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QuotedData’s morning briefing 31 January 2023

In QuotedData’s morning briefing 31 January 2023:

  • Picton Property (PCTN) posted a 12.4% fall in NAV to 102.2p per share for the quarter to 31 December 2022, as property yields moved out in response to higher interest rates. The group’s diversified portfolio fell in value by 9.0% over the quarter to £758.9m (less than the MSCI Monthly UK Property Index, which fell 15.6%). The company completed nine lettings across all sectors, securing £0.4m of rent, 7% ahead of the September 2022 estimated rental value (ERV). It also renewed / regeared 12 leases across all sectors, with a combined annual rent of £0.5m, an increase of 28% against the previous passing rent and 3% ahead of the September 2022 ERV. In the industrial sector, it secured an average increase of 39% against the previous passing rent from four rent reviews, with a combined annual rent of £1.0m, which was 3% ahead of the September 2022 ERV. Occupancy was stable at 90% and it has collected 99% of rent. The company has a low LTV of 26.4% (30 September 2022: 24.1%), with debt predominantly fixed.
  • Impact Healthcare REIT (IHR) reported a 5.5% drop in NAV for the quarter to 31 December 2022 to 110.17p per share. The portfolio of care homes fell in value by 4.0% to £532.5m, with the portfolio net initial yield moving out 30 basis points (0.3%) to 6.98%. This was as a result of changes in yields across the real estate sector driven, in large part, by increases in interest rates during 2022. The group completed 16 rent reviews in the quarter at an average uplift of 4% per annum, in line with the rental increase cap on these leases, contributing an extra £0.2m to contracted rent. It acquired two care homes in the South East for £13.6m and sold on in Attlee for £2.65m. Rent cover among the group’s tenants was just over 1.8x on average for the 12 months to 30 September 2022 (tenants’ detailed operational performance reporting for the quarter to December will be received in February 2023). Occupancy at 30 December 2022 was down slightly to 86.6% (30 September 2022: 87.3%), but in line with expected seasonal fluctuations over the Christmas and New Year holiday period. Occupancy has started to recover in January 2023, the group said. Contracted rent was flat at £43.1m at the year-end (at 30 September 2022: £43.2m). Post year-end acquisition of six care homes, contracted rent has risen to £47.0m.

  • Custodian Property Income REIT (CREI) has sold a high street retail unit in Bury St Edmunds at auction for £0.54m, 35% ahead of valuation. The company had recently increased the lease term by five years but with annual rent decreasing from £53,000 to £40,000. The company said it did not anticipate rents recovering and the disposal continues its planned programme of selling non-prime high street retail assets.

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