Picton Property Income Ld Share Discussion Threads

[envirovision] 21/7/2011 18:05

Here's the main points as I dont want to copy and past the lot suggest people buy this Friday copy.

The assets command a rental yield of 6.9 per cent, which is high by industry standards. The dividend yield is even higher than the rental yield for two reasons. First, the portfolio is geared with £172m of debt (net of cash); at 4.7 per cent, the average cost of that debt is lower than the rental yield, allowing for a profitable arbitrage. Second, the investment trust is trading on a 20 per cent discount to the value of its net assets on 31 Mar, so investors can pick the income stream up cheaply by owning the shares, rather than the properties.

[badtime] 21/7/2011 17:57

Sky u still in MERE?

[skyship] 21/7/2011 17:24

Hmm - as we discussed above - dividend not covered & the perhaps poorly researched IC article didn't mention that £4m of non-recurring income.

The price is headed back into buying territory. These were a sell in the 50s; and to my mind a buy when back to the 45p/47p level.

Will watch and wait awhile - perhaps because already so committed to others in the sector - CIC, IERE, INRE, MCKS & TEIF.

[lord gnome] 21/7/2011 16:59

Covered yield? That does change things. I thought that the yield here was uncovered. Good discount to NAV here as well.

[envirovision] 21/7/2011 15:23

I have bought back in today.

Tipped in IC this week regarding covered 8.2% yield.



Will go ex divi in 3 weeks so good timing for that as well.

[alanji] 22/6/2011 09:27

Very naughty not adding a reference to the figure in the p&l imo. Maybe they can produce additional rentals to make it up?
Rugby Estates makes the estimated income too difficult to estimate (for me anyway).
Interim results will be interesting to see.

[jimbo3352] 21/6/2011 21:07

Thanks, AlanJI, for that additional piece of information. I didn't notice as the P&L other income is not referenced to a note. Seems a bit cheeky of the company treating that as underlying income unless they envisage more leases being surrendered for £4m+. Perhaps once Rugby has been fully integrated and the management fees come down further, PCTN will be a better bet.

[alanji] 21/6/2011 15:18

Hi jimbo,
I must admit to not having done a full analysis as I no longer hold the shares - and I did say "my guess". Main concern is the "other operating income" of 5.174m - see post 21 on old IRET thread. This was the reply I received from the co re the interim accounts:

"The £4m+ 'other operating income' refers to the surrender of the lease at Farringdon. This is mentioned on page 7 of the accounts under offices. I have copied and pasted below for your information.

Other notable transactions include the surrender of Merrill Lynch's lease of 50 Farringdon Road, London, EC1 with the tenant paying the Company a surrender premium in excess of £4 million. The building is now to be refurbished to provide Grade A office accommodation. The refurbishment is expected to be completed by the end of 2010, which we believe will be good timing in terms of attracting a tenant in an improving central London occupier market."

[jimbo3352] 21/6/2011 14:04

Per PCTN's annual accounts, an investment restriction operates to prevent the company paying a dividend unless covered by underlying income. Also EPRA income was 4pps, same as divi, so I'm not sure why AlanJI believes divi not covered. (The investment restrictions also prevent the distribution by dividend of realised property surpluses) I would however agree IFD and MCKS look more attractive.

[skyship] 16/6/2011 14:57

An extract from AlanJI's Post No.795 on the "CP+" thread:



=============================================
Picton Property (PCTN, formerly IRET) 52-52.75

16% discount to March nav (2p swap cost added back). Yield is 7.6% but almost certainly not covered – my guess is less than 75% but difficult to calculate.
43% London & SE; 34% offices, 34% industrial, 27% retail

My view – SELL – better value elsewhere
=============================================

I do have to agree with him, better value elsewhere, especially IFD, MCKS & TEIF.

Top pick today has to be IFD which @ 38p yield 9.26% for a 34% NAV discount.

[skyship] 09/6/2011 12:43

Charts amended - thnx ADVFN....

[sleepy] 08/6/2011 22:10

SKYSHIP - thank you

[skyship] 08/6/2011 18:00

For some reason I am unable to incorporate the old IRET charts into the Header. Will ask ADVFN tomorrow!

[skyship] 08/6/2011 17:42

Picton Property Income Limited - PCTN

INTRODUCTION: (Header last updated 12/11/2024)

This thread was started on 08/06/11 so as to replace the previous IRET thread after the name change (see link below).



In the second half of 2011 the share price was a very poor market; the share price fell remorselessly, by 32% to 36p, this versus a fall of c20% in the wider propco market. The fall was due to the weak CP market; and concerns over both the safety of the dividend and the refinancing of the Company’s debt. The ship steadied in 2012 as peers showed the way by refinancing through the new non-bank funding sources of corporate bonds, insurance companies and pension funds. PCTN then did this in style in Jun’12 and for a time sported one of the lowest and longest maturity financing packages in the whole commercial property sector:



2012 was a significant year for PCTN with both the refinancing and the internalising of the management after the severance from ING Real Estate. It was also the year when the dividend was “rebased” from 1.0p/Qtr to a more sustainable, covered rate of 0.75p/Qtr.

Perhaps management had their eye off the ball to one extent, namely, unlike many of their peers, they failed to sell a few assets into the falling market so as to reduce the relatively high LTV of 53.2%. Hence, in the first 9months of 2012 Net Assets fell from £208m to £182m and the NAV slumped from 60p/share to 52p/share. Starting the year @ 36p, the shares see-sawed between 35p/43p, and closed out back @ 36p for an NAV discount of 30.8%; and a yield of 8.3%.

By Mar'15 however the share price had doubled to 72p as the NAV soared in a booming Real Estate market; and with commercial property yields still well North of long-term financing costs, the sector was set fair.

Jan'24: Trading Update & NAV:



May'24 - Finals for 12months to 31/03/24:


Nov'24 - Interims to 30/09/24:



THE BUSINESS:

Picton is a property investment company, investing in property in the UK, the Isle of Man and the Channel Islands.

The investment objective of the Company is to provide shareholders with an attractive level of income together with the potential for capital growth.

The Company holds a diversified portfolio of properties invested in five commercial sectors: industrial, office, retail warehousing, retail and leisure

At Sep’24, the portfolio comprised 48 assets with an average lot size of £15 million and valued in total at GBP721 million. The portfolio had a net initial yield of 5.1%; and a net reversionary yield of 6.9%. Sector split is: Industrial: 62%; Office: 27%; Retail & Leisure (inc. R/Whse): 11%.

Total borrowings were £210 million (100% fixed), with a weighted average interest rate of 3.7% and a weighted average debt maturity profile of 7.2 years. LTV = 25%.


WEBSITE:

INDUSTRY STATS:

Link to the ADVFN commercial property thread – “CP+”:

[purplebox] 05/6/2011 13:29

ING REIT is now Picton Property Income Ltd.