Hermes and M&G to sell Reading offices
Institutional fund managers Hermes Real Estate and M&G Real Estate are selling two Reading town centre office buildings with a total value of £90m, helping to counter a sluggish start to the year in the South East office investment market.
Hermes has appointed agents at Montagu Evans to sell the Abbey Gardens scheme for a guide price of £50m, which reflects a yield of 7%, while M&G has appointed Savills to market Reading Bridge House for around £40m.
The two offices are the first significant assets to be put up for sale in town centre locations in the South East this year and are expected to test investor appetite for such stock.
Abbey Gardens, which at 150,000 sq ft is the larger of the two buildings, is being quietly marketed to a handful of investors on an off-market basis.
It was bought in 2011 by Hermes, which then carried out a speculative refurbishment programme on the 77,000 sq ft south block. The building is let off average rents of £26/sq ft and is currently 30% vacant, although a couple of letting deals are under offer.
At a capital value of around £350/sq ft, the building offers investors a discount on other Reading town centre assets and the chance to reposition the scheme.
Meanwhile, M&G has put the 113,000 sq ft Reading Bridge House on the market less than two years after buying it for £32.5m from Lumina Real Estate Capital and Wrenbridge.
In that time, the fund manager secured a 27,659 sq ft letting at the 10-storey building to Capita. The London-based professional services company agreed a deal to occupy the second, third and part-fourth floors of the building in March last year at a rent of around £27.50/sq ft.
Other tenants include Royal London Group, accountancy firm Throgmorton and IT services group SCISYS.
The only other significant South East office to hit the market this year is the Reading headquarters of energy giant BG Group. The building, at the out-of-town business park Thames Valley Park, was put up for sale for £90m by its private Middle Eastern investor owner last month.