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Solid performance from A&J Mucklow

The developer is well placed to take advantage of the shortage of quality commercial space in the Midlands region
September 7, 2017

As demand for industrial space continues to outstrip supply in its Midlands environs, landlord A&J Mucklow (MKLW) delivered a solid performance in the year to June 2017, pushing adjusted net asset value ahead by nearly 6 per cent to 471p a share. Headline profits were boosted by a £13m uplift on the portfolio; that’s up from £10.2m a year earlier, while net property income grew by 3 per cent to £22.7m.

IC TIP: Buy at 501p

Average rental growth reached around 10 per cent on new lettings and rent reviews, and while the vacancy rate edged up to 4.2 per cent, this included 1.2 percentage points of vacant space returned on the expiry of five leases just before the year-end.

Two pre-let developments were acquired for a total of £10.3m, bringing in rent of £750,000, while a 12,000 sq ft vacant office in Henley on Thames was sold to a developer for £4.1m, delivering a £1.9m profit over the last valuation.

Mucklow also renewed its £64m banking facility at a lower rate and repaid a fixed loan due to expire in 2022. And while early repayment costs pushed total financial expenses higher, the weighted average cost of debt is down from 4.1 per cent a year earlier to 3.1 per cent, with the maturity increasing.  

Analysts at Stifel forecast adjusted net asset value per share of 466p at the June 2018 year-end, up from 471p in mid-2017.

A&J MUCKLOW (MKLW)  
ORD PRICE:501pMARKET VALUE:£317m
TOUCH:501-515p12-MONTH HIGH:521pLOW: 441p
DIVIDEND YIELD:4.4%TRADING PROPERTIES:£0.5m
PREMIUM TO NAV:7%  
INVESTMENT PROP:£387mNET DEBT:26% 
Year to 30 JunNet asset value (p)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201330316.327.219.64
201435640.766.520.23
201542456.289.020.84
201644325.239.921.47
201746929.646.622.12*
% change+6+17+17+3
Ex-div:14 Sep   
Payment:16 Oct   
*Dividends paid quarterly. Ex-div and pay date refer to third interim of 5.15p, with a final dividend of 7.09p payable on 15 Jan 2018 (Ex-div: 14 Dec)