Market Capitalisation £447.39M

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PR Newswire

26 April 2016


(“Picton” or the “Company” or the “Group”)

Net Asset Value as at 31 March 2016 and Interim Dividend

Picton (LSE: PCTN), the income focused property investment company, announces its Net Asset Value for the quarter ended 31 March 2016 and Interim Dividend.  Highlights during the quarter included:


  • Net Assets increased to £417.1 million (31 December 2015: £408.8 million).
  • NAV/EPRA NAV per share rose 2.0% to 77.2 pence (31 December 2015: 75.7 pence).
  • Total return for the quarter of 3.1% (31 December 2015: 5.1%).
  • £15.8 million drawn from revolving credit facility at cost of 2.3% to part fund Manchester acquisition.
  • Average debt maturity of 10.7 years, with a weighted average interest rate of 4.4% per annum.
  • Net gearing of 34.6% (31 December 2015: 33.3%).


  • Dividend of 0.825 pence per share declared and to be paid on 31 May 2016 (31 December 2015: 0.825 pence per share).
  • Post-tax dividend cover for the quarter of 106% (31 December 2015: 117%).
  • Dividend yield of 4.7%, based on a share price of 70.25 pence on 22 April 2016.

Portfolio Activity

  • Like-for-like increase in property portfolio valuation of 1.5% (31 December 2015: 2.6%), with the strongest valuation gains in the regional office portfolio, primarily due to specific asset management activity.
  • Improvement in income profile through lettings, lease restructuring and lease renewals, with weighted average lease length to first termination increasing to 5.9 years (31 December 2015: 5.7 years).
  • Increase in occupancy to 96% (31 December 2015: 95%), driven by activity including:-
  • 12 lettings on average 12% ahead of December ERV, adding £0.8 million per annum to the rent roll.
  • Three lease renewals, 32% ahead of December ERV, securing £0.5 million per annum.
  • Two lease extensions, 15% ahead of December ERV, securing £1.3 million per annum.
  • Acquisition of a high quality, fully let office building in Salford Quays, Greater Manchester in February for £17.6 million, reflecting a net initial yield of 6.2%, rising to 8.3% in April 2017.

Commenting, Nick Thompson, Chairman of Picton, said:

“We have continued to deliver results which have outperformed and it is particularly pleasing to deliver positive NAV growth, despite European Referendum headwinds and the one-off effect of the Chancellor’s hike in stamp duty in March. This demonstrates the quality of our portfolio, the success of our strategy and its implementation over the period.”           

Michael Morris, Chief Executive of Picton Capital, added:

“As you can see from the results, we have successfully completed the pipeline of asset management activity we highlighted in January, which has had a positive impact over the period.  Looking ahead we remain confident in our ability to continue to deliver income and value accretive occupier focused transactions.”

For further information:

Jeremy Carey/James Verstringhe, 020 7920 3150,

Picton Capital Limited
Michael Morris, 020 7011 9980,

The Company Secretary
Northern Trust International Fund Administration Services (Guernsey) Limited
Trafalgar Court
Les Banques
St Peter Port

David Sauvarin, 01481 745 001,

Note to Editors

Picton Property Income Limited 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 £417.1 million at 31 March  2016, 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.


The unaudited Net Asset Value (‘NAV’) of Picton, as at 31 March 2016, was £417.1 million, reflecting 77.2 pence per share, an increase of 2.0% 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 31 March 2016, including income for the quarter, but does not include a provision for the dividend this quarter, which will be paid in May 2016.

The next independent valuation of the property portfolio is scheduled for June 2016 and the unaudited NAV per share, as at 30 June 2016, will be announced in July 2016.

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


An interim dividend of 0.825 pence per share is declared in respect of the period 1 January 2016 to 31 March 2016 (1 October 2015 to 31 December 2015: 0.825 pence).

The dividend will be paid on 31 May 2016 to shareholders on the register on 13 May 2016. The ex-dividend date is 12 May 2016.

Post-tax dividend cover, which does fluctuate quarter on quarter, was 106% (31 December 2015: 117%).


The Group has total borrowings of £249.5 million with a weighted average interest rate of 4.4% (94% fixed rate) and a weighted average debt maturity profile of approximately 10.7 years.

To part fund the acquisition of Metro, Salford Quays, £15.8 million was drawn down under the revolving credit facility in the period, at a floating rate of 2.3%. As at 31 March 2016, net gearing, calculated as total debt including ZDPs, less cash, as a proportion of gross property value, was 34.6% (31 December 2015: 33.3%).

The Group has 22 million zero dividend preference shares which it intends to repay at maturity in October 2016. Picton has considered the potential of a conversion of ZDPs into ordinary shares, but has concluded this is not a viable option in the current market. It currently has £10.2 million of undrawn facilities, more than £95 million of uncharged property assets, and existing cash resources to facilitate the repayment. As such the Group has agreed terms in principle for a new five year debt facility, to meet the ZDP liability, which will be subject to usual due diligence before being finalised.


According to the MSCI IPD Monthly Index, total returns were 1.1% in the quarter to March 2016, compared to 3.1% in the quarter to December 2015.

Whilst capital growth generally was slower in January and February, the impact of stamp duty changes announced in March had a negative impact. Capital growth was -0.2% over the quarter, compared with 1.7% in the quarter to December 2015.

Across the principal IPD sectors, office values rose by 0.2% (December 2015: 2.5%), industrial by 0.1% (December 2015: 2.3%) and retail fell by -0.8% (December 2015: 0.8%). Out of a total of 37 segments, nine recorded positive capital growth, compared to 34 last quarter. The rise in stamp duty costs in March, caused the majority of the IPD segments to record negative capital growth over the quarter. By way of illustration, in January and February, on average 25 of the 37 IPD segments recorded positive capital growth, whereas in March all 37 segments were negative as valuations included the effect of higher acquisition costs.

Over the quarter to March, rental values rose by 0.7%, compared with 1.1% in December 2015. Across the principal IPD sectors, office rental values rose by 1.3% (December 2015: 1.9%), industrial by 0.8% (December 2015: 1.5%) and retail by 0.2% (December 2015: 0.3%).  Over the quarter, the majority of the IPD segments recorded positive rental growth, with a majority of falls again recorded in the retail sector. Out of a total of 37 segments, 28 recorded positive rental growth compared to 32 last quarter.

The occupancy rate in the March IPD Monthly Index was higher than the previous quarter at 91.4% (December 2015: 91.2%).


The valuation of the property portfolio incorporates the government’s changes to Stamp Duty Land Tax (SDLT), introduced in the recent Budget, and effective from 17 March 2016, increasing the charge by 1% to 5%. 

These changes, which have a one off impact to valuation and pricing, have negatively impacted upon the values of larger commercial properties across England and Wales. Notwithstanding this, on a like-for-like basis the portfolio valuation increased by 1.5% during the period and occupancy increased to 96%, well ahead of the market.

As at 31 March, the portfolio had a net initial yield of 5.6% (allowing for void holding costs) or 5.7% (based on contracted net income) and a reversionary yield of 7.1%. The weighted average unexpired lease term based on headline rent increased to 5.9 years. As detailed within the Appendix, the regional office assets in the portfolio recorded the strongest valuation gains, which was a reflection of asset management activity as detailed below.

Key highlights in the quarter included:-


During the quarter we acquired a high quality, fully let office building of 71,000 sq ft, for £17.6 million.  The property is located within Salford Quays, 2.5 miles west of Manchester city centre and close to the BBC’s home at Media City.

The acquisition price reflected a net initial yield of 6.2%, rising to 8.3% in April 2017 and a capital value of under £250 per sq ft, which is close to the cost of construction.  After finance costs this transaction will increase the Company’s net income by approximately £0.9 million per annum, rising to £1.2 million per annum in April 2017.

At Pembroke Court, Chatham, which was acquired in June 2015, we restructured a lease securing a 10 year term (1.8 years on acquisition) for the second largest occupier at an initial rent of £0.71 million, with 2.5% per annum compound increases. No incentive was given and the initial rent was 6% ahead of ERV. We have now extended 80% of the income since this asset was purchased and the weighted average unexpired lease term to first termination has risen from 2.9 years on acquisition to 9.5 years as at 31 March 2016.

We re-geared Natwest’s lease at Building 100, Colchester Business Park for a further 10 years, (subject to a break in year five) at a rent of £0.20 million per annum with three months rent free. The rent was 19% ahead of ERV.

In addition, further letting activity took place at the following properties which are now all fully let:

  • Citylink, Croydon - Let 4,700 sq ft to Bodyshop on a seven year lease, subject to break, at £0.10 million per annum (10% ahead of ERV).
  • 401 Grafton Gate, Milton Keynes - Let 6,500 sq ft on a 10 year lease, subject to break, at £0.14 million per annum (6% ahead of ERV).
  • Boundary House, EC3 - Let 1,950 sq ft on a five year lease at £0.09 million per annum (8% ahead of ERV)
  • Queens House, Glasgow - Let three suites for a combined £0.06 million (23% ahead of ERV).

At 50 Farringdon Road, EC1 (adjacent to the new Crossrail station), one of the larger occupiers vacates this summer. They are currently paying £0.84 million per annum, and would have had a capped rent review at £1.14 million per annum. The building was comprehensively refurbished five years ago and we are seeing strong demand, such that we expect to see over a 60% rental uplift on any new letting ahead of the current rent passing and approximately 20% above the capped level.


At Parkbury, Radlett we settled the November 2015 rent review on the largest unit on the estate, increasing the rent to £0.66 million per annum, 8% ahead of the previous passing rent and 5% ahead of ERV.

Furthermore we completed a lease surrender in February and re-let the unit in March (without refurbishment) to an existing occupier on a 10 year lease at £0.22 million per annum with six months rent free. The letting was 20% ahead of both the previous passing rent and ERV. The transaction allows our occupier to ‘rightsize’ their business by staying on the estate. We are taking back their smaller unit at the end of the year, three months ahead of lease expiry, allowing them time to relocate and also giving us a nine month marketing period. There is currently one vacant unit which is being refurbished ahead of reletting.

In Harlow, we secured a new 10 year lease (subject to a break in year five) to an existing occupier securing £0.62 million per annum which is 26% ahead of ERV with a three month rent free period. We renewed the lease on a smaller unit, securing a five year term at £0.07 million per annum which is 21% ahead of the previous passing rent and 4% ahead of ERV. Three units are coming back in the summer totalling 84,000 sq ft; two are already under offer.

A lease at The Business Centre in Wokingham was renewed, securing a 10 year lease (subject to breaks in years four and eight) at £0.23 million per annum rising to £0.26 million in year three with three months rent free. The initial rent is 60% ahead of ERV and sets great evidence on the estate. We currently have two small units to let, one of which is under offer.

Dencora Way, Luton and Easter Court, Warrington are now fully let with two lettings completing over the quarter adding a combined £0.09 million to the rent roll, 4% ahead of ERV.

Retail / Leisure

There has been limited activity over the quarter, with occupancy within this sub-sector remaining in excess of 99%.

At Gloucester Retail Park (acquired in March 2015), we have secured planning on a unit for a change of use from retail to leisure. Simultaneously we have signed an Agreement to Lease/Surrender with Pure Gym/Carpetright respectively.  Pure Gym are taking a 10 year lease at a rent of £0.14 million per annum, 32% ahead of ERV. The letting improves the occupier mix on the park and the surrender premium received will cover the cost of the works to the unit.



The unaudited Net Asset Value is as follows:

                                               31 Mar 2016
31 Dec 2015
30 Sept 2015
Investment properties *646.0619.7606.3
Other assets17.318.418.8
Other liabilities     (19.5)(20.4)(19.0)
Borrowings: Loan facilities




Net Assets417.1408.8393.1
Net Asset Value per share77.2p75.7p72.8p

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

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

TotalMovementPer share
NAV at 31 December 2015408.875.7
Movement in property values8.12.01.5
Net income after tax for the period4.71.10.8
Dividends paid(4.5)(1.1)(0.8)
NAV at 31 March 2016417.12.077.2


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

31 March 2016
Like for Like
Valuation Change
Office – Rest of UK19.7%3.6%
Office – Central/Greater London18.9%1.5%


31 March 2016
South East32.1%
Central & Greater London27.5%
South West3.6%
Northern Ireland0.3%


The top ten assets, which represent 46% of the portfolio by capital value, are detailed below.

Parkbury Industrial Estate, RadlettIndustrialSouth East
River Way Industrial Estate, HarlowIndustrialSouth East
Angel Gate Office Village, City Road, EC1OfficeLondon
Stanford House, Long Acre, WC2RetailLondon
Boundary House, Jewry Street, EC3OfficeLondon
50 Farringdon Road, EC1OfficeLondon
Shipton Way, Rushden, NorthamptonshireIndustrialEast Midlands
Pembroke Court, ChathamOfficesSouth East
Phase II Parc Tawe, SwanseaRetail WarehouseWales
Queens Road, SheffieldRetail WarehouseNorth


Occupier focused, Opportunity led