McKay Securities (MCKS) raised £87m through a share placing in February and the proceeds have been put to good use during the first-half. Specifically, the funds boosted the pace of refurbishment projects and also financed seven property acquisitions at a cost of £62.5m - two of those deals were completed after the period ended.
The group operates predominantly in the South East office market where demand for space continues to grow. Indeed, and after including the acquisitions, the portfolio's value grew by a hefty 26 per cent to £322m. Net rental income rose 15 per cent to £7.2m, too, while improving rental values and completed refurbishment projects increased the reversion in the portfolio - the potential uplift in rental income if all assets were rented at current market levels - by 73 per cent to £4.4m a year. Moreover, the development programme is expected to increase the portfolio's estimated rental value by a further £4.75m.
An increase in the negative value of interest rate hedging instruments - by £4.2m to nearly £27m - explains the slide in headline profits. Adjusted pre-tax profit actually rose 65 per cent to £2.75m. Some of these positions have since been closed and the initial hedging position of £150m has been reduced to £80m.
Broker Oriel Securities expects full-year adjusted book value of 246p a share (from 227p in 2014).
| MCKAY SECURITIES (MCKS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 225p | MARKET VALUE: | £208m | |
| TOUCH: | 225-229p | 12-MONTH HIGH: | 245p | LOW: 181p |
| DIVIDEND YIELD: | 3.8% | DEVELOPMENT PROPERTIES: | nil | |
| PREMIUM TO NAV: | 5% | |||
| INVESTMENT PROPERTIES: | £319m | NET DEBT: | 43% | |
| Half-year to 30 Sep | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 201 | 22.8 | 49.7 | 2.7 |
| 2014 | 215 | 13.9 | 15.1 | 2.7 |
| % change | +7 | -39 | -70 | - |
Ex-div: 27 Nov Payment: 8 Jan | ||||
