Picton Property Income Ld Share Discussion Threads

[speedsgh] 29/7/2019 09:38

Net Asset Value as at 30 June 2019 -

Picton (LSE: PCTN) announces its Net Asset Value for the quarter ended 30 June
2019.

Highlights during the quarter included:

NAV growth and enhanced balance sheet through fundraising

* Net Assets increased to GBP508.4 million (31 March 2019: GBP499.4 million).
* NAV/EPRA NAV per share rose 0.3% to 93.0 pence (31 March 2019: 92.7 pence).
* Raised GBP7.1 million of new equity at a 1.9% premium to the March NAV.
* LTV reduced to 24.1% (31 March 2019: 24.7%)
* Total return for the quarter of 1.3% (31 March 2019: 1.2%).

Dividend declared

* Dividend of 0.875 pence per share declared and to be paid on 30 August 2019
(31 March 2019: 0.875 pence per share).
* Annualised dividend equivalent to 3.5 pence per share, delivering a
dividend yield of 3.7%, based on 25 July 2019 share price.
* Dividend cover for the quarter of 100% (31 March 2019: 113%).

Valuation uplift primarily driven by asset management initiatives

* Like-for-like increase in property portfolio valuation for the quarter of
0.5% (31 March 2019: 0.2%) driven primarily by industrial sector gains.
* Completed seven lease renewals / regears and uplifts secured on three rent
reviews, on average 7% ahead of the March ERV, with a combined annual rent
of GBP1.6 million.
* Completed four lettings on average 5% ahead of the March ERV, with a
combined annual rent of GBP0.6 million.
* Active management completed to remove or extend four break options,
securing GBP1.2 million of income the majority of which was at risk in the
next 12 months.
* Stable occupancy of 90%, with a number of refurbishment projects underway
(31 March 2019: 90%).

Nick Thompson, Chairman of Picton, commented:
"We have delivered another positive set of results during a quarter in which we
also raised equity on a non-dilutive basis. This equity has been used initially
to reduce borrowing from our revolving credit facilities ahead of it being
deployed in a timely and cost-efficient manner into asset enhancing projects."

Michael Morris, Chief Executive of Picton, commented:
"Overall the portfolio has responded well to our various asset management
initiatives and fluctuations in the market. During the period, we have invested
nearly GBP1 million into refurbishment and repositioning projects, which will now
enable us to improve income. Furthermore, leasing transactions over the quarter
have completed ahead of the independently derived rental valuations and we are
continuing to make good progress on several value-enhancing asset management
initiatives, which all bodes well for the future."

[ugandalad] 30/6/2019 09:18

I have a slight discomfort over these book building capital raising run by the Fund management xstockbroking Industry but the low cost and the apparent full value being paid is also reassuring.

[skyship] 30/6/2019 08:11

Very well managed operation; however recent performance slightly damaged by their Retail holdings.

At the issue price of 94.5p the places would have been asked to buy at a 1.6% NAV premium and a 3.6% yield; so personally I wouldn't have seen much of an attraction.

At the share price of 98p that NAV premium rises to 5.3%; so IMO quite clearly the shares are now a sell on valuation grounds.

There are some really bizarre valuation discrepancies currently. Take CREI @ 120p on a 10% premium and 5% yield. LXI at 127p on an 11% premium and 4.3% yield - and both companies managing to make large equity issues at those NAV premiums. I just don't get it!

[speedsgh] 19/6/2019 08:55

Likewise. Can't help but think they might be disappointed with raising only £7.1m, although they were cute to not advertise how much they were actually targeting to raise in the first place. Might be wider implications for the sector if a quality operator like Picton have indeed struggled to raise even a relatively small amount of capital.

[danielbird193] 19/6/2019 08:45

Not a bad result but I thought they'd raise more. The asset management initiatives identified in the 'Proposed Placing' RNS were costed at £15 million so I was expecting them to get away £12 million at least.

[speedsgh] 19/6/2019 08:37

The placing has raised gross proceeds of £7.1m...

Results of Proposed Placing -

[speedsgh] 13/6/2019 14:11

Picton Property launches share issue as LXi Reit raises £200m -

[danielbird193] 13/6/2019 08:47

Sounds sensible but I wish they'd include details of how much additional rent roll will result from the planned capex (or at least give a targeted IRR for the additional capital raised). If the IRR isn't higher than their WACC then it's a foolish move. I assume they (or their bankers) have done their sums so why don't they give humble investors this information?

[speedsgh] 12/6/2019 18:04

Proposed placing at 2.4% discount to yday's closing price. No confirmation of exactly how much they are seeking to raise but one assumes it might be in the region of £15m as they allude to having "identified in excess of 20 separate asset management initiatives in its portfolio, with total costs of approximately £15 million". Of course, if there is appetite amongst IIs for more, they may well take advantage of the additional demand. Proceeds will initially be used to reduce amounts currently drawn on their revolving credit facilities. Placing is only open to IIs.

Proposed Placing -

The Board of Directors of Picton (the ''Board'') announces a proposed placing of new ordinary shares in the Company (the "Placing" and the "Placing Shares" respectively) at a price of 94.5 pence per Placing Share (the "Placing Price").

The Placing Price represents a discount of 2.4 per cent to the closing share price of 96.8 pence per existing ordinary share in the capital of the Company ("Ordinary Share") on 11 June 2019 (being the last business day prior to the date of this announcement) and a premium of 1.9 per cent to the Company's last reported EPRA NAV per Ordinary Share as at 31 March 2019 of 92.7 pence...

USE OF PROCEEDS
The Group has identified in excess of 20 separate asset management initiatives in its portfolio, with total costs of approximately £15 million, which it is seeking to progress further over the short to medium term. These opportunities are expected to improve the quality of the existing portfolio and are intended to deliver higher occupancy, rental income and capital values over time, including:

· upgrading and repositioning internal space;

· converting assets to higher value uses; and

· enhancing the external fabric of some assets to help maintain and attract new occupiers.

Furthermore, the Company continues to explore other investment opportunities and, owing to its strong reputation as well as its attractive corporate and management structure, is well positioned to source asset and portfolio opportunities which may arise as a result of the ongoing volatility and uncertainty in the market.

The Group has two revolving credit facilities with Santander, of which £26 million was drawn as at 31 March 2019. The net proceeds of the Placing will be immediately deployed to reduce the amounts drawn on these facilities, thereby avoiding any cash drag on investment returns as well as providing the Company with increased financial flexibility to take advantage of investment opportunities that may arise...

The Placing is currently expected to close at 11.00 a.m. (London time) on 18 June 2019 and the results of the Placing will be announced as soon as practicable thereafter.

[mushypeas] 04/6/2019 08:46

2w:-
Picton was previously domiciled in the channel islands where no corporation tax was levied. The UK treasury is now bearing down on this tax exemption - hence the change to UK REIT status and with it no effective change in the distributions for an ISA investor.

[2wild] 03/6/2019 22:31

REITs don't pay tax on rental income. Theforere shareholders are taxed at 20% upfront on PID divs. Shares held in an ISA or pension are exempt, but providers need to let the company know.
I don't get why this div was not increased as Picton are not now paying tax and are require to distribute 90% of income under REIT rules.

[speedsgh] 14/5/2019 16:26

10min Citywire video interview with Picton CEO, Michael Morris...

[p49b] 04/3/2019 13:45

Hi Ugandaland, The issue is the change of status to a REIT. The dividend has been taxed at 20% because the broker had not updated there system with the change.
The tax has been deducted from the amount PCTN paid to HL hence the need for HL
to approach HMRC to refund the tax. Thats how HL explained the mistake to me.
I didnt think REITS paid tax, and I hold mine in a ISA. Go figure.

[danielbird193] 04/3/2019 11:48

Thanks for that P49b. I use AJ Bell Youinvest and have just double checked. My recent dividend payment was correct down to the penny, so obviously no similar issue at AJ Bell. I moved my SIPP and ISA from Hargreaves Lansdown to AJ Bell a few years ago and have been pleasantly surprised by the quality of the service, while the platform fee is much lower (0.25% compared to 0.45% from HL). They will also cover the cost of any exit fees charged by your current provider if you transfer a certain amount (about £20,000 from memory).

[p49b] 04/3/2019 11:05

My Dividend paid on the 28/02/19 was lower than I expected, i use HL as my broker
,and calling them was told that HL hadnt picked up that PCTN had converted to a REIT
and therefore HMRC had deducted TAX from the Divi. HL have said they will now claim the Tax back from HMRC but this will take 2 months and now this Reit status is known to them (HL)this should not happen in future. I have made a complaint as I think that HL should be on top of changes that companies make, but I was told that because there are thousands of companies that isnt possible, make you wonder what you pay account fees for?.

[dendria] 29/1/2019 10:31

Edison update note out this morning:

[speedsgh] 23/1/2019 10:11

This is Picton's first distribution as a UK REIT...

Dividend Declaration -

Picton today announces an interim dividend payment in respect of the financial period from 1 October 2018 to 31 December 2018, of 0.875 pence per share.


The dividend timetable is set out below:

Ex-Dividend Date - 31 January 2019

Record Date - 1 February 2019

Pay Date - 28 February 2019


The dividend of 0.875 pence per share will be designated as a property income distribution (‘PID’).

[speedsgh] 23/1/2019 10:08

Net Asset Value as at 31 December 2018 -

Picton (LSE: PCTN), the property investment company, announces its Net Asset Value for the quarter ended 31 December 2018.

Highlights during the quarter included:

Positive results with improved balance sheet

Net Assets increased to £498.1 million (30 September 2018: £497.1 million).
NAV/EPRA NAV per share rose 0.3% to 92.5 pence (30 September 2018: 92.2 pence).
LTV of 25.0% (30 September 2018: 25.5%)
Total return for the quarter of 1.2% (30 September 2018: 1.5%).

Dividend declared and continued strong cover

Dividend of 0.875 pence per share declared and to be paid on 28 February 2019 (30 September 2018: 0.875 pence per share).
Annualised dividend equivalent to 3.5 pence per share, delivering a dividend yield of 4.2%, based on 22 January 2019 share price.
Dividend cover for the quarter of 123% (30 September 2018: 129%).

Continued portfolio activity

Like-for-like increase in property portfolio valuation for the quarter of 0.1% (30 September 2018: 0.7%) driven by industrial sector gains.
Completed six lease renewals / regears and uplifts secured on eight rent reviews, on average 9.9% ahead of the September ERV, with a combined annual rent of £2.1 million.
Completed six lettings and one agreement to lease on average 2.1% below the September ERV, with a combined annual rent of £0.9 million.
Completed five surrenders and one agreement to surrender where the market rents are 23.2% ahead of rent passing and surrender payments received in excess of £0.3 million.
Occupancy of 93%, albeit principally impacted by the surrender activity (30 September 2018: 94%).

Nick Thompson, Chairman of Picton, commented:

“Given the current macro environment, we are encouraged by positive NAV growth during the period. The benefits of lower taxation, through our entry into the REIT regime, alongside lower financing costs this quarter have positively contributed to this result.”

Michael Morris, Chief Executive of Picton, commented:

“As the debate and uncertainty around Brexit continues, it is becoming much clearer which parts of the market are still active and which are not. While we believe that our portfolio is well positioned with a strong weighting to the industrial sector, we’ve also proved that it is possible to limit the impact of some of the structural challenges being faced in other sectors through creative and innovative asset management. The expansion and transfer of Lidl from one unit in Swansea to replace a retailer subject to a CVA is an excellent example of this. We are also encouraged by our pipeline of asset management initiatives.”

[danielbird193] 07/1/2019 09:21

Seems like they did a good deal, letting Homebase remain at 10% of the previous rent would have been a disaster in terms of any future re-lettings / rent reviews. Reaffirms my positive view of management here.

[gorilla36] 07/1/2019 08:51

Quality bit of business (Swansea) from a quality company.

[danielbird193] 20/11/2018 13:47

Yes, this a nice "tucker awayer". Will be in my portfolio for many years to come.

[petewy] 20/11/2018 13:30

Thanks to spdgh sship, avid reader. Long haul stock.

[skyship] 20/11/2018 13:19

EDISON Update:

[speedsgh] 13/11/2018 11:00

From Half Year Results...

"During the period we paid dividends of 1.75 pence per share, an increase of 3% compared to a year ago. Our last dividend to be paid as an investment company will be later this month. From February next year we will continue to pay dividends on the usual quarterly basis but primarily in the form of Property Income Distributions (PIDs). We will review our dividend policy in light of the minimum REIT distribution requirements and prevailing market conditions ahead of this time."

"Volatility in the listed real estate equity market has contributed significantly to the fact that the share price does not currently fully reflect the underlying net asset value of the Company, but this is not uncommon."

Strategic Priorities

During the period, we remained focused on our strategic priorities to ensure we continue to deliver long-term value for shareholders. As we have stated over the past few years, Picton aims to be one of the consistently best performing diversified UK focused property companies listed on the London Stock Exchange.

By repaying some debt in July, we have reduced financing costs and secured additional changes to our loan arrangements which will translate into future operational flexibility. We have de-risked the capital structure, undertaken a small number of disposals, which have been accretive to net asset value, and continue to improve the effectiveness and efficiency of our business model through our REIT conversion and associated changes.

We expect to see the savings from becoming a REIT start to flow through in the next six months. We have also created additional operational efficiencies by migrating management and control to the UK and by streamlining our reporting process, removing the duplication of net asset value statements overlapping with annual and half yearly results.


Property Strategy

We have a good quality portfolio of assets that continues to outperform the MSCI IPD Quarterly Benchmark.

We have been overweight in the outperforming industrial, warehouse and logistics sector, whilst at the same time being underweight in the far more challenging and underperforming retail sector. This is more fully detailed below. Despite a small reduction over the period, occupancy remains high and the Board is encouraged by initiatives both ongoing and planned for assets within the portfolio.

We continue to work with our occupiers to provide space that meets their needs and, through a process of upgrading space, help mitigate any risks to our cashflow. We hope to be able to report on several specific asset management initiatives before the year end.

[speedsgh] 13/11/2018 10:58

Half Year Results -

Picton announces its half year results for the period to 30 September 2018.

Growth in NAV and EPRA earnings
> Profit after tax of £18.9 million
> Total return of 3.9%
> Increase in EPRA earnings per share of 9.5% to 2.2p
> Increase in EPRA NAV per share of 2.0%, to 92 pence per share
> Dividends paid of £9.4 million or 1.75 pence per share
> Dividend cover of 125%

Corporate Highlights
> Converted to a UK REIT on 1 October
> Successfully changed listing status to commercial company, from investment company
> Repaid £33.7 million of fixed debt using cash reserves and lower cost revolving credit facility
> Gearing reduced to 25.5% and weighted average interest rate reduced from 4.1% to 4.0%
> Net saving of £1.1 million in annual finance costs
> Created greater operational flexibility by restructuring one of the principal debt facilities

Portfolio outperformance
> Total property return of 4.4%, outperforming the MSCI IPD Quarterly Benchmark of 3.2%
> Total property return and income return outperformance ahead of MSCI IPD over 1, 3, 5 and 10 years
> Like-for-like valuation increase of 1.5%, driven by industrial and office sectors
> Two disposals for £11.8 million, 8.4% ahead of March 2018 valuation
> Occupancy at 94%, ahead of the MSCI IPD Quarterly Digest of 92%

Picton Chairman, Nicholas Thompson, commented:

“Picton aims to be one of the best performing diversified UK-listed property companies and is therefore delighted to have delivered yet another solid set of results during the first half of the year, generating a 4% total return and an increase in EPRA earnings. With the resounding support of our shareholders, we also successfully completed the transition to become a UK REIT and other associated changes, realigning the Board in the process.”

Michael Morris, Chief Executive of Picton, commented:

“We continue to manage the portfolio and our occupiers, with a view to enhancing our income and capital position through the investment cycle. Our current performance can be directly attributed to the work we’ve put into reshaping the property portfolio, and separately having considerably strengthened the Company’s balance sheet over the past few years.”