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.
H120 EPRA NAV total return was 2.8%, comprising two quarterly dividends of 0.875p, fully covered (1.07x) by EPREA earnings and a 0.9% increase in EPRA NAV per share to 94p. Underlying the returns, portfolio performance continues to benefit from an overweighting of industrial and regional offices properties and an underweighting of retail and leisure. The end-H120 estimated market rental value at full occupancy was £9.4m, 25% above the passing rent of £37.9m. The current year focus is on asset management projects aimed at enhancing the quality of the portfolio and capturing this income and value potential. Refurbishments are temporarily affecting income but their completion and re-leasing represents a significant opportunity. Gearing remained moderate (LTV of 24.5% at end-H120) and has since reduced further with the £18.2m disposal of an office property in Croydon. Together with flexible access to debt this provides scope for any acquisition opportunities that may emerge.
The supply demand balance for regional office and industrial property remains generally firm, and a positive yield spread between the regions and London offers potential for further narrowing. Rents and capital values in the retail sector have continued to weaken.