Net Asset Value(s) and Interim Dividend

RNS Number : 2554L

Picton Property Income Limited

28 July 2011

Picton Property Income Limited

28 July 2011

PICTON PROPERTY INCOME LIMITED (PCTN) - Net Asset Value as at 30 June 2011 and Interim Dividend

Picton Property Income Limited, a closed-end commercial property investment company, formerly known as the ING UK Real Estate Income Trust Limited, today reports its Net Asset Value and Interim Dividend as at 30 June 2011.

The unaudited Net Asset Value ('NAV') as at 30 June 2011 was GBP 208.9 million, reflecting approximately 61 pence per share.

The Company also announces an interim dividend of 1 pence per share in respect of the period 1 April 2011 to 30 June 2011. The dividend payment will be made on 26 August 2011 to shareholders on the register on 12 August 2011. The ex-dividend date will be 10 August 2011.

At an underlying property level there has been a GBP 2.2 million increase in the property portfolio valuation, representing a like for like increase of 0.5% over the period. Despite this increase in the property valuation, the NAV remains broadly unchanged. This is primarily a reflection of capital expenditure over the period as a result of investment in a number of asset management initiatives which are expected to enhance value over time.

The NAV attributable to the Ordinary Shares is calculated under International Financial Reporting Standards ('IFRS'), which includes the marked to market value of the interest rate swap contracts.

This NAV figure incorporates the external portfolio valuation as at 30 June 2011. It includes income for the current quarter and is calculated after the deduction of dividends paid prior to 30 June 2011, but it does not include a provision for the next quarterly dividend which will be paid in August 2011.

The unaudited NAV is as follows:

	30 Jun 2011 £m	31 Mar 2011 £m	31 Dec 2010 £m	30 Sept 2010 £m
Investment properties *	425.8	425.6	424.3	422.6
Other assets	43.1	41.9	42.4	49.1
Other liabilities	(17.3)	(16.2)	(15.6)	(18.2)
Borrowings: Securitised loan Liquidity facility RBS loan Loan stock ZDP's	(171.6) (10.7) (20.1) (2.3) (28.5)	(171.6) (10.7) (20.1) (2.3) (28.0)	(171.6) (10.7) (20.4) (2.6) (27.6)	(171.6) (10.7) (20.4) (2.6) (31.0)
Market value of interest rate swaps	(9.5)	(9.4)	(11.3)	(13.8)
Net Asset Value	208.9	209.2	206.9	203.4
Net Asset Value per share	61p	61p	60p	59p
EPRA Net Asset Value	218.4	218.6	218.2	217.2
EPRA Net Asset Value per share	63p	63p	63p	63p

* The underlying property valuation is stated net of lease incentives

The European Public Real Estate Association (EPRA) NAV ignores marked to market swap liability or gains and was GBP 218.4 million at 30 June 2011 moving from GBP 218.6 million as at 31 March 2011.

The movements in the NAV can be summarised as follows;

	Total	Per share	movement
	£m	Pence	%
NAV at 31 March 2011	209.2	61

Gains in property values (realised and unrealised )	1.2	0.5	0.5
Movement in swap value	(0.1)	-	-
Net income for the period (after distributions)	(1.4)	(0.5)	(0.5)

NAV at 30 June 2011	208.9	61	-

An external valuer will next value the property portfolio during September 2011 and the NAV per share as at 30 September 2011 will be issued in October 2011.

Investment Manager Commentary

BACKGROUND

According to the IPD Monthly Index, capital growth continues to remain subdued recording gains of 0.4% over the preceding three months. This is the fourth consecutive quarter where capital growth remained below 1.0%. Growth was strongest in the Office sector at 0.9%, Retail recorded 0.3% and Industrial -0.1%.

Rental value growth has moved marginally back into positive territory over the quarter. The strongest growth was seen in the Office sector, driven by the Central London market, which recorded an uplift of 0.4%. Both the Retail and Industrial sectors saw negative rental value growth of -0.1% and -0.2% respectively.

According to IPD, occupancy rates continued to remain stable at 90%.

PORTFOLIO COMPOSITION

The Company's current portfolio is structured as follows :-

Sector	Weighting 30 June 2011

Retail	19.7%
Offices - Central/Greater London	14.2%
Offices - Rest of UK	20.9%
Industrial	33.5%
Leisure	4.5%
Retail Warehouse	7.2%
Total	100%

GEOGRAPHICAL WEIGHTINGS

Geography	Weighting 30 June 2011

Central London	14.3%
Greater London	7.4%
South East	30.8%
South West	4.7%
East Midlands	12.0%
West Midlands	4.6%
Yorkshire & the Humber	4.6%
North West	10.7%
North East	2.4%
Scotland	2.5%
Wales	5.5%
Northern Ireland	0.5%
Total	100%

TOP TEN ASSETS

Asset	Weighting 30 June 2011
Unit 5320 Magna Park, Lutterworth	6.8%
River Way Industrial Estate, Harlow	6.5%
Stanford House, Long Acre, WC2	4.9%
Phase II Parc Tawe, Swansea	4.2%
Colchester Business Park, Colchester	3.5%
Boundary House, Jewry Street, EC3	3.0%
Angouleme Way, Bury	3.0%
50 Farringdon Road, EC1	3.0%
1-3 Chancery Lane, WC2	2.7%
Crown & Mitre Complex, Carlisle	2.5%
Total	40.1%

PORTFOLIO UPDATE

The underlying portfolio saw an increase in value of 0.5% over the quarter, in line with the wider market. Central London exposure in particular was the primary driver of capital growth across the portfolio, albeit an improvement in income in the industrial sector further supported performance.

The Company completed two asset disposals over the period and exchanged contracts for the sale of a further three assets in Poole, St Leonards on Sea and Basildon for GBP 1.7 million, in line with valuation.

Over the quarter the Company completed ten lettings, seven lease renewals and four active management initiatives. The lettings will generate additional income in excess of GBP 220,000 per annum, following expiry of rent free periods.

During the quarter, a tenant for the Company's third largest rental void was identified at the Harlow asset. Whilst terms were agreed prior to the quarter end, which set an enhanced rental tone for the Estate, the letting only completed following the quarter end. The rental income is GBP 190,000 per annum.

At 50 Farringdon Road, London, EC1, the Company's largest rental void, good interest has been shown in its newly refurbished office scheme and it hopes to provide a more detailed update in the coming quarter.

As at the 30 June 2011 the portfolio had a net initial yield of 6.9% and a net reversionary yield of 7.8%. The occupancy rate remains stable at 90% and the average lease length is 7.6 years.

DEBT

The two assets disposed of by the Company over the quarter were charged against the RBS loan and GBP 1.8 million was used to repay debt following the quarter end.

The Company continues to make progress on its refinancing strategy and has started discussions with both existing and prospective lenders, in respect of its refinancing options. Whilst this is at an early stage, initial discussions have been encouraging. Further updates will be provided during the course of 2011.

INTERNALISATION UPDATE

The Company continues to make good progress in respect of internalisation which will be fully effective by 31 December 2011. To reflect the change from IRET to PCTN, the Company's new website is now www.pictonproperty.co.uk and further updates will be provided during the year.

Picton Capital Limited, the Company's UK Investment Management subsidiary, has received conditional approval from the FSA in respect of its application to become a regulated entity. It is expected that the conditions will be satisfied during the quarter.

In addition Picton Capital Limited has been consulting with the existing Investment Manager and affected staff under Transfer of Undertakings (Protection of Employment) Regulations 2006 and a further update will be provided in respect of the internalised team over the quarter.

Commenting, Nick Thompson, Chairman of the Company, said:

"Our key focus over the quarter has continued to be on enhancing income from our portfolio which has been demonstrated through the transactions which have been successfully completed. Our other priorities, namely internalisation and refinancing are progressing well and we will update shareholders as soon as we are able."

For further information:

All Enquiries

David Sauvarin

The Company Secretary

Northern Trust International Fund Administration Services (Guernsey) Limited

Trafalgar Court

Les Banques

St Peter Port

Guernsey

GY1 3QL

Tel: 01481 745529

Fax: 01481 745085