Picton Property Income Ltd – Net Asset Value as of December 31, 2021

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January 27, 2022

PICTON REAL ESTATE REVENUE LIMITED

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

LEI code: 213800RYE59K9CKR4497

Net asset value at December 31, 2021

Picton Announces 7.4% Net Asset Value Increase for the Quarter Ended December 31, 2021 and a further 2.9% increase in the dividend, restoring the dividend to its pre-pandemic level.

Financial Highlights

  • Net assets of £615.7 million (September 30, 2021: £573.6 million).
  • NAV/EPRA NTA per share increased by 7.4% to 112.8 pence (September 30, 2021: 105.0 pence).
  • Total return for the quarter of 8.2% (September 30, 2021: 6.0%).
  • LTV of 20.8% (September 30, 2021: 21.9%).

Operational Highlights

  • Increase in the valuation of the portfolio on a like-for-like basis of 6.0% over the quarter.
  • Completed six lettings, across all sectors, with a combined annual rent of £0.2m, 3% below the September 2021 REV.
  • Renewal/redevelopment of seven leases, mainly in the office sector, with a combined annual rent of £0.6m, 1% below the September 2021 REV.
  • Achieved an average increase of 22% over previous run-in rent through three rent reviews, all in the industrial sector, with a combined annual rent of £0.4m, which was in line with September 2021 REV.
  • 91% occupancy (September 30, 2021: 93%).

Collection of rents

  • 98% of December 2021 rents have been collected or are expected to be collected under monthly payment plans.
  • 98% of September 2021 rents have been collected.

The dividend increased by 2.9% and returned to its pre-pandemic level

  • Increase in the interim dividend of 0.875 pence per share declared and payable on February 28, 2022 (September 30, 2021: 0.85 pence per share).
  • Annualized dividend equivalent to 3.5 pence per share, generating a dividend yield of 3.3%, based on January 25, 2022 share price.
  • Dividend coverage for the quarter of 115% (September 30, 2021: 122%).

Lena Wilson ECBPresident of Picton, commented:

“The strength of NAV growth and the collection of underlying rents gave the board confidence to restore the dividend to its pre-pandemic level, marking the fourth increase since its reset at the start of the pandemic.”

Michael MorrisPicton’s general manager, said:

“We saw strong valuations this quarter, reflecting improving market demand for assets such as ours. We are encouraged by the momentum in our asset management pipeline and are focused on further revenue and value growth in 2022, through leasing and acquisition activity.

THIS ANNOUNCEMENT CONTAINS INITIAL INFORMATION FOR THE PURPOSES OF THE UK MARKET ABUSE REGULATIONS

For more information:

Tavistock
Jeremy Carey/James Verstinghe020 7920 3150, [email protected]

picton
Michael Morris020 7011 9980, [email protected]

Note to Editors

Picton, created in 2005, is a UK REIT. It owns and actively manages a diversified UK commercial property portfolio of £790 million, invested in 46 assets and with approximately 350 occupants (as of 31 December 2021).

Through an occupier-focused and opportunity-driven approach to asset management, Picton aims to be one of the best and most successful diversified UK 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 December 31, 2021 was £615.7 million, reflecting 112.8 pence per share, an increase of 7.4% in the quarter or 8.2% on a total return basis.

The net asset value attributable to ordinary shares is calculated according to IFRS standards and incorporates the independent market valuation in the December 31, 2021including income for the quarter, but does not include a provision for the dividend for this quarter, which will be paid in February 2022.

Dec 31 2021
million pounds
September 30, 2021
million pounds
June 30, 2021
million pounds
March 31, 2021
million pounds
Investment properties* 774.2 730.2 687.5 669.2
other assets 25.3 26.2 23.2 21.5
Cash 17.7 16.7 21.2 23.4
Other liabilities (19.3) (20.0) (20.3) (19.7)
Loans (182.2) (179.5) (165.9) (166.2)
Net assets 615.7 573.6 545.7 528.2
Net asset value per share 112.8p 105.0p 99.9p 96.8p

*The valuation of investment properties is shown net of rental incentives and includes the value of owner-occupied properties.

The evolution of the net asset value can be summarized as follows:

Total
million pounds
Movement
%
Per share
Under
NAV as of September 30, 2021 573.6 105.0
Movement of land values 41.5 7.2 7.6
Net income after tax for the period 5.4 1.0 1.0
Dividends paid (4.6) (0.8) (0.8)
Other (0.2)
NAV as of December 31, 2021 615.7 7.4 112.8

DIVIDEND DECLARATION

A separate announcement was released today declaring a dividend increase of 0.875 pence per share for the period October 1, 2021 at December 31, 2021 (July 1, 2021 at September 30, 2021: 0.85 pence).

This increase restores the dividend to its pre-pandemic level and reflects a 2.9% increase from the previous quarter.

Dividend coverage for the quarter was 115% (September 30, 2021: 122%).

RENT COLLECTION

The Group collected 92% of the rent for the December quarter, which increases to 98% including the agreed monthly payments, and this should improve further.

Rent collected for the September quarter is currently at 98%.

DEBT

Total borrowings at December 31, 2021 was £182.2 million, of which £17.0 million was drawn under the revolving credit facility and the balance drawn under the 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 20.8% (September 30, 2021: 21.9%).

The weighted average maturity profile of the Group’s debt is approximately 7.7 years and the weighted average interest rate is 4.0%.

Picton has £33m available through its unused revolving credit facility.

PORTFOLIO UPDATE

On a like-for-like basis, the valuation of the portfolio increased during the quarter by 6.0% or £44.5m, with £2.6m of capital expenditure incurred across the portfolio during the quarter. of the period. Valuation movements during the quarter are shown below:

Sector Wallet
Allocation
Alike
Assessment change
Industrial 58.2% 10.4%
South East 43.0%
Rest of UK 15.2%
Desks 31.1% (0.6)%
London City and West End 7.4%
Inside and outside London 4.1%
South East 9.7%
Rest of UK 9.9%
Retail and Leisure 10.7% 3.3%
Retail warehouse 6.8%
High Street – Rest of UK 2.4%
Hobbies 1.5%
Total 100% 6.0%

Continued strength in investment and professional demand in the industrial sector again led to very positive performance and an increase in capital value of 10.4% in the quarter. A supply/demand imbalance persists, particularly in the South-East multi-tenant market where more than 70% of our industrial portfolio is located, which continues to drive rental and capital growth.

Overall, the valuation of offices fell by 0.6% over the quarter, the decline being more marked in London. Investments in the office portfolio over the past few years have enabled us to have good quality buildings that meet occupier requirements and the majority of our vacant space is ready to be let.

Retail warehousing continues to drive performance in the retail and leisure sector. Our commercial warehouse portfolio is fully leased, on generally low rents and increased 5.0% in the quarter, reflecting the positive underlying position. Our main street portfolio, where we found two new occupants during the quarter, declined slightly by 1.0%.

Like a December 31, 2021, the portfolio had a net initial yield of 4.2% (assuming zero holding costs) or 4.5% (based on net contracted income) and a net return yield of 5.6%. The weighted average duration of the remaining leases, based on the headline rent, is 4.8 years.

The occupancy rate decreased slightly to 91%, reflecting the return of space in the office and industrial sectors. This will be refurbished before the remarketing.

The top ten assets, which represent 55% of the portfolio by capital value, are detailed below.

Active Sector Site
Parkbury Industrial Estate, Radlett Industrial South East
River Way Industrial Estate, Harlow Industrial South East
Data Point, Cody Road, E16 Industrial London
Lyon Business Park, Barking Industrial outer london
Stanford Building, Long Acre, WC2 Office London
Shipton Way, Rushden, Northants Industrial East Midlands
Angels Gate, City Road, EC1 Office London
Tower Quay, Cheese Lane, Bristol Office South West
50 Farringdon Road, EC1 Office London
Sundon Business Park, Luton Industrial South East

MARKET CONTEXT

According to the MSCI Monthly UK Property Index, the total return for all properties was 7.8% for the quarter to December 2021against 4.6% in the previous quarter.

Capital growth was 6.6% (September 2021: 3.4%) and rental growth was 1.5% for the quarter (September 2021: 0.6%). 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 12.5% seven 0
Office 1.7% seven 3
Retail 4.0% 12 seven
All properties 6.6% 26 ten

MSCI rental growth

Number of MSCI Segments
Quarterly growth Positive growth Negative growth
Industrial 4.0% seven 0
Office 0.6% 9 1
Retail -0.5% seven 12
All properties 1.5% 23 13

ENDS


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