Net Asset Value as at 31 December 2020

28 January 2021 

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

Net Asset Value as at 31 December 2020

Picton announces its Net Asset Value for the quarter ended 31 December 2020.

Financial Highlights

· Net assets of £521.0 million (30 September 2020: £505.9 million).

· NAV/EPRA NAV per share increased by 3.0% to 95.5 pence (30 September 2020: 92.7 pence).

· NAV total return for the quarter of 3.7% (30 September 2020: 1.3%).

· LTV of 21.3% (30 September 2020: 22.4%).

Operational Highlights

· Like-for-like portfolio valuation uplift of 2.7% over the quarter.

· Completed six lettings, all in the office sector, 4% ahead of the September 2020 ERV with a combined annual rent of £0.7 million.

· Secured an average increase of 15% against the previous passing rent from eight lease events (six renewals and two rent reviews), with a combined annual rent of £0.7 million which was 2% ahead of the September 2020 ERV. 

· Disposal of retail asset for £3.98 million completed with high street retail exposure reduced to 3%.

· Stable occupancy of 90% (30 September 2020: 90%).

Rent Collection

· 87% of December 2020 rents have been collected or are expected to be received under monthly payment plans. The collection rate is expected to improve further over the coming weeks.

· Rent collection rates of 95% for September 2020, 95% for June 2020 and 90% for March 2020.

· In respect of the remaining rent outstanding, ongoing discussions and active management opportunities are expected to further improve either the income or capital position of the portfolio. The NAV includes a provision of £2.6 million in respect of outstanding sums.

Increased Dividend Declared

· Dividend of 0.8 pence per share declared and to be paid on 26 February 2021 (30 September 2020: 0.7 pence per share).

· Annualised dividend equivalent of 3.2 pence per share, delivering a dividend yield of 4.1%, based on 26 January 2021 share price.

· Dividend cover for the quarter of 122% (30 September 2020: 178%).

Nick Thompson, Chairman of Picton, commented: 

“I am pleased that we have been able to deliver such a strong uplift in net assets during the period, which combined with our improving operating performance, including resilient rent collection, gives us the confidence to increase the dividend further, following the increase announced just last November.”

Michael Morris, Chief Executive of Picton, commented:

“This has been the second consecutive quarter where we have delivered portfolio growth, with the largest NAV uplift since December 2017, driven principally by our exposure to South East industrial assets and our heavily underweight retail exposure.”

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF THE MARKET ABUSE REGULATION (EU) NO. 596/2014

For further information:

Tavistock 

Jeremy Carey/James Verstringhe, 020 7920 3150, [e-mail]

Picton

Michael Morris, 020 7011 9980, [e-mail] 

Note to Editors

Picton, established in 2005, is a UK REIT. It owns and actively manages a £675 million diversified UK commercial property portfolio, invested across 46 assets and with around 350 occupiers (as at 31 December 2020). 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 2020, was £521.0 million, reflecting 95.5 pence per share, an increase of 3.0% over the quarter, or 3.7% 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 2020, including income for the quarter, but does not include a provision for the dividend this quarter, which will be paid in February 2021.

	31 Dec 2020 £million	30 Sept 2020 £million	30 Jun 2020 £million	31 Mar 2020 £million
Investment properties*	662.5	650.6	648.9	654.5
Other assets	23.2	22.6	23.0	19.1
Cash	22.6	18.9	19.4	23.6
Other liabilities	(20.8)	(19.4)	(20.9)	(20.4)
Borrowings	(166.5)	(166.8)	(167.2)	(167.5)
Net Assets	521.0	505.9	503.2	509.3
Net Asset Value per share	95.5p	92.7p	92.2p	93.4p

*The investment property valuation is stated net of lease incentives.

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

	Total £million	Movement %	Per share Pence
NAV at 30 September 2020	505.9		92.7
Movement in property values	14.0	2.8	2.6
Net income after tax for the period	4.7	0.9	0.9
Dividends paid	(3.8)	(0.7)	(0.7)
Other	0.2	-	-
NAV at 31 December 2020	521.0	3.0	95.5

DIVIDEND DECLARATION

A separate announcement has been released today declaring an increased dividend of 0.8 pence per share in respect of the period 1 October 2020 to 31 December 2020, reflecting a 14% uplift on the preceding quarter (1 July 2020 to 30 September 2020: 0.7 pence). 

Dividend cover over the quarter was 122% (30 September 2020: 178%), including the higher dividend paid in November.

RENT COLLECTION

The Group has received 76% of the rent for the December quarter, which increases to 87% including agreed monthly payments. These collection figures are slightly better than the September numbers calculated after the same number of days.

The table below sets out the rent collection statistics for the December quarter, analysed by sector.

	Total	Industrial	Offices	Retail & Leisure
Collected	76%	72%	85%	64%
Moved to monthly	11%	14%	0%	26%
Outstanding	13%	14%	15%	10%

A provision of £2.6m has been made in relation to all outstanding sums, this has reduced the NAV per share by 0.4p.

DEBT 

Total borrowings at 31 December 2020 were £166.5 million, 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 21.3% (30 September 2020: 22.4%). 

The weighted average debt maturity profile of the Group is approximately 9.2 years and the weighted average interest rate is 4.2%.

Picton has £50 million available through its undrawn revolving credit facility.

PORTFOLIO UPDATE

Like-for-like, the portfolio valuation increased over the quarter by 2.7% or £17.5 million, and £1.7 million of capital expenditure was 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	52.4%	7.9%
South East	39.4%
Rest of UK	13.0%
Offices	36.4%	(2.5)%
London City and West End	8.7%
Inner and Outer London	5.1%
South East	11.1%
Rest of UK	11.5%
Retail and Leisure	11.2%	(2.5)%
Retail Warehouse	6.7%
High Street – Rest of UK	3.0%
Leisure	1.5%
Total	100%	2.7%

Positive performance continued in the industrial sector on the back of high occupancy, proven rental growth and strong investor demand, leading to the sector repricing.

The ongoing refurbishment of Stanford Building in Covent Garden has substantially completed, with the first office letting secured 3% ahead of the September 2020 ERV. Other key office lettings completed in Cardiff, Bristol and Chatham, Kent, 4% ahead of the September ERV. Despite this, office demand was more muted, leading to a valuation decline in this sector.

The decrease in the retail and leisure sector was driven by the continued repricing and impact of Covid-19. Retail warehousing was less impacted than High Street retail assets.

As at 31 December 2020, the portfolio had a net initial yield of 4.7% (allowing for void holding costs) or 4.8% (based on contracted net income) and a net reversionary yield of 6.2%. The weighted average unexpired lease term, based on headline rent, was 5.0 years. 

Occupancy was maintained at 90%.

The top ten assets, which represent 56% 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, City Road, EC1	Office	London
Stanford Building, Long Acre, WC2	Office	London
Tower Wharf, Cheese Lane, Bristol	Office	South West
Datapoint, Cody Road, E16	Industrial	London
Shipton Way, Rushden, Northants	Industrial	East Midlands
50 Farringdon Road, EC1	Office	London
Lyon Business Park, Barking	Industrial	Outer London
Colchester Business Park, Colchester	Office	South East

MARKET BACKGROUND

According to the MSCI Monthly UK Property Index, the All Property total return was 2.1% for the quarter to December 2020, compared to 0.7% for the previous quarter. 

Capital growth was 0.8% (September 2020: -0.7%) and rental growth was -0.4% for the quarter (September 2020: -0.7%). 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	5.4%	7	0
Office	-1.2%	0	10
Retail	-2.4%	1	19
All Property	0.8%	8	29

MSCI rental growth

		Number of MSCI segments
	Quarterly growth	Positive growth	Negative growth
Industrial	1.1%	6	1
Office	-0.1%	5	5
Retail	-2.1%	0	20
All Property	-0.4%	11	26

ENDS