Picton back in the black as it rebalances its portfolio

Picton Property Income has moved back into the black with a pretax profit of £11.5m in the six months ended 30 September. This is up from a loss of £1.4m during the same period in 2023. The group said that the continued disposal of office assets from its portfolio as it rebalances towards industrial and residential, had enabled it to repay costly debt. It said its remaining £210m of debt was now secured at an average fixed rate of 3.7%. During the period under review, Picton sold office property Angel Gate, EC1, for £29m, has been edging closer to a sale of its Longcross property in Cardiff, where planning is in place to redevelop the site as a 706-bed student accommodation scheme, and has put an office at Charlotte Terrace, W14, up for sale after securing consent to convert it to residential. CBRE is handling the sales of Longcross and Charlotte Terrace. They have a combined valuation of £20.6m. The value of the group’s portfolio rose by 0.8% on a like-for-like basis to £721m, driven primarily by gains in its industrial and retail warehousing assets. The portfolio of 48 assets delivered £42.8m of rent and a total return of 2.5%, just below the MSCI benchmark of 2.7%. Picton secured 12 new leasing deals over the period under review, adding some £1.6m of new rents. In addition, 16 lease renewals and regears added £500,000 of fresh rent. Occupancy across Picton’s portfolio nudged up from 91% to 92% during the period. The group said it remained focused on “unlocking potential” from its portfolio and capturing upside from new opportunities. Chief executive Michael Morris said: “We have now seen a change of government and two reductions in the base rate. “UK commercial property capital values have started to react positively with the MSCI UK Quarterly Property Index showing recent increases in some sub-markets. “We expect to see signs of a more stable macro environment and, following the repricing of the retail and office sectors, we expect medium-term returns across all sectors to be more convergent, with stock selection and asset management becoming increasingly important.” He added: “We have been encouraged by the recent investment opportunities being marketed and have been undertaking due diligence on assets, primarily in the retail and industrial sectors.” Picton Property Income’s office portfolio reduced by 27% in the first half of 2024 and will further reduce to 25% with the planned disposals of the Longcross and Charlotte Terrace properties. Image © Pete Linforth/Pixabay