Picton Property Income Ld Share Discussion Threads

[skyship] 22/1/2013 09:26

IMS, NAV & Divi statement must be due any day now - 26th Jan last year.

[hugepants] 21/1/2013 19:20

There's a 500K sell today. I think one of the institutional shareholders is still selling. I hold some investment trusts for income and they have all gone up 10%-15% in this rally except the commercial property ones ie. PCTN and UKCM. Seems this sector is well out of favour even though these two trusts yield 8%

[lord gnome] 13/1/2013 12:52

That's why I am here skyship. As soon as the new tax year starts I have a few more preference shares to sell and will reinvest here for the 8% yield plus the prospect of future capital growth. I see this as a widows and orphans income stock.

[flying pig] 13/1/2013 11:55

I agree a good SIPP stock - somewhat unexciting but very good medium term value.

[skyship] 12/1/2013 16:47

I have today updated the Header.

As shareholders will be aware, PCTN has just finished a year of share price under-performance versus many peers. As I state in the Header:

"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%."

However:

"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."

As to that refinancing, well:

"PCTN then did this in style in Jun'12 and now sports one of the lowest and longest maturity financing packages in the whole commercial property sector"

======================================================================
To my mind 2013 is likely to be another year of consolidation for PCTN; and the share price should find support from its high yield. However, a further NAV decline has to be on the cards, with a base level down at 48p a very real possibility; though that in itself might not shake the 35p/36p support as the NAV discount would still be a quite acceptable 25%.

I rate the shares a BUY/HOLD for income seekers.....and being one myself, I have bought back in this week.

[skinny] 10/1/2013 07:13

PICTON SECURES QUARTET OF CENTRAL LONDON LETTINGS

Picton (LSE:PCTN), the income focused property investment company, announces that it has secured four new lettings in central London as part of the Company's ongoing leasing programme.

At Boundary House, London EC3, the Company secured two lettings on a total of 3,207 square feet of offices with a rental income of £80,000 per annum. At Austin Friars, London EC2, two occupiers signed leases on office suites with a combined area of 1,954 square feet and a total rent of £82,000 per annum. All lettings were secured in line with the estimated rental values.

Picton will shortly start marketing two floors of office space totalling 4,834 square feet following a refurbishment at 1 Chancery Lane WC2. In addition, the refurbishment of 6,890 square feet of office space at the Company's Long Acre scheme in Covent Garden is due to complete at the end of January with marketing to commence thereafter. These schemes have a combined ERV of over £550,000 per annum.

Michael Morris, of Picton, commented: "Following the completion last year of a number of significant initiatives to strengthen both the financial and operational position of the Company, these latest lettings reflect our focus this year on portfolio initiatives. This will be achieved through a combination of asset management, to enhance underlying assets, and through increasing occupancy across the portfolio with a particular focus on London."


ENDS

[hugepants] 07/1/2013 15:39

this dog certainly hasn't joined in the rally so far

[lord gnome] 05/12/2012 08:47

On board as of this morning, using my ISA allowance. Nice 8% yield, paid quarterly and with good asset cover. But you would already know all that, wouldn't you? :-))

[cerrito] 03/12/2012 22:01

As an ex RUGB shareholder I have the zeros. Spent quite a lot of today looking to see if I should buy the ordinaries. I guess you know a stock is perfectly priced is when you do a good study and have difficulty reaching a conclusion.
Will keep on my radar. Being overweight the Midlands, Wales and the North and underweight London they are no a copy cat property trust and I note the positive things that Mucklow said the other day on the Midlands market

[badtime] 03/12/2012 19:14

Good to see a directors buy

[skinny] 23/11/2012 07:21

· Income profit for the period of £6.9 million (30 June 2011: £5.3 million);
· Benefits of internalisation evident through significant reduction in management expenses;
· Movement in net asset value per share to 52 pence (31 March 2012: 57 pence) driven by 4.0% decline in property portfolio valuation;
· Dividends paid of 2 pence per share (30 June 2011: 2 pence);
· Dividend cover of 100% for the period (30 June 2011: 76%, 31 March 2012: 82%);
· New loan facilities drawn down for £209.0 million, with simultaneous repayment of existing facilities;
· Successful rollover and placing of zero dividend preference shares following period end;
· Significant reduction in refinancing risk with staggered debt maturity profile achieved of 4, 10, 15 and 20 years;
· Annual cost savings from lower average interest rate on borrowings at 4.5% (31 March 2012: 4.8%).

OPERATIONAL HIGHLIGHTS

· Additional rental income of £0.4 million per annum generated through 13 lettings;
· Six active management transactions, extending and securing over £0.4 million per annum;
· Three lease renewals completed securing income of £0.7 million per annum;
· Longevity of income increased to 6.9 years from 6.8 years;
· Occupancy rate of 89% at 30 September 2012, down from 91% at 31 March 2012;
· Portfolio initial yield of 7.3% at 30 September 2012, ahead of the IPD Quarterly Index of 6.1%.

[speedsgh] 24/10/2012 09:50

DIVIDEND

As previously advised, Picton has undertaken a detailed review of its dividend policy in light of the new financing arrangements, which provide for debt repayment through amortisation.

In a market where, according to the IPD Monthly Index, commercial property valuation movements have been negative for 11 consecutive months and rental growth negative for 10 out of the past 12 months, it is important to have a distribution policy that enhances rather than undermines the balance sheet.

The Board has concluded that it would be inappropriate to continue to pay dividends on an uncovered basis out of capital reserves, but rather that it should rebase the dividend to a sustainable level financed by cashflow generated by the business.

This more prudent approach will ensure that the Group is able to reduce its indebtedness whilst at the same time providing adequate working capital to maintain and enhance the quality of the underlying portfolio, which should provide further potential for income and capital enhancement.

The Board has concluded that the appropriate quarterly dividend will be set at 0.75 pence per share.

As such, an interim dividend of 0.75 pence per share is declared in respect of the period 1 July 2012 to 30 September 2012 (1 April to 30 June 2012: 1 pence). The dividend will be paid on 30 November 2012 to shareholders on the register on 16 November 2012. The ex-dividend date will be 14 November 2012.

[flashheart] 24/10/2012 07:05

Unfortunately unable to add but a stonking buy it seems Skyship now all the doubts/unknowns are out of the way.

[skyship] 24/10/2012 07:03

So, 3p it is. Yield @ 35p = 8.57%. NAV discount = 32.7% at the slightly lower NAV of 52p (54p).

[flashheart] 17/10/2012 05:42

Thanks for that tournesol. An interesting and reassuring last para of your post and one which is very important in investing decisions. I am already a holder here btw.

[tournesol] 16/10/2012 23:14

I incline to the view that much of the recent share price weakness has been caused by market uncertainty about refinancing.

Now that those uncertainties have been dispelled, it seems to me likely that the share price will achieve at least a modest recovery.

I bought in today on a fairly small scale

Should add that I used to work with Nick Thompson many years ago and found him very impressive - I do like to invest in companies whose CEO is both honest and highly competent and this is one such

T

[colonel a] 15/10/2012 10:51

redsonning,
don't particularly disagree with any of the above but do suspect that the price weakness is largely due to the people {the market} being uncomfortable with the uncertainty.
And I agree that pretty much whatever level they set the dividend at the share price will rise - although if they hang about it may be rising from below the current level.
But I've just bought some more.

[redsonning] 15/10/2012 10:33

Whilst I think all the comments made are understandable, I tend to take a slightly different stance here. Picton has recently raised (including the zeros) around £230m of funding from a market which cannot generally be described as easy. And this funding has been raised at quite attractive rates, putting the company into a very well financed position for many years ahead, so clearly there are hard-nosed financiers who are satisfied with the soundness of Picton. This funding position now places it in a very good situation when compared with the main peer group property stocks.

The discount to NAV on which the shares trade, around 33%, is very large compared to the peer group. This cannot be entirely attributed to dividend concerns. For one thing the discount has been high for a long time (even when Picton was reporting a covered dividend). And secondly when comparing with the likes of IRP it does not take much analysis to see that the IRP dividend is probably going to be unsustainable too under the present financial structure. And yet IRP presently trades on a discount of just 10%. It's true that IRP has various more favourable factors, so that partly explains the difference. However the huge difference (in my opinion) is generated by the market's overall judgement of the overall sustainability of each company's ongoing mix of financial structure, gearing, management, dividend, and potential for growth in both dividends and NAV etc etc. There is no simple formula for determining where the net discount should be and so it fluctuates as the market gradually takes in the changing factors. The market for example has already taken in the fact that SREI is now improved following the change of manager and is continuing to move to a more favourable position as that manager gradually shifts the portfolio. On the other hand it is arguable that the IRP position (in terms of discount, not in terms of the company's actual financial position) is vulnerable to further widening of the present discount as the market begins to sense the dividend pressure there. On the other hand there is nothing much new to be known about Picton on that front. The dividend is, by many peer comparisons, already well covered. The decision on whether or not to reduce the dividend is largely a matter of choice for the Board about the mix between simply paying out cash or leaving a greater potential for future growth. Given the range in which they are likely to be considering, I think it unlikely that the dividend choice will now make any real impact on the level of price discount to NAV. Indeed there is even an argument that paying out a little less (and therefore improving the prospects for growing future assets) will result in a re-rating of the discount which may move the price upwards. For example, another well-funded company with broadly similar gearing and a well protected dividend is SLI. This trades at around asset value. The discount difference between this and Picton is so huge as to be pretty much unexplainable.

All this leads me to conclude that Picton is likely to be in for a positive re-rating as the market gradually takes in the improved and improving position of Picton, and this will eventually happen if the dividend remains unchanged or even if it is reduced somewhat. Either way Picton is a well financed company with a decent management and the market will gradually price that into the shares.

Of course all of the above is nothing other than my own thoughts on this matter, and not in any way intended to influence anyone else. Everyone needs to do their own research and come to their own conclusions about each situation.

redsonning

[speedsgh] 12/10/2012 15:55

Steady march down of the share price here in anticipation of the widely expected re-basing of the div. Rightly or wrongly I've decided to stay put for the long term - too late to sell now as my average is somewhat above the current level :o(

Assuming new full yr div of 3p, i reckon the price should settle c33p. The journey for the share price back up will be a long one imo seeing as it will be partially linked to them being able to raise the div again in the future.

[sleepy] 10/10/2012 15:41

Milord,
Each to his own I guess.
I don't normally attach any value to the unearned portion of dividends. I view the cost of the ZDPs as a charge against income.
A more conservative valuation of the properties here might be 10% lower which would knock the NAV back to c 43p
I find it hard to see where growth will come from in the short term - currently as most of their leases approach their end or breaks the properties are likely to decline in value.
Would see a recovery in the share price to the low 40s as an opportunity to sell
All IMHO
Sleepy

[lord gnome] 10/10/2012 11:13

Given that the ZDPs won't consume any cash for a few years, I don't see that as an obstacle, Sleepy.
I will wait until the dividend review before committing, but anything near a 9% yield, with quarterly dividends covered by earnings, plus a good discount to NAV and I will be in (I don't ask for much, do I). I have some pref shares to sell and I see these as a good surrogate replacement with added growth potential.

[sleepy] 10/10/2012 10:13

Would a 3p dividend be covered? After providing for the interest on the zdps?

[sleepy] 10/10/2012 10:13

speedsgh - SREI dividend not covered whereas 3p div from Picton presumably would be. I think you should make allowance for this in your calculation.

[speedsgh] 10/10/2012 09:41

Assuming there is a cut in the dividend to 3p announced in due course, where do people feel the share price will settle?

SREI is currently yielding 9% based on mid-price of 39.25p. A similar read across here based on a re-based annual div of 3p would indicate a price of c33p.

[tiltonboy] 10/10/2012 09:15

Hoping they will have a bit of a fall on the potential dividend cut, and will hope to pick them up below 35p.