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Picton Property Income Ltd - Trading Update and Net Asset Value as at 30 June 2022

Picton Property Income Ltd - Trading Update and Net Asset Value as at 30 June 2022

PR Newswire

27 July 2022 

PICTON PROPERTY INCOME LIMITED
(“Picton”, the “Company” or the “Group”)
LEI: 213800RYE59K9CKR4497

Trading Update and Net Asset Value as at 30 June 2022

Picton announces a 2.0% increase in Net Asset Value for the quarter ended 30 June 2022.

Financial Highlights

Operational Highlights

Dividend

Lena Wilson CBE, Chair of Picton, commented:

“It is encouraging to have delivered yet another quarter of positive NAV growth. Looking ahead, our conservative balance sheet and predominately fixed long-term debt facilities put us in a favourable position to take advantage of opportunities arising from current market conditions.”

Michael Morris, Chief Executive of Picton, commented:

“We have seen valuation gains across each sector of the portfolio. Whilst we recognise that macro events are leading to a slowing of capital growth in many markets, both asset management initiatives and rental growth in a number of subsectors have contributed to the overall positive result. We continue to watch the market carefully for opportunities to grow the portfolio.”

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF THE UK MARKET ABUSE REGULATION

For further information:

Tavistock 

James Verstringhe, 020 7920 3150, james.verstringhe@tavistock.co.uk

Picton

Michael Morris, 020 7011 9980, michael.morris@picton.co.uk 

Note to Editors

Picton, established in 2005, is a UK REIT. It owns and actively manages a £879 million diversified UK commercial property portfolio, invested across 48 assets and with around 400 occupiers (as at 30 June 2022).

Through an occupier focused, opportunity led approach to asset management, Picton aims to be one of the consistently best performing diversified UK focused property companies listed on the main market of the London Stock Exchange.

For more information please visit: www.picton.co.uk 


 

NET ASSET VALUE

The unaudited Net Asset Value (‘NAV’) of Picton as at 30 June 2022 was £670.0 million, reflecting 122.9 pence per share, an increase of 2.0% over the quarter or 2.8% on a total return basis.

The NAV attributable to the ordinary shares is calculated under IFRS and incorporates the independent market valuation as at 30 June 2022, including income for the quarter, but does not include a provision for the dividend this quarter, which will be paid in August 2022.


30 Jun 2022
£million

31 Mar 2022
£million

31 Dec 2021
£million

30 Sept 2021
£million
Investment properties* 863.2 834.2 774.2 730.2
Other assets 25.5 24.2 25.3 26.2
Cash 22.4 38.5 17.7 16.7
Other liabilities (22.6) (21.0) (19.3) (20.0)
Borrowings (218.5) (218.8) (182.2) (179.5)
Net Assets 670.0 657.1 615.7 573.6
Net Asset Value per share 122.9p 120.4p 112.8p 105.0p

*The investment property valuation is stated net of lease incentives and includes the value of owner-occupied property.

The movement in Net Asset Value can be summarised as follows:

Total
£million
Movement
%
Per share
Pence
NAV at 31 March 2022 657.1 120.4
Movement in property values 13.3 2.0 2.5
Net income after tax for the period 4.9 0.7 0.9
Dividends paid (4.8) (0.7) (0.9)
Other (0.5) - -
NAV at 30 June 2022 670.0 2.0 122.9

DIVIDEND DECLARATION

A separate announcement has been released today declaring a dividend of 0.875 pence per share in respect of the period 1 April 2022 to 30 June 2022 (1 January 2022 to 31 March 2022: 0.875 pence).

Dividend cover over the quarter was 103% (31 March 2022: 103%).

DEBT 

Total borrowings at 30 June 2022 were £218.5 million, with £4.9 million drawn under the revolving credit facility and the balance drawn under long-term fixed rate facilities. The net loan to value ratio, calculated as total debt less cash, as a proportion of gross property value, is 22.3% (31 March 2022: 21.2%). 

The weighted average debt maturity profile of the Group is approximately 9.3 years and the weighted average interest rate is 3.7%.

Picton has £45.1 million available through its undrawn revolving credit facility.

PORTFOLIO UPDATE

Like-for-like, the portfolio valuation increased over the quarter by 1.9% or £16.2 million, with £1.1 million of capital expenditure incurred across the portfolio during the period. The valuation movements over the quarter are shown below:

Sector Portfolio
Allocation
Like-for-like
Valuation Change

Industrial

59.3%

2.3%
South East 43.1%
Rest of UK 16.2%
Offices 30.3% 0.7%
London City and West End 7.0%
Inner and Outer London 5.2%
South East 8.7%
Rest of UK 9.4%
Retail and Leisure 10.4% 2.8%
Retail Warehouse 6.8%
High Street – Rest of UK 2.1%
Leisure 1.5%

Total

100%

1.9%

Against a backdrop of rising inflation and financing costs, there was some upward pressure on yields in certain subsectors, albeit this was offset through rental growth and portfolio activity.  

The retail and leisure element of the portfolio saw the strongest growth, principally reflecting lower yields for retail warehouse assets. On a like-for-like basis the valuation of our office portfolio increased by 0.7% over the quarter, principally reflecting investment into the assets. Occupational demand in the industrial sector remains strong with associated rental growth and this led to positive performance and a capital value uplift, despite some small outward yield adjustments for lower yielding assets.

Charlotte Terrace, Hammersmith Road, London, W14 was acquired for £13.7 million. This mixed use London block comprises four adjoining buildings, which total 28,500 sq ft of office space and 4,400 sq ft of retail space, arranged over five floors. The property was redeveloped behind the façade in 1990 and is Grade II listed, meaning there are no business rates payable on void units. The purchase price reflects a net initial yield of 3.3%, rising to over 8% once fully let and reflecting a low capital value of £417 per sq ft, which is below its estimated replacement cost. In order to assist the leasing process, works are underway to improve the occupier amenities.

As at 30 June 2022, the portfolio had a net initial yield of 4.1% (allowing for void holding costs) or 4.3% (based on contracted net income) and a net reversionary yield of 5.4%. The weighted average unexpired lease term, based on headline rent, was 4.9 years. 

Occupancy reduced to 91%, principally reflecting the existing vacancy in the above recent acquisition.

The top ten assets, which represent 55% of the portfolio by capital value, are detailed below.

Asset Sector Location
Parkbury Industrial Estate, Radlett Industrial South East
River Way Industrial Estate, Harlow Industrial South East
Datapoint, Cody Road, E16 Industrial London
Lyon Business Park, Barking Industrial Outer London
Stanford Building, Long Acre, WC2 Office London
Shipton Way, Rushden, Northants Industrial East Midlands
Angel Gate, City Road, EC1 Office London
Tower Wharf, Cheese Lane, Bristol Office South West
Sundon Business Park, Luton Industrial South East
50 Farringdon Road, EC1 Office London

MARKET BACKGROUND

According to the MSCI Monthly UK Property Index, the All Property total return was 3.6% for the quarter to June 2022, compared to 5.5% for the previous quarter. 

Capital growth was 2.5% (March 2022: 4.3%) and rental growth was 1.1% for the quarter (March 2022: 1.3%). A more detailed breakdown of the MSCI Monthly Digest is shown below:

MSCI capital growth

Number of MSCI segments
Quarterly growth Positive growth Negative growth
Industrial 4.1% 7 0
Office 0.6% 5 5
Retail 2.2% 11 8
All Property 2.5% 23 13

MSCI rental growth

Number of MSCI segments
Quarterly growth Positive growth Negative growth
Industrial 2.7% 7 0
Office 0.1% 5 5
Retail 0.2% 10 9
All Property 1.1% 22 14

ENDS