Picton Prop Inc Ltd

Trading Update & Covid-19 Impact

15 April 2020 

(“Picton”, the “Company” or the “Group”)  

LEI: 213800RYE59K9CKR4497  

Trading Update & Covid-19 Impact

Picton makes a trading update in light of the current Covid-19 situation and ahead of the release of its Annual Results which are expected in June 2020, subject to any further guidance from the FCA and FRC.

Picton owns and actively manages a £665 million diversified UK commercial property portfolio, of which 82% is invested in the Industrial and Office sectors. The portfolio is diversified across 47 assets with rent receivable from around 350 occupiers, with the largest occupier contributing 4% of the rental income.

The following trading update reflects activity over the first quarter of 2020, details of the March 2020 valuation and the Company’s response to the Covid-19 pandemic and its impact on the business.

Michael Morris, Chief Executive of Picton, commented:  

“Whilst we are all operating in difficult circumstances, Picton is making good progress against our strategic priorities as further detailed below. We have a strong balance sheet, significant headroom against our debt covenants and are fortunate to have made recent disposals, as well as having access to fully undrawn revolving credit facilities if required.

“We have had good leasing activity over the period, particularly in the regional office markets which has mitigated valuation declines as a result of Covid-19. Our diversified portfolio and wide occupier base underpin our resilience at this time.  Our focus is on continuing to proactively manage the portfolio through this difficult period, ensuring we are well positioned for the long-term.

“We continue to make every effort to support our employees, occupiers, communities and suppliers in these difficult times.”

Portfolio activity

The principal portfolio activity that has taken place in the first quarter of 2020 is set out below.

The Company completed nine lettings (3.5% ahead of the December 2019 ERV), three lease renewals and lease extensions (7.1% ahead of the December 2019 ERV) and four rent reviews (12.6% ahead of the December 2019 ERV).

In addition to the announcement dated 20 March 2020 in respect of three key regional office lettings, the Company has achieved practical competition of the former Lidl unit in Swansea which has been let to Farmfoods. Other principal transactions over the quarter include the extension of the Pets at Home lease in Swansea by a further five years and a letting of a unit at a Greater London industrial estate, which completed following refurbishment works, 9.5% ahead of the December 2019 ERV.

The Company completed seven refurbishment projects over the quarter, investing a further £3.7 million into the portfolio. The principal completion was at the Company’s distribution unit at Rugby. www.swiftbox-rugby.co.uk/

In January 2020 Picton completed the disposal of a distribution warehouse in Lutterworth, Leicestershire, for £15.9 million and used the proceeds to reduce debt. The sale price reflects a net initial yield of 5.8% and a 1% uplift to the independent 31 December 2019 valuation. 


CBRE, the Company’s external valuers, have valued the portfolio at £665 million as at 31 March 2020. Overall, the valuation decreased by 0.8% over the quarter, or by 1.3% reflecting capital expenditure.

The breakdown by sector is as follows: -

  Valuation movement   Sector weighting

Industrial, Warehouse & Logistics -0.3% 47.9%
Office -0.2% 33.8%
Retail & Leisure -2.9% 18.3%

The valuers have confirmed that the valuation as at 31 March 2020, in accordance with industry practice, is subject to a material uncertainty clause as follows:

The outbreak of the Novel Coronavirus (COVID-19), declared by the World Health Organisation as a “Global Pandemic” on the 11 March 2020, has impacted global financial markets. Travel restrictions have been implemented by many countries. Market activity is being impacted in many sectors. As at the valuation date, we consider that we can attach less weight to previous market evidence for comparison purposes, to inform opinions of value.  Indeed, the current response to COVID-19 means that we are faced with an unprecedented set of circumstances on which to base a judgement. Our valuation(s) is / are therefore reported on the basis of

‘material valuation uncertainty’ as set out in VPS 3 and VPGA 10 of the RICS Valuation – Global Standards. Consequently, less certainty – and a higher degree of caution – should be attached to our valuation than would normally be the case. Given the unknown future impact that COVID-19 might have on the real estate market, we recommend that you keep the valuation under frequent review.

Rent collection 

The most recent rent quarter day in England and Wales was 25 March 2020. By 7 April 2020, 71% of the rent due on the March quarter day had been paid in full.

Picton has been able to draw down on rent deposits, which increase the collection rate to 72% and having agreed with a number of occupiers a short-term monthly payment plan, this figure rises to 80%. The March 2019 rent collection after two weeks was 95%.

Rent in Scotland and Northern Ireland is due in May 2020.

It is clear that companies operating directly or indirectly in the retail, leisure or hospitality sectors have been particularly impacted by this pandemic and we are working closely with these occupiers to seek both long and short-term solutions.

Whilst lower than normal, under the circumstances, these are good rent collection numbers, which reflect our ongoing occupier focused approach. We are working to address individual occupier requests and hope to agree appropriate solutions with them in due course. As a responsible landlord, we have been in direct dialogue with any occupier currently experiencing difficult trading or cashflow issues. The aim is to seek solutions that assist occupiers through these uncertain times while minimising impact to both Picton’s capital values and cashflow. 

Operational activity 

The Picton team is fully operational and working remotely.

The Company is especially mindful of the health and safety of our employees, occupiers, our wider external team of suppliers and the on-site property management team. Operationally the Company is in a strong position but is cognisant of the reasons behind the Government imposed lockdown and the need to provide support where needed.

The majority of our capital projects have been suspended until site access can be obtained, with cost reduction measures being implemented to reduce occupier service charges and minimise capital expenditure.

Following Government advice, viewings of currently vacant space will be limited until restrictions are lifted, but the Company has a pipeline of four leasing transactions with a combined rent roll of £0.2 million.

All our multi-let office buildings remain operational, but the majority of occupiers only have a limited on-site presence currently. With this in mind, we are also implementing the following measures:

The refurbishment project at the Stanford Building in Covent Garden has been halted in line with Government guidelines. Once it has re-commenced, it is expected to be a further eight weeks to reach practical completion. www.stanfordbuildingwc2.co.uk/

We continue to engage with all our stakeholders and for a long time Picton has operated an occupier focused approach. Our key commitments to Action, Community, Technology, Sustainability and Support are particularly relevant at this time.  The Company is also continuing and has increased its support for its key charity partners. In addition, within the last week, we have leased, on a rent free and temporary basis, a vacant unit in the Docklands to the London Ambulance Service NHS Trust, to assist them with their Covid-19 response.

The Company has no plans to furlough employees, nor to seek access to any emergency grants or Government assistance.

Balance sheet

In January 2020, following an asset sale, the Group fully repaid its revolving credit facilities, which are currently undrawn.  The Company has no short-term refinancing events and the average debt maturity profile, on drawn debt is ten years.

Overall the Group’s LTV is 22% as at 31 March 2020 and on average across the drawn facilities (i.e. ignoring the undrawn RCFs) rental income or asset values would have to fall by over 40% for there to be any impact on covenants.  The Company has been in dialogue with its lenders who are fully supportive of Picton’s approach. 

In addition, the Group has £36.3 million of uncharged assets that could be used as additional security if required.

The Group remains fully compliant with each of its loan facilities. In addition to the remaining proceeds from the recent Lutterworth disposal, the Group also has access to £49 million of undrawn facilities.

As at 31 March 2020, the Group had over £23 million of cash or cash equivalents.


In line with its usual practice, the Board will review the level of the forthcoming dividend, due to be paid in May 2020, at its next meeting, which will take place towards the end of April.  It will assess prevailing circumstances at the time and will make a further announcement later in April 2020.


For further information:  

Jeremy Carey 07836 734 625 /James Verstringhe, 07769 698 105, [email protected] 

Michael Morris, 020 7011 9980, [email protected] 

Note to Editors 

Picton, established in 2005, is a UK REIT. It owns and actively manages a £665 million diversified UK commercial property portfolio, invested across 47 assets and with around 350 occupiers (as at 31 March 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