19th Feb 2014 09:07
LONDON (Alliance News) - Property investors A & J Mucklow Group PLC Wednesday reported an increase in profit and revenue for the first half of its financial year as it reduced its vacancy rate and acquired a number of investment properties, prompting it to call the start of a recovery in its industrial property markets.
The company, which develops property in the Midlands, posted pretax profit of GBP14.2 million for the six months to end-December, up from GBP8.1 million a year earlier, boosted in part by revaluation gains.
Its investment properties and development land were valued at GBP278.5 million, up from GBP26.2.7 million in June 2013, which resulted in a revaluation gain of GBP7.7 million, or 2.8%, for the period.
Mucklow which invests in industrial, retail and office property saw revenue rise to GBP11.0 million during the period, from GBP10.6 million during the first half of its 2013 financial year.
Gross rental income from investment and development properties crept up to GBP10.5 million, from GBP10.2 million a year earlier, while it also received income from trading properties of GBP45,000, compared with nil in 2012.
The firm said over the last six months, there has been a steady rise in the number of active letting enquiries for industrial space in the Midlands, with very little choice available for occupiers. As a consequence, typical lease incentives have reduced from 12-18 months to 3-9 months for a 5-year term. In some locations rental levels have started to increase, it said.
During the period, Mucklow said it reduced its vacancy rate to 6.2%, from 6.7%, and acquired a number of properties including a 62,000 square foot industrial unit in Halesowen, West Midlands for GBP3.7 million.
The property is currently let on a long lease at a rent of GBP340,000 a year.
In November, Mucklow agreed terms to build a new 115,00 square foot distribution warehouse for Worcester Bosch Group on land at Apex Park, Worcester. The deal is conditional on Mucklow taking back Worcester Bosch's building of 50,000 square feet at Knightsbridge Park, Worcester, on completion of the development.
Planning consent for this development was granted in January and construction is due to commence in March. The new property will generate an income of GBP720,000 a year and will cost around GBP6.0 million, excluding land, to complete.
Financially, net debt at the end of the period stood at GBP77.3 million, up from GBP74.9 million in June 2013, while undrawn banking facilities totaled GBP24.5 million.
"It would appear that we may have reached a turning point in the property cycle during the first half year, with strengthening occupational demand outstripping supply and a growing appetite from Investors, pushing up property values," Chairman Rupert Mucklow said in a statement.
"We intend to continue our strategy of investing in quality industrial and commercial properties in the Midlands, with attractive long term growth prospects and we anticipate another satisfactory performance in the second half year," he added.
The board proposed an interim dividend of 9.04 pence, up from GBP8.78 pence a year earlier.
By Anthony Tshibangu; [email protected]; @AnthonyAllNews
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