26 January
2016
PICTON ZDP LIMITED
Corporate update
The announcement below has been released today to Picton
Property Income ordinary shareholders and is included in full for
information:-
Picton (LSE: PCTN), the income focused property investment
company, announces its Net Asset Value for the quarter ended
31 December 2015 and Interim
Dividend. Highlights during the quarter included:
Financial
- Net Assets increased to £408.8 million (30 September 2015: £393.1 million).
- NAV/EPRA NAV per share rose 4.0% to 75.7
pence (30 September 2015:
72.8 pence).
- Total return for the quarter of 5.1% (30
September 2015: 3.9%), and 19.9% for the calendar year.
- Net gearing of 33.3% (30 September
2015: 34.6%).
- Average debt maturity of 11.6 years, with a weighted average
interest rate fixed at 4.6% per annum.
Dividend
- Dividend of 0.825 pence per share
declared and to be paid on 29 February
2016 (30 September 2015:
0.825 pence per share).
- Post-tax dividend cover for the quarter of 117% (30 September 2015: 122%).
- Dividend yield of 4.8%, based on a share price of 69.25 pence on 25 January
2016.
Portfolio Activity
- Like-for-like increase in property portfolio valuation of 2.6%
(30 September 2015: 2.2%), with the
strongest valuation gains in the office portfolio.
- Occupancy maintained at 95% (30
September 2015: 95%) for the 5th consecutive quarter.
- Disposed of a low yielding, non-core retail asset in
Guildford for £3.25 million, at a
9% premium to September 2015
valuation.
- Completed nine lettings, adding £0.5 million per annum to the
rent roll (after incentives), three lease renewals securing £0.17
million per annum (after incentives) and four rent reviews securing
an income uplift of over £0.03 million, in line with September 2015 ERV s.
Post Quarter End Activity
- Subsequent to the quarter end and following the valuation date,
a number of significant asset management transactions have
completed, which are expected to further enhance the income and
capital position.
- In 2016 we have completed three regears totalling £1.4 million
pa, extending this income on average by over eight years (2% ahead
of the December 2015 ERV), one rent
review securing a £0.05 million pa uplift (5% ahead of
December 2015 ERV) and one letting
securing £0.15 million pa (50% ahead of the December 2015 ERV)).
- In addition, terms have been agreed in respect of 14 new
lettings, subject to contract, at a combined rental in excess of
£0.9 million pa (11% ahead of the December
2015 ERV).
Commenting, Nick Thompson, Chairman of Picton, said:
“OurThe strong performance thisover the quarter is attributable
toa reflection of our high relative exposure to the
outperformingoffice and industrial sectors which have outperformed,
as well as our covered dividend, the positive impact of our capital
structureuse of debt and the full benefit of the higher income as a
result of recent acquisitions.”
Michael
Morris, Chief Executive of Picton Capital, added:
“We are encouraged, not only by the activity within the
portfolio during the quarter, and also but the strong start to
2016., in terms of underlying portfolio activity. In
particular, a number of lettings and repositioning initiatives
continue to drive rents, enhancing our capital base and
contributing to performance ahead of the wider market.”
For further information:
Tavistock
Jeremy Carey/James Verstringhe, 020 7920 3150,
jverstringhe@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
David Sauvarin, 01481 745 001, team_picton@ntrs.com
NET ASSET VALUE
The unaudited Net Asset Value (‘NAV’) of Picton, as at
31 December 2015, was £408.8 million,
reflecting 75.7 pence per share, an
increase of 4.0% 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
December 2015, including income for the quarter, but does
not include a provision for the dividend this quarter, which will
be paid in February 2016.
The next independent valuation of the property portfolio is
scheduled for March 2016 and the
unaudited NAV per share, as at 31 March
2016, will be announced in April
2016.
A detailed breakdown of the NAV is included in the Appendix.
DIVIDEND
An interim dividend of 0.825 pence
per share is declared in respect of the period 1 October 2015 to 31
December 2015 (1 July 2015 to
30 September 2015: 0.825 pence).
The dividend will be paid on 29 February
2016 to shareholders on the register on 12 February 2016. The ex-dividend date is
11 February 2016.
Post-tax dividend cover for the quarter was 117% (30 September 2015: 122%).
DEBT
The Group has total borrowings of £233.5 million with a fixed
weighted average interest rate of 4.6% and a weighted average debt
maturity profile of approximately 11.6 years.
As at 31 December 2015, net
gearing, calculated as total debt including ZDPs, less cash, as a
proportion of gross property value, was 33.3% (30 September 2015: 34.6%).
The Company, through subsidiary Picton ZDP Limited (PCTZ), has
22 milliona Zero Dividend Preference shares which are scheduled to
mature maturity in October 2016. It
intends to repay these ZDP shares in full at the maturity date and
is currently exploring the most appropriate method of repayment.
Thethe Company currently has a £26 million undrawn Rolling Credit
Facility, over £70 million of uncharged assets, and existing cash
resources to facilitate this..
The Company has received enquiriesfeedback from a number
of from PCTZ of ZDP shareholders concerning a possible rollover of
ZDPs to Picton ordinary shares, recognising the higher dividend
yield compared tovs the ZDP GRY and the potential benefit of
deferringment of any Capital Gains TaxCGT liabilitiesy.
The Company therefore nowIt intends to consult more widely with
ZDP holders to establish whether a rollover would be viablein the
coming quarter to establish if there is sufficient demand to
facilitate a roll over from PCTZ to PCTN on a non dilutive basis
for Ordinary shareholders. It will provide clarity on the
strategy at the time of the Annual Results, if not sooner.
MARKET BACKGROUND
According to the MSCI IPD Monthly Index, total returns were 3.1%
in the quarter to December 2015,
compared to 3.4% in the quarter to September
2015.
Capital growth remained positive and was 1.7% over the quarter,
compared with 2.1% in September 2015.
Across the principal IPD sectors, office values rose by 2.5%
(September 2015: 3.1%), industrial by
2.3% (September 2015: 3.1%) and
retail by 0.8% (September 2015:
0.8%). Over the quarter, the majority of the IPD segments recorded
positive capital growth, with falls only recorded within the
rRetail sector. Out of a total of 37 segments, 34 recorded positive
capital growth, compared to 36 last quarter.
Over the quarter to December, rents grew by 1.1%, compared with
1.2% in September 2015. Across the
principal IPD sectors, office rental values rose by 1.9%
(September 2015: 2.1%), industrial by
1.6% (September 2015: 1.4%) and
retail by 0.3% (September 2015:
0.3%). Over the quarter, the majority of the IPD segments
recorded positive rental growth, with falls only recorded in
thesome retail sectorgments. Out of a total of 37 segments, 31
recorded positive rental growth compared to 29 last quarter.
The occupancy rate in the December IPD Monthly Index was higher
than the previous quarter at 91.2% (September 2015: 90.6%).
PORTFOLIO UPDATE
The portfolio valuation increased by 2.6% during the period and
occupancy was maintained at 95%.
The office assets in the portfolio recorded the strongest
valuation gains and this was in part a reflection of asset
management activity and rising rental levels across the
portfolio.
The strongest gains were seen in the London portfolio where rising rental values
(of currently at an average of £43 per sq ft across the
London portfolio) £43 per sq ft
overall) and the low overall current rental levels (which currently
reflect under £31 per sq ft) will, in our view, offer further scope
for income growth.
As at 31st December, 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
5.7 years.
Key highlights in the quarter included:
Industrial
At Parkbury, Radlett we secured a 3% uplift in rent at the
second largest unit (40,000 sq ft) at a February 2014 rent review increasing the rent to
£0.38 million per annum. The uplift is 8% ahead of ERV.
We have agreed aon early surrender of a 22,000 sq ft unit which is
coming back in February 2016, on the
back of the strong demand we are presently seeing and currently we
have one vacant unit, which is under offer.
In Harlow, we secured a 5% uplift in rent at a July 2013 rent review increasing the rent to
£0.22 million per annum. The uplift is 1% ahead of ERV and a
positive result especially with regard to other outstanding
reviews. As anticipated, a 55,000 sq ft unit came back at the end
of December and will be refurbished, prior to relettingwe expect
strong interest in the unit post the refurbishment.
In Epsom, at Nonsuch Industrial Estate, we have let one of the
larger units for a ten-year term, without break, at a rent of £0.04
million per annum with no incentive. The new rent equates to £16
per sq ft, which is 6% ahead of ERV and sets a new tone for the
estate. We have one remaining unit to let.
During the quarter wethe company obtained planning permission to
enable a former vacant industrial unit to be occupied by a national
gym operator, which will be at a significantly higher rental income
compared to the former industrial use.
Office
Following further repositioning and upgrading of our units at
our Angel Gate scheme in Islington,
we have let two units securing £0.31 million per annum, which was
32% ahead of Septmeber ERV. We continue to see strong demand
for this scheme and have one vacant building to let where the
refurbishment has just completed.
At 30 and 50 Pembroke Court in Chatham, which were acquired in
June 2015, we have completed a lease
regear at one of the buildings to Canterbury Christ Church
University extending the income of £0.6 million per annum, by a
further ten years, in return for a short rent free period.
In Fleet, the leasing transaction of 33,000 sq ft completed to a
serviced office occupier, following refurbishment works undertaken
by Picton, at a stepped rent rising to £0.4 million pa (reflecting
£12.10 per sq ft), plus a top up reflecting occupancy within the
building.
Retail / Leisure
At Gloucester Retail Park (acquired in March 2015), a planning application has been
submitted to construct a new circa 2,000 sq ft retail pod, within
the car park area, to further enhance the estate. Terms have
in principle been agreed to lease the unit with an
established multinational occupier and an Agreement for Lease is
currently being negotiated. Completion of the lease will
occur once planning has been secured and construction
completed. A further update will be provided in due course.
Trading Activity
A non core high street retail unit in Guildford was sold for £3.25 million,
reflecting a net initial yield of 4.3%. The unit is leased to
L’Oreal (UK) Ltd, trading as Kiehl’s, for a further 4.8 years at an
annual passing rent of £0.15 million. This price reflects a 9.2%
premium to the September 2015
valuation and a 32% uplift from the 2010 acquisition price.
Terms have been agreed in principle and subject to contract, to
redeploy these proceeds into a larger and relative income accretive
opportunity, which meets the Company’s Investment criteria.
Legal and technical due diligence is being undertaken and iIt is
expected that a further announcement will be made in the coming
weeks, should the transaction proceed to confirm as such.
APPENDIX
NET ASSETS SUMMARY
The unaudited Net Asset Value is as follows:
|
31 Dec
2015
£million |
30 Sept
2015
£million |
30 June
2015
£million |
|
|
|
|
Investment properties
* |
619.7 |
606.3 |
562.4 |
Other assets |
18.4 |
18.8 |
18.4 |
Cash |
24.6 |
20.3 |
53.9 |
Other
liabilities |
(20.4) |
(19.0) |
(19.1) |
Borrowings: Loan facilities
ZDP’s |
(206.0)
(27.5) |
(206.2)
(27.1) |
(206.5)
(26.5) |
Net Assets |
408.8 |
393.1 |
382.6 |
Net Asset Value per
share |
75.7p |
72.8p |
70.8p |
* The investment 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 30 September
2015 |
393.1 |
|
72.8 |
Movement in property
values |
14.9 |
3.8 |
2.7 |
Net income after tax
for the period |
5.2 |
1.3 |
1.0 |
Dividends paid |
(4.4) |
(1.1) |
(0.8) |
NAV at 31 December
2015 |
408.8 |
4.0 |
75.7 |
PORTFOLIO COMPOSITION
The Group’s current portfolio is structured as follows:-
Sector |
Weighting
31 Dec 2015 |
Like
for Like
Valuation Change |
|
|
|
Industrial |
36.9% |
1.8% |
Office –
Central/Greater London |
19.4% |
6.4% |
Office – Rest of
UK |
17.1% |
4.4% |
Retail and
Leisure |
26.6% |
0.0% |
Total |
100.0% |
2.6% |
GEOGRAPHICAL WEIGHTINGS
Geography |
Weighting
31 Dec 2015 |
|
|
South East |
32.0% |
Central & Greater
London |
28.4% |
North |
13.4% |
Midlands |
14.3% |
Wales |
4.0% |
South West |
3.8% |
Scotland |
3.7% |
Northern Ireland |
0.4% |
Total |
100.0% |
TOP TEN ASSETS
The top ten assets, which represent 47% 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 |
Angel Gate Office
Village, City Road, EC1 |
Office |
London |
Stanford House, Long
Acre, WC2 |
Retail |
London |
Boundary House, Jewry
Street, EC3 |
Office |
London |
50 Farringdon Road,
EC1 |
Office |
London |
Shipton Way, Rushden,
Northamptonshire |
Industrial |
East
Midlands |
Pembroke Court,
Chatham |
Office |
South
East |
Phase II Parc Tawe,
Swansea |
Retail
Warehouse |
Wales |
Queens Road,
Sheffield |
Retail
Warehouse |
Yorkshire & Humberside |
END