Picton Property Income

LSE: PCTN

Market Cap£475m

Last Close 87p

Picton Property Income is an internally managed UK REIT that invests in a diversified portfolio of commercial property across the UK. It is total return driven with a strong income focus and aims to generate attractive returns through proactive management of the portfolio.

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Investment summary

Picton’s H123 results will be published on 9 November. FY22 total profit of £147m was the highest since the company’s launch, driven by a 21% like-for-like uplift in property valuations. This continued into Q123 (1.9% like-for-like valuation increase, 2.0% NAV increase and 2.8% NAV total return). However, rising bond yields are an increasing headwind for asset values and, in the current year, income is likely to drive returns. FY22 EPRA earnings increased 5.5%, while annualised DPS of 3.5p was restored to pre-pandemic levels, 115% covered. Building on this, the portfolio contains significant rent reversion, particularly from recently refurbished but vacant assets. With Q123 gearing moderate (LTV of 22%) and drawn borrowing nearly all long-term and fixed rate, PCTN has since utilised its strong balance sheet to acquire a mixed-use property for £5.3m at an accretive 7.2% with further upside potential.

Y/E Mar
Revenue (£m)
EBITDA (£m)
PBT (£m)
EPS (p)
P/E (x)
P/CF (x)
2021A 33.5 28.1 33.8 3.68 23.6 18.3
2022A 35.4 29.7 147.0 3.88 22.4 16.9
2023E 37.1 30.9 70.3 3.95 22.0 14.6
2024E 38.6 32.0 38.1 4.15 21.0 14.5
Industry outlook

The commercial property market is cyclical, historically exhibiting substantial swings in capital values through cycles while income returns have been significantly more stable. Commercial property has the potential to offer a degree of inflation hedging but rising government bond yields have begun to weigh on asset valuations across the main sectors.

Last updated on 30/11/2022
Content on Picton Property Income
Picton Property Income – Strong returns continued through Q123
Real Estate | research Flash note | 27 July 2022
Picton Property Income – Record FY22 with positive outlook
Real Estate | research Outlook | 20 June 2022
Picton Property Income – executive interview
Real Estate | Edison TV | 14 June 2022
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Share price graph
Balance sheet
Forecast net cash (£m) 198.9
Forecast gearing ratio (%) N/A
Price performance
%
1m
3m
12m
Actual 1.2 (3.9) (12.7)
Relative* (5.3) (6.9) (15.1)
52-week high/low 106.0p/72.0p
*% relative to local index
Key management
Lena Wilson Chairman
Michael Morris CEO
Andrew Dewhirst FD