13th May 2008 15:38
Mucklow (A & J) Group plc
13 May 2008
INTERIM MANAGEMENT STATEMENT
A & J Mucklow Group plc, the Midlands based Real Estate Investment Trust, are pleased to publish an Interim Management Statement, covering the period since the half year end, from 1 January 2008 to date, as required by the UK Listing Authority's Disclosure and Transparency Rules.
Rupert Mucklow, Chairman commented:
Despite all the 'doom and gloom' currently being reported in the commercial property market, we are still experiencing some steady occupier demand and rental growth, for our industrial properties and are continuing to perform in line with our expectations.
Three speculative developments were completed during Q3, adding 109,000 sq ft of new business space to our property portfolio. As a consequence, the level of vacant space increased during the period, from 142,000 sq ft to 221,000 sq ft (7.5%), of which 65,000 sq ft is currently under offer. Construction also started on three pre - let industrial units, with a combined area of 115,000 sq ft.
Our balance sheet remains in good shape, with total borrowings of £31.8m and net gearing of only 13% at 30 April. We have recently agreed terms with Lloyds TSB Bank plc, to borrow an additional £20m at a fixed rate of 5.59% for a period of 15 years. The funds will initially be used to pay off existing revolving credit facilities, freeing up those facilities to fund our development programme and any new investment opportunities.
Property yields still appear to be falling, particularly for secondary property and those on short leases. Funding is becoming a big issue for many property investors, as the Banks are being very selective on lending and the number of active buyers is reducing. In the six months to 31 December 2007, the equivalent yield on our investment portfolio moved out from 6.0% to 6.7% and we may see a further fall in our asset value, by the year end, if the investment market continues to weaken.
The upside of falling property values, are the attractive investment opportunities that arise. We have recently strengthened our management team, with the appointment of a senior investment surveyor, whose role will be to source suitable, modern investment properties, across the Midlands, for long term growth.
We have also recently strengthened our Board, with the appointment of Stephen Gilmore as an independent non-executive director. Stephen is a corporate lawyer and was previously partner in charge of the Birmingham office of the law firm Cobbetts LLP.
It is difficult to predict when commercial property values will stabilise, however, we are extremely well positioned to capitalise on any distressed selling and remain upbeat about our future prospects.
Other than as stated above, there has been no significant change in the Group's financial position since 31 December 2007.
For further information contact:
Rupert Mucklow
Chairman
0121 504 2121
David Wooldridge
Finance Director
0121 504 2108
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