Picton Property Income Reports Strong Half-Year Growth and Share Buyback Expansion

Offices: deliberate pain now for gain later

Office occupancy is 75%. Picton sold its largest, lowest-yielding office for £34.5 million at a 1% premium to the March valuation and took several early surrenders where it was paid to take space back. Two thirds of the current voids are identified for or under refurbishment.

There is £4.3 million of ERV in vacant offices and another £0.7 million of potential from rent resets. That is meaningful, but leasing will be the proof point. The post-period lettings and renewals are encouraging, albeit from a low office base.

Post-period catalysts: Rushden and Radlett in focus

After the period, Picton completed lettings totalling £0.9 million per annum, 5% ahead of March 2025 ERV, and renewals of £0.3 million per annum that were 47% above previous rents. It also received £3.6 million from two industrial occupiers who vacated, comprising £2.3 million of dilapidations and £1.3 million of additional income.

Two specific swing factors:

• Rushden logistics: the occupier exercised a break effective October 2025. Picton received £2.5 million after period end (£0.8 million break penalty and £1.7 million dilapidations). ERV is around 50% above the previous passing rent of £1.6 million. Short-term, EPRA EPS may dip while the unit is re-let, but the medium-term uplift could be substantial.
• Radlett: an occupier vacated in November with £1.1 million received for surrender and dilapidations. ERV is more than 20% above the previous £1.0 million per annum rent, and Picton has a positive pre-application response on a proposed extension.

Retail steadying, sustainability spend rising

Retail and leisure is 12% of the portfolio and looks steadier, with occupancy at 95% and ERV now above contracted rent for the first time in years. The Carlisle hotel lease restructure brought in a £2.4 million premium in exchange for a longer lease at a lower rent.

On upgrades, Picton invested £4.0 million across eight assets. EPC ratings improved again, with 86% now rated A-C. Decarbonisation projects completed in Milton Keynes and Chatham, with Bristol and Manchester underway. That matters for occupier demand, operating costs, and compliance risk.

Balance sheet – low LTV, fixed-rate debt, flexibility intact

LTV sits at 22% (March 2025: 24%), helped by disposal proceeds. Total borrowings are £209 million, all at fixed rates with a 3.7% weighted average interest rate and 6.2 years to maturity. The £50 million revolving credit facility is undrawn.

EPRA NDV per share is 106p, £23 million above reported net assets, reflecting the fair value of debt. In short, leverage is conservative, interest costs are predictable, and liquidity is available for buybacks or selective acquisitions.

Dividend – small rise, still covered

Dividends of 1.9p per share were paid in the half, up 2.7% and covered 106% by EPRA earnings. That cover gives room to keep paying while voids are worked through and before the reversion is fully captured.

What I think this means for shareholders

• Positive: NAV per share up to 102p, TSR of 12.1%, and property returns ahead of the index. Buybacks at a 22-25% discount are accretive. The industrial tilt and 3.7% ERV growth underpin future income.
• Watch-outs: Office occupancy at 75% drags EPRA earnings near term. The Rushden void is a temporary headwind until re-let, even with the £2.5 million received.
• Opportunity: £10.0 million of reversion versus contracted rent is meaningful. If leasing momentum continues and proceeds are recycled into higher yielding assets, EPRA earnings should improve.

What to watch next quarter

• Leasing pace on the £5.3 million ERV of vacant space, especially offices.
• Progress and pricing on re-letting Rushden and the Radlett unit, plus any extension plans.
• Deployment of disposal proceeds into higher yielding assets and how that compares to ongoing buybacks.
• Dividend cover holding around or above 100% while voids are addressed.

Bottom line

Picton is doing the simple things well: recycle out of low-yield offices, double down on industrial, fix the balance sheet, and buy back shares at a discount. There is execution risk around leasing, but the reversion runway is clear. For income-focused investors who can tolerate some near-term volatility, this looks like steady progress with sensible capital allocation.