PCTN Picton Property Income Ld

23 October 2017

PICTON PROPERTY INCOME LIMITED
(“Picton”, the “Company” or the “Group”)

LEI: 213800RYE59K9CKR4497

Net Asset Value as at 30 September 2017 and Interim Dividend Declaration

Picton (LSE: PCTN), the property investment company, announces its Net Asset Value for the quarter ended 30 September 2017 and Interim Dividend.

Highlights during the quarter included:

Continued NAV growth

• Increase in Net Assets to £463.8 million (30 June 2017: £452.5 million).
• NAV/EPRA NAV per share rose 2.5% to 85.9 pence (30 June 2017: 83.8 pence).
• Total return for the quarter of 3.5% (30 June 2017: 3.4%).
• Net gearing of 28.2% (30 June 2017: 27.0%).

Fully covered dividend declared

• Dividend of 0.85 pence per share declared and to be paid on 30 November 2017 (30 June 2017: 0.85 pence per share).
• Annual dividend equivalent to 3.4 pence per share, delivering a dividend yield, based on 19 October 2017 share price, of 4.2%.
• Dividend cover for the quarter of 119% (30 June 2017: 116%).

Portfolio growth and improvement in occupancy

• Like-for-like increase in property portfolio valuation for the quarter of 1.9% (30 June 2017: 1.8%).
• Completed the purchase of a grade A office in Bristol for £23.15 million.
• Completed the disposal of two non-core assets for £9.86 million, 5.9% ahead of the June valuation.
• Completed seven lettings, six rent reviews and two lease renewals, on average 3.3% ahead of the June ERV, with a combined annual rent of £1.8 million.
• Occupancy increased to 95% (30 June 2017: 94%).

Nick Thompson, Chairman of Picton, commented:

“This is another positive quarter with continued NAV growth and further improvement in our dividend cover. We acquired, off market, a grade A regional office asset which provides further scope to enhance our earnings.”

Michael Morris, Chief Executive of Picton Capital, said:

“We have improved occupancy, achieved further lettings success and continued to invest back into the portfolio to enhance longer term returns. Our industrial and office assets have performed particularly well, benefitting from good occupational demand and in turn rental growth.”

This announcement contains inside information.

The next NAV update as at 31 December 2017 will be announced in January 2018.

For further information:

Tavistock

Jeremy Carey/James Verstringhe, 020 7920 3150, james.verstringhe@tavistock.co.uk

Picton Capital Limited

Michael Morris, 020 7011 9980, michael.morris@picton.co.uk

The Company Secretary

Northern Trust International Fund Administration Services (Guernsey) Limited

Trafalgar Court

Les Banques

St Peter Port

Guernsey

GY1 3QL

Andy Le Page, 01481 745 001, team_picton@ntrs.com

Note to Editors

Picton is a property investment company established in 2005.  It owns and actively manages a £661 million diversified UK commercial portfolio, invested across 52 assets and with around 350 occupiers (as at 30 September 2017). Through an occupier-focused, opportunity-led approach to asset management, Picton aims to be one of the consistently best performing diversified UK property companies listed on the main market of the London Stock Exchange.

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

NET ASSET VALUE

The unaudited Net Asset Value (‘NAV’) of Picton, as at 30 September 2017, was £463.8 million, reflecting 85.9 pence per share, an increase of 2.5% over the quarter:

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

The NAV attributable to the ordinary shares is calculated under IFRS and incorporates the independent market valuation as at 30 September 2017, including income for the quarter, but does not include a provision for the dividend this quarter, which will be paid in November 2017.

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

The next independent valuation of the property portfolio is scheduled for December 2017 and the unaudited NAV per share, as at 31 December 2017, will be announced in January 2018.

DIVIDEND DECLARATION

A dividend of 0.85 pence per share is declared in respect of the period 1 July 2017 to 30 Sept 2017 (1 April 2017 to 30 June 2017: 0.85 pence). The dividend will be paid on 30 November 2017 to shareholders on the register on 10 November 2017. The ex-dividend date is 9 November 2017.

Post-tax dividend cover over the quarter was 119% (30 June 2017: 116%).

DEBT

Total borrowings at 30 September were £216.6 million, with a weighted average interest rate of 4.1% (94% fixed) and a weighted average debt maturity profile of approximately 10.8 years. Net gearing, calculated as total debt less cash, as a proportion of gross property value, was 28.2% (30 June 2017: 27.0%).

To part fund the acquisition of Tower Wharf, Bristol, £12.5 million was drawn down in the period under the revolving credit facility at a rate of 2.2%.

The Company has a further £39 million available from its undrawn revolving credit facilities.

PORTFOLIO UPDATE

The portfolio valuation increased by 1.9% or £11.7 million, with the industrial sector delivering the strongest growth followed by the office sector, and by regional assets in particular. The retail & leisure sector valuation remained broadly flat for the quarter.

The portfolio consisted of 52 assets with an average lot size of £12.7 million. The sector weightings at 30 September 2017 and valuation movements over the quarter are shown below:

Occupancy increased to 95%, primarily due to a further letting at our Farringdon building in EC1 and the disposal of two non income producing assets. The acquisition of Tower Wharf, Bristol, which is 64% occupied, will have a short-term adverse affect on occupancy until it is let.

As at 30 September 2017, the portfolio had a net initial yield of 5.7% (allowing for void holding costs) or 5.8% (based on contracted net income) and a net reversionary yield of 6.8%. The weighted average unexpired lease term, based on headline rent, was 5.3 years.

The top ten assets, which represent 48% of the portfolio by capital value, are detailed below.

Key highlights in the quarter included:

Office

A suite of 3,700 sq ft was let at 50 Farringdon Road, generating rental income of £0.19 million per annum, which was in line with ERV. 87% of the building is now leased, leaving one final suite of 3,900 sq ft available. A rent review was settled on a further suite, increasing the passing rent by 70% to £0.19 million per annum, 7% ahead of ERV.

Two suites were let at Angel Gate in Islington, securing £81,000 per annum, in line with ERV. We have just completed a comprehensive refurbishment of two further vacant units which are being marketed.

We completed the acquisition of Tower Wharf, a grade A office building in Bristol city centre, for £23.15 million. It is situated in a prominent position on the waterfront, and equidistant to both Temple Meads station and the Cabot Circus shopping district. Constructed in 2005 to a BREEAM “Excellent” rating, the building provides 71,000 square feet of office accommodation arranged over ground and five upper floors, with car parking in the basement. The purchase price reflects a net initial yield of 3.6%, which is expected to grow to 7.5% on leasing the remaining vacant space and capturing the full reversionary potential. We have good interest in the vacant space.

The disposal of two non income producing Bracknell assets completed, having exchanged in the previous quarter. The combined sale price was 5.9% ahead of the June valuation.

In Fleet, we removed tenant break options which were due in 2021, improving the longevity of income and enhancing the valuation.

Industrial

We settled three rent reviews at units in Barking, Epsom and Radlett, increasing the annual passing rent by £0.12 million, or 31%. Two further leases were surrendered to facilitate active management.

At River Way, Harlow, we renewed a lease securing a 10% uplift on the annual passing rent to £0.18 million,  10% ahead of ERV.

Retail and Leisure

The development of a pod unit at Gloucester Retail Park completed facilitating a letting on a 10 year lease at £0.06 million per annum.

MARKET BACKGROUND

According to the MSCI IPD Monthly Index, the All Property total return was 2.7% for the quarter to September 2017, compared to 2.5% for the previous quarter. Capital growth was 1.3% (June 2017: 1.1%) and rental growth was 0.6% (June 2017: 0.4%).

IPD quarterly growth*

Number of IPD segments with positive growth*

Number of IPD segments with negative growth*

*Source: MSCI IPD Monthly Index, September 2017

ENDS