NAV and Dividend

21 October 2015

PICTON PROPERTY INCOME LIMITED
(“Picton” or the “Company” or the “Group”)

Net Asset Value as at 30 September 2015 and Interim Dividend
 

Picton (LSE: PCTN), the income focused property investment company, announces its Net Asset Value for the quarter ended 30 September 2015 and Interim Dividend.

Highlights during the quarter included:

Financial

• Net Assets increased to £393.1 million (30 June 2015: £382.6 million).
• NAV/EPRA NAV per share rose 2.8% to 72.8 pence (30 June 2015: 70.8 pence).
• Total return for the quarter of 3.9% (30 June 2015: 4.6%).
• Net gearing of 34.6% (30 June 2015: 31.4%), reflecting a lower cash balance following property acquisitions.
• Average debt maturity of 11.8 years, with a weighted average interest rate fixed at 4.6% per annum.

Dividend

• Dividend of 0.825 pence per share declared and to be paid on 30 November 2015 (30 June 2015: 0.825 pence per share).
• Post-tax dividend cover for the quarter of 122% (30 June 2015: 101%).
• Dividend yield of 4.6%, based on a share price of 71.5 pence on 19 October 2015.

Portfolio Activity

• Like-for-like increase in property portfolio valuation of 2.2% (30 June 2015: 2.9%), with the strongest valuation gains in the central London office subsector.
• Made two income accretive acquisitions: a modern office building in central Glasgow for £14.25 million, yielding 7.8%, and a single let retail warehouse in Sheffield for £17.7 million, yielding 6.6%.
• Completed eight lettings, adding £420,000 per annum to the rent roll (after incentives); three lease renewals securing £210,000 per annum (after incentives) and six rent reviews securing an uplift of over £40,000 per annum.
• Occupancy maintained at 95% (30 June 2015: 95%).

Commenting, Nick Thompson, Chairman of Picton, said:

“Over the quarter, we continued to deliver strong returns to investors, increasing net assets and improving dividend cover. We have now also fully invested the proceeds from our recent Placing Programme into new assets that are already contributing to income growth.”

Michael Morris, Chief Executive of Picton Capital, added:

“We have continued with our strategy to reshape the portfolio by acquiring attractive new assets at yields which will enhance earnings. In addition, we continue to make good progress with our asset management initiatives across the portfolio and have maintained high occupancy over the quarter.”

For further information:

Tavistock

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

Picton Capital Limited

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

The Company Secretary
Northern Trust International Fund Administration Services (Guernsey) Limited
Trafalgar Court
Les Banques
St Peter Port
Guernsey
GY1 3QL
 

David Sauvarin, 01481 745 001, [e-mail]

Note to Editors

Picton Property Income Limited ('Picton') is an income focused, property investment company listed on the London Stock Exchange. Picton can invest both directly and indirectly in commercial property across the United Kingdom.

With Net Assets of £393.1 million at 30 September 2015, 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.  www.picton.co.uk

NET ASSET VALUE

The unaudited Net Asset Value (‘NAV’) of Picton, as at 30 September 2015, was £393.1 million, reflecting 72.8 pence per share, an increase of 2.8% over the quarter.

The NAV attributable to the ordinary shares is calculated under International Financial Reporting Standards and incorporates the external portfolio valuation as at 30 September 2015, including income for the quarter, but does not include a provision for the dividend this quarter which will be paid in November 2015.

The next independent valuation of the property portfolio is scheduled for December 2015 and the NAV per share, as at 31 December 2015, will be announced in January 2016.

A detailed breakdown of the NAV is included in the Appendix.

DIVIDEND

An interim dividend of 0.825 pence per share is declared in respect of the period 1 July 2015 to 30 September 2015 (1 April 2015 to 30 June 2015: 0.825 pence).

The dividend will be paid on 30 November 2015 to shareholders on the register on 13 November 2015. The ex-dividend date is 12 November 2015.

Post-tax dividend cover for the quarter was 122% (30 June 2015: 101%).

DEBT

The Group has total borrowings of £233.3 million with a fixed weighted average interest rate of 4.6% and a weighted average debt maturity profile of approximately 11.8 years.

As at 30 September 2015, net gearing, calculated as total debt including ZDPs, less cash, as a proportion of gross property value, was 34.6% (30 June 2015: 31.4%) and principally reflected a lower cash balance at September 2015 compared with June 2015, following two property acquisitions.

MARKET BACKGROUND

According to the MSCI IPD Monthly Index, total returns were 3.4% in the quarter to September 2015, compared to 3.6% in the quarter to June 2015.

Capital growth remained positive and was 2.1% over the quarter, compared with 2.2% in June 2015. Across the principal IPD sectors, office values rose by 3.1% (June 2015: 3.9%), industrial by 3.1% (June 2015: 2.8%) and retail by 0.8% (June 2015: 0.7%). Over the quarter, 36 of the 37 IPD segments recorded positive capital growth, unchanged from last quarter.

Over the quarter to September, rents grew by 1.2%, compared with 1.1% in June 2015. Across the principal IPD sectors, office rental values rose by 2.3% (June 2015: 2.3%), industrial by 1.4% (June 2015: 1.1%) and retail by 0.3% (June 2015: 0.2%).  Positive rental growth was recorded in 29 of the 37 segments, unchanged from the previous quarter, with the segments recording negative movements predominantly in the retail sector.

The occupancy rate in the September IPD Monthly Index was marginally lower at 90.6% (June 2015: 91.2%).

PORTFOLIO UPDATE

The portfolio comprises 58 properties which produce an annualised contractual net rental income of £40 million,  reflecting a net initial yield of 6.1% and a net reversionary yield of 6.9%. The weighted average unexpired lease term (to first termination) is 6.0 years.

The portfolio valuation increased by 2.2% during the period, with central London offices again performing particularly well. Occupancy was maintained at 95%.

Key highlights in the quarter included:

Industrial

At a unit in River Way, Harlow, which remains fully let, we secured a 16% uplift in rent at the February 2015 rent review, increasing the rent to £169,600 per annum. The uplift was 6% ahead of ERV.

Following completion of the refurbishment works to four vacant units at Lyon Business Park, Barking, terms have been agreed in respect of one unit, and we expect strong interest in the remaining units.

At Parkbury, Radlett, we renewed one lease for a further five years, increasing the previous passing rent by 5% to £103,800 per annum, which was 3% ahead of ERV. One unit came back during the quarter and is being refurbished.

Office

At Angel Gate, London EC1, we continue to implement a rolling refurbishment programme to upgrade space.  As a result of this we have completed the letting of one unit at an annual rent of £131,950 per annum, or £47.50 per sq ft, 12% ahead of ERV. We are also under offer to lease a further two units at a combined rent of £307,000 per annum, equivalent to £48.43 per sq ft, 3.2% ahead of ERV.  We are currently refurbishing a further unit which will complete in Q4 2015.

We acquired a modern office building in Glasgow for £14.25 million, reflecting a net initial yield of 7.8%. 180 West George Street was constructed in 2000 and provides 52,100 sq ft of office accommodation over basement, ground and six upper floors and is located on a prime street in the heart of Glasgow's central business district. It is fully let and produces a net annual rental income of £1.18 million, equivalent to an average rent of under £23 per sq ft.  Occupiers include TSB Bank, Standard Life and Michael Page and the weighted average unexpired lease term is 2.4 years.

Retail / Leisure

We acquired a freehold retail warehouse in Sheffield for £17.7 million, reflecting a net initial yield of 6.6%. The property is well located close to Sheffield city centre, in an established retail warehouse location and adjacent to Queens Road Retail Park.  It was built in 2002 on a nine acre site, comprising a 103,000 sq ft retail warehouse with a 40,000 sq ft outdoor garden centre, builders’ yard and 460 space car park. The property is leased to B&Q plc for a further 12.4 years at an annual rent of £1.24 million, which equates to a low overall rent of approximately £12 per sq ft and is subject to review in 2017.

APPENDIX

NET ASSETS SUMMARY

The unaudited Net Asset Value is as follows:

	30 Sept 2015 £million	30 June 2015 £million	31 Mar 2015 £million
Investment properties *	606.3	562.4	532.9
Other assets	18.8	18.4	17.6
Cash	20.3	53.9	70.1
Other liabilities	(19.0)	(19.1)	(17.8)
Borrowings: Loan facilities	(206.2)	(206.5)	(206.7)
ZDP’s	(27.1)	(26.5)	(26.1)
Net Assets	393.1	382.6	370.0
Net Asset Value per share	72.8p	70.8p	68.5p

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

The movements in Net Asset Value can be summarised as follows;

	Total	Movement	Per share
	£million	%	Pence
NAV at 30 June 2015	382.6		70.8
Movement in property values	9.5	2.5	1.8
Net income after tax for the period	5.4	1.5	1.0
Dividends paid	(4.4)	(1.2)	(0.8)
NAV at 30 Sept 2015	393.1	2.8	72.8

PORTFOLIO COMPOSITION

The Group’s current portfolio is structured as follows:-

Sector	Weighting 30 Sept 2015	Like for Like Valuation Change
Industrial	37.0%	1.6%
Office – Central/Greater London	18.6%	4.7%
Office – Rest of UK	14.4%	2.3%
Retail	14.7%	0.6%
Retail Warehouse	13.1%	0.0%
Leisure	2.2%	0.2%
Total	100.0%	2.2%

GEOGRAPHICAL WEIGHTINGS

Geography	Weighting 30 Sept 2015
South East	32.1%
Central & Greater London	27.6%
North	13.8%
Midlands	14.5%
Wales	4.0%
South West	3.9%
Scotland	3.7%
Northern Ireland	0.4%
Total	100.0%

TOP TEN ASSETS

The top ten assets, which represent 47% 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 Road, EC1	Office	London
Stanford House, Long Acre, WC2	Retail	London
Boundary House, Jewry Street, EC3	Office	London
50 Farringdon Road, EC1	Office	London
Shipton Way, Rushden, Northamptonshire	Industrial	East Midlands
Pembroke Court, Chatham	Office	South East
Phase II Parc Tawe, Swansea	Retail Warehouse	Wales
Queens Road, Sheffield	Retail Warehouse	Yorkshire & Humberside

ENDS