Picton Property Income Ld Share Discussion Threads

[speedsgh] 25/7/2018 19:10

PCTN scheduled to enter UK REIT regime on 1/10/18...

Net Asset Value as at 30 June 2018 -

Picton (LSE: PCTN), the property investment company, announces its Net Asset Value for the quarter ended 30 June 2018.

Highlights during the quarter included:

Improved Balance Sheet and early debt repayment

- Net Assets increased to £494.6 million (31 March 2018: £487.4 million).
- NAV/EPRA NAV per share rose 1.5% to 91.8 pence (31 March 2018: 90.4 pence).
- Total return for the quarter of 2.5% (31 March 2018: 3.1%).
- Post quarter end completed the early repayment of £33.7 million of debt due to mature in July 2022.
- As a result of the early repayment a proforma 30 June NAV would be 91.1 pence per share.

Dividend declared with strong cover

- Dividend of 0.875 pence per share declared and to be paid on 31 August 2018 (31 March 2018: 0.875 pence per share).
- Annual dividend equivalent to 3.5 pence per share, delivering a dividend yield of 3.9%, based on 23 July 2018 share price.
- Dividend cover for the quarter of 121% (31 March 2018: 128%).

Further valuation gains

- Like-for-like increase in property portfolio valuation for the quarter of 0.8% (31 March 2018: 1.4%).
- Completed the disposal of two office assets for a combined sale price of £11.8 million, 8.4% ahead of the March valuation.
- Completed seven lettings, six lease renewals / regears and two rent reviews, on average 6.2% ahead of the March ERV, with a combined annual rent of £0.9 million.
- Occupancy of 95%, reflecting ongoing active management (31 March 2018: 96%).

REIT conversion

- Shareholder approval obtained on 23 July 2018 for REIT conversion, 99.97% of votes cast in favour.
- Intention to enter the REIT regime on 1 October 2018.

Nick Thompson, Chairman of Picton, commented:
“We have made considerable progress implementing several initiatives over the quarter which have resulted in an increase in net assets, strong dividend cover and improvements to the balance sheet, which culminated in a debt repayment post quarter end.”

Michael Morris, Chief Executive of Picton Capital, said:
“The portfolio continues to perform well with the industrial assets driving performance overall. Looking ahead, we believe Picton is well positioned with high occupancy and the ability to generate greater efficiencies later in the year on conversion to a REIT.”

[speedsgh] 25/7/2018 19:05

Dividend Declaration -

Picton (LSE: PCTN), the property investment company, today announces an interim dividend payment in respect of the financial period from 1 April 2018 to 30 June 2018, of 0.875 pence per share.

The dividend timetable is set out below:

Ex-Dividend Date - 9 August 2018
Record Date - 10 August 2018
Pay Date - 31 August 2018

[danielbird193] 25/7/2018 08:04

Reassuring update today. PCTN continues to maintain high occupancy and good rental uplifts on new lettings and rent reviews. Dividend maintained and debt paid down post-quarter end.

[speedsgh] 26/6/2018 12:35

Latest Edison research note...

FY18 builds on successful track record -

[skyship] 06/6/2018 18:07

Agreed - though that is why I see some alternative motive behind the appointment of Charles Butler as non-exec chairman.

He comes from big-company background; former CEO of Market Tech - the £2bn propco which owns great chunks of Camden Market. His appt was certainly a vote of confidence in HCFT & its Board; but it may be that he was appointed to help HCFT find scale.

[danielbird193] 06/6/2018 14:46

Thanks for the tips Skyship. Just spent an hour reading through the HCFT 2017 Annual Report and it's an impressive company. Seems to be well run, transparent and focused on shareholder value. Directors' remuneration isn't excessive given the performance over the period.

Shame it's so small, with circa 40% of the shares held by the Kingerlee company (David Kingerlee is on the Board). Seems like it could be fairly illiquid and difficult to get out if anything did go wrong.

[wirralowl] 06/6/2018 11:08

No worries, Sky, thanks for your reply.

Good question Danielbird - having had a quick look at SREI & FCRE, I can see both their divvy's have been flat for several years now, whereas PCTN has been progressive and hopefully will continue to be so, so that might be one reason.

As Ugandalad says, there are often many reasons for discounts, but I'm also inclined to stick with PCTN for the time being..

[skyship] 06/6/2018 11:01

Daniel/Ugandalad and any others searching for propcos offering a good discount and a higher yield; then perhaps consider:

# RGL @ 96p - Discount = 8.6% & current yr Yield = 8.4%

# RLE @ 56p - Discount = c20% & current yr Yield = 6.25%

Also, for perhaps the most transparent and conservatively run propco you are ever likely to find, take a look at one totally off everyone's radar. This propco has ZERO voids:

# HCFT @ 930p - Discount = c20% & current yr Yield = 5.0%

See my comments over on the Commercial Property thread:



(Disclosure - I own all three!)

[ugandalad] 06/6/2018 10:40

Ignore this had blip sending above And can’t delete this post

[ugandalad] 06/6/2018 10:40

I invested in PCTN a few years ago when it too was at a discount and paying uncovered dividends but with a clear strategy to change that. Assuming thE market is thinking I would suggest past achievements in running the business and the quality of its current portfolio in today’s market justifies the premium which could of course disappear. One other of my portfolio HSTN has been returning capital so I have been looking at alternatives that can do a”PCTN” but not straightforward. There are always reasons for the discount. Need clarity from management how that is to be managed without overly relying on buy backs. I’m keeping PCTN for growing income at least until A better opportunity comes along.

[danielbird193] 06/6/2018 10:16

I've held PCTN for the past 12 months or so and am a satisfied shareholder. However, in the interests of 'spring cleaning' my portfolio I have been doing some comparisons with other UK REITs. Most of them current sit at discounts (eg Schroder REIT 9.1% discount, F&C REIT 4.0% discount, LandSec 33.3% discount!!).

What's the justification for the slight premium on Picton shares? Would I be better reinvesting in one of the Trusts sat at a discount to try and take advantage of the value on offer?

[sleepy] 06/6/2018 08:05

I believe UK REITs must distribute at least 90% of their income

[skyship] 06/6/2018 07:38

Wirral - sorry, unable to find why I stated that 4p divi! Doesn't appear to be referenced from an IC or Edison article. Could still be of course.

[speedsgh] 05/6/2018 18:04

My initial impression was that they were guiding a probable increase subject to prevailing market conditions but the statement is poorly worded and unclear. We'll find out in due course. Would be somewhat surprised to see a reduction when the company seems in such rude health. Aimho

[wirralowl] 05/6/2018 15:07

So is it right to presume that post-REIT the dividend is likely to be increased rather than decreased, in light of their statement today?

I note Skyship in post 392 refers to a potential 4.0p dividend post-REIT (which would be very nice!), but can't find any reference to this elsewhere?

[speedsgh] 05/6/2018 09:16

Indeed, pete. Note that, as they have previously flagged, they intend to convert to a UK REIT on 1/10/18. Also state that they will review the dividend level once they have converted taking into account prevailng market conditions...

Annual Financial Results -

REIT conversion

At the time of our last Half Year Report, I advised that we were awaiting an announcement of new legislation in the UK regarding the taxation of non-resident landlord companies such as Picton. Six months later and there are now two new pieces of legislation being introduced that will impact Picton. The first is that non-resident landlord companies will be brought into the scope of UK corporation tax, from 1 April 2020. The result of this is that we would expect our liability to UK tax to increase significantly from that date. Additionally, from 1 April 2019, capital gains made by a non-resident on the disposal of commercial property will be subject to UK tax.

Therefore, any disposals the Company makes from its portfolio after that date will be taxed, consequently reducing shareholder returns. I have stated previously that we were preparing plans to convert to a UK REIT in the event of tax changes adversely affecting Picton, and these have now been finalised. We will shortly be issuing a circular to shareholders with our detailed proposals, including a number of resolutions to be voted on at a General Meeting in July.

In summary, we wish to enter the REIT regime on 1 October this year, after becoming tax resident in the UK, which is a condition of entry. There will be some changes proposed to the articles of the Company to facilitate the REIT conversion. At the same time we are proposing to transfer our technical listing status from an investment company to a commercial company, which we believe is more appropriate for Picton and is consistent with the vast majority of internally managed UK REITs. As a result there will be changes to the way the Company is managed once we are based in the UK, including having a business strategy rather than an investment objective. We will no longer have an investment management subsidiary but will be managed through a traditional board structure with an executive function. However, our investment approach and portfolio strategy will remain very similar.

We have set out, separately within this report, a ‘Question and Answer’ section on the proposed changes, and within the Governance section there is also more detail regarding management changes and the role of the Board. We believe that these changes represent an important step in the evolution of the Company and recommend their approval by shareholders.

Dividends

I am pleased to report that in each of the last three financial years we have increased our dividend, most recently by 3% in February 2018. During this year we paid dividends to shareholders of £18.5 million, an increase of 3% compared to last year, with dividend cover of 122%.

We have continued to maintain a covered dividend throughout the year, in line with our strategy and enabling reinvestment back into the portfolio. Once we are in the UK REIT regime, we will review our dividend level in light of prevailing market conditions.

[petewy] 05/6/2018 08:53

Strong financial results
Total profit after tax increased by 50% to �64.2 million
Net assets increased to �487.4 million, from �441.9 million
Increase in EPRA NAV per share of 10.5%, to 90 pence per share
Total return of 14.9%
Increase in earnings and dividends

Increase in earnings per share to 11.9p from 7.9p
Increase in EPRA earnings per share of 10.1% to 4.2p from 3.8p
Dividend increase of 3% in February 2018 to 3.5 pence per share per annum
Dividends paid of �18.5 million with dividend cover of 122%

[petewy] 04/6/2018 08:48

Results tomorrow

[speedsgh] 24/4/2018 10:41

8.6p (+10.5%) increase in NAV over the past 12 months is not to be sniffed at imo...

90.4p as at 31/3/18
88.6p as at 31/12/17
85.9p as at 30/9/17
83.8p as at 30/6/17
81.8p as at 31/3/17
80.4p as at 31/12/16
78.5p as at 30/9/16
77.4p as at 30/6/16
77.2p as at 31/3/16
75.7p as at 31/12/15

[speedsgh] 24/4/2018 10:24

Dividend Declaration -

Picton (LSE: PCTN), the property investment company, today announces an interim dividend payment in respect of the financial period from 1 January 2018 to 31 March 2018, of 0.875 pence per share.

The dividend timetable is set out below:

Ex-Dividend Date - 10 May 2018
Record Date - 11 May 2018
Pay Date - 31 May 2018

[speedsgh] 24/4/2018 10:22

Net Asset Value as at 31 March 2018 -

Continued NAV growth

> Net Assets increased to £487.4 million (31 Dec 2017: £477.4 million).
> NAV/EPRA NAV per share rose 2.1% to 90.4 pence (31 Dec 2017: 88.6 pence).
> Total return for the quarter of 3.1% (31 Dec 2017: 4.1%).
> Net gearing reduced to 26.7% (31 Dec 2017: 27.4%).

Dividend declared and improved cover

> Dividend of 0.875 pence per share declared and to be paid on 31 May 2018 (31 Dec 2017: 0.875 pence per share).
> Annual dividend equivalent to 3.5 pence per share, delivering a dividend yield of 4.0%, based on 20 April 2018 share price.
> Dividend cover for the quarter of 128% (31 Dec 2017: 126%).

Portfolio growth and improved occupancy

> Like-for-like increase in property portfolio valuation for the quarter of 1.4% (31 Dec 2017: 2.1%).
> Exchanged contracts to dispose of a non-core asset for £3.85 million, 5% ahead of the December valuation.
> Completed five lettings, nine lease renewals / regears and one rent review, on average 4.5% ahead of the December ERV, with a combined annual rent of £1.9 million.
> Occupancy increased to 96% (31 Dec 2017: 95%).

Nick Thompson, Chairman of Picton, commented:

“Picton has had another good quarter and end to its financial year. We remain well placed, delivering further growth in net assets, strong dividend cover and having further reduced our gearing.”

Michael Morris, Chief Executive of Picton Capital, said:

“Our focus on leasing and tenant retention has been the main driver behind the increase in portfolio valuation during the period and our improvement in occupancy reflects this. We have also been helped by the weighting of our portfolio towards the industrial and office sectors, given the recent well publicised difficulties in the retail sector.”

[skyship] 11/4/2018 14:24

Ahh - an old IRET holder - as per the Header. Glad you stocked up in the new form.

[mushypeas] 10/4/2018 14:35

Only since the change of company name. My first tranche cost me 107p!

Happily brought a load more after 2009 and the management have subsequently done a good job.

[skyship] 10/4/2018 14:00

Breaking 88p - an all-time high...

[petewy] 09/4/2018 12:39

trades picking up. ISA's coming into play as a safe bet for dividend