Shift of emphasis for Mucklow as market conditions decline
HALESOWEN based property group AJ Mucklow is shifting the emphasis of its operation in the wake of slowing yields.
In its latest set of interim results, the company said the regional investment market had become more subdued since November last year, mainly because some Institutional investors had become more selective and there have only been a limited number of quality buying opportunities.
It said yields on prime Midlands industrial property were still reducing and values increasing, but at a slower rate, while yields on secondary properties were starting to drift a little, due to a bit of investor caution.
Chairman Rupert Mucklow said: “We are still actively looking to acquire further modern investment properties in the Midlands with long term income and capital growth potential, but our emphasis is now more focused towards creating our own industrial investments, by carrying out pre-let development while there is good occupier demand.”
Half year results to December 31, 2015 show gross rental income received during the first six months was 9.7% higher at £11.5m (December 31, 2014: £10.5m).
Underlying pre-tax profit increased by £1.0m to £7.5m (December 31, 2014: £6.5m).
The directors have declared an interim dividend of 9.59p per ordinary share, an increase of 3% over last year (December 31, 2014: 9.31p). The dividend will be paid on July 1, 2016 to shareholders on the register at the close of business on June 3, 2016.
It said its vacancy rate at the end of December 2015 had fallen to 4.7% (June 30, 2015: 5.4%). The vacancy rate temporarily dropped below 4% at the beginning of December, before the group took back three industrial units prior to half year end.
“Our Midlands industrial portfolio has continued to benefit from steady occupier demand and a shortage of available, modern space. Approximately one quarter of our vacant space was reserved by prospective tenants at December 31, 2015,” added Mucklow.
“New benchmark rental levels set in the previous 12 months are still being achieved on new lettings and lease renewals. Potential rent reversions from higher estimated rental values are also starting to be reflected in the property valuations.”
Mucklow said its second half had started well and it remained optimistic about its prospects for the full year to June 30, 2016.
“However, it is more difficult to predict what impact the slowdown in the global economy and other macro factors may have on the Midlands property market in the medium term,” added Mucklow.
“Our property portfolio (valued at almost £360m) has already proved to be very resilient in the past recession. Should circumstances change, we are extremely well positioned to capitalise on any attractive investment opportunities that may arise, but in the meantime, we are very much looking forward to progressing our pre-let development programme over the next couple of years.”
