Property investor to push on with speculative development programme

Property group A&J Mucklow is to focus on development as it continues to see “no signs of the industrial property market weakening”.

Although chairman Rupert Mucklow acknowledges that it is “difficult to predict what might happen over the next 12 months in the industrial occupier and investment markets”, the company is to embark on a controlled speculative development programme.

He said: “Usually, at this late stage in the property cycle, with occupancy levels at record highs and industrial property yields at all time lows, we would be anticipating a correction in property values and be preparing ourselves to start acquiring attractively priced investment properties again.”

While that is not yet the case for the Halesowen property investor, it believes it “remain[s] well positioned to capitalise on a weaker investment market” should the market turn.

The confidence is underpinned by a strong set of financial results, which have been released to the stock market this morning.

It more than doubled pre-tax profits to £69.5m in the year to June, boosted by the sale of Bull Ring Trading Estate for £13m and Camp Hill, Birmingham for £7m. The group’s underlying pre-tax profit was down fractionally, to £15.7m.

Mucklow did not buy any properties during the year although said it “continue[s] to look for attractively priced investment properties”.

It has cut its vacancy rate by one-third, to 2.8%, while its portfolio has risen in value by £50m, to £434m.

Managing partner Justin Parker said: “Given investor demand for industrial property, which remains at the core of our portfolio, we expect there to be limited opportunities for us to acquire investment properties in the short-term.

“However, our quality investment portfolio, development land bank and strong balance sheet provide us with a strong base to pursue opportunities as we enter the next financial year.”

Mucklow has increased the size of its debt funding facility, extending the average term of its facilities and locked-in lower funding rates.

Lloyds Bank Commercial Real Estate has provided a new 13-and-a-half-year, £20m loan through its partnership with Scottish Widows, secured against nine assets and replacing a previous facility with the bank.