Picton Prop Inc Ltd Net Asset Value and Interim Dividend

 
TIDMPCTN TIDMPCTZ 
 
25 April 2017 
 
                        PICTON PROPERTY INCOME LIMITED 
                  ("Picton" or the "Company" or the "Group") 
 
           Net Asset Value as at 31 March 2017 and Interim Dividend 
 
Picton (LSE: PCTN) announces its Net Asset Value for the quarter ended 31 March 
2017 and Interim Dividend. 
 
Highlights during the quarter included: 
 
Financial 
 
  * Increase in Net Assets to GBP441.9 million (31 December 2016: GBP434.4 
    million). 
  * NAV/EPRA NAV per share rose 1.7% to 81.8 pence (31 December 2016: 80.4 
    pence). 
  * Total return for the quarter of 2.8% (31 December 2016: 3.5%). 
  * Reduction in net gearing to 27.4% (31 December 2016: 28.3%). 
 
Dividend 
 
  * Dividend of 0.85 pence per share declared and to be paid on 31 May 2017 (31 
    December 2016: 0.85 pence per share). 
  * Annual dividend equivalent to 3.4 pence per share, delivering a yield, 
    based on 21 April 2017 share price, of 4.0%. 
  * Dividend cover for the quarter of 106%, reflecting the increased dividend 
    paid February 2017 (31 December 2016: 112%). 
 
Portfolio Activity 
 
  * Like-for-like increase in property portfolio valuation of 0.9% (31 December 
    2016: 1.9%). 
  * Completed six lettings, on average 6% ahead of December 2016 ERV, adding GBP 
    0.4 million per annum to the rent roll. 
  * Completed the sales of three non-core assets for GBP6.5 million, overall 10% 
    ahead of the December 2016 valuation. 
  * Resultant portfolio of 53 assets with average lot size of GBP11.8 million (31 
    December 2016: GBP11.4 million). 
  * Occupancy maintained at 94% (31 December 2016: 94%). 
  * Post quarter end, completed letting of largest industrial void for GBP0.2 
    million per annum improving the proforma occupancy to 95%. 
 
Commenting, Nick Thompson, Chairman of Picton, said: 
 
"We have had a good start to 2017, which is shown by a further increase in NAV. 
During the quarter, we maintained a covered dividend and reduced net gearing to 
27%. We also continued to reshape the portfolio selling three non-core assets 
and increasing our average lot size." 
 
Michael Morris, Chief Executive of Picton Capital, added: 
 
"We continue to create positive momentum, making NAV accretive disposals and 
letting space above independent valuation assessments. We now have more than 
40% of the portfolio allocated to the industrial, warehouse and logistics 
sector, where we are experiencing strong performance and which has proven to be 
resilient to the broader economic and political volatility. We are carefully 
reviewing opportunities in the market but will only look to progress these 
where the property and financial fundamentals are compelling." 
 
The Company intends to release its year end results during the week commencing 
5 June and a further announcement will be made in due course. 
 
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 GBP441.9 million at 31 March 2017, 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 March 2017, was GBP 
441.9 million, reflecting 81.8 pence per share, an increase of 1.7% 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 March 2017, including income for the quarter, but does not include a 
provision for the dividend this quarter, which will be paid in May 2017. 
 
The next independent valuation of the property portfolio is scheduled for June 
2017 and the unaudited NAV per share, as at 30 June 2017, will be announced in 
July 2017. 
 
A detailed breakdown of the NAV is included in the Appendix. 
 
DIVID 
 
A dividend of 0.85 pence per share is declared in respect of the period 1 
January 2017 to 31 March 2017 (1 October 2016 to 31 December 2016: 0.85 pence). 
The dividend will be paid on 31 May 2017 to shareholders on the register on 12 
May 2017. The ex-dividend date is 11 May 2017. 
 
Post-tax dividend cover over the quarter, based off the recently increased 
dividend, was 106% (31 December 2016: 112%). 
 
DEBT 
 
Total borrowings at 31 March were GBP204.6 million, with a weighted average 
interest rate of 4.2% (100% fixed) and a weighted average debt maturity profile 
of approximately 11.7 years. Net gearing, calculated as total debt less cash, 
as a proportion of gross property value, was 27.4% (31 December 2016: 28.3%). 
 
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 0.9% or GBP5.4 million, primarily 
as a result of our portfolio being positioned in better performing sub-sectors 
of the market combined with the active management and leasing activity 
completed during the period. 
 
The best performing sector in the portfolio was again industrial, reflecting 
our on-going active management of these assets as well as robust occupational 
demand, as detailed below. 
 
Occupancy was maintained at 94%, which is expected to improve over the short 
term as we have completed a letting post quarter end of our largest industrial 
void and as we make progress at 50 Farringdon Road, EC1. 
 
As at 31 March 2017, the portfolio had a net initial yield of 5.9% (based on 
contracted net income and allowing for void holding costs) and a net 
reversionary yield of 6.9%. 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 final suite at Trident House, St. Albans was leased, securing a rent of GBP 
0.1 million per annum which was 27% ahead of ERV, 91% ahead of the previous 
passing rent and at GBP38 per sq ft sets a record rent in this location. 
 
At 50 Farringdon Road, a proposed transaction for leasing the remaining space 
became abortive during the quarter. Despite this we have good interest having 
relaunched the building in March. 
 
The sale of a building at Waterside House, Bracknell, which was vacant and 
required refurbishment, completed during the quarter realising GBP1.54 million 
which was 9% ahead of the 31 December 2016 valuation. The sale of this non-core 
vacant building improves our occupancy, reduces our void holding costs and is 
in line with our business plan to grow the average lot size. We have one 
further vacant building to dispose of at this location. 
 
Industrial 
 
Space was let in Epsom, Luton and Radlett securing a combined rent after 
incentives of GBP0.33 million per annum, 1% ahead of the December 2016 ERV. 
 
We re-geared two leases in return for short rent free periods, securing a 
combined GBP0.2 million per annum. At the same time, we settled five rent 
reviews, securing GBP0.42 million per annum which was a 12% increase on the 
passing rent and 3% ahead of the December 2016 ERV. 
 
Retail and Leisure 
 
In line with our strategy to dispose of our smaller properties once business 
plans are completed, we sold 2 Bath Street in Bath for GBP2.75 million and, 
following considerable management, disposed of Drury Lane in Oldham for GBP2.2 
million. The combined sale price of these assets was 10% ahead of the December 
2016 valuation. 
 
MARKET BACKGROUND 
 
According to the MSCI IPD Monthly Index, the All Property total return was 2.3% 
in the quarter to March 2017, compared to 2.6% in the quarter to December 2016. 
Capital growth was 0.9% over the quarter, compared with 1.1% in the quarter to 
December 2016. 
 
Across the principal IPD sectors, industrial capital values grew by 2.4% 
(December 2016: 2.7%), office by 0.6% (December 2016: 1.0%) and retail by 0.3% 
(December 2016: 0.4%). Out of a total of 37 segments (based on a rolling three 
months), 31 segments recorded positive capital growth compared to 29 last 
quarter. Only the industrial sector saw a positive valuation movement across 
all of its segments over the quarter. 
 
Over the quarter to March 2017, rental values rose by 0.3%, compared with 0.5% 
in the quarter to December 2016. Across the principal IPD sectors, industrial 
rental values grew by 1.0% (December 2016: 1.3%), office by 0.1% (December 
2016: 0.3%) and retail recorded nil growth (December 2016: 0.3%). Over the 
quarter, 23 of the IPD segments recorded positive rental growth compared to 29 
segments last quarter. The industrial sector primarily saw positive rental 
growth but this was more muted in the office and retail sectors. 
 
                                   APPIX 
 
NET ASSETS SUMMARY 
 
 
The unaudited Net Asset Value is as follows: 
 
                             31 Mar 2017   31 Dec 2016   30 Sept 2016 
                              GBPmillion      GBPmillion       GBPmillion 
 
Investment properties *         615.2         615.6         621.1 
 
Other assets                    18.6          17.6           24.1 
 
Cash                            33.9          28.2           35.3 
 
Other liabilities              (21.2)        (22.1)         (22.4) 
 
Borrowings: Loan facilities    (204.6)       (204.9)       (205.2) 
 
                 ZDP's            -             -           (29.0) 
 

Net Assets                      441.9         434.4         423.9 
 
Net Asset Value per share       81.8p         80.4p         78.5p 
 
* 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 31 December 2016           434.4                              80.4 
 
Movement in property values        7.2              1.7              1.4 
 
Net income after tax for the       4.9              1.1              0.9 
period 
 
Dividends paid                    (4.6)            (1.1)            (0.9) 
 
NAV at 31 March 2017              441.9             1.7              81.8 
 
 
 
PORTFOLIO COMPOSITION 
 
The portfolio consisted of 53 assets and an average lot size of GBP11.8 million 
at the end of March 2017. 
 
The Group's portfolio is structured as follows: 
 
Sector                          Portfolio       Like for like 
                                weightings     valuation change 
                               31 Mar 2017 
 
Industrial sub-total              40.1%              2.1% 
 
South East                        26.9% 
 
Rest of UK                        13.2% 
 
Offices sub-total                 34.3%              0.3% 
 
South East                        21.4% 
 
Rest of UK                         8.7% 
 
City & West End                    4.2% 
 
Retail and Leisure                25.6%             -0.2% 
sub-total 
 
Retail warehouse                  10.4% 
 
High Street - Rest of UK           7.4% 
 
High Street - South East           5.6% 
 
Leisure                            2.2% 
 
Total                              100%              0.9% 
 
 
 
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,               Industrial               South East 
Radlett 
 
River Way Industrial Estate,              Industrial               South East 
Harlow 
 
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      Yorkshire & Humberside 
 
Phase II Parc Tawe, Swansea            Retail Warehouse              Wales 
 
Metro, Manchester                           Office                 North West 
 
 
 
 
 
                                     ENDS 
 
 
 
END 
 

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April 25, 2017 02:00 ET (06:00 GMT)