Picton Property Income Ld Share Discussion Threads

[skyship] 28/10/2011 09:41

Simon - did you input ADSL - not ads1

SKY

[simon gordon] 28/10/2011 09:38

SKY,

That address has failed as well.

[skyship] 28/10/2011 09:32

SIMON - on behalf of Alan, try this:

& many thnx, rec'd. I look forward to their Update at some stage!

[simon gordon] 28/10/2011 09:22

AlanJI,

Got an "mail delivery failure" on the email address you've posted.

[skyship] 28/10/2011 09:01

Simon - likewise - thnx:

[alanji] 28/10/2011 08:48

simon:

alan2 at alanji.adsl24.co.uk

thanks very much

[horndean eagle] 28/10/2011 06:58

mackra1 at aol.com

thanks in advance

[madmix] 27/10/2011 22:51

Thanks for that Simon.

[simon gordon] 27/10/2011 18:29

If anyone would like an emailed copy of the Matrix 13 page note, dated June 2011, just post your email address.

[envirovision] 27/10/2011 16:46

Noted a willing buyer appeared though. 300K taken at 41p at the end of the day. I would be surprised to see the price remain at these silly levels for much longer.

[skyship] 27/10/2011 14:52

Thnx again - I've added...

Also bought a few TEIF today; I would expect a rally there as we begin to hear news of Scandinavian disposals.

[simon gordon] 27/10/2011 14:08

Hi Guys,

More info from the Fairfax note:

Picton Property Income (PCTN) announced an end September NAV yesterday of 64p per share on an EPRA basis, up 1.6% over the period. At a property level, the portfolio was up 0.5% on a like for like basis.

• Although rental value growth was flat during the quarter, the company also announced a third quarter dividend of 1p per share and we believe that the 9.8% running yield on offer is as attractive as any in the UK property sub-sector.

• The shares are trading at a -36% discount and as the Z-Score of -2.3% indicates, look relatively good value at this level.

• The management team have been occupied recently, not least with the internalisation of the management function, the cost benefits of which should feed through in next year, but also on the Offer for Invista Foundation Property Trust.

• However, the ongoing developments should not deflect from what has been accomplished in asset management terms during this quarter, as the team have completed 16 lettings and six rent renewals as well as implementing four active management initiatives, achieving headline rental value of £1.5m per annum.

• Two floors of the Farringdon office building, the largest void in the portfolio, were let, as well as the largest retail void and the largest industrial void. The occupancy rate improved from 90% to 91% and the average lease length is now 7.5 years.

• As at 30 September 2011 the portfolio had a net initial yield of 6.9% comparing favourably against the IPD All Property Initial Yield of 6.2%, and a net reversionary yield of 7.7%. Based on a portfolio of £425m, a move towards the reversionary level has the potential to add around £3m onto the underlying profit.

• Refinancing the debt due in October 2012 and January 2013 is the main issue facing PCTN. The ZDPs mature in October 2012 requiring capital of £31m, and the remaining bank debt amounting to approximately £202m is repayable in January 2013.

• Notwithstanding this, the Company has been reducing its debt with funds generated through its strategic asset disposal programme, and excluding the ZDP requirement, the net LTV on the bank debt is now in the region of 40%, well ahead of its weighted average covenant of circa 59%. The covenant ratio drops to circa 54% from January 2012.

A reduction in debt naturally leads to reduced finance costs which is positive in terms of improving dividend cover from rental income, although based on the half year numbers, and making assumptions on recent developments, we estimate that the current year's dividend cover will fall marginally short at about 0.94x.

• However, the scope to improve occupancy and the implied potential from the reversionary yield suggests a higher future return, and more tangibly, the reduction in costs expected from the internalisation of the management contract, which we expect to be in the region of approximately £0.4m per annum, should mean that future dividends are fully covered.

[alanji] 27/10/2011 13:18

Thanks for the figures, Simon. Made me have a detailed look at the interims. Looking much healthier than when I last checked.
Not sure why Fairfax have reduced the estimated interest by 1 million but it does look as though the dividend cover is currently better than IFD.
I have switched half my IFD investment (my largest holding) into PCTN.

[horndean eagle] 27/10/2011 13:14

Baring knocked out 1.2m yesterday. 4m left to clear. Market strength means they might bide their time rather than press the issue as they have been.

[skyship] 27/10/2011 10:48

Likewise - thnx Simon

I'm pretty certain Michael Morris wouldn't wish to cut the divi; and that 2011 Pro-forma suggests now not really necessary.

[sleepy] 26/10/2011 21:29

Thanks Simon

[simon gordon] 26/10/2011 21:17

Fairfax - 26/10/11:

Pro-forma revenue account full year 2011

Gross rental income - £32.7m
Other income - £1.1m
= Gross Income - £33.8m

Property operating costs - £4.3m
= Net rental income - £29.5m

Management fees - £3.3m
Other Expenses - £2.1m
Finance Costs - £10.6m
Tax - £0.5m
= Underlying profit - £13.0m

Shares in issue (m) - 345.3

Underlying profit per share - 3.8p
Dividends - 4.0p
Dividend cover times - 0.94

[envirovision] 26/10/2011 14:38

40.5 seems to be the price

[skyship] 26/10/2011 14:02

A 1m trade @ 40.5p - could clear Barings sooner than you think!

[skyship] 26/10/2011 13:19

Bought a few this morning @ 40.375p...

[horndean eagle] 26/10/2011 11:31

I think PCTN is more attractive on a stand alone basis than IFD. Historically PCTN has traded around 20% higher than IFD. That gap has narrowed down to 10%. It looks as though Baring Asset Management are responsible for the overhang in PCTN. They have been shifting stock and knocked out 350k or so yesterday. Unfortunately they still have over 5m shares left to go. Once cleared though I would expect the re-rating to kick in. Don't see why it shouldn't go back to the 50p level over the next few months.

[envirovision] 25/10/2011 16:39

Cracking value though, concur HE.

[envirovision] 25/10/2011 14:17

An update of the IFD deal/rational would not have gone amiss.