South: McKay Securities announces Theale project as it reports strong results

McKay Securities plc the only UK REIT specialising exclusively in the London and South East office and industrial markets, has announced its trading update for the period October 1, 2017 to March 1, 2018.

Simon Perkins, CEO of Reading-based McKay, commented: “Following a positive half-year, letting progress has continued to be strong and released further income, contributing to our strategic objective of delivering earnings and capital growth. Our pure focus on the resilient office and industrial markets of London and the South East continues to underpin this objective.

“All of our lettings highlight the importance of providing high-quality floorspace and at Prospero, Redhill the decision we made to develop this new office building on a speculative basis has paid off.

“Today we are also pleased to announce the commencement of our redevelopment scheme at Brunel Road, Theale for a single 134,430 sq ft high-bay warehouse to be completed in Spring 2019, which we expect to generate strong interest from e-commerce and logistics occupiers.”

At Brunel Road, Theale, planning consent was secured in October 2017 to increase the floor space on site by up to 38.8% through the redevelopment of the existing warehouse building with either a single high-bay warehouse of 134,430 sq ft or four detached buildings totalling 117,700 sq ft.

As anticipated, the existing tenant vacated the property in February 2018, having paid a year’s rent of £0.75 million as a surrender premium. Following an early marketing campaign, McKay has taken the decision to progress with the single warehouse scheme on a speculative basis to maximise the site’s potential, adjacent to Junction 12 of the M4 motorway on the western outskirts of Reading. The demolition contract has been placed, and works will commence this month with scheme completion anticipated in spring 2019.

Among other highlights:

  • Freehold disposal of Pinehurst Park, Farnborough completed at £5.88m following the exchange of contracts in February 2017, crystallising a 71.9% return on cost since acquisition in May 2012.
  • Completion of the freehold disposal of Albion House, Newbury for £1.24m following the exchange of contracts in September 2017; 43.0% ahead of book value as at 31st March 2017. Further disposals are under consideration.
  • With the continued lettings progress over the period, at Prospero, Redhill, (50,370 sq ft) the Group’s most recently completed office building is now 64% let.
  • Positive progress made within the selective development programme of prime assets in established locations, set to deliver further income and capital gains.
  • Portfolio occupancy (excluding developments) increased to 94% (March 31, 2017: 93.7%).