13 May 2009 07:00
Mucklow (A & J) Group plc
13 May 2009
INTERIM MANAGEMENT STATEMENT
A&J Mucklow Group plc, the Midlands based Real Estate Investment Trust, issues its Interim Management Statement covering the period from 1 January 2009 to 30 April 2009.
The Company continues to benefit from a strong balance sheet, with net debt to equity gearing of only 22%. Rental income remained steady during the third quarter, despite recessionary pressures and we have been successful with some property disposals and a favourable planning decision.
Rent collection and occupancy levels for the March quarter were in line with our expectations. However, market conditions remain challenging and tenant demand for new space has weakened.
We successfully let 87,000 sq ft of new space during the period, but had 109,000 sq ft returned to us, mainly due to insolvencies. As a consequence, our vacancy rate increased marginally from 6.8% to 8.0%.
Rent collection for the March quarter was similar to the corresponding period last year, with over 90% collected within 12 days. Most of our investment properties are securely let, to strong covenants. Approximately 6% of our rent roll is currently being paid by monthly arrangements.
Financial incentives being offered on new lettings are rising, as occupier demand reduces and prospective tenants have more choice. Headline rental levels are also under increased pressure, as Landlords compete to secure lettings, in order to avoid paying empty property rates.
Property values appear to be stabilising, having continued to decline for much of the period. We are actively monitoring the investment market and preparing ourselves to start buying some modern properties, when there are more sensibly priced opportunities available.
Contracts have been exchanged for the sale of two mature investment properties in Wolverhampton for £1.70m, with completions expected before our year end. The properties have a combined income of £0.08m per annum and are being sold above the December 2008 valuations.
Outline planning consent has been obtained for a 130,000 sq ft warehouse club, on our 9 acre site at Torrington Avenue, Coventry. Detailed plans have now been submitted to the local authority and we hope to commence development later this year. The property has been pre-let to a large International operator, on a long lease, at a rent of £1.3m per annum and is likely to cost around £9m to build.
Measures were introduced during the period to reduce our cost base. Executive directors and management have collectively volunteered to take pay cuts in excess of 10% of salaries for 12 months.
We are still expecting a tough 12 months ahead, but remain positive about our future prospects.
Other than as stated above, there has been no significant change in the Group's financial position since 31 December 2008.
For further information contact:
Rupert Mucklow
Chairman
07815 151254
David Wooldridge
Finance Director
0121 504 2108