30 January
2024
PICTON PROPERTY INCOME
LIMITED
('Picton', the 'Company' or
the 'Group')
LEI:
213800RYE59K9CKR4497
Trading Update and Net Asset
Value as at 31 December 2023
Picton announces its Net Asset Value
for the quarter ended 31 December 2023.
Lena Wilson CBE, Chair of Picton, commented:
"The real estate market showed
continued resilience from an occupational perspective, with all
three core sectors showing positive rental growth for the year.
With capital values having seen on average a 25% write down since
their 2022 peak, the outlook, assuming interest rates have peaked,
will become supportive and as such we expect a stabilisation of
values in 2024."
Michael Morris, Chief Executive of Picton,
commented:
"This quarter we have agreed some
significant rental increases, which have mitigated the impact of
outward yield movements, against a backdrop of rising interest
rates in 2023. We have maintained a well covered dividend over the
period and made good progress on specific asset management
initiatives. These will enable us to improve earnings as we
reposition our portfolio, to ensure it continues to meet evolving
occupier needs. As we start 2024, we are already encouraged by
portfolio activity."
Financial
Highlights
•
|
Net assets of £524.3 million (30
September 2023: £537.1 million).
|
•
|
NAV/EPRA NTA per share decreased by
-2.5% to 96.0 pence (30 September 2023: 98.5 pence).
|
•
|
Total return for the quarter of
-1.6% (30 September 2023: 0.0%).
|
•
|
LTV of 27.7% (30 September 2023:
27.7%).
|
Operational
Highlights
•
|
Like-for-like portfolio valuation
movement of -1.5% over the quarter, with the industrial sector
showing most resilience.
|
•
|
Secured a 33% increase against the
previous passing rent from four rent reviews in the industrial and
retail sectors, with an annual rent of £2.3 million, which was 5%
ahead of the September 2023 ERV or the ERV at the time of the
review if prior.
|
•
|
Renewed / regeared two leases in the
industrial sector, with a combined annual rent of £0.1 million, an
increase of 101% against the previous passing rent and in line with
the September 2023 ERV.
|
•
|
Completed five lettings in the
industrial and office sectors, securing a combined annual rent of
£0.5 million, in line with the September 2023 ERV.
|
•
|
Secured valuable residential
permitted development rights at Angel Gate EC1, in order to
maximise future disposal proceeds.
|
•
|
Stable occupancy at 90% (30
September 2023: 90%).
|
Dividend
•
|
Interim dividend of 0.875 pence per
share declared in respect of the period 1 October 2023 to 31
December 2023 and to be paid on 29 February 2024 (1 July 2023 to 30
September 2023: 0.875 pence per share).
|
•
|
Annualised dividend equivalent to
3.5 pence per share, delivering a dividend yield of 5.3%, based on
the share price at close of business on 26 January 2024.
|
•
|
Dividend cover for the quarter of
108% (30 September 2023: 115%).
|
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
Kathy Thompson, Company
Secretary
020 7011 9988, kathy.thompson@picton.co.uk
About
Picton
Picton, established in 2005, is a UK
REIT. It owns and actively manages a £745 million diversified UK
commercial property portfolio, invested across 49 assets and with
around 400 occupiers (as at 31 December 2023).
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 31 December 2023 was £524.3 million, or
96.0 pence per share, reflecting a -2.5% decline over the quarter
or -1.6% on a total return basis.
The NAV attributable to the ordinary
shares is calculated under IFRS and incorporates the independent
market valuation as at 31 December 2023, including income for the
quarter, but does not include a provision for the dividend this
quarter, which will be paid in February 2024.
|
31 Dec 2023
£million
|
30 Sept
2023
£million
|
30 Jun 2023
£million
|
31 Mar 2023
£million
|
Investment properties*
|
728.3
|
740.0
|
744.1
|
749.6
|
Other assets
|
23.6
|
26.6
|
25.1
|
23.4
|
Cash
|
21.6
|
17.2
|
20.7
|
20.0
|
Other liabilities
|
(21.3)
|
(19.9)
|
(20.9)
|
(20.9)
|
Borrowings
|
(227.9)
|
(226.8)
|
(227.1)
|
(224.5)
|
Net
Assets
|
524.3
|
537.1
|
541.9
|
547.6
|
Net
Asset Value per share
|
96.0p
|
98.5p
|
99.4p
|
100.4p
|
*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 30 September 2023
|
537.1
|
|
98.5
|
Movement in property
values
|
(13.3)
|
(2.5)
|
(2.5)
|
Net income after tax for the
period
|
5.1
|
0.9
|
0.9
|
Dividends paid
|
(4.8)
|
(0.9)
|
(0.9)
|
Other
|
0.2
|
-
|
-
|
NAV
at 31 December 2023
|
524.3
|
(2.5)
|
96.0
|
DIVIDEND DECLARATION
A separate announcement has been
released today declaring a dividend of 0.875 pence per share in
respect of the period 1 October 2023 to 31 December 2023 (1 July
2023 to 30 September 2023: 0.875 pence).
Dividend cover over the quarter
was 108% (30 September 2023:
115%).
DEBT
Total borrowings at 31 December 2023 were
£227.9 million. The majority is drawn under long-term fixed rate
facilities with only £16.4 million drawn under the revolving credit
facility.
The net loan-to-value ratio, calculated as
total debt less cash, as a proportion of gross property value, is
27.7% (30 September 2023: 27.7%). The weighted average debt
maturity profile of the Group is approximately 7.5 years and the
weighted average interest rate is 3.9%.
Picton has £33.6 million available through its
undrawn revolving credit facility
(30 September 2023: £35.1 million).
MARKET
BACKGROUND
The MSCI UK Monthly Property Index showed a
total return for All Property for the three months to December 2023
of -1.4%, with an income return of 1.4% and capital growth of
-2.7%. Rental growth was 1.2% for the three months to December
2023, compared to 0.8% for the three months to September 2023. The
All Property Net Initial Yield was 5.3% in December 2023, compared
to 5.1% in September 2023.
The market performance for the three months to
December 2023 for All Property and the three main sectors is shown
below.
Three months
to December 2023
|
All Property
|
Industrial
|
Office
|
Retail
|
|
|
|
|
|
Total Return
|
-1.4%
|
0.3%
|
-4.2%
|
-1.9%
|
|
|
|
|
|
Income Return
|
1.4%
|
1.2%
|
1.3%
|
1.7%
|
|
|
|
|
|
Capital Growth
|
-2.7%
|
-0.8%
|
-5.5%
|
-3.6%
|
Number of segments with positive
growth
|
1
|
1
|
0
|
0
|
Number of segments with negative
growth
|
34
|
6
|
10
|
18
|
|
|
|
|
|
ERV Growth
|
1.2%
|
2.2%
|
0.7%
|
0.2%
|
Number of segments with positive
growth
|
27
|
7
|
8
|
12
|
Number of segments with negative
growth
|
8
|
0
|
2
|
6
|
PORTFOLIO
UPDATE
On a like-for-like basis, the
portfolio valuation movement was -1.5%, with the
industrial sector showing most resilience, whilst regional office
and retail warehouse sub-sectors showed more weakness over the
quarter, with investment activity significantly lower than previous
years.
The breakdown of valuation movements
over the quarter are shown below:
Sector
|
Portfolio
allocation
|
Like-for-like
valuation
change
|
Average
equivalent
yield
movement
|
Industrial
|
58.9%
|
-1.0%
|
+11
bps
|
South East
|
42.0%
|
|
|
Rest of UK
|
16.9%
|
|
|
|
|
|
|
Office
|
30.4%
|
-2.4%
|
+18
bps
|
London City and West End
|
7.1%
|
|
|
Inner and Outer London
|
1.7%
|
|
|
South East
|
8.0%
|
|
|
Rest of UK
|
8.9%
|
|
|
Alternative use assets
|
4.7%
|
|
|
|
|
|
|
Retail and Leisure
|
10.7%
|
-1.9%
|
+13
bps
|
Retail Warehouse
|
6.7%
|
|
|
High Street - Rest of UK
|
2.4%
|
|
|
Leisure
|
1.6%
|
|
|
Total
|
100%
|
-1.5%
|
|
Capturing
rental growth in the industrial sector and extending
income
At our distribution unit in Grantham, we settled a rent review at
£1.6 million per annum,
increasing the passing rent by 38%, 6% ahead
of the September 2023 ERV.
In Harlow, we settled a rent review
at £0.5 million per annum, increasing the passing rent by 29%, in
line with the ERV at the time of the 2021 review.
At our largest multi-let estate in
Radlett, we settled a rent review at £0.1 million per annum,
increasing the passing rent by 56%, 5% ahead of the September 2023
ERV.
Two leases were renewed in Belfast
and Wokingham, increasing the passing rent by 101% to £0.1 million
per annum, in line with the September 2023 ERV.
In Gloucester, we let a refurbished
unit with an A-rated EPC to an existing occupier for their
expansion. The rent agreed was £0.1 million per annum, 9% ahead of
the September 2023 ERV and we will benefit from additional income
from solar installation.
At Colchester Business Park, we have
let a refurbished unit with a B-rated EPC. The rent agreed was £0.3
million per annum, 1% below the September ERV, and the occupier
took a 15-year lease, subject to break.
Leasing space in the office sector and retaining
income
We have let three suites at Queens House,
Glasgow and at Angel Gate, London on flexible SwiftSpace agreements
for a combined rental income of £0.1 million per annum.
At Angel Gate we have removed two break options
securing £0.2 million per annum of short-term income. In addition,
we secured value accretive residential permitted development rights
across the entire estate following engagement with both the local
and national planning authorities during 2023, to remove the
restrictive Article 4 Direction. This unlocks residential
conversion potential in order to maximise future disposal
proceeds.
As at 31 December 2023, the
portfolio had a net initial yield of 5.3% (allowing for void
holding costs) or 5.5% (based on contracted net income), an
equivalent yield of 6.8% and a net reversionary yield of 7.0%. The
weighted average unexpired lease term, based on headline rent, was
4.3 years.
Occupancy remained stable at 90%, or
92% excluding offices at Cardiff and Angel Gate, where alternative
use strategies are being pursued.
The top ten assets,
which represent 54% of the portfolio by capital value, are detailed
below.
Asset
|
|
Sector
|
Location
|
Parkbury
Industrial Estate, Radlett, Hertfordshire
|
|
Industrial
|
South East
|
River Way
Industrial Estate, Harlow, Essex
|
|
Industrial
|
South East
|
Stanford
Building, Long Acre, London, WC2
|
|
Office
|
London
|
Shipton
Way, Rushden, Northamptonshire
|
|
Industrial
|
East Midlands
|
Datapoint,
Cody Road, London, E16
|
|
Industrial
|
London
|
Lyon
Business Park, Barking, London
|
|
Industrial
|
Outer London
|
Angel Gate,
City Road, London, EC1
|
|
Office
|
London
|
Sundon
Business Park, Luton, Bedfordshire
|
|
Industrial
|
South East
|
Tower
Wharf, Cheese Lane, Bristol
|
|
Office
|
South West
|
50
Farringdon Road, London, EC1
|
|
Office
|
London
|
ENDS