TIDMMCKS
RNS Number : 4251E
McKay Securities PLC
04 July 2019
McKay Securities Plc ("the Group" or "McKay")
TRADING UPDATE
McKay Securities Plc, the only UK REIT specialising exclusively
in the London and South East office, industrial and logistics
markets, announces its trading update for the quarter to 30th June
2019 ahead of its 73rd Annual General Meeting to be held at 3:00pm
today.
Simon Perkins, CEO of McKay, commented:
"Since the year end, we have made good progress with our active
programme of portfolio refurbishment and development schemes,
maintaining our focus on the office, industrial and logistics
sectors of London and the South East. Completion of these schemes
will enhance our ability to deliver further income growth from
unlocking our significant 24.3% (GBP6.6 million pa) portfolio
reversion.
"Having derisked the office development programme with lettings
last year, the resulting valuation gains enabled us to increase our
banking facilities by GBP55 million shortly after the year end.
This has provided additional headroom for acquisitions and future
portfolio projects, which will also contribute to future earnings
growth.
"Market conditions remain generally as reported in our year end
statement issued on the 20(th) May 2019. Occupational demand in the
South East office sector, which accounts for 54% of our portfolio
(by value), has proved resilient despite the continuing political
uncertainty. Once a Brexit conclusion is reached, stronger economic
activity and limited supply, now at a 10 year low, should support
rental value growth in this market sector.
"The South East industrial and logistics sector (16% of the
portfolio) has continued to benefit from rental growth, albeit at a
slower pace, with limited supply also constraining occupier choice.
These remain positive market conditions for the speculative
development of our distribution warehouse at Theale Logistics Park,
referred to below.
"Investment volumes in our markets are down compared to this
time last year, due primarily to the extended Brexit programme.
Buyers are exercising caution in view of uncertainty over the
outcome, and sales are generally on hold for the same reason."
Active management continues in earnest
-- Contracts exchanged in May for the freehold disposal of
Station Plaza, Theale (41,420 sq ft) to an owner occupier for
GBP8.23 million. Completion July 2019.
-- Positive progress with refurbishment projects to upgrade portfolio properties:
- completion in May of the 3rd floor (8,300 sq ft) at the Mille,
Brentford, providing fully fitted suites, as successfully trialled
at Portsoken House, EC3.
- completion in June of two office floors (11,390 sq ft) and reception at Mallard Court
in Staines-upon-Thames.
- full refurbishment of Pegasus 2 in Crawley (12,720 sq ft) on track to complete in July.
-- Four open market lettings achieved at ERV (31st March 2019)
with a combined contracted rent of GBP0.15 million p.a. including
welcoming new tenant, Handelsbanken PLC, to One Crown Square,
Woking.
-- Continued strong tenant retention of 78.0% at lease break /
expiry, including 5 lease renewals at a combined rent of GBP0.33
million p.a.
Development progress
-- With site clearance complete, piling is now underway for the
speculative development of a 134,430 sq ft warehouse distribution
unit at Theale Logistics Park, Reading, due for completion at the
end of the year.
Enhanced financial platform
-- New GBP180.00 million revolving credit facility secured in
April 2019 with a maturity of five years, replacing three existing
bilateral facilities totalling GBP125.00 million.
-- Drawn debt of GBP169.00 million (31(st) March 2019: GBP165.00
million), with undrawn facilities of a further GBP76.00
million.
-- Loan to value of 35.0% (based on 31(st) March 2019 valuations).
-- Weighted average length of debt: 6.6 years after refinancing.
-- Weighted average cost of debt: 3.3% (year to 31(st) March 2019).
Date: 4(th) July 2019
For further information please
contact:
McKay Securities Plc FTI Consulting
Simon Perkins, CEO Dido Laurimore, Ellie Sweeney
Giles Salmon, CFO 020 3727 1000
01189 502333 McKay@fticonsulting.com
About McKay
McKay Securities Plc is a commercial property investment company
with Real Estate Investment Trust (REIT) status, listed on the main
market of the London Stock Exchange. It specialises in the
development and refurbishment of good quality office, industrial
and logistics buildings within established and proven markets of
London and South East England. The portfolio, which was valued at
31(st) March 2019 at GBP482.70 million, comprises 33 properties in
strong and established areas, which deliver diversity in terms of
both sector and location.
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