Mucklow (A&J) says industrial property prices higher than they can justify, focused on development instead of acquisitions – Mucklow (A&J) Group has published results covering the year ended 30 June 2018. Its EPRA NAV rose from 471p to 559p over the year and EPRA EPS were flat at 25.06p (25.05p). The full year dividend has been increased by 3% to 22.78p.
The statement says that their occupancy rate at 30 June 2018 was at a record high of 97.2% (30 June 2017: 95.8%). The occupier market remained strong throughout the year and they continued to benefit from steady rental growth, averaging around 12.8% on lease renewals and 12.2% from rent reviews, on approximately 15% of the property portfolio by area.
They completed the refurbishment of a 25,200 sq ft office building at Trinity Central, next to Birmingham International Railway station, in the second half year at a cost of around GBP3.0m. This building is now let to a single occupier at a rent of GBP0.57m pa (previous rent GBP0.45m pa). They also successfully re-let the 110,000 sq ft warehouse at Shire Business Park, Worcester in March 2018, at a rent of GBP0.59m pa (previous rent GBP0.55m pa). The property only became vacant in December 2017.
A number of other asset management initiatives were carried out during the year, enhancing rental and capital values, including a substantial refit of a 29,963 sq ft retail warehouse at Birchley Island, Oldbury, at a cost of GBP1.7m, where they agreed a new 15 year lease with the tenant at a rent of GBP0.42m pa (previous rent GBP0.28m pa). They also agreed to extend the lease on a 41,534 sq ft industrial unit at Birchley Island for a further 19 years, expiring in 2042.
Industrial prices higher than they can justify
They were unable to buy any industrial investments during the year. They say that there were limited opportunities available in the Midlands and prices achieved were considerably higher than they could justify paying. Instead, they continued to focus on creating new investment properties through development.
A 44,250 sq ft pre-let industrial development at Mucklow Park i54, Wolverhampton was completed in the second half year and is now leased at GBP0.28m pa. They have recently agreed terms on a 58,000 sq ft pre-let industrial unit at Mucklow Park, Tyseley, Birmingham and hope to obtain detailed planning consent for the 58,000 sq ft unit and for a speculative scheme of 7 industrial units totalling 77,000 sq ft next month, and start both developments later this year.
Two industrial properties in Birmingham were sold during the year for GBP20.0m (Bull Ring Trading Estate for GBP13.0m and Camp Hill for GBP7.0m), with a combined rental income of GBP0.8m pa. The two properties were sold significantly above their previous valuation at 30 June 2017 of GBP10.7m. The main tenants of both properties are intending to vacate within 18 months, offering investors some potential for future redevelopment.
They also exchanged contracts to sell another small industrial property in Birmingham for GBP5.0m. The property comprises an 11,650 sq ft industrial unit on a site area of 0.6 acres and currently generates a rental of GBP0.06m pa. The value of this investment property 12 months ago was GBP1.2m.
MKLW : Mucklow (A&J) says industrial property prices higher than they can justify