Picton Property Income (PCTN)
13/11/2024
Results analysis from Kepler Trust
Intelligence
Picton Property Income (PCTN)
released its half-year results for the six-month period to
30/09/2024, with a return to profit being the main headline. The
company generated a profit of £11.5 million during the
period.
Profit was driven by capital,
income and rental growth, with a like-for-like portfolio valuation
increase of 0.8%, contracted rent increases of 1% and estimated
rental value (ERV) growth of 1.6%.
Earnings growth was strong,
with EPRA earnings of £11.2 million, or 2.1p per share, 11.6%
higher than in the same period last year.
PCTN paid dividends of £10.1
million, or 1.85p per share, an increase of 5.7%. Dividend cover
was strong, at 111%. The net asset value (NAV) total return over
the period was 2.2% and the shareholder total return was
17.4%.
PCTN fully repaid its
floating rate debt, using proceeds from the disposal of its Angel
Gate property. The remaining £210 million of total borrowings are
100% at fixed rates, with a weighted average interest rate of 3.7%
and a weighted average debt maturity of seven
years.
From a portfolio construction
perspective, PCTN continues to reduce its office exposure, which
currently stands at 27% but will fall to 25% with the planned
disposals of Longcross, Cardiff and Charlotte Terrace,
London.
Michael Morris, chief
executive of PCTN, said: "We are progressing our portfolio
repositioning strategy and are also encouraged by our pipeline of
asset management activity. Alongside our investment into our
portfolio, this will drive occupancy, income and capital
growth."
Kepler
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Picton Property Income's
(PCTN) half-year results were encouraging, as improved earnings saw
the portfolio return to profit during the
period.
Its strategy of repurposing
office assets into alternative use venues continues to bear fruit,
with the proceeds of the sale of its Angel Gate property in London
being used to repay its revolving credit facility, reducing total
borrowings and the LTV.
One of PCTN's key attractions
is its internal management structure, which aligns management with
shareholders.
The dividend remains a strong
suit for PCTN, with cover of 111%, higher than many of its peers.
Its reversionary yield could translate into further dividend
growth.
UK commercial property
capital values have started to react positively to the two interest
rate cuts seen since July. A more stable macro environment and
continued falling interest rates present a more constructive
outlook for the property market more broadly.
The past few years have been
a tricky period for REIT managers to navigate, but PCTN's
management certainly hasn't stood still. On a discount of c. 27%
and with strong income-generating ability, PCTN offers value at an
interesting juncture for this asset class.
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