McKay Securities Plc has agreed to sell the freehold interest of Great Brighams Mead, a prominent office building located in Reading’s town centre, to residential property developer King’s Oak.
McKay said the sale price of £19 million (£224 psf) reflects a premium of 21.0% to the 30 September 2021 book value. Completion of the sale is conditional on delivering vacant possession and is anticipated in April 2022.
Great Brighams Mead was developed by McKay in 2000 and has been let since then on a 21 year lease which expires on 24 March 2022. The current rent passing is £2.28 million pa. The 84,840 sq ft three-storey building sits on a 2.6 acre site in a prime central location within Reading’s town centre, and benefits from its close proximity to Reading Railway Station and the River Thames.
The site was part of a larger holding acquired by McKay in 1973 for £0.91 million. Since then a range of disposals and asset management initiatives have enhanced the value of the site, culminating in the development of Great Brighams Mead.
McKay reviewed a range of options to maximise the asset’s value ahead of lease expiry and was subsequently successful in obtaining planning approval for the conversion of the building to 110 residential apartments, enabling the freehold to be marketed for a range of commercial and residential uses.
Proceeds from the sale will initially be used to reduce borrowings, prior to reinvestment in value add opportunities including acquisitions, development and asset management initiatives, added McKay.
Commenting on the disposal, Simon Perkins, Chief Executive of McKay, said: “This sale is a positive conclusion to the Company’s ownership of this site and Great Brighams Mead’s lifecycle as an office. It is a good illustration of our active asset management and our ability to maximise the value of our portfolio for the benefit of shareholders. In this instance, our analysis of a full range of potential uses for the building concluded that a residential sale would optimise value. We have been able to achieve this, having obtained planning consent for residential conversion prior to disposal, delivering a 21.0% surplus over book value.”
Savills acted for McKay and BNP Paribas acted for the purchaser.
