Rupert Mucklow, Chairman, will comment:
The Group's property portfolio has continued to benefit from steady occupier demand and a shortage of quality business space during the first four months of this financial year, enabling us to maintain our solid financial performance from the previous year.
The Midlands property investment market has also continued to be strongly competitive during the same period, suggesting yields may still be falling and values rising on some prime regional properties. We declined to buy any investment properties during the period.
We sold our Bull Ring Trading Estate in Birmingham last month for £13.0m, significantly above our 30 June 2017 valuation of £5.4m. The main tenant on the estate is due to vacate next year after 30 years of occupation.
Conditions in the Midlands property market are gradually becoming more favourable for pre-let development, due to the limited supply of stock. We are experiencing greater interest from potential occupiers on our two industrial sites at Tyseley, Birmingham and i54 Wolverhampton.
Our current void rate remains low at around 4.2%. We re-let approximately 25% of our vacant space during the period, while a similar amount was returned to us on lease expiries. We will, however, be taking back a 110,000 sq ft warehouse in Worcester next month, so our void rate is likely to be higher at our half year end.
A number of lease renewals and extensions have been agreed since 1 July 2017, including a 29,500 sq ft retail warehouse let to Dunelm for 15 years and a 41,500 sq ft warehouse let to Safestore for a further 25 years.
The substantial refurbishment of our 24,125 sq ft office building at Trinity Central, close to Birmingham International railway station, is due to complete in January next year and is starting to generate some good occupier interest.
Our 44,250 sq ft pre-let industrial building at i54 Wolverhampton is progressing well and is due to complete in February 2018.
Financially the Group remains in good health, with total net borrowings of £73.9m at 31 October 2017, against a property investment portfolio last valued at £386.9m on 30 June 2017.
We are currently in a very good position, benefiting from low gearing, significant cash resources and a heavy weighting towards Midlands industrial property. Nevertheless, we remain mindful that circumstances can change rapidly, particularly with Brexit looming. We are, however, confident of our ability to manage and protect the investment portfolio through different phases of the property cycle and we remain positive about our prospects for the full year.