PICTON PROPERTY INCOME LIMITED
24 January 2017
PICTON PROPERTY INCOME LIMITED
("Picton" or the "Company" or the "Group")
Net Asset Value as at 31 December 2016 and Interim Dividend
Picton (LSE: PCTN) announces its Net Asset Value for the quarter ended 31
December 2016 and Interim Dividend.
Highlights during the quarter included:
Financial
* Increase in Net Assets to £434.4 million (30 September 2016: £423.9
million).
* NAV/EPRA NAV per share rose 2.5% to 80.4 pence (30 September 2016: 78.5
pence).
* Total return for the quarter of 3.5% (30 September 2016: 2.5%).
* Repaid in full 7.25% zero dividend preference shares for £29.1 million
using proceeds from asset disposals.
* Reduction in net gearing to 28.3% (30 September 2016: 31.6%).
* Reduction in the weighted average annual interest rate to 4.2% (30
September 2016: 4.6%).
Dividend
* Dividend of 0.85 pence per share declared and to be paid on 28 February
2017 (30 September 2016: 0.825 pence per share).
* Annual dividend increased by 3%, equivalent to 3.4 pence per share,
delivering a yield, based on 20 January 2017 share price, of 4.4%.
* Dividend cover for the quarter of 112% (30 September 2016: 130%).
Portfolio Activity
* Like-for-like increase in property portfolio valuation of 1.9% (30
September 2016: 0.1%).
* Increased occupancy to 94% (30 September 2016: 93%).
* Completed nine lettings, on average 2% ahead of September ERV, adding £1.3
million per annum to the rent roll, including:
- The two largest industrial voids in Barking and Harlow, for a
combined initial rent of £0.6 million per annum.
- 50 Farringdon Road, London EC1 - First Floor North Wing, at an
initial rent of £0.42 million per annum.
* Completed £17.7 million of disposals of 1 Chancery Lane, London WC2 and 6
Argyle Street, Bath.
* Resultant portfolio of 55 assets with average lot size of £11.4 million.
Post Quarter End Activity
* Completed the sale of 2 Bath Street, Bath for £2.75 million, 10% above the
December valuation.
Commenting, Nick Thompson, Chairman of Picton, said:
"We have continued to make good progress over the quarter on many fronts. We
have enhanced occupancy and had notable success on both lettings and asset
disposals. We have repaid debt, which has simplified our corporate structure
and achieved an 8% reduction in our average annual interest rate. Our continued
high dividend cover enables us to declare an increased dividend today, which is
payable to shareholders next month."
Michael Morris, Chief Executive of Picton Capital, added:
"This quarter, we have delivered strong NAV growth and a total return of 10.8%
for 2016. By comparison the MSCI IPD Monthly Index showed a total return of
2.6% for 2016. This is a reflection of our capital structure, portfolio
composition and the considerable asset management activity undertaken."
This announcement contains inside information.
For further information:
Tavistock
Jeremy Carey/James Verstringhe, 020 7920 3150,
james.verstringhe@tavistock.co.uk
Picton Capital Limited
Michael Morris, 020 7011 9980, michael.morris@picton.co.uk
The Company Secretary
Northern Trust International Fund Administration Services (Guernsey) Limited
Trafalgar Court
Les Banques
St Peter Port
Guernsey
GY1 3QL
Sam Walden, 01481 745 001, team_picton@ntrs.com
Note to Editors
Picton is an income focused, property investment company listed on the London
Stock Exchange.
With Net Assets of £434.4 million at 31 December 2016, the Company's objective
is to provide shareholders with an attractive level of income, together with
the potential for capital growth by investing in the principal commercial
property sectors. Picton can invest both directly and indirectly in commercial
property across the United Kingdom.
www.picton.co.uk
NET ASSET VALUE
The unaudited Net Asset Value ('NAV') of Picton, as at 31 December 2016, was £
434.4 million, reflecting 80.4 pence per share, an increase of 2.5% over the
quarter.
The NAV attributable to the ordinary shares is calculated under International
Financial Reporting Standards and incorporates the external market valuation as
at 31 December 2016, including income for the quarter, but does not include a
provision for the increased dividend this quarter, which will be paid in
February 2017.
The next independent valuation of the property portfolio is scheduled for March
2017 and the unaudited NAV per share, as at 31 March 2017, will be announced in
April 2017.
A detailed breakdown of the NAV is included in the Appendix.
DIVIDEND
An increased interim dividend of 0.85 pence per share is declared in respect of
the period 1 October 2016 to 31 December 2016 (1 July 2016 to 30 September
2016: 0.825 pence). The dividend will be paid on 28 February 2017 to
shareholders on the register on 10 February 2017. The ex-dividend date is 9
February 2017.
Post-tax dividend cover over the quarter was 112% (30 September 2016: 130%).
DEBT
In the quarter, the 7.25% zero dividend preference shares were repaid in full
for £29.1 million using proceeds from asset disposals in this and the previous
quarter. This repayment has simplified the capital structure of the Group as
well as reducing net gearing and the overall cost of debt.
Total borrowings at 31 December were £204.9 million, with a weighted average
interest rate of 4.2% (100% fixed rate) and a weighted average debt maturity
profile of approximately 12.0 years. Net gearing, calculated as total debt less
cash, as a proportion of gross property value, was 28.3% (30 September 2016:
31.6%).
The Group currently has access to £53.0 million of undrawn facilities. If
drawn, interest will be charged at 175 basis points over 3 month LIBOR, which
is currently equivalent to 2.1% per annum.
PORTFOLIO UPDATE
The like for like portfolio valuation increased 1.9% or £11.9 million,
primarily as a result of our positioning in the better performing industrial
and office sectors, active management and leasing activity completed during the
period. The Group incurred £1.8 million of capital expenditure over the period.
Occupancy across the portfolio increased to 94%, principally reflecting leasing
activity.
As at 31 December 2016, the portfolio had a net initial yield of 5.8% (allowing
for void holding costs) or 5.9% (based on contracted net income) and a net
reversionary yield of 7.0%. The weighted average unexpired lease term based on
headline rent was unchanged from the previous quarter at 5.7 years.
Key highlights in the quarter included:
Office
The sale of 1 Chancery Lane, London WC2 was completed realising £17.25 million,
which was 2% ahead of the 30 September 2016 valuation. Having acquired the
building in 2005 for £9.0 million, the sale crystallised the value created
since purchase and concludes our strategy to reduce the portfolio's central
London exposure.
At 50 Farringdon Road, London, the larger wing on the first floor was leased to
the multidisciplinary contractor, Volker Wessels, on a ten year lease, subject
to break in the fifth year. The annual rent is £0.42 million, which is in line
with ERV.
Industrial
In Radlett, a tenant break clause was removed in return for a short rent free
period and secured the occupier until 2022. Concurrently, a rent review at the
unit was settled, securing income of £85,000 per annum which was a 19% increase
on the passing rent and 8% ahead of ERV.
The largest industrial void, at Unit D River Way in Harlow was let to BOC on a
ten year lease with no break at £0.35 million per annum, which is in line with
the September ERV. An Agreement for Lease was also completed on the only other
vacant unit on the estate, which will complete once planning is secured by the
occupier.
The second largest industrial void, at Unit O Lyon Business Park in Barking,
was let at a rent of £0.25 million per annum, 6% ahead of the September ERV,
and 17% ahead of the prior rent passing.
Retail and Leisure
At Queens House in Glasgow, an increase over 25% of the prior passing rent was
achieved on a restaurant unit securing a new rent of £160,500 per annum, over
25% ahead of the September ERV.
A small non-core retail asset at 6 Argyle Street, Bath was sold for £0.5
million, which was in line with the September valuation.
MARKET BACKGROUND
According to the MSCI IPD Monthly Index, total returns were 2.6% in the quarter
to December 2016, compared to -2.3% in the quarter to September 2016. Capital
growth was 1.1% over the quarter, compared with -3.6% in the quarter to
September 2016. Capital growth has been positive each consecutive month since
October. In December monthly growth was 0.7%, its highest monthly rise since
December 2015.
Across the principal IPD sectors, industrial capital values grew by 2.7%
(September 2016: -2.1%), office by 1.0% (September 2016: -4.7%) and retail by
0.4% (September 2016: -3.9%). Out of a total of 37 segments (based on rolling
three months), 29 segments recorded positive capital growth compared to only
one last quarter. The eight negative movements were only seen in the office and
retail sectors.
Over the quarter to December 2016, rental values rose by 0.5%, compared with
0.2% in the quarter to September 2016. Across the principal IPD sectors,
industrial rental values grew by 1.3% (September 2016: 0.4%), office by 0.3%
(September 2016: 0.2%) and retail by 0.3% (September 2016: 0.0%). Over the
quarter, 30 of the IPD segments recorded positive rental growth compared to 23
segments last quarter. The seven negative movements were only seen in the
office and retail sectors.
APPENDIX
NET ASSETS SUMMARY
The unaudited Net Asset Value is as follows:
31 Dec 2016 30 Sept 2016 30 June 2016
£million £million £million
Investment properties * 615.6 621.1 648.5
Other assets 17.6 24.1 18.5
Cash 28.2 35.3 23.4
Other liabilities (22.1) (22.4) (22.7)
Borrowings: Loan facilities (204.9) (205.2) (221.2)
ZDP's - (29.0) (28.5)
Net Assets 434.4 423.9 418.0
Net Asset Value per share 80.4p 78.5p 77.4p
* The investment property valuation is stated net of lease incentives.
The movement in Net Asset Value can be summarised as follows:
Total Movement Per share
£million % Pence
NAV at 30 September 2016 423.9 78.5
Movement in property values 10.0 2.4 1.8
Net income after tax for the 5.0 1.2 0.9
period
Dividends paid (4.5) (1.1) (0.8)
NAV at 31 December 2016 434.4 2.5 80.4
PORTFOLIO COMPOSITION
The portfolio consisted of 55 assets and an average lot size of £11.4 million
at the end of December 2016.
The Group's portfolio is structured as follows:
Sector Portfolio Like for like
weightings valuation change
31 Dec 2016
Industrial sub-total 39.2% 2.8%
South East 26.1%
Rest of UK 13.1%
Offices sub-total 34.4% 2.3%
South East 21.5%
Rest of UK 8.7%
City 4.2%
Retail and Leisure sub-total 26.4% 0.2%
Retail warehouse 10.5%
High Street - Rest of UK 7.8%
High Street - South East 5.6%
Leisure 2.5%
Total 100% 1.9%
TOP TEN ASSETS
The top ten assets, which represent 48% 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
Angel Gate Office Village, City Office London
Road, EC1
Stanford House, Long Acre, WC2 Retail London
50 Farringdon Road, EC1 Office London
Shipton Way, Rushden, Industrial East Midlands
Northamptonshire
Pembroke Court, Chatham Office South East
Queens Road, Sheffield Retail Warehouse North
Phase II Parc Tawe, Swansea Retail Warehouse Wales
Metro, Manchester Office North West
ENDS
Picton Property Income : Net Asset Value and Interim Dividend
January 24, 2017 at 02:01 am
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© PRNewswire - 2017
