A&J Mucklow posts £41.2m fall in value of commercial property portfolio

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by Lin Freestone

As a result of the writedown of its property portfolio by £41.2m, A&J Mucklow Group has recorded a pre-tax loss for the year to the end of June 2008 of £26.7m. This compares with a profit of £33.4m in the previous year and several years of steady capital growth.

A&J Mucklow Group is a long-established property investment company with a £288m portfolio of modern, high quality industrial and commercial property. Of this, more than 80% is located in the Midlands and occupied by over 200 companies.

The reduction in the market value of £41.2m in the group’s investment properties and development land is a 14.8% fall in net asset value. In 2007, A&J Mucklow reported a profit of £33.4m that included an increase in the market value of the group’s investment properties and development land of £16.3m.

Vacancy levels for the group’s portfolio are static at around 7%, with rental growth of approximately 2% on the existing property portfolio. The majority of the investment properties are very modern and securely let to strong covenants, and will continue to provide good long-term growth prospects.

However, the company has warned that the economic indicators for the next 12 months do not look very favourable. It is anticipated that these could impact on the UK occupier market and cause a further deterioration in property values.