Trading Update

20 April 2023

Picton Property Income Limited
(“Picton” or the “Company”)
LEI: 213800RYE59K9CKR4497

Trading Update
Asset Management progress and stabilising valuations

Picton provides a trading update ahead of its full year results, to be released on 25 May 2023.

Valuation

The independent valuation of the Group’s property portfolio as at 31 March 2023 was £766.2 million, reflecting a 1.2% decline relative to 31 December 2022.

This compares with the recently released MSCI UK Monthly Property Index which shows that All Property Capital Growth over the first three months of the year was -1.2%. This represents a significant improvement relative to the prior period and reflects stabilisation following the marked repricing after the September 2022 mini budget. Specifically, the MSCI Index has shown positive Capital Growth movements in March in both the industrial and retail sectors, for the first time since June 2022.

Rent collection

Rent collection remains consistently strong at 99.8%, for the last quarter.

Occupancy

Occupancy has improved to 91% (from 90% at 31 December 2022) following several leasing transactions offsetting space which has become available.

Portfolio activity

Activity over the three months included 19 lease renewals and extensions, 15 lettings, eight rent reviews and six surrenders. Key highlights over the quarter include:-

Capturing rental growth in the industrial sector

At Parkbury Industrial Estate, Radlett, an existing occupier was upsized, with two leases extended from 2025 to 2030 and the rent increased by 46% from £0.4 million to £0.6 million per annum, effective January 2025. In addition, Picton has pre-leased a unit which will become vacant in 2024, increasing the passing rent by 60% to £0.2 million per annum. Rents were in line with the December ERV.

At Riverway Industrial Estate, Harlow, an occupier has agreed to take an additional unit which became vacant at the end of 2022, after completion of upgrading works by Picton, including the installation of solar panels. Their rent increases from £0.3 million to £0.7 million per annum, which is in line with the December ERV.

At Madleaze Trading Estate, Gloucester, a rent review has been agreed with the largest occupier, increasing the rent by 29% to £0.3 million per annum, which is 23% ahead of the ERV at the time of acquisition in 2021. Elsewhere on the estate, two leases were renewed and separately occupier break options were removed in a further two leases, securing income until 2029. These transactions resulted in a combined uplift on the previous passing rent of 52% to £0.3 million per annum, 5% ahead of the December ERV.

Repositioning office assets  

In response to market conditions, Picton is exploring higher value alternative uses at several office assets. Further details will be provided as these progress, but specifically at Angel Gate, London, EC1, Picton has used permitted development rights to secure residential use at this part vacant office scheme. Consent has been secured across seven buildings, totalling 17,760 sq ft, with the potential to create 19 residential units. In addition, applications are being progressed for residential use on another six buildings totalling 11,700 sq ft, creating a further 16 units.

Maintaining high retail occupancy

At Parc Tawe, Swansea, a lease has been renewed to a national retailer. The new rent is £110,000 per annum and is 10% above the December ERV but 17% below the previous passing rent.

At Gloucester Retail Park, a rent review was settled on one unit, increasing the rent by 30% to £78,000 per annum, 8% ahead of the December ERV.

In Cheltenham, a lease to a local retailer has been surrendered, securing a premium payment and a new letting to a national retailer has been agreed. This increases the passing rent by 6% to £45,000 per annum which is 1% ahead of December ERV.

A small retail unit has been leased to a local retailer at Charlotte Terrace, London, W10, for £25,000 per annum in line with December ERV.

Michael Morris, Chief Executive commented.

‘Our own independent valuation and the recent MSCI figures appear to indicate that the marked repricing seen at the end of last year has substantially run its course. In our portfolio increasing rents and rising rental values are having a positive valuation impact and offsetting some of the outward yield movement we have seen in recent months. Being able to improve occupancy and adapt our portfolio to changing market conditions is also encouraging.’

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF THE UK MARKET ABUSE REGULATION

For further information:

Tavistock 
James Verstringhe, 020 7920 3150, [e-mail]

Picton
Michael Morris, 020 7011 9980, [e-mail] 

Note to Editors

Picton, established in 2005, is a UK REIT. It owns and actively manages a £766 million diversified UK commercial property portfolio, invested across 49 assets and with around 400 occupiers (as at 31 March 2023).

Through an occupier focused, opportunity led approach to asset management, Picton aims to be one of the consistently best performing diversified UK focused property companies listed on the main market of the London Stock Exchange.

For more information please visit: www.picton.co.uk

ENDS