At a time of considerable uncertainty, McKay Securities (MCKS) has shown that demand for quality office space in the south-east of England remains as robust as ever, with the level of named occupier demand up 4.8 per cent at the September half-year from a year earlier.
With a sizeable development arm, the company has continued to crystallise some of the reversionary value embedded in the portfolio, pushing contracted rental income ahead by 5.3 per cent to £24.7m a year. Demand for office space also meant that the previous year’s £3.3m portfolio devaluation was replaced by a £10.6m uplift, which helped to boost adjusted net asset value (NAV) by 3.9 per cent to 296p a share.
Key redevelopment schemes completed included the full letting of 9 Greyfriars Road in Reading at just under 40,000 sq ft. This and seven other lettings boosted contracted rental values by £1.46m; that’s 2.9 per cent ahead of estimated rental value. The next scheme in the pipeline is the redevelopment of a 97,000 sq ft warehouse near junction 12 on the M4 motorway. Planning consent has already been secured to increase the existing floor space to as much as 134,000 sq ft.
Analysts at Stifel are forecasting adjusted NAV at the March 2018 year-end of 305p, up from 303p a year earlier.
| MCKAY SECURITIES (MCKS) | ||||
| ORD PRICE: | 233p | MARKET VALUE: | £219m | |
| TOUCH: | 230.25-238p | 12-MONTH HIGH: | 245p | LOW: 169p |
| DIVIDEND YIELD: | 3.9% | TRADING PROP: | £18.1m | |
| DISCOUNT TO NAV: | 22% | |||
| INVESTMENT PROP: | £453m | NET DEBT: | 51% | |
| Half-year to 30 Sep | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 269 | -3.8 | -4.0 | 2.7 |
| 2017 | 300 | 16.5 | 17.6 | 2.8 |
| % change | +12 | - | - | +4 |
| Ex-div: | 23 Nov | |||
| Payment: | 4 Jan |
