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Portfolio Review / Continued
Portfolio investment
We are continually focused on future-proofing our assets from a sustainability perspective, which has resulted in an improvement in our EPC ratings. Jay Cable Head of Asset Management
Longcross, Cardiff
During the year, we exchanged contracts to sell this almost vacant office building to an experienced student accommodation developer. The transaction is conditional on planning permission, which will be submitted during Summer 2024. The sale price is dependent on the exact planning consent obtained and, in particular, upon the number of rooms secured. The base price was 16% ahead of the March 2023 valuation and we expect to benefit from an overage payment once planning is secured. We will retain an adjacent small income-producing industrial unit and vacant car parking site. To facilitate the disposal, we have completed a number of surrenders that ensure we can secure vacant possession in 2024, albeit this has a short-term negative effect on portfolio occupancy and net income. Currently, the property is approximately 90% vacant and represents 12% of the total portfolio void.
Refurbishment upgrades Over the year, we have invested £4.5 million into the portfolio across more than 20 projects, with the top five projects accounting for 57% of the spend. These have all been aimed at enhancing space to retain and attract occupiers, improve sustainability credentials and grow income. All works undertaken are in line with our sustainable refurbishment guidelines, outlining best industry practice. Where appropriate, we remove natural gas from buildings, install solar panels and upgrade insulation, in line with our net zero carbon pathway. We are continually focused on future-proofing our assets from a sustainability perspective, which has resulted in an improvement in our EPC ratings with 80% of our properties (by rental value) now rated C and above, an increase of 4% on the prior year.
Investment activity The investment market was subdued throughout 2023, with a low volume of transactions. However, since the start of 2024, we have seen more activity in the market, reflecting greater optimism. No acquisitions were made during the year, and we exchanged contracts to sell two properties as detailed below. Angel Gate, London EC1 Contracts were exchanged at the end of March 2024 to sell Angel Gate, EC1, with completion occurring mid-April. The sale is in line with our strategy to repurpose appropriate office assets and follows the securing of residential planning consents during 2023. The sale consideration was 5% ahead of the 31 December 2023 valuation of £28.1 million. The property is approximately 50% occupied and represented 19% of the total portfolio void at the year-end.
£4.5m Invested into the portfolio 80% EPC ratings A–C
Picton Property Income Limited / Annual Report 2024 36
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