Reading: McKay Securities delivers capital and rental growth

McKay Securities plc, the only Real Estate Investment Trust (REIT) specialising exclusively in the London and South East office and industrial markets, has announced its half-year results for the six months ended September 30, 2018.

The Reading-headquartered REIT has increased gross rental income over the past year – and said its business remains underpinned by strong fundamentals, despite some prevailing uncertainty in the commercial property sector. 

Financial highlights

  • Gross rental income of £10.43 million (September 30, 2017: £10.90m), up 6.2% after adjusting for loss of income from disposals and planned development activity
  • Net rental income of £9.17m (September 30, 2017: £9.92m)
  • Adjusted profit before tax of £4.32m (September 30, 2017: £4.70m)
  • Interim dividend of 2.8p per share, maintaining the level of dividend paid for the same period last year, payable on January 3, 2019

Portfolio highlights

  • Property valuation of £478.55m, an increase of 4% since March 31, 2018, generating a 1.7% (£8.18m) valuation surplus over cost
  • Portfolio ERV of £33.46m pa, up 0.9% (March 31, 2018: £33.15m pa)
  • Contracted rental income of £27.17m pa (31st March 31, 2018: £27.05m pa)
  • Substantial 23.1% portfolio reversion of £6.29m pa, well placed to deliver future value and income growth
  • Contractor selected for speculative distribution warehouse scheme (134,150 sq ft) at Junction 12 of the M4 at Theale
  • Pre-let City of London development at 30 Lombard Street, EC3 due to go unconditional shortly on PC
  • Continued focus on refurbishing and upgrading properties at lease expiry to deliver high quality, affordable product that appeals to increasingly discerning occupiers in supply constrained markets
  • Recognition of ESG (environmental, social and governance) efforts with a GRESB (Global Real Estate Sustainability Benchmark) Green Star award for the third year running 

Simon Perkins, chief executive of McKay Securities, said: “Our active focus on the office and industrial markets of London and the South East continues to drive outperformance. We delivered further growth in capital and rental values during the period and continue to work on the release of our 23% portfolio reversion. We see sustained levels of demand from a range of investors and occupiers supporting this, despite the economic and political uncertainty surrounding Brexit.

“Attracting and retaining tenants is a cornerstone of our business and today’s occupiers increasingly require choice, flexibility, and excellent customer service. We continue to meet these requirements, as demonstrated by recent lettings success across the portfolio and by our active refurbishment and development programme.

“Although the commercial property sector exists in an uncertain operating environment, McKay’s markets remain underpinned by strong fundamentals. Recent lettings have de-risked our office development programme, and we are well positioned to deliver further growth in a measured fashion from the significant reversion within our portfolio and from our warehouse development at Theale.”