A marginal increase in the value of A&J Mucklow' s (MKLW) portfolio pushed up the industrial property developer's net asset value during the six months to December. However, this revaluation gain was a fraction of the £10m secured during the prior year, weighing on pre-tax profits.
The good news was that demand for industrial space in the West Midlands remained high. Average rental increases of around 10 per cent on new lettings and lease renewals helped lift gross rental income by £0.3m to £11.8m. Two acquisitions - a warehouse in Barton-under Needwood and a pre-let office space in Leicester - also provided a boost in rental income.
The increasing popularity of industrial property with institutional investors meant quality buying opportunities continued to be scarce, according to chairman Rupert Mucklow. The group is therefore concentrating on developing pre-lets. Management agreed terms for its first pre-let development at i54 Wolverhampton and plans to build a 44,250 square foot industrial unit. The vacancy rate increased slightly to 4.1 per cent, but would have been at a record low of 2.5 per cent if management had not voluntarily taken back an industrial unit.
Analysts at house broker Arden Partners expect an adjusted net asset value (NAV) of 457p a share at the end of June 2017, up from 446p the previous year.
A&J MUCKLOW (MKLW) | ||||
|---|---|---|---|---|
| ORD PRICE: | 494p | MARKET VALUE: | £313m | |
| TOUCH: | 482-495p | 12-MONTH HIGH: | 521p | LOW: 380p |
| DIVIDEND YIELD: | 4.4% | TRADING PROP: | £0.8m | |
| PREMIUM TO NAV: | 11% | |||
| INVESTMENT PROP: | £373m* | NET DEBT: | 28% | |
| Half-year to 31 Dec | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 443 | 14.4 | 22.7 | 9.59 |
| 2016 | 446 | 9.1 | 14.4 | 9.88** |
| % change | +1 | -37 | -37 | +3 |
Ex-div: 16 Mar Payment: 18 Apr *Includes development properties **Dividends paid quarterly, ex-div and payment dates refer to first quarter. The second dividend will be paid on 17 July 2017 and will go ex-div on 15 June 2017. | ||||
