News Column

Mckay Securities Sees Profit Jump After Interest Rate Hedging Gains

May 28, 2014

Anthony Tshibangu

LONDON (Alliance News) - Real estate investment trust McKay Securities PLC Wednesday reported an increase in profit for its last financial year, driven partly by a gain in the market value of its interest rate hedging instruments.

The company, which focuses on office and industrial properties, posted pretax profit of GBP38.3 million for the period ended March 31, up from GBP1.7 million a year earlier, due to a GBP18.0 million positive movement in the value of interest rate hedging instruments, and a substantial valuation surplus of GBP22.9 million.

Contracted rental income from the portfolio fell to GBP16.9 million, from GBP20.1 million, reflecting a change in vacancy levels.

Nonetheless, London and the South-East focused McKay said rental income benefited from increased contributions from its properties in Maidenhead and Crawley, supplemented by income from acquisitions made during the period.

McKay said its EPRA net asset value per share dipped to 227 pence, from 238 pence. EPRA is the European Public Real Estate Association, the industry body for European REITs.

The portfolio was valued at GBP254.6 million, up from GBP212.9 million a year earlier.

During the period the company acquired four properties for GBP16.50 million, including a redevelopment site on London Road, Redhill. Mckay said this was acquired off market, and provides a "well priced addition to our development programme".

Post the year end, the company acquired the freehold to a property in Reading from Hermes Real Estate for GBP5.8 million.

The property is located close to the main line railway station and the Station Hill regeneration site within central Reading. Mckay said committed and proposed investment in the station, Crossrail and a major redevelopment will all enhance the attraction of the area to occupiers.

On the back of its performance, the company increased its final dividend to 5.9 pence, from 5.8 pence a year earlier, making a total dividend of 8.6 pence from 8.5 pence.

McKay shares were untraded Wednesday morning.

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Source: Alliance News

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