23 January 2019
PICTON PROPERTY INCOME
LIMITED
(“Picton”, the “Company” or the “Group”)
LEI: 213800RYE59K9CKR4497
Net Asset Value as
at 31 December 2018
Picton (LSE: PCTN), the property investment company, announces
its Net Asset Value for the quarter ended 31
December 2018.
Highlights during the quarter included:
Positive results with improved balance
sheet
- Net Assets increased to £498.1 million (30 September 2018: £497.1 million).
- NAV/EPRA NAV per share rose 0.3% to 92.5
pence (30 September 2018:
92.2 pence).
- LTV of 25.0% (30 September 2018:
25.5%)
- Total return for the quarter of 1.2% (30
September 2018: 1.5%).
Dividend declared and continued strong
cover
- Dividend of 0.875 pence per share
declared and to be paid on 28 February
2019 (30 September 2018:
0.875 pence per share).
- Annualised dividend equivalent to 3.5
pence per share, delivering a dividend yield of 4.2%, based
on 22 January 2019 share price.
- Dividend cover for the quarter of 123% (30 September 2018: 129%).
Continued portfolio activity
- Like-for-like increase in property portfolio valuation for the
quarter of 0.1% (30 September 2018:
0.7%) driven by industrial sector gains.
- Completed six lease renewals / regears and uplifts secured on
eight rent reviews, on average 9.9% ahead of the September ERV,
with a combined annual rent of £2.1 million.
- Completed six lettings and one agreement to lease on average
2.1% below the September ERV, with a combined annual rent of £0.9
million.
- Completed five surrenders and one agreement to surrender where
the market rents are 23.2% ahead of rent passing and surrender
payments received in excess of £0.3 million.
- Occupancy of 93%, albeit principally impacted by the surrender
activity (30 September 2018:
94%).
Nick Thompson, Chairman of Picton,
commented:
“Given the current macro environment, we are encouraged by
positive NAV growth during the period. The benefits of lower
taxation, through our entry into the REIT regime, alongside lower
financing costs this quarter have positively contributed to this
result.”
Michael Morris, Chief Executive of Picton,
commented:
“As the debate and uncertainty around Brexit continues, it is
becoming much clearer which parts of the market are still active
and which are not. While we believe that our portfolio is well
positioned with a strong weighting to the industrial sector, we’ve
also proved that it is possible to limit the impact of some of the
structural challenges being faced in other sectors through creative
and innovative asset management. The expansion and transfer of Lidl
from one unit in Swansea to
replace a retailer subject to a CVA is an excellent example of
this. We are also encouraged by our pipeline of asset management
initiatives.”
This announcement contains inside
information.
For further
information:
Tavistock
Jeremy Carey/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 is a UK REIT established in 2005. It owns and actively
manages a £684 million diversified UK commercial property
portfolio, invested across 49 assets and with around 350 occupiers
(as at 31 December 2018). 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 of 31 December 2018,
was £498.1 million, reflecting 92.5
pence per share, an increase of 0.3% over the quarter.
|
31 Dec
2018
£million |
30 Sept
2018
£million |
30 June
2018
£million |
31 March
2018
£million |
Investment properties* |
674.7 |
673.9 |
669.4 |
674.5 |
Other assets |
16.7 |
18.8 |
16.6 |
17.9 |
Cash |
22.8 |
20.1 |
44.0 |
31.5 |
Other liabilities |
(22.2) |
(21.4) |
(21.6) |
(22.5) |
Borrowings |
(193.9) |
(194.3) |
(213.8) |
(214.0) |
Net Assets |
498.1 |
497.1 |
494.6 |
487.4 |
Net Asset Value per
share |
92.5p |
92.2p |
91.8p |
90.4p |
*The investment property valuation is stated net of lease
incentives.
The NAV attributable to the ordinary shares is calculated under
IFRS and incorporates the independent market valuation as at
31 December 2018, including income
for the quarter, but does not include a provision for the dividend
this quarter, which will be paid in February
2019.
The movement in Net Asset Value can be summarised as
follows:
|
Total
£million |
Movement
% |
Per share
Pence |
NAV at 30 September 2018 |
497.1 |
|
92.2 |
Movement in property values |
0.1 |
- |
- |
Net income after tax for the
period |
5.8 |
1.2 |
1.1 |
Dividends paid |
(4.7) |
(0.9) |
(0.8) |
Other |
(0.2) |
- |
- |
NAV at 31 December 2018 |
498.1 |
0.3 |
92.5 |
DIVIDEND DECLARATION
A separate announcement has been released today (23 January 2019) declaring a dividend of
0.875 pence per share in respect of
the period 1 October 2018 to
31 December 2018 (1 July 2018 to 30
September 2018: 0.875
pence).
Post-tax dividend cover over the quarter was 123% (30 September 2018: 129%).
DEBT
Total borrowings at 31 December
2018 were £193.9 million, 87% of the debt is fixed under
long term facilities, with the remainder at variable rates. The net
gearing ratio, calculated as total debt less cash, as a proportion
of gross property value, is 25.0% (30
September 2018: 25.5%).
The weighted average debt maturity profile of the Group is
approximately 10.1 years and the weighted average interest rate is
4.0%.
The Company has a further £26 million
available from its undrawn RCFs.
PORTFOLIO UPDATE
The portfolio valuation increased by 0.1% or £1.0 million, with
the industrial sector delivering the strongest growth. The office
sector saw a slight decline, which was in part due to the
short-term impact of surrender activity. The retail and leisure
sector valuation declined over the quarter, principally impacted by
weaker sentiment in the regional retail and retail warehouse
sectors.
The sector weightings at 31 December
2018 and valuation movements over the quarter are shown
below:
Sector |
Portfolio
Weightings |
Like for
like
Valuation change |
Industrial |
44.7% |
2.3% |
South East |
31.5% |
|
Rest of UK |
13.2% |
|
Offices |
34.3% |
-0.4% |
London City and West End |
4.2% |
|
Inner and Outer London |
8.3% |
|
South East |
11.0% |
|
Rest of UK |
10.8% |
|
Retail and Leisure |
21.0% |
-3.2% |
Retail warehouse |
8.3% |
|
High Street – Rest of UK |
5.1% |
|
High Street – South East |
5.7% |
|
Leisure |
1.9% |
|
Total |
100% |
0.1% |
As of 31 December 2018, the
portfolio had a net initial yield of 5.2% (allowing for void
holding costs) or 5.4% (based on contracted net income) and a net
reversionary yield of 6.5%. The weighted average unexpired lease
term, based on headline rent, was 4.9 years.
Occupancy reduced slightly to 93%,
principally reflecting the surrender activity referred to
below.
The top ten assets, which represent 50%
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 |
Stanford
House, Long Acre, WC2 |
Retail |
London |
Angel
Gate, City Road, EC1 |
Office |
London |
50
Farringdon Road, EC1 |
Office |
London |
Tower
Wharf, Cheese Lane, Bristol |
Office |
South
West |
Belkin
Unit, Shipton Way, Rushden, Northants |
Industrial |
East Midlands |
30 &
50 Pembroke Court, Chatham |
Office |
South
East |
Colchester Business Park, Colchester |
Office |
South
East |
Lyon
Business Park, Barking |
Industrial |
Outer
London |
Key highlights in the quarter included:
Industrial
Recognising the high occupancy in this element of the portfolio
leasing activity was limited. We let a unit at Parkbury Radlett,
achieving 100% occupancy, and securing £0.1 million per annum, in
line with ERV. At the same estate we renewed two leases, increasing
the passing rent by a combined 39% to £0.3 million per annum, 2%
ahead of ERV and settled one rent review increasing the passing
rent by 42% to £0.1 million per annum, 1% ahead of ERV.
At Nonsuch Industrial Estate in Epsom, where we have smaller
units, we settled four rent reviews increasing the passing rent by
11% to a combined £0.1 million per annum setting a new rental tone
for the estate. At the same estate we have surrendered two leases,
so we can relocate an occupier and create a double unit to satisfy
demand.
We extended £0.4 million of income at a 100,000 sq ft
distribution facility at Haynes Way, Rugby on a short-term basis 33% ahead of
ERV.
Office
We let the first of two suites at 180 West George Street,
Glasgow, generating income of
£0.22 million per annum. During the period we received a floor back
on lease expiry, which will be refurbished ahead of releasing
alongside the remaining suite.
We surrendered a suite at Tower Wharf in Bristol, which expired in September 2019, receiving a payment of £0.34
million. Whilst this has a short-term impact on income and value we
have completed a simple refurbishment and expect to secure a 40%
uplift on the previous passing rent.
In a back to back transaction, we surrendered a lease at Trident
House in St. Albans that had a
break in September 2019, securing a
new occupier on a new five-year lease at a rent of £0.11 million
per annum in line with ERV.
Retail and Leisure
At Parc Tawe North in Swansea,
we completed an Agreement to Lease with Lidl on the former Homebase
unit, moving Lidl from its existing premises on the retail park and
making it the anchor occupier.
Lidl currently occupies a 10,000 sq ft unit on a lease expiring
in 2023 and will increase its footprint by 255%, as it takes the
entire 35,500 sq ft previously occupied by Homebase. Following
enabling works by Picton, Lidl will take a 20-year lease, with a
break after 15 years, at an annual rent of £0.39 million. The
lease is subject to five-yearly Retail Price Index (RPI) based rent
reviews capped at 2% per annum. Homebase was paying a rent of
£0.44 million per annum on a lease expiring in 2022.
Lidl will continue to trade from its existing unit, paying £0.14
million per annum, until the enabling works and fit out have been
completed at the former Homebase unit, which is expected to happen
in the second quarter of 2019. The current lease will then be
surrendered.
We simultaneously renegotiated a restrictive covenant to allow
additional food retailing on the park and served notice to
terminate Homebase’s lease as they had proposed a 90% reduction in
rent post their CVA.
At Regency Wharf in Birmingham,
we renegotiated a lease by inserting a rolling Landlord’s break
option, which will enable us to secure vacant possession in the
future. This will allow us to pursue a strategy of change of use
from restaurant to office, which we anticipate will significantly
enhance the ERV.
Two new occupiers were secured at Kings Heath in Birmingham, achieving 100% occupancy at the
property. The combined rent is £0.07 million per annum, which is
line with ERV.
MARKET BACKGROUND
According to the MSCI Monthly Index, the All Property total
return was 1.1% for the quarter to December
2018, compared to 1.7% for the previous quarter.
Capital growth was -0.2% (September
2018: 0.4%) and rental growth was -0.1% for the quarter
(September 2018: 0.1%). A more
detailed breakdown is shown below:
MSCI rental growth
|
|
Number of MSCI segments |
|
Quarterly
growth |
Positive
growth |
Negative
growth |
Industrial |
1.1% |
7 |
- |
Office |
0.6% |
9 |
1 |
Retail |
-1.5% |
- |
20 |
All
Property |
-0.1% |
16 |
21 |
MSCI capital value growth
|
|
Number of MSCI segments |
|
Quarterly
growth |
Positive
growth |
Negative
growth |
Industrial |
2.2% |
7 |
- |
Office |
0.6% |
9 |
1 |
Retail |
-3.3% |
- |
20 |
All
Property |
-0.2% |
16 |
21 |
*Source: MSCI Monthly Digest, December
2018
ENDS