Market Capitalisation £562.94M

Picton Property Income Limited entered the UK REIT regime on 1 October 2018 and became a commercial company. As such Picton is outside the scope of AIFMD and is not required to produce a Key Information Document (KID) under PRIIPs.

The planning system - creating value and income growth

The value of a real estate asset derives from a number of factors:- the income stream from the occupier, the fundamentals of the building (location, quality, age), and permited use.

It is the last point - permitted use - that enables the owner to optimise the previous two. When the market changes, the ability to change the use of a building allows owners and occupiers to change the dynamic of a location.

In 2010, Picton acquired a 16,000 sq ft former builders merchants in Oldham through a portfolio transaction. The building had an A1 retail planning consent (restricted to the sale of building products), and was leased to a national trade retailer at £74,000 per annum.

The purchase price was discounted and reflected the fact that the tenant was not in occupation and the lease only had 5 years left to run. The combination of an oversupplied local market, condition of the unit and short lease, made it hard to secure a new occupier before the lease expires.

Affordable gyms have been a real success story over the past few years as they have capitalised on a gap in the market for budget driven consumers unable or unwilling to pay expensive annual subscriptions to gym chains. Part of this success is due to their ability to utilise space in locations previously occupied by retail, office and industrial occupiers.

Recognising this, we approached and started negotiations with a number of gym operators for our Oldham site, and quickly identified The Gym Group as our preferred occupier.

However, in order to complete the transaction we needed to obtain planning consent to change the permitted use to allow gym usage. In addition we needed to acquire a small adjacent piece of land owned by Oldham Council to increase the site area and allow provision of sufficient car parking.

Working in partnership with The Gym Group we have since successfully applied for and secured a change of planning use to D2 (leisure use), and have also acquired the vacant site from Oldham Council to deliver the additional car parking.

As a result, contracts have been exchanged on a 15 year Lease with The Gym Group at an annual rent of £150,000 per annum (more than double the rent under the previous use) and work is now underway to refurbish the building for their occupation in Summer 2016.

When completed the new gym will provide a much needed amenity for the community, and significantly improve the visual appearance of a prominent site in Oldham.



It also demonstrates the value that can be added by engaging with occupiers and local authorities, as well as using the planning system to optimised the use of vacant and unloved sites.

The Picton Team, October 2016


Occupier focused, Opportunity led