A READING town centre office space could become residential accommodation following a real estate deal.
McKay Securities Plc (McKay) has exchanged contracts to sell the freehold interest of Great Brighams Mead, off Vastern Road.
Residential property developer King’s Oak has agreed a sale price of £19 million (£224 psf). Completion of the sale is conditional on delivering vacant possession and is anticipated in April.
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. Tenants include telecommunications firm Hutchison 3G UK, which runs the Three mobile network.
The 84,840 sq ft three-storey building sits on a 2.6 acre site, close to Reading 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 said it 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.
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.
