Demand for industrial and warehouse space in the Midlands remained as strong as ever for A&J Mucklow (MKLW) in the six months to December 2018. While a lower valuation uplift dented headline profits, gross rental income grew by 4 per cent to £12.5m.
Occupancy rose to a record 97.6 per cent, with another 1 per cent reserved. However, Brexit uncertainty meant that occupiers with unsatisfied requirements were more cautious about committing to new developments on a pre-let basis.
No investment properties were acquired in the first half, although reduced competition for assets means that investment opportunities are becoming more attractive.
A total of 11 new lettings were agreed as well as two lease renewals and four rent reviews generating new rent of £1.36m a year. However, there is also considerable reversionary value yet to be crystallised because the industrial portfolio, some 70 per cent of the portfolio, currently generates gross rental income of around £5.73 per square foot, whereas the estimated rental value if all rents were charged at current market rates equates to £6.14 per square foot. And further rental increases are expected; one letting has already been secured at £8.25 per square foot.
Analysts at Stifel are forecasting adjusted net asset value (NAV) per share at the June 2019 year-end of 591p, from 559p a year earlier.
A&J MUCKLOW (MKLW) | ||||
ORD PRICE: | 504p | MARKET VALUE: | £319m | |
TOUCH: | 504-520p | 12-MONTH HIGH: | 574p | LOW: 477p |
DIVIDEND YIELD: | 4.6% | TRADING PROPERTIES: | £5m | |
DISCOUNT TO NAV: | 12% | NET DEBT: | 19% | |
INVESTMENT PROPERTIES: | £432m |
Half-year to 31 Dec | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p)* |
2017 | 504 | 29.9 | 47.4 | 10.18 |
2018 | 572 | 17.2 | 27.1 | 10.48 |
% change | +13 | -42 | -43 | +3 |
Ex-div: | 14 Mar | |||
Payment: | 15 Apr | |||
*Dividends paid quarterly. Ex-div and pay date refers to 1st dividend. 2nd dividend Ex-div on 13 Jun payable on 15 Jul |