11 October 2023

Picton Property Income Limited

("Picton" or "the Company")

LEI: 213800RYE59K9CKR4497  

Portfolio and Asset Management Update

Picton is pleased to provide an update, highlighting recently completed value and income accretive transactions alongside further progress made against key asset management initiatives, including:-

·      NAV and income accretive leasing, regear and rent review activity across all sectors.

·      Asset enhancements, including solar provision, supporting a net zero transition.

·      NAV accretive disposal, subject to planning, of a part vacant office asset.

Key activity across sectors includes:-

Industrial

At River Way Industrial Estate, Harlow we have let a unit to an existing occupier, helping them to expand. The letting followed a comprehensive refurbishment, which included the provision of solar panels, providing an additional revenue which will be linked to the renewable electricity generated. Simultaneously we extended the income on the occupier's existing unit, securing a new ten-year lease on both units at a rent of £0.7 million per annum, in line with the March ERV.

At another unit on the estate, we have exchanged unconditional contracts on a 15 year lease renewal (subject to a break after ten years) at a rent of £0.6 million per annum, in line with the March ERV and increasing the passing rent by 45%.

In York, we settled a rent review at £0.6 million per annum, increasing the passing rent by 17%, 3% ahead of ERV at the time of the review. We also removed the occupier break option in 2028, securing income until 2033, in return for a short rent free period. The lease was updated with our green lease clauses, and the occupier now intends to install solar panels at the property.

At Madleaze Trading Estate in Gloucester we have let a unit for £0.1 million per annum, in line with the March ERV, helping an existing occupier to expand. The letting followed a comprehensive refurbishment securing an A-rated EPC. This included the provision of solar panels, for which there will be an additional revenue stream which will be linked to the renewable electricity generated.

Retail

In Covent Garden, WC2 we have assigned the lease of our retail unit to a UK based global cosmetics retailer with no loss of income.  Our previous occupier, Scotch & Soda, went into administration earlier this year, at which time we successfully claimed on the bank guarantee secured when the unit was originally leased. We worked with the administrator to enable trading to continue, ensuring rental and other lease obligations were met until a new occupier was secured.

In Carlisle, we finished the landlord works and completed the lease to a national restaurant chain at £0.1 million per annum, in line with the March ERV.

Office - alternative uses

In Cardiff, we have exchanged contracts to sell a partially vacant office building to an experienced PBSA (Purpose-Built Student Accommodation) developer. The transaction is conditional on planning permission, which will be submitted by June 2024. The sale price is dependent on the exact planning consent obtained and in particular upon the number of rooms secured, subject to a collar and cap. In all scenarios the transaction is NAV accretive and we will retain an adjacent small income producing industrial unit and car parking site.

To facilitate the disposal, we have completed a number of occupier led transactions that have ensured we can secure vacant possession in 2024. Further details will be provided in due course once planning permission is obtained.

We have secured further planning consents at Angel Gate, EC1 using permitted development rights, to now convert over 30,000 sq ft of office space to residential use, creating 34 dwellings. We have also let an office suite on a short-term basis to an existing occupier, extending their lease at a combined rent of £0.1 million per annum, 3% below the March ERV.

At Colchester Business Park we have leased a vacant office suite to a healthcare occupier at a rent of £0.1 million per annum, which is in line with the March ERV. The lease completed following receipt of planning permission for change of use and once the associated conditions were satisfied.

Office

In Fleet, we extended the leases of two office buildings due to expire in 2025, by a further five years, to 2030. We agreed a small rental uplift in 2025 to £0.5 million per annum, 4% ahead of the March ERV. In return the occupier has received a half-rent period and we will cover the cost of improved energy efficiency measures. The reversionary leases were updated to include our green lease clauses, and we will be arranging for solar panels to be installed, with the cost being deducted from the incentive being given to the occupier. Modelling shows the buildings will achieve a minimum B-rated EPC.

At 180 West George Street, Glasgow we have leased the ground floor suite at a rent of £0.1 million per annum, prior to it being refurbished. The agreed rent is 19% below the March ERV but reflects a receipt of £0.1 million from the outgoing occupier, a reduced incentive and the incoming occupier taking the existing fit out.

In Birmingham, we have let a ground floor suite at our refurbished Rum Runner scheme to a global business support company, for a rent of £0.1 million per annum, 4% ahead of the March ERV.

Breaks actioned and lease expiries over the quarter in Bristol and Colchester will provide further space to be upgraded and re-leased, creating additional value enhancement opportunities.

Further information will be provided in our half year results which are due to be released in November 2023.

Michael Morris, Chief Executive of Picton, commented:

"The progress outlined in this update highlights the importance of our asset management team's proactive approach and how they work closely with our occupiers to anticipate their evolving space requirements across a diverse portfolio of UK assets.

It also demonstrates significant progress across a number of key initiatives aimed at improving our portfolio and finding alternative uses for some of our offices assets, including in the healthcare, student accommodation and residential sectors."

For further information:

Picton

Katharine Thompson, Company Secretary

020 7011 9988, kathy.thompson@picton.co.uk

Tavistock 

James Verstringhe

0207 920 3150, james.verstringhe@tavistock.co.uk

About Picton

Picton, established in 2005, is a UK REIT. It owns and actively manages a £761 million diversified UK commercial property portfolio, invested across 49 assets and with around 400 occupiers (as at 30 June 2023).

Through an occupier focused, opportunity led approach to asset management, Picton aims to be one of the consistently best performing diversified UK focused property companies listed on the main market of the London Stock Exchange.

For more information please visit: www.picton.co.uk

ENDS