McKay Securities Plc, the only Real Estate Investment Trust (REIT) specialising exclusively in the South East and London office, industrial and logistics markets today announces its half year results for the six months ended 30 September 2021.
Financial Highlights
- Portfolio valuation increased to £454.95 million (31 March 2021: £437.90 million), generating a 2.7% surplus with strong gains in the industrial and logistics segment, representing 30.1% of weighting
- Portfolio ERV of £31.20 million pa (31 March 2021: £31.45 million pa), not including post-period office acquisition
- Adjusted profit before tax down 22.4% to £4.09 million (30 September 2020: £5.27 million), reflecting a 12.3% reduction in gross rental income to £11.18 million (30 September 2020: £12.75 million), following significant disposal in prior period
- IFRS profit before tax of £15.44 million (30 September 2020: £15.02 million loss)
- Adjusted earnings per share decreased by 21.1% to 4.41 pence (30 September 2020: 5.59 pence
- IFRS earnings per share: 16.67 pence (30 September 2020: 15.93 pence loss)
- EPRA earnings per share: 4.57 pence (30 September 2020: 5.53 pence)
- IFRS NAV per share up 4.2% to 322 pence (31 March 2021: 309 pence)
- EPRA NTA per share up 4.2% to 322 pence (31 March 2021: 309 pence)
- LTV of 33.6% (31 March 2021: 32.4%), with cash and undrawn facilities of £92.35 million
- Share buy-back programme of up to £10.00 million (announced in March 2021) maintained, accretive to both NAV per share and earnings per share; 2,628,016 shares acquired by period-end at a cost of £5.86 million
- Interim dividend of 2.9 pence per share, a 3.6% increase on the dividend paid for the prior period
Portfolio and Operational Highlights
Committed to sustainability
- ESG considerations remain integral to Company strategy and operating practices, demonstrated through the 2019 Sustainability Strategy Framework and the 2021 Net Zero Carbon Pathway, delivering sustainability-driven asset management activity and the achievement of a 4-star 2021 GRESB rating
Strong rent collection and scope for growth
- Rent collection remained robust, with 99.3% of amounts due for the year to March 2021 received or agreed, and 96.4% of rent for the year to date (three quarters) already received
- Post-period acquisition of Evergreen Studios, Richmond-on-Thames for £14.75 million, delivering an immediate income yield of 5.8%
- 24.5% (£6.15 million pa) portfolio reversion potential, providing attractive scope to grow income from the current refurbishment and development programm
- Well placed to invest in new opportunities with substantial cash and undrawn facilities, while maintaining a patient and selective approach
Active asset management supporting portfolio resilience
- Strength of in-house property management continued to deliver high tenant retention levels of 73.9% at lease break or expiry
- 13 open-market lettings completed during the period, 3.8% ahead of ERV
- Expenditure of £5.32 million during the period on numerous value-enhancing asset management initiatives, including McKay+ refurbishments offering semi fitted-out floors to facilitate ease and speed of occupation, proving popular with tenants
- Progressing with plans to refurbish or redevelop an existing 63,140 sq ft warehouse at Sopwith Drive, Weybridge
Simon Perkins, Chief Executive of McKay, said:
“Our consistent focus on our core office, industrial and logistics sectors across the South East and London, combined with the intensive in-house management of our portfolio, can be credited for the delivery of another positive set of results. The first half of the period under review saw the UK confined to a Government lockdown, so it has been encouraging to witness improving confidence as restrictions have eased and the re-emergence of the office market with a return to the workplace.
“Both occupier demand and market lettings continue to strengthen, and our portfolio is positively positioned thanks to our ongoing investment programme which has supported our ability to retain tenants and attract new occupiers willing to pay a premium for quality space. The pace of economic recovery and market sentiment will dictate the outlook for the remainder of the year, but we can look forward with the assurance of our tested resilience and the benefit of substantial portfolio potential, as well as the resources to respond as opportunities present themselves.”