McKay Securities enjoyed a net asset value increase of 2.8% in its 2011 financial year, despite no increase in the value of its property portfolio.

NAV was 229p a share at the end of March this year, compared with 223p the year before.

However basic net asset value, which unlike EPRA reports the impact of hedge instrument movements, fell 17.7% due to a 37p reduction in the value of hedging instruments.

The value of McKay’s property portfolio increased to £214m from £208.5m the year before, due to the acquisition of Doncastle House in Bracknell. On a like-for-like basis the value increase was 0.01%.

Valuation gains within McKay’s portfolio came from its London properties with City assets increasing in value by 9.6% and Victoria properties improving by 14.6%.

McKay’s south east portfolio fell in value by 3.4% and properties in Glasgow declined by 2.2%.

However, the valuation is already out of date, since McKay has let two of its largest assets since the year end. Great Surrey House in London’s Blackfriars Road was let to the Overseas Development Institute at £800,000 a year and 100 Bothwell Street in Glasgow was re-let to the Student Loans Company.

Oriel Securities estimates the two lettings will add 10p a share to the NAV.

David Thomas, chairman, said: “The group continued to manage its properties proactively over the year.  Its exposure to and knowledge of the more resilient office and industrial markets of central London and the South East, combined with an entrepreneurial approach, has helped to grow the portfolio, reduce voids and retain income whilst generating profits in line with last year and maintaining secure and stable financing.

“The pre-letting of Great Surrey House, London, SE1 (office: 21,000 sq ft) and the grant of a new lease to our existing tenant at 100 Bothwell Street, Glasgow after the year end, are excellent results. 

“Both these transactions will generate capital gains at the September 2012 interim valuation, protect the group’s future income returns and further increase portfolio occupancy.

“Although market conditions are likely to remain tough this year, the group’s concentration on well established markets, together with its proven property skills, leave the group well placed to take advantage of further recovery in occupier markets and emerging acquisition opportunities.”