10 December 2024

PICTON PROPERTY INCOME LIMITED

('Picton' or the 'Company')

LEI: 213800RYE59K9CKR4497

Portfolio Update

Office disposal and asset management activity improve income and occupancy

Picton is pleased to provide an update on the progress of several initiatives highlighted in the half year results announcement on 12 November 2024.

The recently completed transactions comprising an office sale, strategic purchase and several leasing and asset management transactions demonstrate progress in improving the occupancy, net income and value within the portfolio, as further detailed below.

Office disposal

We have exchanged contracts to sell Charlotte Terrace, London W14, with completion due in January 2025. 

The disposal is in line with our strategy of disposing of assets that have been repositioned for alternative use. We secured residential planning consent in respect of a significant part of the void office element in August this year. The asset is around 50% vacant by estimated rental value (ERV) and comprises the second largest portfolio void. Proforma occupancy will rise to 93% on completion (30 September 2024: 92%).

The disposal price of £13.1 million reflects a 5% premium to the external valuation as at 30 September 2024.

Purchase adjacent to existing industrial holding

We have completed a freehold acquisition of a retail warehouse/trade counter unit at 90 Bristol Road, Gloucester for £0.5 million, funded through cash resources. The property comprises 5,100 sq ft and is located adjacent to our Mill Place Trading Estate ownership. The acquisition will improve the estate's overall roadside frontage to Bristol Road.

The off-market transaction was structured as a sale and leaseback and reflects a net initial yield of 7.7%, increasing to 8.7% in year six, based on a fixed rental uplift. The purchase price reflects a low capital value of £98 per sq ft, which is less than half of the estimated replacement cost.

Leasing activity

We have re-let two retail warehouse units, subject to completion of landlord works and within two months of them becoming vacant, both at rents in line with the September 2024 ERV:

Expanding and securing existing occupiers

At Mill Place Trading Estate, Gloucester, we have enabled the largest occupier to expand and have extended their lease commitment by a further five years. This involved leasing a vacant unit, relocating another occupier, upgrading space and the demolition of a small unit, enabling open storage land to be leased and rentalised. The new lettings total £0.1 million per annum, and combined with the regear of their current leases, secures £0.3 million per annum, subject to a minimum uplift in 2026 at an open market rent review. The combined new rent is 8% ahead of the September ERV.

At River Way Industrial Estate, Harlow, in a back to back transaction, we have surrendered a lease from an occupier in financial difficulty and re-leased it to a new occupier. The new rent of £0.6 million per annum is over 50% ahead of the previous passing rent and is 4% higher than the September 2024 ERV.

At 401 Grafton Gate, Milton Keynes, we extended two office leases, representing approximately a quarter of the space, that were due to expire in 2025. We have agreed an immediate rental uplift of 37% to £0.4 million per annum, 17% ahead of the September ERV. As part of the transaction, we will be comprehensively upgrading the air conditioning within the building which should achieve an A rated EPC. The works, due to commence in 2025, include energy efficiency measures which transition from a gas to electric system.

Michael Morris, Chief Executive of Picton, commented:

"This is further demonstration of the Picton team delivering on identified initiatives that will support earnings growth and create value for shareholders. Pleasingly, all bar one of these transactions completed following the recent Budget and show a depth of both investor and occupational demand across our portfolio."

For further information:

Picton

Kathy Thompson, Company Secretary

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

James Verstringhe, Tavistock

020 7920 3150, james.verstringhe@tavistock.co.uk

About Picton

Established in 2005, Picton is listed on the main market of the London Stock Exchange and is a constituent of a number of EPRA indices including the FTSE EPRA Nareit Global Index.

Picton owns and actively manages a £721 million UK commercial property portfolio, invested across 48 assets and with around 350 occupiers (as at 30 September 2024).

Through an occupier focused, opportunity led approach, Picton aims to be one of the consistently best performing diversified UK REITs and has delivered upper quartile outperformance and a consistently higher income return than the MSCI Quarterly Property Index since launch. 

With a portfolio strategically positioned to capture income and capital growth, currently weighted towards the industrial sector, Picton's agile business model provides flexibility to adapt to evolving market trends over the long-term.

Picton has a responsible approach to business and is committed to being net zero carbon by 2040.

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

ENDS