Picton Property Income has announced its interim results for the six-months ended 30 September 2015. During the period, the company’s EPRA NAV increased 6% to 73p per share (69p as at 31 March 2015), whilst its EPRA earnings per share increased by 13% year-on-year to 1.8p. The company has posted gains on its investment properties of £22.0m, whilst profit after tax was £31.9m for the period (£31.8m for the same period last year).
In terms of operational performance, the company says that the portfolio has provided a total return of 7.3% (ahead of MSCI IPD Quarterly Benchmark of 6.9%) whilst like-for-like growth in the property portfolio valuation was 5.1% over the period. 17 lettings were completed during the period securing rent of £1.0m per annum. Seven lease renewals and re-gears were completed retaining rent of £0.4m per annum. The company also invested £54.6m in four new property assets with a combined yield of 7.7% and disposed of two non-core assets for £6.2m with a combined yield of 2.0%. £2.9m was invested in refurbishment projects, across the portfolio, and the occupancy rate maintained at 95%.
Of the four properties acquired, two were multi-let office buildings (one in Chatham and one in Glasgow), a single-let retail warehouse in Sheffield and a further unit at Angel Gate, London EC1 (consolidating the company’s ownership at that property). On purchase these assets provided, on average, a net initial yield of 7.7%, a lease length of 5.6 years and a lot size of £13.0m. The company says that the purchases reflect there strategy of buying larger lot sizes where they see opportunities to add value. A non-income producing property in Swindon was sold for £4.8m and a non-core property in Southampton for £1.5m, before costs, which when combined were 11% ahead of the March 2015 valuation and 40% ahead of the September 2014 valuation.
The company says that its industrial portfolio remains well let. It has 13 vacant units, reflecting 95% occupancy. The distribution units remain fully let and the focus has been on the multi-let industrial estates. There were no acquisitions or disposals during the period. The largest industrial void is at Lyon Business Park in Barking, where they have just completed the refurbishment of four units, with a combined rental value of £300,000 per annum. One has been let following the period end, at 22% ahead of the September estimated rental value.
The retail and leisure portfolio is almost fully let, with only two vacant units at this time. The company says these are high street units with a combined rental value of £45,000 per annum.
The managers say that they remain positive in our outlook. We continue to provide space that meets occupiers’ needs which has enabled us to run the and that activity within the portfolio remains encouraging across all sectors, they say that this allowing them to push rents and extend income, which in itself is providing further opportunities for valuation improvement. The managers also say that, in their view, Investment markets are in a much healthier position than for many years and liquidity has considerably improved. However, they say that the question remains about over-pricing but believe that with the benign interest rate environment, capital values will continue to be supported. Similarly, with a backdrop of improving occupational demand, limited supply and the emergence of rental growth, the property cycle, in particular outside of central London, still has some way to run in their opinion. They believe that their strategy of being overweight to the better performing office and industrial sectors and maintaining a diversified income stream, remains appropriate for current market conditions.
Picton Property grows NAV 6% during first half : PCTN