Midlands industry solid says Mucklow

Given the economic backdrop, chairman Rupert Mucklow is surprisingly upbeat about the start of the group’s next half-century. He points to a “buzzing” automotive and component sector around Birmingham, which helped drive a flurry of leasing activity at the end of last year, mainly to existing tenants. That pushed the company’s vacancy rate down to 6.5 per cent, the lowest since 2007. Underlying pre-tax profits were up 19 per cent to £6.8m thanks to a number of acquisitions last year. Rents remain flat at roughly £5 per square foot.

Valuations slid by 2.5 per cent, however, led by those properties let on shorter leases. That wiped £6.56m off reported profits. Mr Mucklow explains that banks are refusing to lend money against property with less than five years of guaranteed rental income. Yet that’s an advantage when acquiring property as Mucklow has recently bought an office building in Coventry for £1.5m which has an annual rent of £237,500 payable until the lease expires in 2015.

Brokerage Arden Partners expects full-year adjusted pre-tax profit of £13m, a full-year dividend of 19.1p and a year-end NAV of 311p.