Real estate investment trust McKay Securities (MCKS) continued to reap the rewards of its refurbishment and development projects at a time when both rental and capital growth was strong.
Headline profit rose smartly thanks to a £34.6m valuation uplift on the property portfolio and £9.1m profit on disposals. There was an added boost as last year's loss on derivatives of £15.1m was turned into a £2.2m gain. Leaving these aside meant that the company's preferred measure of recurring profit jumped by 37 per cent to £7.9m.
Gross rental income grew by 14.4 per cent to £20.2m, bolstered by recent acquisitions and additional rent secured through its refurbishment programme. The estimated rental value (ERV) of McKay's properties - the rent they would fetch at current market values - grew by 8.5 per cent to £31.4m excluding acquisitions and disposals. That meant the reversionary potential, the difference between ERV and contracted rental income, rose 6.7 per cent to £10.3m. Crystallising this reversion would lift contracted rents by nearly a half.
Analysts at Stifel are forecasting adjusted net asset value at March 2017 of 315p, from 301p a year earlier.
| MCKAY SECURITIES (MCKS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 230p | MARKET VALUE: | £214m | |
| TOUCH: | 222-230p | 12-MONTH HIGH: | 280p | LOW: 217p |
| DIVIDEND YIELD: | 3.8% | TRADING PROPERTIES: | nil | |
| DISCOUNT TO NAV: | 18% | NET DEBT: | 44% | |
| INVESTMENT PROPERTIES: | £401m | |||
| Year to 31 Mar | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 162 | -11.6 | -25.2 | 8.4 |
| 2013 | 157 | 1.7 | 3.8 | 8.5 |
| 2014 | 206 | 38.3 | 75.0 | 8.6 |
| 2015 | 233 | 33.3 | 36.1 | 8.7 |
| 2016 | 280 | 53.2 | 57.2 | 8.8 |
| % change | +20 | +60 | +58 | +1 |
Ex-div: 2 Jun Payment: 28 Jul | ||||
