A & J Mucklow Group Plc, the Midlands specialist Real Estate Investment Trust (REIT), announces a trading update for the period from 1 July 2015 to 9 November 2015 to coincide with its Annual General Meeting this morning.
Rupert Mucklow, Chairman, will comment:
The Midlands industrial property market has continued to flourish during the first four months of our financial year and the Board remains positive about prospects for the full year.
The availability of modern industrial space across the Midlands has continued to decline, whilst occupational demand has been maintained at similar levels to the previous half year. Rental growth is beginning to be reflected in our property portfolio, as higher rents are consistently being achieved on new lettings and lease renewals.
Our vacancy rate since 30 June 2015 has fallen from 5.4% to 4.7%, our lowest level on record and may reduce further by our half year end.
The regional investment market also remains strong and competitive. Property yields still appear to be reducing and values increasing, due to rental growth expectations and large amounts of institutional money chasing a limited number of quality investment opportunities.
As a consequence, it is proving more difficult for us selectively to acquire sensibly priced investment properties, however, we have managed to secure one off market deal so far this year and hopefully we will continue to find more.
In August 2015, we acquired a 19,200 sq ft retail warehouse unit in Leicester City centre for £2.8m. The property occupies a prominent site with 80 car parking spaces and is currently let on a long lease at a passing rent of £0.18m pa.
Our medium term objective is focused towards carrying out development in the Midlands, to create our own investment properties. Favourable market conditions look set to continue for the next few years and pre-let development currently offers an attractive income return.
Progress has been made at Mucklow Business Park, Tyseley. Birmingham City Council have now received planning permission and funding for the new link road which will run alongside our 20 acre industrial site. We intend to start actively marketing this site once we have confirmation on timing for the construction of the road.
We have also recently entered into an option agreement with Wolverhampton City Council and Staffordshire County Council to promote and develop a prime 15 acre industrial site adjacent to the new Jaguar Land Rover engine manufacturing facility at i54 in Wolverhampton. The land is immediately available for development and marketing will commence shortly.
In total, the two development sites could accommodate over 600,000 sq ft of new industrial space; generate in excess of £3.6m pa of rental income and have an end value of around £60.0m when fully developed.
Financially, the Group remains in good health. Total net borrowings at 31 October 2015 were £74.7m, against a property investment portfolio last valued at £350.0m, while undrawn banking facilities totalled £29.0m. Debt to equity gearing was 27% and loan to value 21%.
Rupert Mucklow, Chairman
David Wooldridge, Finance Director
0121 550 1841