Picton Prop Inc Ltd Picton acquires regional office investment

 
TIDMPCTN 
 
9 August 2017 
 
                        PICTON PROPERTY INCOME LIMITED 
 
                   ("Picton", the "Company" or the "Group") 
 
   Picton acquires highly reversionary multi-let office building in Bristol 
 
Picton (LSE:PCTN), the property investment company, has completed the 
acquisition of a grade A office building located in Bristol city centre for GBP 
23.15 million. 
 
Known as Tower Wharf, the building is situated in a prominent position on the 
waterfront, adjacent to Temple Way, and equidistant to both Temple Meads 
Railway Station and Cabot Circus shopping district. Constructed in 2005 to a 
BREEAM "Excellent" rating, the building provides 70,664 square feet of office 
accommodation arranged over ground and five upper floors, with car parking in 
the basement. 
 
The property has an average unexpired lease term of 5.2 years (2.8 years to 
break) and provides diversified rental income of GBP0.89 million, reflecting a 
low average passing rent of GBP19.65 per square foot from four occupiers: Oracle, 
Newlaw Legal, Ashfords and Lambert Smith Hampton. The remaining 25,392 square 
feet of vacant accommodation is already fully refurbished to a high standard 
and Picton intends to lease the space in an improving occupational market. 
 
The purchase price reflects a net initial yield of 3.6%, which is expected to 
grow to 7.5% on leasing the remaining vacant space and capturing the full 
reversionary potential. The purchase price represents a capital value of 
approximately GBP328 per square foot, in line with its estimated replacement 
cost. 
 
The acquisition was funded using GBP12.5 million drawn down from one of Picton's 
revolving credit facilities ("RCF"), with the balance from existing cash 
resources. 
 
The impact of this acquisition, compared to the Company's position as at 30 
June 2017 is as follows: 
 
  * Initial increase in the Company's net income after finance costs of GBP0.3 
    million per annum and increase in dividend cover by approximately 2%. 
  * Once fully let, it is expected to contribute additional net income after 
    finance costs of GBP1.4 million and will increase dividend cover by 
    approximately 8%. 
  * Initial small reduction in the portfolio's current occupancy levels from 
    96% to 94% 
  * With recently announced disposals, increase the portfolio's average lot 
    size from GBP12.0 million to GBP12.5 million 
  * Reduce the Company's weighted average interest rate from 4.2% to 4.1% 
  * Increase the Company's loan to value ratio to just under 30% 
 
Fraser D'Arcy, Investment Director at Picton, commented: 
 
"Constrained by a lack of Grade A office space and a limited development 
pipeline, the occupier market in Bristol is currently seeing good demand for 
high quality space in buildings like Tower Wharf. Against this backdrop and 
recognising the reversionary potential, this purchase is aligned with our 
strategic objective to grow both income and our asset base." 
 
Michael Morris, Chief Executive of Picton, commented: 
 
"This off-market acquisition, secured using the drawdown of our recently 
extended RCF facility, is in line with our strategy to grow income while 
creating value through active asset management. Tower Wharf is a high quality 
and well-located office asset underpinned by strong property fundamentals, 
which will enable Picton to deliver further income growth and therefore enhance 
future returns for our shareholders." 
 
For further information: 
 
Tavistock 
Jeremy Carey/James Verstringhe, 020 7920 3150, 
[e-mail] 
 
Picton Capital Limited 
Sheryl Bates, 020 7011 9979, [e-mail] 
 
Note to Editors 
 
Picton is a property investment company established in 2005.   It owns and 
actively manages a GBP636 million diversified UK commercial portfolio, invested 
across 53 assets and with around 350 occupiers (as at 30 June 2017). Through an 
occupier-focused, opportunity-led approach to real estate asset management, 
Picton aims to be one of the consistently best performing diversified UK 
property companies listed on the main market of the London Stock Exchange. 
 
For more information please visit: www.picton.co.uk 
 
                                     ENDS 
 
 
 
END 
 

(END) Dow Jones Newswires

August 09, 2017 02:00 ET (06:00 GMT)