26 July 2023
PICTON
PROPERTY INCOME LIMITED
(“Picton”,
the “Company” or the “Group”)
LEI:
213800RYE59K9CKR4497
Trading
Update and Net Asset Value as at 30 June
2023
Picton
announces its Net Asset Value for the quarter ended 30 June 2023.
Financial
Highlights
-
Net assets
of £541.9 million (31 March 2023:
£547.6 million).
-
NAV/EPRA
NTA per share decreased by -1.1% to 99.4
pence (31 March 2023:
100.4 pence).
-
Total
return for the quarter of -0.2% (31 March
2023: -0.9%).
-
LTV of
27.1% (31 March 2023:
26.7%).
-
Like-for-like
portfolio valuation movement of -0.7% over the quarter, with modest
positive valuation movements in the industrial, retail and leisure
sectors.
-
Renewed /
regeared nine leases across the office and industrial sectors, with
a combined annual rent of £0.8 million, an increase of 18% against
the previous passing rent and 3% ahead of the March 2023 ERV.
-
Completed
three lettings in the industrial sector, securing a combined annual
rent of £0.2 million, 5% ahead of the March
2023 ERV.
-
Secured an
increase of 24% against the previous passing rent from a 2022 rent
review in the industrial sector, with an annual rent of £0.1
million, which was 5% ahead of the ERV at the time of the
review.
-
Occupancy
at 90% (31 March 2023:
91%).
Dividend
-
Interim
dividend of 0.875 pence per share
declared in respect of the period 1 April
2023 to 30 June 2023 and to be
paid on 31 August 2023 (1 January 2023 to 31 March
2023: 0.875 pence per
share).
-
Annualised
dividend equivalent to 3.5 pence per
share, delivering a dividend yield of 4.8%, based on the share
price at close of business on 24 July
2023.
-
Dividend
cover for the quarter of 96% (31 March
2023: 111%).
Lena Wilson CBE, Chair of Picton,
commented:
“The
modest reduction in NAV over the period confirms a trend observed
in March that the rate of valuation decline in our portfolio has
stabilised since December 2022. This
is reflective of a number of factors including the macroeconomic
backdrop and the current level of investment activity across the UK
real estate sector.”
Michael Morris, Chief Executive of Picton,
commented:
“It is
encouraging to see that the portfolio valuation has stabilised
relative to previous quarters, supported by positive movements in
the industrial and retail sectors. In addition, the team has made
progress on a number of fronts which has resulted in new lettings
and extending leases with existing occupiers ahead of the
independent ERVs.”
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
£761 million diversified UK commercial property portfolio, invested
across 49 assets and with around 400 occupiers (as
at 30
June 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 30 June 2023 was £541.9 million, or 99.4 pence per share, reflecting a -1.1% decline
over the quarter or -0.2% 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 2023, including income for the quarter,
but does not include a provision for the dividend this quarter,
which will be paid in August
2023.
|
30
Jun 2023
£million
|
31
Mar 2023
£million
|
31
Dec 2022
£million
|
30
Sept 2022
£million
|
Investment
properties*
|
744.1
|
749.6
|
758.6
|
835.4
|
Other
assets
|
25.1
|
23.4
|
23.8
|
27.5
|
Cash
|
20.7
|
20.0
|
20.3
|
19.7
|
Other
liabilities
|
(20.9)
|
(20.9)
|
(20.6)
|
(21.0)
|
Borrowings
|
(227.1)
|
(224.5)
|
(224.8)
|
(225.2)
|
Net
Assets
|
541.9
|
547.6
|
557.3
|
636.4
|
Net
Asset Value per share
|
99.4p
|
100.4p
|
102.2p
|
116.7p
|
*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 2023
|
547.6
|
|
100.4
|
Movement
in property values
|
(5.7)
|
(1.0)
|
(1.0)
|
Net income
after tax for the period
|
4.6
|
0.8
|
0.8
|
Dividends
paid
|
(4.8)
|
(0.9)
|
(0.8)
|
Other
|
0.2
|
-
|
-
|
NAV
at 30 June 2023
|
541.9
|
(1.1)
|
99.4
|
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 2023 to
30 June 2023 (1 January 2023 to 31 March
2023: 0.875 pence).
Dividend
cover over the quarter was 96% (31 March
2023: 111%). The position relative to last quarter primarily
reflects the timing of certain income and costs, alongside the
current occupancy position ahead of re-leasing.
DEBT
Total
borrowings at 30 June 2023 were
£227.1 million. The majority is drawn under long-term fixed rate
facilities with only £14.9 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 27.1% (31 March 2023: 26.7%).
The
weighted average debt maturity profile of the Group is
approximately 8.0 years and the weighted average interest rate is
3.9%.
Picton has
£35.1 million available through its undrawn revolving credit
facility (31 March 2023: £38.1
million).
MARKET
BACKGROUND
According
to the MSCI Monthly UK Property Index, the All Property total
return was 0.9% for the quarter to June
2023, compared to 0.2% for the previous quarter. MSCI
capital growth over the three months to June
2023 was -0.4% (March 2023:
-1.2%). This decline was driven by -4.0% in the office sector,
offset by growth in the industrial and retail sectors of 1.2% and
0.1% respectively.
Rents at
an All Property level grew 1.0% in the quarter according to MSCI
(March 2023: 0.8%). ERV growth was
driven by the industrial sector at 1.8%, with offices at 1.0% and
0.0% in the retail sector.
Occupancy
was 89.6% (March 2023:
89.7%).
A more
detailed breakdown of the MSCI Monthly Index for the quarter to
June 2023 is shown below:
MSCI
Capital Growth
|
|
Number
of MSCI segments
|
|
Quarterly
movement
|
Positive
growth
|
Negative
growth
|
Industrial
|
1.2%
|
7
|
0
|
Office
|
-4.0%
|
0
|
10
|
Retail
|
0.1%
|
8
|
11
|
All
Property
|
-0.4%
|
15
|
21
|
MSCI
Estimated Rental Value (ERV) Growth
|
|
Number
of MSCI segments
|
|
Quarterly
movement
|
Positive
growth
|
Negative
growth
|
Industrial
|
1.8%
|
7
|
0
|
Office
|
1.0%
|
9
|
1
|
Retail
|
0.0%
|
7
|
12
|
All
Property
|
1.0%
|
23
|
13
|
PORTFOLIO
UPDATE
On a
like-for-like basis, the portfolio
valuation movement was -0.7%, principally reflecting upward yield
movement in the office sector whilst stabilising in the industrial,
retail and leisure sectors.
The breakdown of valuation movements over the quarter are shown
below:
Sector
|
Portfolio
allocation
|
Like-for-like
valuation
change
|
Average
equivalent
yield
movement
|
Industrial
|
58.0%
|
0.5%
|
+2
bps
|
South
East
|
41.6%
|
|
|
Rest of
UK
|
16.4%
|
|
|
|
|
|
|
Office
|
31.2%
|
-3.2%
|
+26
bps
|
London
City and West End
|
7.0%
|
|
|
Inner and
Outer London
|
5.7%
|
|
|
South
East
|
8.5%
|
|
|
Rest of
UK
|
10.0%
|
|
|
|
|
|
|
Retail
and Leisure
|
10.8%
|
0.5%
|
0
bps
|
Retail
Warehouse
|
6.9%
|
|
|
High
Street – Rest of UK
|
2.3%
|
|
|
Leisure
|
1.6%
|
|
|
Total
|
100%
|
-0.7%
|
|
Whilst we
saw modest valuation increases in the industrial and retail and
leisure assets, office assets and particularly those in
London were subject to further
decline, reflecting the more limited investor demand in that sector
currently.
We
continue to see rising rental values and have captured further ERV
growth from the portfolio. This includes the letting of a unit at
our largest industrial estate in Radlett where the passing rent is
£0.2 million per annum, in-line with the March 2023 ERV and 11% ahead of the ERV when the
letting was agreed. The letting followed a comprehensive
refurbishment, which included the provision of solar roof panels,
for which there will be an additional revenue stream linked to the
renewable electricity generated and used.
In the
office sector we renewed the leases on a single leased building in
Colchester, two small suites in
Glasgow and an ancillary
residential unit in Covent Garden, securing a combined £0.5 million
per annum, which is 6% ahead of the March
2023 ERV. Using permitted development rights, we have
secured further changes of use from office to residential on vacant
office space at our scheme in Islington. In total permission has
now been secured for 28 units (45 bedrooms) and have applications
pending on a further 7 units (21 bedrooms). We are also progressing
further repositioning initiatives in Cardiff and Hammersmith and updates will be
provided as appropriate.
In the
retail and leisure sector, we completed an Agreement for Lease at a
unit in Carlisle where a national
restaurant chain will take a new 15-year lease at £0.1 million, in
line with March 2023 ERV, once
planning consent is obtained and landlord’s works complete later
this year.
As at
30 June 2023, the portfolio had a net
initial yield of 5.0% (allowing for void holding costs) or 5.3%
(based on contracted net income), an equivalent yield of 6.6% and a
net reversionary yield of 6.8%. The weighted average unexpired
lease term, based on headline rent, was 4.5
years.
Occupancy
was 90%, reflecting slightly lower leasing activity over the
quarter, combined with a specific asset management led
surrender.
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
|
Angel
Gate, City Road, London, EC1
|
|
Office
|
London
|
Shipton
Way, Rushden, Northamptonshire
|
|
Industrial
|
East
Midlands
|
Datapoint,
Cody Road, London, E16
|
|
Industrial
|
London
|
Lyon
Business Park, Barking, London
|
|
Industrial
|
Outer
London
|
Tower
Wharf, Cheese Lane, Bristol
|
|
Office
|
South
West
|
Sundon
Business Park, Luton, Bedfordshire
|
|
Industrial
|
South
East
|
50
Farringdon Road, London,
EC1
|
|
Office
|
London
|
ENDS