Rupert Mucklow, Chairman, will comment:
The Group has maintained its positive momentum during the first four months of the new financial year and, so far, the business has not felt any adverse effect from the referendum decision.
The number of active letting requirements for Midland's industrial property has remained steady since our year end on 30 June 2016, while the availability of space in the region has continued to decline. As a consequence, our occupancy rate has risen further to another record high of 97.1% and rental levels are still growing.
Industrial property values in the Midlands appear to have remained stable, despite the initial uncertainty following the referendum result. We have seen an increase in the supply of investment opportunities, mainly from Institutional retail funds looking to provide more liquidity, but there are still plenty of active buyers in the market and pricing remains very competitive.
We recently acquired a prominent 70,182 sq ft industrial/warehouse building in Barton-under-Needwood for £5.6m. The property is located at the front of Barton Business Park, on the A38 corridor, midway between the A50 and A5 trunk roads. Built in 2005, the unit is currently let at a rent of £0.41m per annum.
Building work is progressing well on our pre-let office development at Grove Park, Leicester, which we are acquiring on a forward commitment basis for £4.7m. The property will comprise 20,620 sq ft of high quality offices with 112 car parking spaces. Completion of the development is expected at the end of this month and the initial rent will be £0.35m per annum.
Terms have also been agreed on our first pre-let industrial development at i54 Wolverhampton. We will shortly be submitting a planning application for a 43,000 sq ft industrial unit on the phase 1 land for Tentec Limited, a subsidiary of Atlas Copco. The initial rent on completion of the property will be £0.28m per annum.
Contracts have been exchanged on the sale of our 12,000 sq ft office building in Henley on Thames for £4.1m, with completion scheduled for the end of this month. The property became vacant in August 2016 and attracted considerable interest from local residential developers. The property was last valued for office use at £2.2m in June 2016. The sale is not conditional on planning.
Financially, the Group remains in good health with total net borrowings of £82.3m at 31 October 2016, against a property investment portfolio last valued at £369.8m and loan to value of 22%.
Since our year end, we have renewed our £64m banking facilities with HSBC for a further 5 years to 2021 at a 30% lower margin.
It is still too early for us to assess what the longer term impact of leaving the EU will have on the UK economy and our business. However, we have been very encouraged by our experiences over the last 4 months and although we anticipate some challenges ahead, we remain positive about prospects for the full year.