A revaluation of A&J Mucklow's (MKLW) property portfolio helped boost the developer's net asset value 9 per cent in the last six months of 2014. Rising prices pushed the equivalent rental yield on the portfolio down from 7.9 per cent at the end of June to 7.5 per cent at the end of December. But with yields having hit 6 per cent at the height of the last cycle, there's still plenty of potential upside from rising commercial-property prices.
Though no new properties were acquired, Mucklow successfully let the recently-bought Redfern Park site in October on a 12 per cent yield on a total acquisition and development cost of £1.74m. Since the year end, the group has acquired a 28,000 sq ft industrial unit in Leicester for £2.1m, now rented out at £150,000, further demonstrating Mucklow's ability to find and market new properties. A pre-let development at Apex Park, Worcester was completed in December and will add £720,000 to annual rental income. Management is confident the prevailing conditions - high demand for Midlands industrial property and a tight supply of available space - will remain.
Broker Oriel Securities forecasts full year NAV of 393p (3013: 358p), which looks like it could easily be exceeded following the strong first half. NAV of 416p and 435p are pencilled in for 2016 and 2017.
| A&J MUCKLOW GROUP (MKLW) | ||||
|---|---|---|---|---|
| ORD PRICE: | 510p | MARKET VALUE: | £323m | |
| TOUCH: | 495-510p | 12-MONTH HIGH: | 542p | LOW: 417p |
| DIVIDEND YIELD: | 4.0% | TRADING PROPERTIES | £0.5m | |
| PREMIUM TO NAV | 32% | NET DEBT: | 27% | |
| PROPERTY PORTFOLIO: | £324m | |||
| Half-year to 31 Dec | Net Asset Value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 315 | 14.2 | 23.5 | 9.0 |
| 2014 | 388 | 27.4 | 43.3 | 9.3 |
| % change | +23 | +93 | +84 | +3 |
Ex-div: 3 Jun Payment: 1 Jul | ||||
