Picton Property Income Limited Annual Report 2023

Portfolio Review/Continued

Portfolio investment

Investment activity We acquired two new properties during the year, as well as the acquisition of a further unit at an existing holding. 109-117 High Street, Cheltenham – £5.3 million This mixed-use property comprises 7,700 sq ft of ground floor retail space with 11,450 sq ft of office space over two upper floors, and is located in Cheltenham’s pedestrianised town centre, adjacent to John Lewis. Comprehensively refurbished in 2020, the property has good environmental credentials including EPC ratings of B on both the office and retail elements and no natural gas. On purchase it was leased to four occupiers, with an average lease length of 12 years to expiry and eight years to break. We have since surrendered one of the retail leases and re-let the unit to a national retailer, securing a ten-year lease, subject to break. The current contracted rent is £0.4 million, equating to £21 per sq ft, with most leases containing fixed rental uplifts that will increase income to £0.5 million per annum by 2026. The purchase price reflected a net initial yield of 7.2%, rising to 9.0% by 2026. The low capital value of £277 per sq ft is below its estimated replacement cost.

Charlotte Terrace, Hammersmith Road, W14 –£13.7 million This mixed-use asset comprises four adjoining buildings, which total 28,500 sq ft of office space and 4,400 sq ft of retail space, arranged over five floors. The property was redeveloped behind the façade in 1990 and is Grade II listed, meaning there are no business rates payable on void units. The property is located close to Olympia, which is currently undergoing a £1 billion redevelopment to deliver a new creative district, with a new theatre, entertainment venue, hotel, office, retail and leisure space, which will enhance the surrounding area. Since purchase we have leased a retail unit and an office suite. We are in the process of relocating an office occupier, to secure vacant possession of one of the office buildings so we can seek a change of use to residential and the planning application for this has been submitted. The purchase price reflects a net initial yield of 3.3%, rising to over 8% once fully let and reflecting a low capital value of £417 per sq ft, which is below its estimated replacement cost. Residential values in the area are approximately £1,000 per sq ft. Unit 7V Madleaze Trading Estate, Gloucester – £0.4 million We acquired another unit on this industrial estate with vacant possession, and leased the space to an existing occupier. The acquisition helps to consolidate our ownership. Read more on pages 12–13 In addition, we acquired the freehold of our Rushden distribution asset for nil consideration, having previously owned a long leasehold interest.

Refurbishment upgrades Over the year we have invested £6.1 million into the portfolio across over 15 projects, with the top five projects accounting for 65% of the spend. These have all been aimed at enhancing space to attract occupiers, improve sustainability credentials and grow income. All works undertaken are in line with our refurbishment guidelines, outlining best industry practice, which includes where appropriate, the removal of natural gas from buildings, installation of solar panels and insulation upgrades in line with our net zero carbon pathway. We are continually focused on future- proofing assets from a sustainability perspective, which has resulted in an improvement in our EPC ratings with 76% of our properties (by rental value) now rated C and above. Read more on pages 14–15 We have invested into our portfolio to enhance space for our occupiers and improve the sustainability credentials of our buildings. Jay Cable Head of Asset Management

£6.1m Invested into the portfolio 76% EPC ratings A-C

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Picton Property Income Limited Annual Report 2023

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