A lower revaluation contribution from McKay Securities’ (MCKS) investment properties depressed pre-tax profits through FY2019, but the specialist Reit – which focuses on office, warehouse and industrial markets in London and the south-east – continued to crystallise the reversionary value within its portfolio, achieving practical completion on its Lombard Street office development in January. That triggered the start of a 15-year pre-let contract at an annual rent of £3.4m.
A total of 19 open-market lettings were completed at 8.1 per cent ahead of estimated rental value, alongside 21 lease renewals at a 31 per cent increase to prior contracted rents. That lifted rental income marginally to £27.2m a year, but set against an estimated rental value of £33.8m that means there is the potential to increase contracted rents by £6.6m a year. That reversionary potential includes the 134,430 sq ft logistics warehouse at the Theale Underway, which is due for completion in December.
The loan-to-value ratio ticked up to 33.3 per cent, from 31.6 per cent, after £13.8m was invested in development and refurbishment projects. However, prior to the year-end £55m in additional loan facilities were secured, with a five-year maturity, bringing the total to £245m.
Analysts at Stifel expect adjusted net assets of 350p a share at the March 2020 year-end, from 326p AT the same time in the prior year.
| MCKAY SECURITIES (MCKS) | ||||
| ORD PRICE: | 245p | MARKET VALUE: | £231m | |
| TOUCH: | 245-250p | 12-MONTH HIGH: | 285p | LOW: 221p |
| DIVIDEND YIELD: | 4.2% | TRADING PROPERTIES: | £14.4m | |
| DISCOUNT TO NAV: | 26% | NET DEBT: | 57% | |
| INVESTMENT PROPERTIES: | £464m | |||
| Year to 31 Mar | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2015 | 233 | 33.3 | 36.1 | 8.7 |
| 2016 | 280 | 53.2 | 57.2 | 8.8 |
| 2017 | 289 | 17.6 | 18.8 | 9.0 |
| 2018 | 326 | 43.3 | 46.3 | 10.0 |
| 2019 | 331 | 13.2 | 14.0 | 10.2 |
| % change | +2 | -70 | -70 | +2 |
| Ex-div: | 30 May | |||
| Payment: | 25 Jul |
