Picton Property Income

Investment summary

We expect Picton to report FY19 full year results in late May. In Q319 (to 31 December 2018) it delivered a solid performance with an NAV total return of 1.2% (or a compound annual 4.9%). The 0.875p quarterly DPS, annualising at 3.5p per share, was 123% covered by income earnings. The portfolio value and net asset value both edged up, with NAV per share increasing 0.3% to 92.5p. There were no portfolio transactions during the period but active asset management continued, aimed at capturing the significant reversionary income potential contained in the portfolio (£6.4m at H119). Portfolio performance again benefitted from an overweight in industrial and regional office property, where market rents and valuations continued to grow, and a significant underweighting of retail and leisure (with no shopping centre exposure), where rents and values are under pressure. With moderate (c 25%) gearing and £26m of undrawn debt facilities, Picton is well placed to seize any opportunities that may emerge amidst increased Brexit uncertainty.