News Column

A&J Mucklow Warns On Competitive Market As Annual Profit Surges

September 2, 2014

Anthony Tshibangu

LONDON (Alliance News) - Property investors A&J Mucklow Group PLC Wednesday reported an increase in profit for the full year, but warned that it may struggle to acquire any further investment properties while the market remains so competitive.

The company, which develops property in the Midlands, posted pretax profit of GBP40.7 million for the year to June 30, up from GBP16.3 million a year earlier, boosted by revaluation gains of GBP22.6 million, compared with just GBP2.8 million a year earlier.

The majority of the uplift, around GBP20 million, came in the second half of the financial year, reflecting the strength of the investment market in the second half.

Revenue, which is largely made up of rental income, rose to GBP22.1 million from GBP21.3 million a year earlier.

Mucklow which invests in industrial, retail and office property, said the Midlands industrial market continues to improve, with a lack of available stock leading to a rise in rental levels.

Whilst property values have been depressed over the last five years, Mucklow has taken advantage of weaker investor demand, and our low level of gearing, to acquire eleven investment properties, mainly industrial, with a total cost of GBP41.6 million.

However, the company said it may now struggle to acquire any further investment properties, while the "market is so competitive and we are not prepared to compromise on quality".

Nonetheless, Chairman Rupert Mucklow said he was sure the group will continue to find ways to grow rental income and improve the value of the property portfolio over the next 12 months.

During the year, the real estate investment trust carried out refurbishments at a number of properties within its existing portfolio in order to benefit from increased occupier demand in future financial years.

On the development side, Mucklow started the construction of a 116,000 square foot pre-let distribution warehouse at Apex Park, Worcester. The cost to complete the development will be around GBP5.5 million, and the project is expected to produce around GBP720,000 in rent a year when completed later this year.

Mucklow said a number of investment properties were acquired in the year, including a industrial building in Birmingham for GBP1.5 million. Conversely, it disposed of an office property in Worcester at a 6.5% premium to its last valuation. The property, which was acquired by the group in 1999 for GBP2.8 million, was sold in a deal worth GBP3.9 million.

Overall the investment properties and development land were valued at GBP298.9 million at the year-end.

On the back of its performance the company increased its final dividend by 10% to 11.19 pence per share, from 10.8 pence, making a total dividend for the year of 20.23 pence compared with 19.64 pence a year earlier.

"The company is in good shape with a quality investment portfolio and a strong balance sheet," Rupert Mucklow said in a statement. "We expect the regional occupier and investment markets to continue to improve over the next 12 months and rental growth to accelerate as the limited supply of available space falls."

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Source: Alliance News

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