Picton Prop Inc Ltd Net Asset Value and Interim Dividend

 
TIDMPCTN 
 
24 January 2017 
 
                        PICTON PROPERTY INCOME LIMITED 
                  ("Picton" or the "Company" or the "Group") 
 
          Net Asset Value as at 31 December 2016 and Interim Dividend 
 
Picton (LSE: PCTN) announces its Net Asset Value for the quarter ended 31 
December 2016 and Interim Dividend. 
 
Highlights during the quarter included: 
 
Financial 
 
  * Increase in Net Assets to GBP434.4 million (30 September 2016: GBP423.9 
    million). 
  * NAV/EPRA NAV per share rose 2.5% to 80.4 pence (30 September 2016: 78.5 
    pence). 
  * Total return for the quarter of 3.5% (30 September 2016: 2.5%). 
  * Repaid in full 7.25% zero dividend preference shares for GBP29.1 million 
    using proceeds from asset disposals. 
  * Reduction in net gearing to 28.3% (30 September 2016: 31.6%). 
  * Reduction in the weighted average annual interest rate to 4.2% (30 
    September 2016: 4.6%). 
 
Dividend 
 
  * Dividend of 0.85 pence per share declared and to be paid on 28 February 
    2017 (30 September 2016: 0.825 pence per share). 
  * Annual dividend increased by 3%, equivalent to 3.4 pence per share, 
    delivering a yield, based on 20 January 2017 share price, of 4.4%. 
  * Dividend cover for the quarter of 112% (30 September 2016: 130%). 
 
Portfolio Activity 
 
  * Like-for-like increase in property portfolio valuation of 1.9% (30 
    September 2016: 0.1%). 
  * Increased occupancy to 94% (30 September 2016: 93%). 
  * Completed nine lettings, on average 2% ahead of September ERV, adding GBP1.3 
    million per annum to the rent roll, including: 
 
              - The two largest industrial voids in Barking and Harlow, for a 
combined initial rent of GBP0.6 million per annum. 
 
              - 50 Farringdon Road, London EC1 - First Floor North Wing, at an 
initial rent of GBP0.42 million per annum. 
 
  * Completed GBP17.7 million of disposals of 1 Chancery Lane, London WC2 and 6 
    Argyle Street, Bath. 
  * Resultant portfolio of 55 assets with average lot size of GBP11.4 million. 
 
Post Quarter End Activity 
 
  * Completed the sale of 2 Bath Street, Bath for GBP2.75 million, 10% above the 
    December valuation. 
 
Commenting, Nick Thompson, Chairman of Picton, said: 
 
"We have continued to make good progress over the quarter on many fronts. We 
have enhanced occupancy and had notable success on both lettings and asset 
disposals. We have repaid debt, which has simplified our corporate structure 
and achieved an 8% reduction in our average annual interest rate. Our continued 
high dividend cover enables us to declare an increased dividend today, which is 
payable to shareholders next month." 
 
Michael Morris, Chief Executive of Picton Capital, added: 
 
"This quarter, we have delivered strong NAV growth and a total return of 10.8% 
for 2016. By comparison the MSCI IPD Monthly Index showed a total return of 
2.6% for 2016. This is a reflection of our capital structure, portfolio 
composition and the considerable asset management activity undertaken." 
 
This announcement contains inside information. 
 
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 
 
 
Sam Walden, 01481 745 001, [e-mail] 
 
Note to Editors 
 
Picton is an income focused, property investment company listed on the London 
Stock Exchange. 
 
With Net Assets of GBP434.4 million at 31 December 2016, 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. Picton can invest both directly and indirectly in commercial 
property across the United Kingdom. 
 
www.picton.co.uk 
 
NET ASSET VALUE 
 
The unaudited Net Asset Value ('NAV') of Picton, as at 31 December 2016, was GBP 
434.4 million, reflecting 80.4 pence per share, an increase of 2.5% over the 
quarter. 
 
The NAV attributable to the ordinary shares is calculated under International 
Financial Reporting Standards and incorporates the external market valuation as 
at 31 December 2016, including income for the quarter, but does not include a 
provision for the increased dividend this quarter, which will be paid in 
February 2017. 
 
The next independent valuation of the property portfolio is scheduled for March 
2017 and the unaudited NAV per share, as at 31 March 2017, will be announced in 
April 2017. 
 
A detailed breakdown of the NAV is included in the Appendix. 
 
DIVID 
 
An increased interim dividend of 0.85 pence per share is declared in respect of 
the period 1 October 2016 to 31 December 2016 (1 July 2016 to 30 September 
2016: 0.825 pence). The dividend will be paid on 28 February 2017 to 
shareholders on the register on 10 February 2017. The ex-dividend date is 9 
February 2017. 
 
Post-tax dividend cover over the quarter was 112% (30 September 2016: 130%). 
 
DEBT 
 
In the quarter, the 7.25% zero dividend preference shares were repaid in full 
for GBP29.1 million using proceeds from asset disposals in this and the previous 
quarter. This repayment has simplified the capital structure of the Group as 
well as reducing net gearing and the overall cost of debt. 
 
Total borrowings at 31 December were GBP204.9 million, with a weighted average 
interest rate of 4.2% (100% fixed rate) and a weighted average debt maturity 
profile of approximately 12.0 years. Net gearing, calculated as total debt less 
cash, as a proportion of gross property value, was 28.3% (30 September 2016: 
31.6%). 
 
The Group currently has access to GBP53.0 million of undrawn facilities. If 
drawn, interest will be charged at 175 basis points over 3 month LIBOR, which 
is currently equivalent to 2.1% per annum. 
 
PORTFOLIO UPDATE 
 
The like for like portfolio valuation increased 1.9% or GBP11.9 million, 
primarily as a result of our positioning in the better performing industrial 
and office sectors, active management and leasing activity completed during the 
period. The Group incurred GBP1.8 million of capital expenditure over the period. 
 
Occupancy across the portfolio increased to 94%, principally reflecting leasing 
activity. 
 
As at 31 December 2016, the portfolio had a net initial yield of 5.8% (allowing 
for void holding costs) or 5.9% (based on contracted net income) and a net 
reversionary yield of 7.0%. The weighted average unexpired lease term based on 
headline rent was unchanged from the previous quarter at 5.7 years. 
 
Key highlights in the quarter included: 
 
Office 
 
The sale of 1 Chancery Lane, London WC2 was completed realising GBP17.25 million, 
which was 2% ahead of the 30 September 2016 valuation. Having acquired the 
building in 2005 for GBP9.0 million, the sale crystallised the value created 
since purchase and concludes our strategy to reduce the portfolio's central 
London exposure. 
 
At 50 Farringdon Road, London, the larger wing on the first floor was leased to 
the multidisciplinary contractor, Volker Wessels, on a ten year lease, subject 
to break in the fifth year. The annual rent is GBP0.42 million, which is in line 
with ERV. 
 
Industrial 
 
In Radlett, a tenant break clause was removed in return for a short rent free 
period and secured the occupier until 2022. Concurrently, a rent review at the 
unit was settled, securing income of GBP85,000 per annum which was a 19% increase 
on the passing rent and 8% ahead of ERV. 
 
The largest industrial void, at Unit D River Way in Harlow was let to BOC on a 
ten year lease with no break at GBP0.35 million per annum, which is in line with 
the September ERV. An Agreement for Lease was also completed on the only other 
vacant unit on the estate, which will complete once planning is secured by the 
occupier. 
 
The second largest industrial void, at Unit O Lyon Business Park in Barking, 
was let at a rent of GBP0.25 million per annum, 6% ahead of the September ERV, 
and 17% ahead of the prior rent passing. 
 
Retail and Leisure 
 
At Queens House in Glasgow, an increase over 25% of the prior passing rent was 
achieved on a restaurant unit securing a new rent of GBP160,500 per annum, over 
25% ahead of the September ERV. 
 
A small non-core retail asset at 6 Argyle Street, Bath was sold for GBP0.5 
million, which was in line with the September valuation. 
 
MARKET BACKGROUND 
 
According to the MSCI IPD Monthly Index, total returns were 2.6% in the quarter 
to December 2016, compared to -2.3% in the quarter to September 2016. Capital 
growth was 1.1% over the quarter, compared with -3.6% in the quarter to 
September 2016. Capital growth has been positive each consecutive month since 
October. In December monthly growth was 0.7%, its highest monthly rise since 
December 2015. 
 
Across the principal IPD sectors, industrial capital values grew by 2.7% 
(September 2016: -2.1%), office by 1.0% (September 2016: -4.7%) and retail by 
0.4% (September 2016: -3.9%). Out of a total of 37 segments (based on rolling 
three months), 29 segments recorded positive capital growth compared to only 
one last quarter. The eight negative movements were only seen in the office and 
retail sectors. 
 
Over the quarter to December 2016, rental values rose by 0.5%, compared with 
0.2% in the quarter to September 2016. Across the principal IPD sectors, 
industrial rental values grew by 1.3% (September 2016: 0.4%), office by 0.3% 
(September 2016: 0.2%) and retail by 0.3% (September 2016: 0.0%). Over the 
quarter, 30 of the IPD segments recorded positive rental growth compared to 23 
segments last quarter. The seven negative movements were only seen in the 
office and retail sectors. 
 
                                   APPIX 
 
NET ASSETS SUMMARY 
 
The unaudited Net Asset Value is as follows: 
 
                                   31 Dec 2016     30 Sept 2016     30 June 2016 

                                    GBPmillion         GBPmillion         GBPmillion 
 
Investment properties *               615.6           621.1            648.5 
 
Other assets                          17.6             24.1             18.5 
 
Cash                                  28.2             35.3             23.4 
 
Other liabilities                    (22.1)           (22.4)           (22.7) 
 
Borrowings: Loan facilities          (204.9)         (205.2)          (221.2) 
 
ZDP's                                   -             (29.0)           (28.5) 
 
Net Assets                            434.4           423.9            418.0 
 
Net Asset Value per share             80.4p           78.5p            77.4p 
 
* The investment property valuation is stated net of lease incentives. 
 
The movement in Net Asset Value can be summarised as follows: 
 
                                     Total           Movement          Per share 
 
                                   GBPmillion              %               Pence 
 
NAV at 30 September 2016             423.9                                78.5 
 
Movement in property values          10.0               2.4               1.8 
 
Net income after tax for the          5.0               1.2               0.9 
period 
 
Dividends paid                       (4.5)             (1.1)             (0.8) 
 
NAV at 31 December 2016              434.4              2.5               80.4 
 
PORTFOLIO COMPOSITION 
 
The portfolio consisted of 55 assets and an average lot size of GBP11.4 million 
at the end of December 2016. 
 
The Group's portfolio is structured as follows: 
 
Sector                                   Portfolio           Like for like 
                                         weightings         valuation change 
                                        31 Dec 2016 
 
Industrial sub-total                       39.2%                  2.8% 
 
South East                                 26.1% 
 
Rest of UK                                 13.1% 
 
Offices sub-total                          34.4%                  2.3% 
 
South East                                 21.5% 
 
Rest of UK                                  8.7% 
 
City                                        4.2% 
 
Retail and Leisure sub-total               26.4%                  0.2% 
 
Retail warehouse                           10.5% 
 
High Street - Rest of UK                    7.8% 
 
High Street -  South East                   5.6% 
 
Leisure                                     2.5% 
 
Total                                       100%                  1.9% 
 
TOP TEN ASSETS 
 
The top ten assets, which represent 48% 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              Office                    London 
Road, EC1 
 
Stanford House, Long Acre, WC2               Retail                    London 
 
50 Farringdon Road, EC1                      Office                    London 
 
Shipton Way, Rushden,                      Industrial              East Midlands 
Northamptonshire 
 
Pembroke Court, Chatham                      Office                  South East 
 
Queens Road, Sheffield                  Retail Warehouse               North 
 
Phase II Parc Tawe, Swansea             Retail Warehouse               Wales 
 
Metro, Manchester                            Office                  North West 
 
                                     ENDS 
 
 
 
END 
 

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January 24, 2017 02:00 ET (07:00 GMT)