Picton Property Income Ltd – Trading Update and Net Asset Value as of June 30, 2022

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July 27, 2022

PICTON REAL ESTATE REVENUE LIMITED
(“Picton”, the “Company” or the “Group”)
LEI code: 213800RYE59K9CKR4497

Trading Update and Net Asset Value as of June 30, 2022

Picton Announces 2.0% Net Asset Value Increase for the Quarter Ended June 30, 2022.

Financial Highlights

  • Net assets of £670.0 million (March 31, 2022: £657.1 million).
  • NAV/EPRA NTA per share up 2.0% at 122.9 pence (March 31, 2022: 120.4 pence).
  • Total return for the quarter of 2.8% (March 31, 2022: 7.6%).
  • LTV of 22.3% (March 31, 2022: 21.2%).

Operational Highlights

  • Increase in portfolio valuation on a like-for-like basis of 1.9% over the quarter.
  • Completion of three small lettings, in the office and retail sectors, and renewal/redevelopment of three leases, all in the industrial sector, with a combined annual rent of £0.3m, 6% ahead of the March 2022 REV.
  • Achieved an average increase of 12% over previous run-in rent through four rent reviews in the industrial and retail sectors, with a combined annual rent of £0.3m, or 14% ahead of the March 2022 REV.
  • Bought a mixed-use multi-tenancy London active for £13.7 million.
  • 91% occupancy rate, primarily reflecting existing vacancy in the acquisition above (March 31, 2022: 93%).

Dividend

  • Interim dividend of 0.875 pence per share declared for the period April 1, 2022 at June 30, 2022 and pay the August 31, 2022 (January 1, 2022 at March 31, 2022: 0.875 pence per share).
  • Annualized dividend equivalent to 3.5 pence per share, generating a dividend yield of 3.8%, based on July 25, 2022 share price.
  • Dividend coverage for the quarter of 103% (March 31, 2022: 103%).

Lena Wilson ECBPresident of Picton, commented:

“It is encouraging to have recorded another quarter of positive NAV growth. Looking forward, our conservative balance sheet and primarily fixed long-term credit facilities position us well to take advantage of opportunities arising from current market conditions.

Michael MorrisPicton’s general manager, said:

“We saw valuation gains in every sector of the portfolio. While we recognize that macroeconomic events are causing capital growth to slow in many markets, asset management initiatives and rental growth in a number of sub-sectors contributed to the overall positive result. We continue to watch the market carefully for opportunities to grow the portfolio. »

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

For more information:

Tavistock

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 £879 million, invested in 48 assets and with approximately 400 occupants (as at 30 June 2022).

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 June 30, 2022 was £670.0 million, reflecting 122.9 pence per share, an increase of 2.0% in the quarter or 2.8% 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 June 30, 2022including income for the quarter, but does not include a provision for the dividend for this quarter, which will be paid in August 2022.

June 30, 2022
million pounds
March 31, 2022
million pounds
Dec 31 2021
million pounds
September 30, 2021
million pounds
Investment properties* 863.2 834.2 774.2 730.2
other assets 25.5 24.2 25.3 26.2
Cash 22.4 38.5 17.7 16.7
Other liabilities (22.6) (21.0) (19.3) (20.0)
Loans (218.5) (218.8) (182.2) (179.5)
Net assets 670.0 657.1 615.7 573.6
Net asset value per share 122.9p 120.4p 112.8p 105.0p

*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 at March 31, 2022 657.1 120.4
Movement of land values 13.3 2.0 2.5
Net income after tax for the period 4.9 0.7 0.9
Dividends paid (4.8) (0.7) (0.9)
Other (0.5)
NAV as of June 30, 2022 670.0 2.0 122.9

DIVIDEND DECLARATION

A separate announcement was released today declaring a dividend of 0.875 pence per share for the period April 1, 2022 at June 30, 2022 (January 1, 2022 at March 31, 2022: 0.875 pence).

Dividend coverage for the quarter was 103% (March 31, 2022: 103%).

DEBT

Total borrowings at June 30, 2022 amounted to £218.5 million, of which £4.9 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 22.3% (March 31, 2022: 21.2%).

The weighted average maturity profile of the Group’s debt is approximately 9.3 years and the weighted average interest rate is 3.7%.

Picton has £45.1m 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 1.9% or £16.2m, with £1.1m 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 59.3% 2.3%
South East 43.1%
Rest of UK 16.2%
Desks 30.3% 0.7%
London City and West End 7.0%
Inside and outside London 5.2%
South East 8.7%
Rest of UK 9.4%
Retail and Leisure 10.4% 2.8%
Retail warehouse 6.8%
High Street – Rest of UK 2.1%
Hobbies 1.5%
Total 100% 1.9%

Amid rising inflation and rising financing costs, there was upward pressure on yields in some subsectors, although this was offset by rental growth and portfolio activity.

The retail and leisure element of the portfolio saw the strongest growth, primarily reflecting lower returns from commercial warehouse assets. On a comparable basis, the valuation of our office portfolio increased by 0.7% during the quarter, mainly reflecting investments in assets. Occupational demand in the industrial sector remains strong with associated rental growth, which has led to positive performance and an increase in capital value, despite some small outward yield adjustments for low-yielding assets .

Charlotte Terracehammersmith road, London, W14 was acquired for £13.7million. This mixed use London block comprises four adjoining buildings, which total 28,500 square feet of office space and 4,400 square feet of retail space, spread over five floors. The property was redeveloped behind the front in 1990 and is Grade II listed, meaning there are no commercial rates payable on empty units. Purchase price reflects a net initial yield of 3.3%, rising to over 8% once fully let and reflecting a low capital value of £417 per square foot, which is below its estimated replacement cost . In order to support the rental process, work is underway to improve the occupants’ equipment.

Like a June 30, 2022, the portfolio had a net initial yield of 4.1% (assuming zero holding costs) or 4.3% (based on net income contracted) and a net return yield of 5.4%. The weighted average duration of the remaining leases, based on the headline rent, is 4.9 years.

Occupancy reduced to 91%, primarily reflecting existing vacancy in recent acquisition above.

The top ten assets, which represent 55% 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
Data Point, Cody Road, E16 Industrial London
Lyon Business Park, Barking Industrial outer london
Stanford Building, Long Acre, WC2 Desk London
Shipton Way, Rushden, Northants Industrial East Midlands
Angels Gate, City Road, EC1 Desk London
Tower Quay, Cheese Lane, Bristol Desk South West
Sundon Business Park, Luton Industrial South East
50 Farringdon Road, EC1 Desk London

MARKET CONTEXT

According to the MSCI Monthly UK Property Index, the total return for all properties was 3.6% for the quarter to June 2022against 5.5% in the previous quarter.

Capital growth was 2.5% (March 2022: 4.3%) and rental growth was 1.1% for the quarter (March 2022: 1.3%). 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 4.1% seven 0
Desk 0.6% 5 5
Detail 2.2% 11 8
All properties 2.5% 23 13

MSCI rental growth

Number of MSCI Segments
Quarterly growth Positive growth Negative growth
Industrial 2.7% seven 0
Desk 0.1% 5 5
Detail 0.2% ten 9
All properties 1.1% 22 14

ENDS


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