UKCP REIT sells Bristol building, buys one in Reading

UK Commercial Property REIT announced the acquisition of the White Building, a multi-let office asset on King's Road in Reading, from Boultbee Brooks Real Estate in partnership with a client of CBRE Global Investors on Thursday.

The FTSE 250 firm said the purchase was for around £51m, based upon a topped-up net initial yield of 5.75%.

It said the acquisition was being funded through existing cash resources.

The real estate investment trust said the eight-level property, which reached practical completion after a comprehensive refurbishment in 2017, comprised 95,903 square feet with a modern reception area, communal roof terrace and flexible and virtually column-free floors with new floor to ceiling glazing.

The asset, which was 82% let to nine tenants, had a weighted average unexpired lease term of five years to break, and was expected to deliver an annual rental income of around £3m once fully let.

It had reportedly attracted a “strong” occupier mix, including international cybersecurity company Carbon Black, financial management and human capital management software business Workday, international pharma company Pharma Cosmos, and flexible office provider Work.Life.

Located in Reading town centre, the White Building was said to have “excellent” transport connections, being about a six minutes walk from Reading Station where Crossrail’s Elizabeth Line was due to open in 2019, considerably improving journey times into central London.

It was also three minutes' walk to Reading's main retail destination, The Oracle.

The asset, which had a BREEAM 'excellent' rating, included 106 car parking spaces and 39 secure cycle spaces.

UKCP REIT also announced the disposal of 1 Rivergate, an office building on Temple Quay in Bristol city centre, to West Midlands Pension Fund for £27.6m , reduced to £26.6 million net allowing for a rental top-up.

The net price was ahead of the 31 March valuation.

It said 1 Rivergate was entirely let to OVO Energy, the UK's largest independent energy technology company and supplier, on a lease that expired between April 2023 and April 2026.

The asset, which was developed in 2002, comprised 69,754 square feet over five floors.

“The acquisition of the White Building in Reading, which is effectively a new office and has proven enormously popular amongst tenants, is in line with our strategy to acquire prime assets with an earnings focus; we fully expect that the property will continue to benefit from the wider infrastructure investment being undertaken in Reading, most significantly the Elizabeth Line links to central London and improvements to the public realm,” said Will Fulton, the lead manager of UKCP REIT at its investment manager Aberdeen Standard Investments.

“Whilst the Elizabeth Line continues to be an attraction for a diverse range of occupiers, the ongoing evolution of Reading as a technology cluster remains the mainstay of activity and, we believe, positions the town well for the future.

“Rivergate in Bristol is a good location and, for that reason, we have retained our neighbouring property at 2 Rivergate; however, having successfully executed our asset management strategy at 1 Rivergate by securing OVO Energy on a new lease, we took the decision to sell 1 Rivergate to crystallise value for our shareholders and remove the potential for capital expenditure at the end of OVO's lease, whilst further diversifying our portfolio and recycling capital into our strong pipeline of investment opportunities.”