9 August
2017
PICTON PROPERTY
INCOME LIMITED
(“Picton”, the
“Company” or the “Group”)
Picton acquires
highly reversionary multi-let office building in Bristol
Picton (LSE:PCTN), the property investment company, has
completed the acquisition of a grade A office building located in
Bristol city centre for £23.15 million.
Known as Tower Wharf, the building is situated in a prominent
position on the waterfront, adjacent to Temple Way, and equidistant
to both Temple Meads Railway Station and Cabot Circus shopping
district. Constructed in 2005 to a BREEAM “Excellent” rating, the
building provides 70,664 square feet of office accommodation
arranged over ground and five upper floors, with car parking in the
basement.
The property has an average unexpired lease term of 5.2 years
(2.8 years to break) and provides diversified rental income of
£0.89 million, reflecting a low average passing rent of £19.65 per
square foot from four occupiers: Oracle, Newlaw Legal, Ashfords and
Lambert Smith Hampton. The remaining
25,392 square feet of vacant accommodation is already fully
refurbished to a high standard and Picton intends to lease the
space in an improving occupational market.
The purchase price reflects a net initial yield of 3.6%, which
is expected to grow to 7.5% on leasing the remaining vacant space
and capturing the full reversionary potential. The purchase price
represents a capital value of approximately £328 per square foot,
in line with its estimated replacement cost.
The acquisition was funded using £12.5 million drawn down from
one of Picton’s revolving credit facilities (“RCF”), with the
balance from existing cash resources.
The impact of this acquisition, compared to the Company’s
position as at 30 June 2017 is as
follows:
- Initial increase in the Company’s net income after finance
costs of £0.3 million per annum and increase in dividend cover by
approximately 2%.
- Once fully let, it is expected to contribute additional net
income after finance costs of £1.4 million and will increase
dividend cover by approximately 8%.
- Initial small reduction in the portfolio’s current occupancy
levels from 96% to 94%
- With recently announced disposals, increase the portfolio’s
average lot size from £12.0 million to £12.5 million
- Reduce the Company’s weighted average interest rate from 4.2%
to 4.1%
- Increase the Company’s loan to value ratio to just under
30%
Fraser D’Arcy, Investment Director at
Picton, commented:
“Constrained by a lack of Grade A office space and a limited
development pipeline, the occupier market in Bristol is currently
seeing good demand for high quality space in buildings like Tower
Wharf. Against this backdrop and recognising the reversionary
potential, this purchase is aligned with our strategic objective to
grow both income and our asset base.”
Michael
Morris, Chief Executive of Picton, commented:
“This off-market acquisition, secured using the drawdown of our
recently extended RCF facility, is in line with our strategy to
grow income while creating value through active asset management.
Tower Wharf is a high quality and well-located office asset
underpinned by strong property fundamentals, which will enable
Picton to deliver further income growth and therefore enhance
future returns for our shareholders.”
For further information:
Tavistock
Jeremy Carey/James Verstringhe, 020 7920 3150,
james.verstringhe@tavistock.co.uk
Picton Capital Limited
Sheryl Bates, 020 7011 9979,
sheryl.bates@picton.co.uk
Note to Editors
Picton is a property investment company established in
2005. It owns and actively manages a £636 million
diversified UK commercial portfolio, invested across 53 assets and
with around 350 occupiers (as at 30 June
2017). Through an occupier-focused, opportunity-led approach
to real estate asset management, Picton aims to be one of the
consistently best performing diversified UK property companies
listed on the main market of the London Stock Exchange.
For more information please visit: www.picton.co.uk
ENDS