Mailbox chair sees positive side of BBC move

Mailbox REIT chair Stephen Barter has described the BBC’s decision to leave Birmingham’s Mailbox as a “great opportunity”. BBC Midlands announced yesterday that it is moving its headquarters from the Mailbox to a new purpose-built broadcast centre at the former Typhoo Tea Factory site in Digbeth, to the east of the city centre. The move was seen as a major blow to the Mailbox, where the BBC occupies 23% of the building’s space. But Barter is determined to see the positive side. “We are really excited about the opportunity this presents for the Mailbox,” he said. “It will allow us to reposition the building by refurbishing their space, offering to the market a rare 120,000 sq ft office suite in the heart of the city.” He added: “It will create a great opportunity for Mailbox REIT to drive the rental value and capture the reversionary potential of the space. Barter also insisted there were no hard feelings between the ISPX-listed, single-asset REIT and the broadcaster. “While the building has enjoyed having the BBC as our anchor tenant for the past 20 years, it is extremely helpful to have had such advanced notice of their decision and we wish them well with their new venture in Digbeth,” he said. “We now have until the end of June 2026 to make alternative arrangements and are fully confident that we will be able to relet the space ahead of that time.” He added that the Mailbox’s combination of large and flexible floorplates – which are fairly rare in Birmingham – a prime City centre, waterside location and strong ESG credentials made it a strong proposition. “The current limited supply of grade-A space in the City, and the constrained new development pipeline because of inflation and supply chain challenges, provides a very supportive leasing environment,” he said. The departure of its anchor tenant will also clear the way for the REIT to get on with vital improvements. “With the BBC no longer in occupation, it will make our pathway to net zero more achievable. These factors further underline our confidence.” The REIT added that 30% of the 50,000 sq ft converted to flexible space in May, and operated by IWG’s Spaces brand, had been taken, ahead of expectations. The space was created by converting surplus retail space. Currently 94.1% of the building is occupied, inclusive of the Spaces management agreement. The property’s valuation improved for the fifth consecutive quarter since the IPO, rising to £192.3m, and reflecting a 2% improvement on March. However, the REIT’s net asset value has fallen to £84.24m, equivalent to 99.28p per share. This compares to £84.65m and 99.77p per share in March. Mailbox said the “small decrease reflects the impact of the increased cost of debt” on cash balances. As of the end of June, the senior debt LTV ratio was 56.4%. The REIT said rising rates and inflation had “accelerated the board’s focus” on its existing loan facilities, which run to the end of January 2023 and allow for up to two extensions of 12 months each. Barter said: “We are well aware of the emerging economic headwinds and inflationary environment, which has led to an increase in the cost of debt. The board is currently exploring appropriate avenues to mitigate these challenges.” To send feedback, e-mail piers.wehner@eg.co.uk or tweet @PiersWehner or @EGPropertyNews View recent leasing deals and values in Birmingham >> Image from Mailbox REIT