Real-estate investment trust McKay Securities (MCKS) shrugged off a dull market environment to post strong numbers for the year to 31 March. The portfolio, which consists mainly of small offices in fringe-central London and the south east, was marked up 1.8 per cent, driving a 3.9 per cent increase to 238p in adjusted book value per share.
Unsurprisingly, the valuation gains were led by London, up 6 per cent, with the provincial portfolio written down once again. Yet there are encouraging signs that the wider office market is picking up, at least for better-quality properties of the kind owned by McKay. The estimated rental level of the company's provincial office portfolio rose 1.1 per cent over the year - the first gain since 2008 and nearly three times the average for south-east offices.
The standout performer last year was a 1980s office on Blackfriars Road that the company refurbished and relet very profitably when the previous occupier, Lloyds Banking, vacated. At Christmas McKay bought a similar building on the northern edge of the City, which it plans to refurbish when the current occupier leaves this summer.
As usual, mark-to-market losses on the £105m portfolio of interest-rate hedges skewed the reported results, reducing profits and statutory book value.
MCKAY SECURITIES (MCKS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 153p | MARKET VALUE: | £70.2m | |
| TOUCH: | 150-155p | 12-MONTH HIGH: | 155p | LOW: 127p |
| DIVIDEND YIELD: | 5.6% | TRADING PROPERTIES: | nil | |
| DISCOUNT TO NAV: | 3% | |||
| INVESTMENT PROPERTIES: | £212m | NET DEBT: | 133% | |
| Year to 31 Mar | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 173 | -100.9 | -220.0 | 14.2 |
| 2010 | 195 | 15.4 | 34.0 | 8.2 |
| 2011 | 197 | 4.5 | 10.0 | 8.3 |
| 2012 | 162 | -11.6 | -25.2 | 8.4 |
| 2013 | 157 | 1.7 | 3.8 | 8.5 |
| % change | -3 | - | - | +1 |
Ex-div: 5 Jun Payment: 1 Aug | ||||
