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Property: ‘quiet’ fourth quarter sees Picton gain 4.1% as Ediston and AEW buy big

Property: ‘quiet’ fourth quarter sees Picton gain 4.1% as Ediston and AEW buy big

Picton Property Income (PCTN), winner of one of Citywire’s first performance awards last November, ended last year on a strong note delivering a 4.1% total return from its portfolio and beating a 3.4% gain in its benchmark, the MSCI IPD Monthly index.

The return comprised of 3.1% increase in net asset value (NAV) and a dividend payment of 0.85p per share.

The news came as the company raised its quarterly dividend 2.9% to 0.875p, representing an annual yield of 4% on yesterday’s share price with improved cover from earnings of 126%.

The three-month period was ‘relatively quiet’, with just one asset sold for £600,000 and the trust focusing on securing additional annual income of £260,000 with five lettings, seven rent reviews and five lease renewals in the quarter.

By comparison, Ediston Property (EPIC) and AEW UK Long Lease Reit (AEWL) were busier with transactions weighing on their NAVs.

The £144 million acquisition of four retail warehouse parks in December was a transformational step for Ediston, enabling the real estate investment trust to increase in size and lift its dividend by 4.5% to 5.75p per share, giving it a yield of 5%.

Annual results released yesterday confirmed the Reit’s dividend position looked strong ahead of the transaction with earnings cover of 115% in the year to October.

However, purchase costs and other capital expenditure meant NAV per share edged 0.3p lower in the fourth quarter to stand at 111p on 31 December.

Chairman William Hill said the off-market transaction with the Stadium Group had been efficient with acquisition costs making up just 0.7% of the purchase price versus the 6.8% normally incurred.

AEW UK Long Lease is in the early days of its development, having only floated last June. It has invested the £80.5 million in raised from its initial public offer (IPO) in a portfolio of hotels, pubs and leisure facilities, having bought eight properties for £53.6 million in the fourth quarter.

The costs of these purchases took a bite with NAV per share dropping 3.9% in the quarter from 96.5p to 92.2p. The NAV should grow in future as rental income flows through. It declared a fourth quarter dividend of 0.5p per share.

Alex Short, manager of the trust, said its average lease was over 22 years with ‘90% of rental income being inflation linked and a net yield at portfolio level of 5.6%’.

The £182 million trust now intends to raise a further £35 million to fund the acquisition of seven more buildings totalling £24.8 million.


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