Despite all the uncertainty generated by Brexit, offices in the south east of England were the strongest performer in McKay Securities ' (MCKS) portfolio of commercial properties, followed by London offices.
Gross rental income grew by 3.1 per cent even after losing £1.03m of income from disposals in the year to March 2017. Headline profit was lower because of the upward valuation of £7.6m was less than the £35m recorded a year earlier. Even so, the valuation uplift and higher rental income helped to lift adjusted net asset value by 2.9 per cent to 285p.
Two of the three development projects reached completion during the year, with the third on track for completion in 2018. The reversionary potential from these when fully let is expected to lift rental income by nearly 40 per cent. However, some erosion of earnings is expected by the carrying cost of the development properties until they are all fully let.
Having doubled the number of shares in issue through a share placing in 2014, McKay's strong performance means that the dividend payment has been covered by earnings a year earlier than forecast.
Analysts at Stifel are forecasting adjusted net asset value of 299p per share at the March 2018 year-end.
| MCKAY SECURITIES (MCKS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 230p | MARKET VALUE: | £216m | |
| TOUCH: | 225.25-230p | 123-MONTH HIGH | 240p | LOW: 140p |
| DIVIDEND YIELD: | 3.9% | TRADING STOCK: | £5.5m | |
| DISCOUNT TO NAV: | 20% | NET DEBT: | 51% | |
| INVESTMENT PROPERTIES: | £391m | |||
| Year to 31 Mar | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 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 |
| 2017 | 289 | 17.6 | 18.8 | 9 |
| % change | +3 | -67 | -67 | +2 |
Ex-div: 1 Jun Payment: 27 Jul | ||||
