NAV, Dividend and IMS

21 January 2015 PICTON PROPERTY INCOME LIMITED ("Picton" or the "Company" or the "Group") Net Asset Value as at 31 December 2014, Interim Dividend and Interim Management Statement Picton (LSE: PCTN) announces its Net Asset Value for the quarter ended 31 December 2014and Interim Dividend. Highlights during the quarter included:- Financial * Net Assets increased to £315.7 million (30 September 2014: £273.7 million). * NAV/EPRA NAV per share rose 5.9% to 66.0 pence (30 September 2014: 62.3 pence). * Like-for-like increase in property portfolio valuation of 4.1% (30 September 2014: 3.8%). * Average debt maturity of 12.6 years, with a weighted average interest rate maintained at 4.5% per annum. * Raised £25 million of new equity, at 2.3% premium to September NAV, for further property acquisitions. * Issued notice to repay remaining £1.8 million loan notes by 31 March 2015. * Reduction in net gearing to 36.7% (September 2014: 43.2%), reflecting improved cash position and valuation gains at quarter end. Dividend * Dividend of 0.75 pence per share declared and to be paid on 27 February 2015 (30 September 2014: 0.75 pence per share). * Post-tax dividend cover over the quarter of 118% (30 September 2014: 125%). * Dividend yield of 4.4%, based on a share price of 67.5 pence on 19 January 2015. Portfolio Activity * Strong valuation gain in office and industrial portfolios driven by leasing and asset management activity. * Further improvement in occupancy to 95% (September 2014: 94%) * Completed 16 lettings, adding £1.2 million per annum to the rent roll (before incentives) and 10 lease renewals securing £1.2 million per annum (before incentives). * Letting completed at Citylink, East Croydon, the largest single vacancy within the portfolio, for an annual rent of £0.52 million which is in line with ERV. * Completed the disposal of one small non-core asset in Brighton for £1.1 million. * Exchanged contracts to sell Middleton Trade Park for £2.2 million which completed following the quarter end. * Further increase in average lot size, following disposals, to £8.8 million (September 2014: £8.4 million). Commenting, Nick Thompson, Chairman of Picton said: "We have continued with our placing programme this quarter, further increasingthe size of the Company, diversifying our shareholder register and positioningourselves to benefit from the economies of scale through growth. We lookforward to providing further updates as the Company progresses its investmentprogramme." Michael Morris, Chief Executive of Picton Capital, added: "We have made good progress over the quarter, enhancing the portfolio byinvesting in our assets, letting space and disposing of non-core assets. Wehave also benefited from positive capital growth across the portfolio and seenencouraging signs of strengthening occupier activity outside the Londonmarkets." For further information: TavistockJeremy Carey/James Verstringhe, 020 7920 3150, [email protected] Picton Capital LimitedMichael Morris, 020 7011 9980, [email protected] The Company SecretaryNorthern Trust International Fund Administration Services (Guernsey) LimitedTrafalgar CourtLes BanquesSt Peter PortGuernseyGY1 3QL David Sauvarin, 01481 745 001, [email protected] Note to Editors Picton Property Income Limited ('Picton') is an income focused, propertyinvestment company listed on the London Stock Exchange. Picton can invest bothdirectly and indirectly in commercial property across the United Kingdom. With Net Assets of £315.7 million at 31 December 2014 and approximately 870investors, the Company's objective is to provide shareholders with anattractive level of income, together with the potential for capital growth byinvesting in the principal commercial property sectors.www.pictonproperty.co.uk NET ASSET VALUE The unaudited Net Asset Value (`NAV') of Picton, as at 31 December 2014, was £315.7 million, reflecting 66.0 pence per share, an increase of 5.9% over thequarter. The NAV attributable to the ordinary shares is calculated under InternationalFinancial Reporting Standards and incorporates the external portfolio valuationas at 31 December 2014, including income for the quarter, but does not includea provision for the quarterly dividend announced herein, which will be paid inFebruary 2015. The next independent valuation of the property portfolio is scheduled for March2015 and the NAV per share, as at 31 March 2015, will be issued in April 2015. A detailed breakdown of the NAV is included in the Appendix. DIVIDEND An interim dividend of 0.75 pence per share is declared in respect of theperiod 1 October 2014 to 31 December 2014 (1 July 2014 to 30 September 2014:0.75 pence). The dividend will be paid on 27 February 2015 to shareholders on the registeron 13 February 2015. The ex-dividend date is 12 February 2015. Post-tax dividend cover during the quarter was 118%. DEBT The Group has total borrowings of £234.4 million with a weighted averageinterest rate of 4.5%, of which 99% is fixed with a weighted average debtmaturity profile of approximately 12.6 years. In order to further simplify the corporate structure notice has been given tothe holders of the Group's loan notes that they will be fully repaid by 31March 2015, for a total of £1.8 million. This has a small positive impact ondividend cover. As at 31 December 2014, net gearing, calculated as total debt, including ZDPs,less cash, as a proportion of gross property value, was 36.7% (30 September2014: 43.2%). EQUITY ISSUANCE ANDPLACING PROGRAMME On 1 May 2014 the Company announced an Initial Offer, Offer for Subscriptionand Placing Programme. A second element to the Placing Programme was announced on 1 December 2014 andas a result a further 39,215,686 shares were issued on 22 December 2014 forgross proceeds of £25 million. Under the Placing Programme, the Company has the ability to issue a further71,462,280 shares, on or before 30 April 2015. Further details are contained within the Prospectus dated 1 May 2014 andsupplementary prospectuses dated 14 July 2014, 4 August 2014, 29 October 2014and 21 November 2014 which are available on the Company's websitewww.pictonproperty.co.uk MARKET BACKGROUND According to the IPD Monthly Index, capital growth was 2.9% over the quarter,compared with 3.2% in September 2014. Over the quarter rental growth was 1.0%,compared with 0.8% in September 2014. This is the highest level of rentalgrowth in a quarter, since September 2007. Overall total returns were 4.4% inthe quarter to December 2014, compared to 4.7% in the quarter to September2014. Across the principal IPD sectors, office values rose by 4.3% (September 2014:4.0%), industrial by 4.3% (September 2014: 3.9%) and retail by 1.3% (September2014: 2.4%). Over the quarter, 34 of the 37 IPD segments recorded positive capital growthand 25 of the 37 segments recorded positive rental growth. All of the negativemovements were either in the standard retail, retail warehouse or shoppingcentre segments. The occupancy rate in the December IPD Monthly Index rose to 91.3% (September2014: 90.5%). PORTFOLIO UPDATE We continued the positive momentum over the quarter, improving occupancy from94% to over 95%. Positive valuation uplifts were seen across the Industrial,Office and Retail sectors within the portfolio which, overall, increased 4.1%over the period. As at 31 December 2014, the portfolio had a net initial yield of 6.1% (allowingfor void holding costs) or 6.2% (based on contracted net income) and a netreversionary yield of 7.2%. The weighted average unexpired lease term (to firsttermination) was 6.3 years. Key highlights over the quarter were as follows:- Industrial In Radlett, Unit 11 was let to Alliance Healthcare, securing £57,942 per annum,6% above ERV with a nominal two months rent free. In addition, at Unit 8 weremoved a June 2015 break clause and simultaneously settled an outstanding rentreview at £127,600 per annum, a 5.5% uplift on the previous rent and securingthe occupier until 2020. The estate is now fully let. At River Way Industrial Estate in Harlow, we renewed the lease on Fleet Houseto DHL securing £675,000 per annum, a 31% uplift on the previous passing rent.TNT vacated Unit D in October and this was let in December, securing £370,000per annum, which represents an 8% uplift on the previous passing rent. Theestate remains fully let. Terms were agreed to surrender the lease of Unit O at Lyon Business Park inBarking, which completed following the quarter end, with the outgoing occupierpaying a surrender premium of £400,000. The 25,000 sq ft unit is currentlybeing refurbished ahead of marketing. At Easter Court in Warrington, we assisted an occupier with their expansion byrelocating them from a small unit, where they were paying £21,850 per annum, toa larger unit paying £51,600 per annum, 10% above ERV. This leaves only theremaining small unit to let. Contracts were exchanged to dispose of Middleton Trade Park in Lancashire for £2.2 million, and the sale completed just after the period end. The sale of this24,000 sq ft multi-let estate follows considerable letting success, whichincluded the letting of six units to a range of occupiers including Screwfix.The sale price is 23% ahead of the apportioned valuation when the asset waspurchased as part of Picton's acquisition of Rugby REIT in 2010 and 8% ahead ofthe September valuation. Office Significant progress was made at the Company's largest void over the quarter.Education provider BPP took 24,000 sq ft of office space at the newlyrefurbished Grade A Citylink in East Croydon. BPP will occupy the whole of thewest side of the building at an annual rent of £521,600 per annum, which is inline with ERV. Citylink is now 90% occupied, leaving one small ground floorsuite of 4,845 sq ft available. The other major occupier is RBS. In central London, we completed the refurbishment of unit 28 Angel Gate,implementing an architect-led scheme, replicating the design of the recentlylet unit 24, which set a new rental tone on the estate of £36 per sq ft.Marketing is underway and we have strong occupier interest. At 401 Grafton Gate in Milton Keynes, we renewed Tech Mahindra's leases of24,700 sq ft for a further five years at a rent of £398,750 per annum, in linewith ERV. Significant refurbishment projects have been completed at Merchants House inChester and Queens House in Glasgow, where we have seen considerable lettingssuccess. During the period, we achieved three lettings in Chester for acombined rent of £80,770 per annum and three lettings in Glasgow for a combinedrent of £68,230 per annum. We have good interest in other remaining suites atboth properties. Retail / Leisure Having recently restructured the long leasehold with Brighton City Council, wedisposed of a small retail and restaurant unit in Bartholomew Square, Brighton,for a combined consideration of £1.1 million. This was in line with theSeptember valuation. Due to a tenant administration at Regency Wharf, Birmingham, this asset saw asmall decline in value. Terms have now been agreed to re-let the units and thisis expected to complete by March 2015. Appendix NET ASSETS SUMMARY The unaudited Net Asset Value is as follows: 31 Dec 2014 30 Sep 2014 30 Jun 2014 £million £million £million Investment properties * 504.7 487.1 441.3 Other assets 15.8 16.0 14.3 Cash 46.6 21.0 54.7 Other liabilities (17.0) (16.2) (17.2) Borrowings: Loan facilities (206.9) (207.2) (207.4) Loan stock (1.8) (1.8) (2.0) ZDP's (25.7) (25.2) (24.8) Net Assets 315.7 273.7 258.9 Net Asset Value per share 66.0p 62.3p 58.9p * The underlying property valuation is stated net of lease incentives. The movements in Net Asset Value can be summarised as follows; Total Movement Per share £million % Pence NAV at 30 September 2014 273.7 62.3 Movement in property values 16.8 5.6 3.5 Share issue 24.4 - - Share premium (net of issue 0.2 0.1 0.1costs) Net income after tax for the 3.9 1.3 0.8period Dividends paid (3.3) (1.1) (0.7) NAV at 31 December 2014 315.7 5.9 66.0 PORTFOLIO COMPOSITION The Group's current portfolio is structured as follows:- Sector Weighting Like for Like 31 December 2014 Valuation Change Industrial 42.3% 4.1%Office - Central/Greater London 19.0% 7.8%Office - Rest of UK 13.2% 4.5%Retail 17.3% 1.6%Retail Warehouse 5.6% 0.9%Leisure 2.6% -1.6%Total 100.0% 4.1% GEOGRAPHICAL WEIGHTINGS Geography Weighting 31 December 2014 South East 32.8%Central & Greater London 29.2%North 12.4%Midlands 16.6%Wales 4.5%South West 2.5%Scotland 1.5%Northern Ireland 0.5%Total 100.0% TOP TEN ASSETS The top ten assets, which represent 49.8% of the portfolio by capital value,are detailed below. Asset Sector Location Parkbury Industrial Estate, Radlett Industrial South EastRiver Way Industrial Estate, Harlow Industrial South EastStanford House, Long Acre, WC2 Retail LondonAngel Gate Office Village, City Road, EC1 Office London50 Farringdon Road, EC1 Office LondonBoundary House, Jewry Street, EC3 Office LondonShipton Way, Rushden, Northamptonshire Industrial East MidlandsPhase II Parc Tawe, Swansea Retail Warehouse WalesColchester Business Park, Colchester Office South East1 Chancery Lane, WC2 Office London