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Share Name Share Symbol Market Type Share ISIN Share Description
Mckay Securities Plc LSE:MCKS London Ordinary Share GB0005522007 ORD 20P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  -4.00 -2.12% 185.00 185.50 190.00 185.50 185.50 185.50 261,116 16:35:01
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Real Estate Investment Trusts 29.3 9.5 8.6 21.5 174

McKay Securities PLC COVID-19 BUSINESS UPDATE

07/04/2020 7:03am

UK Regulatory (RNS & others)


Mckay Securities (LSE:MCKS)
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RNS Number : 0304J

McKay Securities PLC

07 April 2020

7(th) April 2020

McKAY SECURITIES Plc ("McKay") COVID-19 BUSINESS UPDATE

McKay Securities Plc, the only UK REIT specialising entirely in the office, industrial and logistics markets of London and the South East, today provides an update on the impact of the global COVID-19 pandemic on the business to date.

Our primary focus through this profoundly challenging period has been the health and wellbeing of our colleagues, the occupiers of our buildings and our suppliers, whilst maintaining operational resilience and protecting the long-term value of the Company.

Financial strength & flexibility

Our strategy over recent years has strengthened McKay's financial position and capital structure, which leaves us well placed to deal with a period of prolonged uncertainty thanks to a strong balance sheet, high liquidity and significant headroom to covenants.

   -- With drawn debt at 31st March 2020 of GBP194 million, we have GBP51 million of cash and available facilities. 
 
   -- Total facilities consist of a GBP65 million, 15 year term loan with Aviva to 2030, and a five year GBP180 million 
      club Revolving Credit Facility that was completed in April 2019. The weighted average maturity of these 
      facilities is 5.6 years, the first of which does not mature until April 2024. 
 
   -- No committed development expenditure following the completion of all but minor works at 135 Theale Logistics Park 
      shortly before lockdown, and modest committed portfolio capital expenditure of below GBP1 million. 
 
   -- Sale proceeds of c. GBP65 million (net) from the contracted sale of 30 Lombard Street, EC2, will be used to 
      reduce borrowings. Completion of this sale, which remains conditional on satisfying outstanding highway matters, 
      had been anticipated in Q2 2020, but with COVID-19 related delays, is unlikely to take place prior to Q3 2020. 
 
   -- Low leverage, with LTV of 38% (drawn debt at 31st March 2020 and 30th September 2019 asset values, including 
      Rivergate, Newbury acquisition at cost), reducing to 28% on completion of the sale of Lombard Street. 
 
   -- Rental income (over a 12 month rolling period) would have to fall by 27% and asset value by 37% before affecting 
      our bank covenants. 

The long-term drivers for our key market sectors, being office, industrial and logistics, remain positive, providing us with confidence that McKay is well positioned for the future.

Operational resilience

Throughout this rapidly evolving situation, we have closely monitored and implemented government guidance, with all staff working from home since 19(th) March 2020. Despite the extreme scale of business disruption, we have been able to maintain a high level of business continuity.

   -- Recent investment has upgraded our IT infrastructure, providing staff with remote access to our operating systems 
      and the ability to collaborate effectively from home. 
 
   -- The in-house management of our portfolio, and our direct relationships with our occupiers, has facilitated the 
      swift and efficient introduction of initiatives to secure and maintain our assets, and to minimise the risks to 
      our occupiers. All buildings remain accessible, and measures are being taken to support our occupiers with 
      reduced running costs. 
 
   -- With our narrow geographic focus on the South East and London, all our buildings can be easily accessed in the 
      event of essential maintenance. 
 
   -- Following the recent completion of our sole outstanding development project, the 134,430 sq ft logistics 
      warehouse at Theale, we had no active construction sites or material asset management activity that required 
      closure at the time the government's enhanced social distancing measure came into place . 

Rent receipts

We benefit from a highly diverse customer base of predominantly office, industrial and warehouse operators, but are acutely aware that livelihoods and businesses are at risk from short-term cashflow issues. It is in the interest of all stakeholders to work together during this period of economic suspension and we place great value on our relationships with our occupiers.

   -- Following the most recent quarterly payment date of 25th March 2020 for rent due to 30th June 2020, 65% has been 
      paid or is being paid monthly. A further 11% is subject to agreed deferred payment plans. This compares with c. 
      90% in prior periods. 
 
   -- Of the balance, 13% of rent due is in advanced discussions with two of our larger occupiers, and a further 7% is 
      under discussion with others. The remaining 4% is due from eight occupiers who we've been unable to contact so 
      far. 

Outlook

Underlying earnings for the year ending 31(st) March 2020 are currently expected to be in line with previous expectations. However, we have been advised that our independent valuation as at 31(st) March 2020 will include a material uncertainty clause, in accordance with the guidance issued to all valuers by RICS.

At this stage, we anticipate publishing our preliminary financial results for the year to 31(st) March 2020 in May 2020 and will confirm a date in due course.

The scale of the impact of the pandemic on future earnings and capital values cannot be assessed at this stage, as the duration of disruption and the effectiveness of Government support remains unknown. We will continue to respond to the evolving situation and, once our year end results are finalised, will consider recommendations in respect of a final dividend.

-ENDS-

For further information, please contact:

   McKay Securities Plc                                       FTI Consulting 
   Simon Perkins, CEO                                          Dido Laurimore, Ellie Sweeney 
   Giles Salmon, CFO                                            0203 727 1000 
   0118 950 2333                                                   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 office, industrial and logistics buildings within proven markets of London and South East England. The portfolio at 30(th) September 2019 comprised 32 properties with 175 occupiers on 211 leases, valued at GBP492.14m, located in established areas, predominantly along the M4 corridor, where McKay has deep expertise, with a focus on growing satellite towns benefitting from strong connectively to London and robust demand amongst leading occupiers.

www.mckaysecurities.plc.uk

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

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