Picton Property Income Ld Share Discussion Threads

[skyship] 11/7/2012 09:13

A reduction to perhaps a maximum of 4 x 0.875p would seem to be on the cards. That 3.5p annual dividend would give us 1.063% cover and yields & NAV discounts of:

8.75% & 29.8% @ 40p
8.97% & 31.6% @ 39p
9.21% & 33.3% @ 38p
9.46% & 35.1% @ 37p

[lord gnome] 11/7/2012 09:12

I'd say that reads like advance warning of a dividend cut. Certainty! Other than that it looks ok and a steady business. Could be a nice safe little dividend earner once the size of the cut is known. I'll keep this on the watch list until then. I reckon the price could drift back down again.

PS. the announcement did clear up one of the debating points on here. The new finance is at fixed rate.

[madmix] 11/7/2012 08:41

Looks like the dividend could be reduced slightly going forward :

Dividend

"During the period the Company paid dividends of £17.3 million. Prior to the one off costs associated with internalisation and corporate activity referred to above, this reflected dividend cover of 93%, with the shortfall being funded from reserves.

Despite Picton having one of the strongest levels of dividend cover within its immediate peer group, the Board intends to review the Company's dividend policy once the refinancing exercise has been completed. It has been our intention for a period of time to reach a position where the Company operated with dividend cover of at least 100%, rather than pay dividends on an uncovered basis.

In the current economic environment we believe the balance should be more weighted to strengthening the balance sheet rather than over distribution. Following completion of the refinancing, and once financing costs are finalised, we will be in a position to update shareholders on the future dividend policy. We remain committed to distributing as high a dividend as is commercially sensible to do so and will continue to benchmark our performance against the other income orientated listed property vehicles."

[nerja] 11/7/2012 08:33

Anybody more savvy than me give a heads up on the results please,

31 March 2012* 31 December 31 December
2010 2009
Property assets GBP411.7m GBP424.3m GBP352.6m
Net assets GBP196.1m GBP206.9m GBP181.1m
Rental income GBP40.6m GBP31.1m GBP31.9m
Profit before tax GBP6.2m GBP31.9m GBP(19.3)m
Income profit before GBP14.0m GBP14.6m GBP12.0m
tax
Net asset value per
share 57p 60p 55p
Earnings per share 1.9p 9.3p (5.9)p
EPRA earnings per share 4.1p 4.2p 3.6p
Total dividend per
share 5.0p 4.0p 3.0p

On the surface the longer period this time seems to account for the greater rental income but why the profit before tax drop?
Thanks in advance.

[sleepy] 06/7/2012 14:57

Spec - I think the interest rates on the new loan are/will be fixed

[specuvestor] 06/7/2012 14:36

I am trying to understand this new refinancing deal. From what I have read my understanding is that it is an interest only commercial mortgage with a variable rate of interest linked to the gilt rate. I thought that nornmally these loans are linked to libor. There doesnt seem to be any mention of hedgeing against interest rate raises. Isnt this more risky than before?
I am a holder of SREI & MCKS and have been in and out of a few of these property companies over the last few years. All have had some sort of interest rate hedge in place.
With gilt rates historically low isnt there a risk of the gilt bubble bursting and hence interest rates increasing drastically? Without hedging would not Picton be badly exposed? Or have I missed something?
I would like to buy in because of the high yield but this could be affected if their interest rate payments shot up and the divi had to be cut.

[rooky4] 02/7/2012 09:43

Swap break costs were given as £5.1 million as at 31 March 2012, so they will be presumably be less in July, and lower still if completion drags out as often happens. So maybe a bit of good news still to come.

[envirovision] 29/6/2012 12:34

We don't know the swap details, but why would it not be with the lender, or if not likely conditional upon and having been chosen by the loan provider.

One would think the fact it cannot run to expiry would be be down to the fact it would have been conditional upon the finance having been provided by the lender.

--------------------
nice 250K buy gone through as I type

[yieldsearch] 29/6/2012 12:30

AlanJI fully agree with you, they could have left the existing financing in place, with the swap costs declining to zero at maturity in early 2013, with a forward commitment from the new lender.

May be they were really concern with the lack of banks lending on real estate?

Or they could have use the existing swap for the new financing, forcing them to pay on the old swap term instead of paying an upfront 5m

[alanji] 29/6/2012 12:18

Who said it had to be fair? The swap will not be with the lender but they no doubt received a generous kickback when it was taken out.
The question is why refinance now rather than let it run down to expiry. I would have thought they could get some sort of advance commitment for less than £5m

[envirovision] 29/6/2012 12:12

Anyway, so let me get this strait? Pictons debt agreement was coming to an end and needed to be refinanced. No one was party to the discussions with existing lenders, but it is assumed that they would not have wanted to refinance on generous terms and infact may well have been demand terms which would have been highly unfavourable to existing shareholders, possibly who knows, even wipe out existing shareholders to an extent.

For the our privilege of not agreeing to what ever these "not so favourable terms" we have had to pay them an interest rate swap liability cost penalty of £5.1 million pounds.

.....................hmmmmmm does that sound fair ??

[envirovision] 28/6/2012 10:04

Grab year self a juicy 10% plus yield with a fully financed portfolio way out into the future

[yellowdog] 28/6/2012 08:34

S what about the £5m cost of the swaps?

[irenekent] 28/6/2012 08:18

At last-I'm in! Recommended by Chronic Investor in Feb at 41p.

[skyship] 28/6/2012 07:35

Well done Picton - up to 20yr year refinancing with AVIVA & CANADIAN LIFE. Set @ 2.1% margin, so starts @ 4.4% but will rise with interest rates:

[trustman] 30/5/2012 15:21

Anybody know timing of 2011 accounts?

[cwa1] 25/4/2012 07:19

NAV and Div release just out:-



Picton Property Income Limited ("Picton" or the "Company"), the internally managed Investment Company with an income focused approach to the UK commercial property market, announces its Net Asset Value and Interim Dividend as at 31 March 2012.
-- NAV per share 57 pence (December 2011: 60 pence).
-- Net Assets of GBP 196.1 million (December 2011: GBP 207.9 million).
-- 2.9% decrease in property portfolio valuation.
-- Completed the letting of 50 Farringdon Road, EC1.
-- Repayment of GBP 0.1 million of debt following asset sale.
-- Enhancement of Central London exposure through Angel Gate, EC1 acquisition.
-- Interim dividend declared of 1 pence per share.
Commenting, Nick Thompson, Chairman of Picton, said:

"In addition to managing our assets efficiently, our primary objective is to put in place new debt facilities during H1 2012 and this has been the focus of activity over the quarter. We have been encouraged by the feedback that has been received and the progress we have made in meeting this objective."

Michael Morris, Chief Executive of Picton Capital, said:

"Reflecting wider market conditions, our portfolio highlights have been Central London focused, having secured two new tenants at 50 Farringdon Road, completing the scheme. In addition, we have further enhanced our London exposure, which now represents just under a quarter of the portfolio by value, through the acquisition of two buildings at Angel Gate, consolidating our holdings at this asset."

[puku] 23/4/2012 18:41

hi - is the a REIT that I can get my tax back ?

[danny500] 20/4/2012 15:29

good news thanks for posting.

[speedsgh] 20/4/2012 15:23

Picton completes letting at 50 Farringdon road, EC1

[tiltonboy] 06/3/2012 10:48

SKYSHIP,

I'm fairly confident that they will maintain it. They will look to build dividend cover up when possible, so no possibility of an increase for some time.

[skyship] 06/3/2012 10:15

That over-valuation vis-a-vis IFD (Post No.83) has now unravelled, partly because PCTN stalled over the past month; but mostly because IFD broke out of its absurd under-valuation.

Tilts - at that meeting, did you get a feel for his commitment to retaining the 4p annual dividend?

[tiltonboy] 29/2/2012 11:46

Had a constructive meeting with Michael Morris. Nothing particularly major to come out of it.

[seekerofvalue] 24/2/2012 16:28

SKYSHIP, some Income ideas are written about in yesterday's Investors Chronicle article. PCTN gets a mention.

Income for your Isa

[sleepy] 20/2/2012 11:57

Tilts

Thank you

I expect you know the issues better than I do! Obviously the refinancing of the loan and the zeros. Will they need to take any other actions - raise equity, roll over/issue more zeros, sell property etc?

Last interim results shown 49% of eases expiring in less than 5 years. This cannot be helpful.