to argue otherwise.  I still recall one business man telling me that he had bought the building his company operated from and which now paid him rent. “Whatever else may or may not happen in the business, I’ve always got this asset.  The business pays me rent and it’s my pension fund.”  Alas it did him little good as he died young from cancer.

But the figures in the Swanjar operation are indeed eye-catching. Three centres are let to the VW group which then sub-lets them to a trio of Audi retailers which pay passing rents of £305,000, £271,538 and £197,996 respectively. VW pockets a handsome annual profit of £79,500 from the deal. Easier money than selling Golfs I suppose…

This is hardly a one-off situation and is fairly commonplace among many franchised sectors but even so, forking out an average of more than £25,000 to your manufacturer before you even turn on the lights on a Monday morning must be a little galling. Aren’t they all supposed to be in it together? It’s the cost of doing business maybe but if I’m a retailer selling a manufacturer’s cars and both parties benefit from more volume, the manufacturer taking money from me that I might otherwise spend on say, a sales exec seems a little hard to stomach.

But there is a wider issue of motor retail property and one which has long struck me as odd and a risk. These days a large, modern showroom and service facility are pretty bespoke buildings, certainly with all the vastly expensive CI that goes into them. Look at the `double M’ frontage of a combined JLR retailer. What happens if the car operation fails, how do you find an alternative use for that building? I don’t see them easily lending themselves to another purpose in which case someone has a very expensive property on their hands eating rather than earning money.

Perhaps it’s easier to be a tenant after all.

John Swift