News Column

Picton Property Income Swings To Profit As Values Stabilise

June 16, 2014

Anthony Tshibangu

LONDON (Alliance News) - Picton Property Income Ltd Monday said it swung to a profit in its recent full year, after its results in the previous year were hit by valuation losses.

The company, which invests in commercial property in the UK, Isle of Man and the Channel Islands, posted pretax profit of GBP37.7 million for the year ended March 31, compared with a GBP14.3 million loss a year earlier. Picton benefited from valuation gains on property of GBP18.4 million in addition to GBP5.7 million in profit related to the disposal of investment properties. In the previous year Picton's results were hit by GBP30.9 million in valuation losses.

Picton said it has started to see property values stabilise in the UK commercial property market. The firm said it is particularly seeing markets outside central London show signs of "resilience" after a prolonged period of re-pricing.

"The combination of improving investor sentiment, transaction volumes and market pricing has led to a rise in capital values over 12 consecutive months," the firm said.

Net property income, which incorporates revenue from properties and property expenses, fell to GBP27.8 million from GBP29.8 million a year earlier. Revenue from properties dipped to GBP36.7 million from 38.8 million, reflecting a change in vacancy level.

Picton said it made progress in a number of areas during the period, including increasing total shareholder return to 50.2% from 6.2% a year earlier. The total return based on net asset value was 21.6% compared with a deficit of 7.6% a year ago.

The property investors said it has "re-shaped" its portfolio with three acquisitions and seven disposals during the year. In addition, Picton signed 47 new lettings securing GBP2.4 million in additional income.

Overall occupancy across the portfolio increased to 91% from 88% a year ago. The portfolio was valued at GBP423.0 million at the period-end and consists of 57 assets, the majority, 39% made of of industrial units.

The largest assets in the portfolio is Parkbury Industrial Estate, which Radlett acquired as part of a property swap deal with Segro PLC.

In March, Segro acquired a distribution warehouse at Magna Park, Lutterworth from Picton for GBP34.0 million, while Picton bought from Segro the Radlett-based industrial estate for GBP40.5 million. Picton paid Segro the balance of GBP6.5 million in cash.

Looking ahead, Picton said its objectives of the next twelve months include further increasing the portfolio's occupancy and improving its income profile, while creating value through identified asset management initiatives.

Picton paid four interim dividends of 0.75 pence per share making a total dividend for the year of 3.0 pence per share, compared with 3.5 pence a year earlier. In the previous year the firm paid two interim dividends of 1 pence per share and two interim dividends of 0.75 pence per share.

Picton shares were quoted up 1.0% at 62.39 pence at the open Monday.

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Source: Alliance News

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