McKay Securities has exchanged contracts to sell the freehold interest of Great Brighams Mead, a prominent office building in Reading town centre, to residential property developer King’s Oak.
The sale price of £19m reflects a premium of 21% 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 the South East and London investor in 2000 and has been let since then on a 21-year lease which expires on 24 March 2022. The current rent passing is around £2.3m pa. The 84,840 sq ft three-storey building sits on a 2.6-acre site in a prime central location close to Reading railway station.
The site was part of a larger holding acquired by McKay for £910,000 in 1973. 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.
Planning is already in place to transform the office block into 110 flats.
McKay said proceeds from the sale would be used to reduce borrowings and be reinvested in value-add opportunities including acquisitions, development and asset management initiatives.
Chief executive Simon Perkins 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% surplus over book value.”
Savills acted for McKay; BNP Paribas Real Estate acted for the purchaser.
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