Picton Property Income Limited Annual Report 2022

Strategic Report

Financial Statements

Additional Information

Governance

Growing occupancy and income profile We have improved occupancy this year, which has led to increased income. Our rent collection over the period has averaged 98% and was close to 100% for the December 2021 and March 2022 quarters. This higher level of income has enabled us to increase the dividend twice during the year, which we cover in more detail in the Financial Review. Enhancing asset quality During the year, we have invested £10 million in upgrading our assets. The impact of some of this activity is very obvious, such as the creation of Rum Runner Works, at Regency Wharf, in Birmingham where we have converted leisure space into offices; however, some of the less visible work is equally important as it aligns to our sustainability targets. For example, the complete upgrade and removal of our gas-fired air-conditioning system at 50 Farringdon Road, London, will help with our net zero commitments and improve energy efficiency for our occupiers. In our refurbishments at Angel Gate, London, 180 West George Street, Glasgow and Longcross, Cardiff, we have also focused on improving occupier amenities, creating more communal and informal space with outside areas where possible. Outperforming MSCI We have outperformed the MSCI UK Quarterly Property Index for the ninth consecutive year. This year, across the Index, the range between lower quartile and upper quartile returns was the widest on record at 10.7%. We delivered a portfolio return of 24.3% compared to the Index of 19.6% and upper quartile of 24.9%. Whilst we are just below upper quartile for the year, we have still delivered upper quartile returns against the Index over three, five and ten years, and since inception. Of note, our industrial assets delivered a total property return of 38.2%, our retail assets delivered 25.6%, which comprised retail warehousing delivering 33.4%, and our office assets delivered 4.4%. 120p Net asset value per share 27p Earnings per share

We have outperformed the MSCI UK Quarterly Property Index for the ninth consecutive year.

Michael Morris Chief Executive

We have had a very successful year, delivering a record profit against a backdrop of reduced pandemic-related disruption. Our clear purpose and strategic priorities have enabled us to focus on what matters. To reflect the closer integration of sustainability into our business model and our commitment to achieving net zero carbon, we have redefined our Purpose, which now states: β€˜To be a responsible owner of commercial real estate, helping our occupiers succeed and being valued by all our stakeholders.’ We have also added two strategic priorities, specifically relating to the work we are doing to reduce our impact on climate change: β€’ Adapting to and mitigating the impact of climate change; and, β€’ reducing emissions to become carbon net zero in or before 2040. This makes it clear that the focus of our sustainability strategy is aligned with our occupiers and other stakeholders. Our strategic priorities are detailed on pages 20-21 , and a summary of our progress is detailed below. Portfolio performance Income and capital growth We have seen exceptionally strong portfolio growth over the period. This has been predominantly driven by our industrial, warehouse and logistics assets where both rental and capital values have continued to move higher. Our retail portfolio, which now comprises 65% retail warehouse assets, has also seen strong valuation growth, with a reversal of some of the writedowns seen during the pandemic. Our office assets have not seen the valuation growth we might have expected, especially recognising the leasing success in this sector. This in part reflects perceived changes in working habits and costs associated with improving sustainability credentials. We will seek to offset increasing cost pressures where we can attract premium rents, either due to limited supply or by providing high quality space.

 Picton Property Income Limited  Annual Report 2022

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