NAV, Dividend and IMS

RNS Number : 0399N

Picton Property Income Limited

23 July 2014

 



23 July 2014

PICTON PROPERTY INCOME LIMITED

("Picton" or the "Company" or the "Group")

Net Asset Value as at 30 June 2014, Interim Dividend

and Interim Management Statement

Picton (LSE: PCTN), the income focused property investment company, announces its Net Asset Value for the quarter ended 30 June 2014, Interim Dividend and Interim Management Statement.

The highlights during the quarter included:-

Financial

·     Net Assets increased to £258.9 million (31 March 2014: £214.1 million).

·     NAV/EPRA NAV per share rose 4.6% to 58.9 pence (31 March 2014: 56.4 pence).

·     Like-for-like increase in property portfolio valuation of 2.9% (31 March 2014: 1.8%).

·     Raised gross proceeds of £35.0 million through the issue of 59.3 million shares at 59.0 pence, a 4.7% premium to the March NAV.

·     Average debt maturity of 13.1 years, with a weighted average interest rate maintained at 4.5% per annum.

·     Reduction in net gearing to 40.2% (March 2014: 47.7%).

Dividend

·     Dividend of 0.75 pence declared and to be paid on 29 August 2014 (31 March 2014: 0.75 pence).

·     Post tax dividend cover over the quarter of 101% (31 March 2014: 129%)

·     Dividend yield of 4.9%, based on share price of 61 pence as at 30 June 2014.

Portfolio Activity

·      Improvement in occupancy for fourth consecutive quarter to 92% (March 2014: 91%).

·      Completed eighteen lettings adding £0.9 million per annum to the rent roll (before incentives).

·      Surrendered three leases to facilitate active management.

·      One disposal of a small non-core asset for £0.42 million in line with the March valuation.

·      Acquired a 335,000 sq ft East Midlands distribution warehouse for £11.5 million reflecting a net initial yield of 8.2%.

·      Post quarter end completed a further acquisition for £20 million reflecting a net initial yield of 7.7%.

Commenting, Nick Thompson, Chairman of Picton said:

"This quarter we have continued to demonstrate good active management and effective deployment of capital. We are taking advantage of market conditions to grow Picton and as we do so ensuring we deliver value to shareholders through the economies of scale provided by our internalised structure."

Michael Morris, Chief Executive of Picton Capital, added:

"We have yet again improved occupancy and are seeing encouraging levels of occupier activity across the portfolio.  As we continue to invest capital from our recent share placing, this will help to enhance the potential for NAV and income growth from the portfolio."

For further information:

Tavistock Communications

Jeremy Carey/James Verstringhe, 020 7920 3150, [e-mail]

Picton Capital Limited

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

The Company Secretary

Northern Trust International Fund Administration Services (Guernsey) Limited

Trafalgar Court

Les Banques

St Peter Port

Guernsey

GY1 3QL

David Sauvarin, 01481 745001, [e-mail]

Note to Editors

Picton Property Income Limited ('Picton') is an income focused, property investment company listed on the London Stock Exchange. Picton can invest both directly and indirectly in commercial property across the United Kingdom.

With Net Assets of £258.9 million at 30 June 2014 and approximately 870 investors, the Company's objective is to provide shareholders with an attractive level of income, together with the potential for capital growth by investing in the principal commercial property sectors.  www.pictonproperty.co.uk

NET ASSET VALUE

The unaudited Net Asset Value ('NAV') of Picton, as at 30 June 2014, was £258.9 million, reflecting 58.9 pence per share, an increase of 4.6% over the quarter.

The NAV attributable to the ordinary shares is calculated under International Financial Reporting Standards and incorporates the external portfolio valuation as at 30 June 2014, including income for the quarter, but does not include a provision for the quarterly dividend announced herein, which will be paid in August 2014.

The next independent valuation of the property portfolio is scheduled for September 2014 and the NAV per share, as at 30 September 2014, will be issued in October 2014.

A detailed breakdown of the NAV is included within the Appendix.

DIVIDEND

An interim dividend of 0.75 pence per share is declared in respect of the period 1 April 2014 to 30 June 2014 (1 January 2014 to 31 March 2014: 0.75 pence).

The dividend will be paid on 29 August 2014 to shareholders on the register on 15 August 2014. The ex-dividend date will be 13 August 2014.

Post-tax dividend cover during the quarter was 101%.  Whilst this tends to fluctuate from quarter to quarter the reduction, compared to the preceding two quarters of 129% and 122% respectively, in part reflects the de-risked income position following the asset swap in the March quarter, the timing of certain property costs and the short-term impact of cash drag, post fundraising.

DEBT

The Group's debt has a weighted average interest rate of 4.5%, of which 99% is fixed with a weighted average debt maturity profile of approximately 13.1 years.

As at 30 June 2014, net gearing, calculated as total debt, including ZDPs, less cash, as a proportion of gross property value, was 40.2% (31 March 2014: 47.7%).

EQUITY ISSUANCE

On 1 May 2014 the Company announced an Initial Offer, Offer for Subscription and Placing Programme. The Initial Offer and Offer for Subscription were oversubscribed and the Company raised gross proceeds of £35 million, at an issue price of 59 pence per share or a 4.7% premium to the March 2014 NAV.

Following receipt of shareholder approval to this transaction a total of 59,322,034 new shares were issued meaning that the Company currently has 439,191,763 shares in issue as at 30 June 2014. The Company has substantially deployed the funds identified through the acquisition of a distribution warehouse in Rushden, Northamptonshire for £20 million as announced on 17 July 2014.

The Company has the ability, through the placing programme, to raise additional gross proceeds up to £65 million prior to May 2015. This is on the basis that any future fundraising is undertaken on a non dilutive basis to existing shareholders.

Further details are contained within the Prospectus dated 1 May 2014 and supplementary prospectus dated 14 July 2014.

MARKET BACKGROUND

According to the IPD Monthly Index, total returns in the quarter to June 2014 were positive at 5.1%, a stronger performance than March 2014 at 3.9%. The income return in the quarter to June 2014 was 1.5% and capital growth was 3.5%.

Across the principal IPD sectors, office values rose by 4.7% (March 2014: 3.7%), industrial by 4.1% (March 2014: 3.2%) and retail by 2.5% (March 2014: 2.3%). In the quarter to June, all of the 37 IPD segments recorded positive capital growth movements compared to June 2013 where only 17 segments recorded positive growth. In terms of rental growth 23 segments recorded positive rental growth in the quarter to June 2014 compared to only 14 in June 2013.

The occupancy rate in the June IPD Monthly Index was 90.1% (March 2014: 90.3%).

PORTFOLIO UPDATE

Key highlights over the quarter are detailed below:-

Industrial

The Group acquired a 335,000 sq ft East Midlands distribution warehouse, in Grantham, Lincolnshire for £11.5 million. The property has good access to the UK road network, located immediately adjacent to the A1 north/south arterial route. The income is secured against The Random House Group Ltd (a Penguin Random House Company) for just under nine years and currently produces an annual rent of £1 million, equivalent to just under £3 per sq ft. The purchase price represents a net initial yield of 8.2% and capital value of £34 per sq ft.

At Parkbury Industrial Estate, Radlett, which was acquired last quarter, we have completed the rebranding of the estate, implemented improvement works to the common areas and met with all of the occupiers. We let one of the two vacant units at £112,500 per annum and completed the letting of the other unit post quarter end for £105,500 per annum. The combined rental levels were 6% ahead of ERV at the time of purchase.

We continued with our repositioning of the Epsom asset with a letting to Toolstation at a rent of £56,800 per annum which followed the active management surrender of an existing occupier's lease and combining two units to satisfy their space requirements. We have two further units available, one of which is under offer, and continue to see strong demand for this estate.

Additionally, we let a unit at Molly Millers Lane, Wokingham for a rent of £27,400 per annum, 29% ahead of ERV, leaving one vacant unit on the estate; we relocated an occupier to a larger unit at Dencora Way in Luton paying £85,000 per annum, 6% ahead of ERV, leaving one vacant unit on the estate; and renewed two smaller leases at Middleton Trade Park to Halfords Autocentres in line with ERV.

Offices

We sold the freehold of a non-core asset known as The Cloisters, Dartford for £0.42 million, which was in line with the March valuation. The property was purchased in 2010 for £0.37 million, following which we surrendered the occupational leases for a premium payment and secured planning consent for residential use.

At unit 24 Angel Gate, EC1 we completed the refurbishment creating the style of light flexible office space generally sought by occupiers in the TMT sector.  We have now agreed terms, in principle, to let the space at a rental some 50% ahead of the ERV prior to this refurbishment.

Following the active management surrender at Boundary House, EC3 last quarter, we let half of this space for £109,000 per annum (£36.50 per sq.ft.) which is over 50% ahead of the previous passing rent and 12% ahead of the estimated rental value in March. There are two vacant suites at the property accounting for 11% of the floor space, one of which is being refurbished. Both suites are now under offer.

At Queens House in Glasgow we have seen an upturn in demand for the office suites with three lettings completing over the quarter for a combined rent of £40,000 per annum. A comprehensive refurbishment of the common areas has been instructed and we have further interest in the vacant suites.

We have also commenced the second phase refurbishment at Citylink, Croydon, which is expected to be completed during Q4 2014.

Retail & Leisure

We have surrendered a temporary occupational lease and re-let a unit in Huddersfield at a rent of £42,500 per annum, 6% ahead of ERV, improving the occupier line up, with Savers Health & Beauty joining Peacocks and Argos at the property.

The final retail unit at Longcross Court in Cardiff was let at a rent of £25,000 per annum, 32% ahead of ERV. All of the retail units at the property are now let.

In Carlisle, we obtained planning permission and listed building consent to combine four vacant retail units into one, to facilitate a future letting.

As at 30 June 2014, the portfolio had a net initial yield of 6.3% (allowing for void costs) or 6.4% (based on contractual net income) and a net reversionary yield of 7.3%. The weighted average unexpired term (to first termination) was 6.6 years.

Appendix

NET ASSETS SUMMARY

The unaudited Net Asset Value is as follows:

	30 Jun 2014 £million	31 Mar 2014 £million	31 Dec 2013 £million
Investment properties *	441.3	417.6	406.0
Other assets	14.3	14.2	13.6
Cash	54.7	32.4	34.4
Other liabilities	(17.2)	(16.0)	(15.7)
Borrowings: Loan facilities                     Loan stock                     ZDP's	(207.4) (2.0) (24.8)	(207.7) (2.0) (24.4)	(207.9) (2.1) (24.0)
Net Assets	258.9	214.1	204.3
Net Asset Value per share	58.9p	56.4p	53.8p

* The underlying property valuation is stated net of lease incentives.

The movements in Net Asset Value can be summarised as follows;

	Total	Movement	Per share
	£million	%	Pence
NAV at 31 March 2014	214.1		56.4
Movement in property values	10.9	4.4	2.4
Share issue	33.4	-	-
Share premium (net of issue costs)	0.4	0.2	0.1
Net income after tax for the period	2.9	1.2	0.7
Dividends paid	(2.8)	(1.2)	(0.7)
NAV at 30 June 2014	258.9	4.6	58.9

PORTFOLIO COMPOSITION

The Group's current portfolio is structured as follows:-

Sector	Weighting 30 June 2014	Like for Like Valuation Change
Industrial	40.3%	2.5%
Office - Central/Greater London	19.3%	9.0%
Office - Rest of UK	13.7%	2.0%
Retail	17.2%	-0.7%
Retail Warehouse	6.3%	2.2%
Leisure	3.2%	0.0%
Total	100%	2.9%

GEOGRAPHICAL WEIGHTINGS

Geography	Weighting 30 June 2014
South East	35.0%
Central & Greater London	30.3%
North	13.3%
Midlands	11.4%
Wales	5.0%
South West	2.9%
Scotland	1.6%
Northern Ireland	0.5%
Total	100%

TOP TEN ASSETS

The top ten assets, which represent 50.8% of the portfolio by capital value, are detailed below.

Asset	Sector	Location
Parkbury Industrial Estate, Radlett	Industrial	South East
River Way Industrial Estate, Harlow	Industrial	South East
Stanford House, Long Acre, WC2	Retail	London
Angel Gate Office Village, City Road, EC1	Office	London
50 Farringdon Road, EC1	Office	London
Boundary House, Jewry Street, EC3	Office	London
Phase II Parc Tawe, Swansea	Retail Warehouse	Wales
1 Chancery Lane, WC2	Office	London
Colchester Business Park, Colchester	Office	South East
GBS Unit, Trent Road, Grantham, Lincs	Industrial	East Midlands

 

END

 

 

MSCRTMRTMBBTBMI