By Elliot Gulliver-Needham
The £353m Picton Property Income trust has sold its second largest office, Angel Gate in London, for £29.6m.
The deal, which will be completed next week, is part of the trust’s plan to move away from office assets, bringing its exposure to the sector from 30 per cent to 28 per cent.
Located a block away from Angel tube station, the office sold for five per cent above its valuation in December and brings in a rental income of £700,000 a year.
This rent is so low because the property is currently only 50 per cent occupied, meaning the sale will bring up Picton’s occupancy rate from 90 per cent to 91 per cent.
The purchaser, Q Square, is located in Brighton and will pay for the sale in cash.
Picton said that part of the proceeds from the sale will be used to pay back its revolving credit facility debt of £16.4m, which is currently costing the trust 6.8 per cent per year.
This will bring down its loan to value ratio from 28 per cent to 25 per cent and the weighted average interest rate from 3.9 per cent to 3.7 per cent.
The company added that it will “consider options” for the remaining £13.2m after the sale.
“Given the notably wide discount to net asset value of 34 per cent compared with the peer group average (12.4 per cent), which seems harsh to us, we would assume that buying back shares would be an obvious use for the excess proceeds,” said Numis analyst Colette Ord.
Michael Morris, chief executive at Picton, said: “The team has done an excellent job at Angel Gate. This sale marks the culmination of a complex process to maximise value from a partially vacant office asset by securing residential planning in a Zone 1 London location.
Picton’s new CFO, Saira Johnson, began her role at the company yesterday.
