McKay Securities (MCKS) finished the year on a very strong note, with valuation gains lifting the property portfolio by 10.2 per cent to £255m. Encouraged by surging market confidence, the group doubled the share capital by raising £86.7m though an oversubscribed placing and open offer in February. Together with the revaluation surplus, this reduced the loan-to-value ratio from 44.4 per cent to just 14.7 per cent.
But it won't stay that low. A real-estate investment trust focused on refurbishing and developing offices in London and the South East, McKay bought four properties for £16.5m, and two more after the year-end, taking the total portfolio up to 39 properties. Refurbishment work on offices in east London and Maidenhead - which carry an estimated rental value of £1.51 - is expected to finish this summer.
This will help replace rental income lost in the sale of 100 Bothwell Street, Glasgow. Recent acquisitions are also expected to deliver contracted rents of £2.86m a year. And with rents now rising, the reversionary potential of the portfolio, which should be gradually crystallised as leases expire, has risen from £0.85m to £2.56m.
Analysts at Oriel Securities currently expect adjusted book value of 226p a share next March (from 227p in 2014), but upgrades look likely.
| MCKAY SECURITIES (MCKS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 223p | MARKET VALUE: | £205m | |
| TOUCH: | 218-225p | 12-MONTH HIGH: | 225p | LOW: 138p |
| DIVIDEND YIELD: | 3.9% | TRADING PROPERTIES: | nil | |
| PREMIUM TO NAV: | 8% | |||
| INVESTMENT PROP: | £253m | NET DEBT: | 21% | |
| Year to 31 Mar | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 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 |
| 2014 | 206 | 38.3 | 75.0 | 8.6 |
| % change | +31 | +2153 | +1874 | +1 |
Ex-div: 4 Jun Payment: 31 Jul | ||||
