11 Nov 2008 11:30
Mucklow (A & J) Group plc
11 November 2008
INTERIM MANAGEMENT STATEMENT
A & J Mucklow Group plc, the Midlands based Real Estate Investment Trust, today announces its Interim Management Statement, covering the period from 1 July 2008 to 31 October 2008, to coincide with its AGM.
Rupert Mucklow, Chairman, will comment:
Since our year end, we have seen further declines in the general pricing of commercial investment properties, due to tight credit conditions and concerns over the slowing economy. Despite the deteriorating investment market, I am pleased to report a marginal increase in occupancy levels and rental income, during the first four months of our financial year.
Our occupancy rate at 31 October 2008, including new developments, rose to 94% compared with 93% at 30 June 2008 and gross rental income increased from £16.1m to £16.4m per annum. However, we anticipate the letting market to soften over the next six months, as recessionary pressures start to bite and although we have few leases expiring over the next 12 months, we are expecting some tenant insolvencies.
As I mentioned in our Annual Report, we have put on hold any further speculative developments, until the economic outlook improves. Only one 40,000 sqft pre-let industrial unit at Yorks Park, Dudley is currently under construction and due for completion in December 2008.
Our balance sheet remains in good shape, with total borrowings of £38m and net gearing of only 17% at 31 October 2008, on a property portfolio valued in June 2008 at £264m. There are no banking facilities due for repayment in the next 12 months and we have no concerns about breaching any banking covenants.
No commercial or development properties have been acquired since the year end and no commercial, development or residential sites have been disposed of in the same period. Given current market conditions, we have delayed the disposal of any trading stock until residential land values have improved.
It is difficult to predict when property values will stabilise and what impact rising yields will have on our net asset value, at the Interim stage. There are currently very few quality investment properties on the market and fewer transactions being concluded, which makes it difficult to establish value. We anticipate seeing more investment stock in the New Year and the pricing is likely to continue to drift, until confidence is restored in the financial markets and banks start lending again.
Our refinancing in May this year has left us with sufficient funds to comfortably manage our business and acquire quality investment properties, when suitable opportunities arise. For the time being, we intend to tread cautiously during these uncertain times and we will continue to closely monitor the investment market for attractive opportunities, but remain patient for the right deals.
Other than as stated above, there has been no significant change in the Group's financial position since 30 June 2008.
For further information contact:
Rupert Mucklow
Chairman
0121 504 2121
David Wooldridge
Finance Director
0121 504 2108