Results analysis from Kepler Trust Intelligence

Picton Property Income (PCTN)

23/05/2025

Results analysis from Kepler Trust Intelligence

Picton Property Income (PCTN) has released its results for the year ending 31/03/2025, recording a NAV total return of 8.1% and profits of £37m. PCTN's property total return was 7.3% for the year, compared to 6.3% for the MSCI UK Quarterly Property Index. This marks the 12th consecutive year PCTN has outperformed the property index. Net assets were c. £533m at the year end.

The NAV per share increased 4.2% to 100p (2024: 96p) and dividends for the year totalled 3.7p (2024: 3.5p), a 5.7% increase. Dividends were covered 113% (2024: 114%). This results in an NAV total return of 8.1%. PCTN's share price total return was c. 16%, with the discount narrowing from c. 32% to 28%. The dividend yield at the current share price is c. 5.1%.

Kepler View

Macro headwinds are abating and PCTN reported a rise in property values this year, on top of further rental growth, which has continued every year through the higher interest rate period. Further, PCTN has reduced the size and cost of gearing and has sufficient firepower to continue to buy shares back. By our calculation the shares are currently at a 28% discount, which means buybacks will be highly accretive to NAV and earnings. Moreover, the UK has cut interest rates once again recently, which could be the start of a period of discounts on REITs narrowing further. Weighing up all the factors, including increasing values, rental growth, active disposals, increasing dividend, PCTN's discount looks to us to be unduly pessimistic at this point in the cycle.

Note that the chart below shows PCTN's discount compared to the AIC's UK commercial property sector. PCTN is not part of this peer group but it provides relevant context to PCTN's discount.

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