MEPC stuck in property doldrums
The Investment Column
Thursday 01 June 1995
To be fair to MEPC, that dismal performance is as much about the troubled state of the property market as anything more specific to the company. With the sector in the doldrums, the market disregarded yesterday's jump in pre-tax profits from pounds 47.6m to pounds 60.4m, focusing instead on the unchanged 5.25p interim dividend and comments from the chief executive, James Tuckey, about still difficult trading and patchy tenant demand.
Earnings per share increased by an impressive 23 per cent to 10.2p but a rise in debt to pounds 1.26bn and a slight increase in the vacancy rate of the portfolio cast a shadow.
Mr Tuckey freely admits that the market is floundering without direction at the moment and he puts himself in the more pessimistic camp that expects the sector's recovery to be slower and less dramatic than optimists hoped for a year ago.
In retail, especially, it is difficult to know what is going on, with the big national chains appearing to be expanding their portfolios despite a string of gloomy consumer confidence figures and profits warnings.
In the important London market, demand in both the West End and City seems to be outstripping the ability of a nervous industry to supply new space, and rents are edging upwards.
Anecdotal evidence suggests that a sizeable West End office was assigned recently for about pounds 50 a square foot. When two floors of Alban Gate, MEPC's flagship City office block, are marketed later this summer, an asking price above pounds 40 a square foot is expected, which is well above recent lows.
The problem for MEPC, however, is that it will take more than the first signs of a thaw in the market to improve prospects of a decent rise in either net assets per share or the dividend. With a proportion of the portfolio let at rents higher than the current market rate, it will take sizeable rental increases before actual income improves to allow an improved payout.
Until that happens, the dividend, uncovered for several years and only barely matched by earnings last year, will remain stuck at the 20p level it has been at since 1991.
That means the shares yield 6.2 per cent, well in excess of the market average, but investors would be unreasonable to expect any less given the lack of growth and MEPC's indifferent record.
- 1 Malaysian cyclist could face disciplinary action after 'Save Gaza' gloves protest
- 2 Is Gideon Levy the most hated man in Israel or just the most heroic?
- 3 Fifty Shades of Grey trailer provokes moral outrage from US parenting groups
- 4 McDonald’s removes chicken nuggets from the menu in Hong Kong amid major food scare
- 5 Students offered grants if they tweet pro-Israeli propaganda
The 'scroungers’ fight back: The welfare claimants battling to alter stereotypes
Arizona execution lasts two hours as killer Joseph Wood left 'snorting and gasping' for air
Malaysia Airlines MH17 crash: Ukrainian military jet was flying close to passenger plane before it was shot down, says Russian officer
Malaysia Airlines MH17 crash: Massive rise in sale of British arms to Russia
Malaysia Airlines MH17 crash: victims’ bodies bundled in black bags and loaded onto trains
John Barrowman praised for Commonwealth Games opening ceremony gay kiss
iJobs Money & Business
£600 - £650 per day: Orgtel: Conduct Risk Liaison Manager - Banking - London -...
£18000 - £23000 per annum + Comission: SThree: SThree, International Recruitme...
£280 - £300 per day + competitive: Orgtel: Test Analyst, Edinburgh, Credit Ris...
£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...