Last checked at 25 Oct 2011 11:50
Picton Property Income Limited
25 October 2011
PICTON PROPERTY INCOME LIMITED (LSE: PCTN) - Net Asset Value as at 30 September 2011, Interim Dividend and Interim Management Statement
Picton Property Income Limited (LSE: PCTN), the investment company with an income focussed approach to the UK commercial property market, announces its Net Asset Value, Interim Dividend and Interim Management Statement as at 30 September 2011.
·; Increase in Net Assets to GBP 211.3 million (up 1.1%).
·; Increase in underlying property valuation, reflecting 0.5% uplift, primarily driven by portfolio initiatives.
·; Enhancement of occupancy rate over the period following significant key lettings.
·; Five non-core asset disposals completed totalling GBP 2.7 million over the period, facilitating continued debt repayments.
·; Interim dividend declared of 1 pence per share.
The unaudited Net Asset Value ('NAV') of Picton Property Income Limited (the "Company") as at 30 September 2011 increased by 1.1% over the quarter to GBP 211.3 million, amounting to approximately 61 pence per share.
At an underlying property level there has been a GBP 2.3 million increase in the property portfolio valuation, excluding asset disposals, representing a like for like increase of 0.5% over the period.
The Company also announces an interim dividend of 1 pence per share in respect of the period 1 July 2011 to 30 September 2011. The dividend payment will be paid on 25 November 2011 to shareholders on the register on 11 November 2011. The ex-dividend date will be 9 November 2011.
The NAV attributable to the Ordinary Shares is calculated under International Financial Reporting Standards ('IFRS'), which includes the marked to market value of the interest rate swap contracts.
This NAV figure incorporates the external portfolio valuation as at 30 September 2011. It includes income for the current quarter and is calculated after the deduction of dividends paid prior to 30 September 2011, but it does not include a provision for the next quarterly dividend which will be paid in November 2011.
The unaudited NAV is as follows:
| 30 Sept 2011 £m | 30 Jun 2011 £m | 31 Mar 2011 £m | 31 Dec 2010 £m |
Investment properties * | 425.2 | 425.8 | 425.6 | 424.3 |
Other assets | 44.5 | 43.1 | 41.9 | 42.4 |
Other liabilities | (18.5) | (17.3) | (16.2) | (15.6) |
Borrowings: Securitised loan
Liquidity facility
Bank loan
Loan stock
ZDP's
| (171.6)
(10.7)
(18.2)
(2.2)
(29.0) | (171.6)
(10.7)
(20.1)
(2.3)
(28.5) | (171.6)
(10.7)
(20.1)
(2.3)
(28.0) | (171.6)
(10.7)
(20.4)
(2.6)
(27.6) |
Market value of interest rate swaps | (8.2) | (9.5) | (9.4) | (11.3) |
Net Assets | 211.3 | 208.9 | 209.2 | 206.9 |
Net Asset Value per share | 61p | 61p | 61p | 60p |
EPRA Net Assets | 219.5 | 218.4 | 218.6 | 218.2 |
EPRA Net Asset Value per share | 64p | 63p | 63p | 63p |
* The underlying property valuation is stated net of lease incentives.
The movements in the Net Assets can be summarised as follows;
Total | movement | Per share | |
£m | % | Pence | |
Net Assets at 30 June 2011 | 208.9 | 61 | |
Gains in property values (realised and unrealised )
| 1.4 | 0.7 | - |
Movement in swap value
| 1.3 | 0.6 | - |
Net income for the period (after distributions) | (0.3) | (0.2) | - |
Net Assets at 30 September 2011 | 211.3 | 1.1 | 61 |
An external valuer will next value the property portfolio during December 2011 and the NAV per share as at 31 December 2011 will be issued in January 2012.
Investment Manager Commentary
BACKGROUND
Over the quarter, All Property capital growth, whilst positive at 0.2%, continued a downward trend (0.6% March, 0.4% June) compared with the preceding quarters. Offices continued to outperform recording a 0.8% increase over the quarter, while industrials improved marginally registering flat growth and retail was negative at -0.2% continuing the downward trend which started in March 2011.
Quarterly rental value growth overall also remained relatively flat at 0.1%, for the fourth consecutive period. Office sector growth, at 0.8%, ensured that the All Property figure was positive offsetting the negative growth of the retail sector at -0.4%, and the industrial sector at -0.2%.
According to IPD, the All Property initial yield as at September 2011 remained broadly stable at 6.2% and occupancy rates remained at 90%.
PORTFOLIO COMPOSITION
The Company's current portfolio is structured as follows :-
Sector | Weighting 30 Sept 2011 | Like for Like Valuation Change |
Retail | 19.7% | 0.1% |
Offices - Central/Greater London | 14.6% | 2.8% |
Offices - Rest of UK | 20.6% | - 1.5% |
Industrial | 33.4% | 1.4% |
Leisure | 4.5% | - 0.6% |
Retail Warehouse | 7.2% | 0.0% |
Total | 100% |
GEOGRAPHICAL WEIGHTINGS
Geography | Weighting 30 Sept 2011 |
Central London | 14.8% |
Greater London | 7.3% |
South East | 30.7% |
South West | 4.5% |
East Midlands | 11.9% |
West Midlands | 4.6% |
Yorkshire & the Humber | 4.6% |
North West | 10.6% |
North East | 2.4% |
Scotland | 2.5% |
Wales | 5.6% |
Northern Ireland | 0.5% |
Total | 100% |
TOP TEN ASSETS
Asset
| Weighting 30 Sept 2011 |
River Way Industrial Estate, Harlow | 7.1% |
Unit 5320 Magna Park, Lutterworth | 6.8% |
Stanford House, Long Acre, WC2 | 5.0% |
Phase II Parc Tawe, Swansea | 4.2% |
Colchester Business Park, Colchester | 3.5% |
50 Farringdon Road, EC1 | 3.3% |
Boundary House, Jewry Street, EC3 | 3.1% |
Angouleme Way, Bury | 3.0% |
1-3 Chancery Lane, WC2 | 2.7% |
Angel Gate Office Village, City Road, EC1 | 2.6% |
Total | 41.3% |
PORTFOLIO UPDATE
The underlying portfolio saw an increase in value of 0.5% on a like for like basis over the quarter which was largely attributable to the asset management initiatives completed during the quarter. Over the period the Company completed 16 lettings, six lease renewals and four active management initiatives, securing tenants such as Dun & Bradstreet, Costa, Trainline.com, Ecco and the Co-Op.
The aggregate headline rental value of the lettings achieved over the quarter was GBP 1.5 million per annum. Of particular note was the letting of the two floors at Farringdon, the largest void in the portfolio, to Trainline.com at GBP 835,000 per annum. The ground floor space continues to be marketed and is receiving strong occupier interest.
Lettings were also completed at two industrial units in Riverway Industrial Estate, Harlow, including the largest industrial void in the portfolio, for a combined rent of GBP 248,000 per annum, and in Bath the Company's largest retail void was let to shoe retailer, Ecco, for GBP 90,000 per annum.
In Croydon the Company agreed a surrender in respect of 28,000 sq ft of office accommodation ahead of lease expiry in August 2011. It is anticipated that following refurbishment next year, the space will be offered to the market at over 35% ahead of the previous passing rent.
The Company continues its strategic asset disposal programme and over the period completed the disposal of five assets in Basildon, Blackpool, Chichester, Poole and St Leonards-on-Sea for a combined consideration of GBP 2.7m, at a small (+2.9%) premium to the preceding valuation.
As at 30 September 2011 the portfolio had a net initial yield of 6.9% and a net reversionary yield of 7.7%. The occupancy rate improved to 91% and the average lease length was 7.5 years.
DEBT
Ahead of the anticipated refinancing in 2012 the Company continued to use proceeds from asset sales to reduce borrowings and during the period a repayment of GBP 1.8 million was made on its bank loan with a further GBP 1.2 million repaid following quarter end.
INTERNALISATION UPDATE
During the period, Picton Capital Limited became authorised and regulated by the FSA. In addition, it signed an agreement with the current Manager and five employees to ensure transfer of staff at the appropriate stage, thus maintaining the integrity of the existing management team.
The Company has obtained approval in respect of its bank facility to a change in Investment Manager to Picton Capital Limited and is in the process of completing the necessary documentation. In respect of the securitised loan facility, the Company has consulted with a significant majority of Noteholders, the rating agencies and other secured creditors in respect of the change. To date, having received supportive feedback to the proposed changes, the Company will proceed with the next step, as required by the Trustee in accordance with the transaction documents, and seek the consent of Noteholders in the near future.
Commenting, Nick Thompson, Chairman of the Company, said:
"The Company has achieved considerable progress over the period on a number of levels. Proactive management has led to a significant number of lettings, securing tenants for our largest voids in the office, retail and industrial sectors. This activity has enhanced the underlying portfolio value and will enhance cashflow.
In addition, good progress is being made in respect of the internalisation which will provide further benefits to shareholders from next year."
For further information:
All Enquiries
David Sauvarin
The Company Secretary
Northern Trust International Fund Administration Services (Guernsey) Limited
Trafalgar Court
Les Banques
St Peter Port
Guernsey
GY1 3QL
Tel: 01481 745529
Fax: 01481 745085
ING Real Estate Investment Management (UK) Limited
Helen Stott, 020 7767 5648 helen.stott@ingrealestate.co.uk
Picton Capital Limited
Michael Morris, 020 7628 4800, michael.morris@pictoncapital.co.uk
Tavistock Communications
Jeremy Carey/James Verstringhe, 020 7920 3150
Notes to Editors
Picton Property Income Limited* ('Picton'), a closed-end Investment Company listed on the London and Channel Islands Stock Exchanges, was established in 2005 to invest both directly and indirectly in commercial property across the United Kingdom.
With a Net Asset Value of GBP 211.3 million at 30 September 2011 and approximately 850 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.
On the 1 January 2012 the Company will become a self managed property investment company with Picton Capital Limited, a wholly owned subsidiary of Picton Property Income Limited, taking over investment management from ING REIM UK Limited.
*Picton Property Income Limited changed its name from ING UK Real Estate Income Trust Limited on 1 June 2011.