28 June 2012
PICTON PROPERTY INCOME LIMITED
("Picton "or the "Company" or the "Group")
PICTON SECURES TWO NEW LONG TERM DEBT FACILITIES WITH AVIVA AND CANADA LIFE
Picton Property Income Limited (LSE: PCTN), the internally managed investment company with an income focused approach to the UK commercial property market, announces that it has entered into conditional agreements for two separate long term debt facilities ahead of its secured loan maturities in January 2013.
· Picton agrees two new facilities totalling £209 million in aggregate from Aviva and Canada Life.
· On completion (expected in July 2012), the new facilities will be used to refinance Picton's existing CMBS facility and bank loan totalling £188.5 million, which are due to mature in 2013.
· Stable, long term financing with a staggered maturity profile of 10, 15 and 20 years.
· Based on current benchmark pricing, the cost of debt is anticipated to be lower than current arrangements.
· Under the new arrangements, there will be orderly debt repayment through an agreed amortisation profile which is consistent with the Group's long term debt reduction strategy.
In two simultaneous transactions, Picton has conditionally secured funding from Aviva Commercial Finance Limited and Canada Life Limited. In summary, the Company has agreed:
· Up to £114 million of debt with Canada Life for a term of up to 15 years with £34 million repayable in year 10.
· Up to £95 million of debt with Aviva for a term of 20 years. The loan has a scheduled annual amortisation profile of repaying approximately one third of the debt over the life of the loan.
· The funding has been secured at a blended margin of approximately 2.1% which, based on benchmark gilts, currently reflects a fixed cost of approximately 4.4%.
· The new loan to value covenant on both facilities is 65%.
· The agreements, which are conditional upon satisfying conditions precedent, are expected to complete in July 2012 to coincide with specified prepayment dates on existing facilities.
· The pricing of the transaction will be confirmed in July on completion and further details will be provided to the market at that time.
· As part of the transaction, the Company will undertake an element of corporate restructuring to facilitate two bilateral pools of assets, providing debt to be made available to two Group vehicles on a reflective non recourse basis, one for each lender.
The Company has approximately £8 million of smaller non-core unsecured assets and these continue to be held for disposal as part of an orderly realisation process.
In order to facilitate an early repayment of its existing facilities, the Company will incur swap break costs in July 2012, which had a liability of £5.1 million as at 31 March 2012, along with additional arrangement and restructuring costs. Further details of these costs will be provided following Completion.
The Company will now consider further the options available to facilitate repayment of the zero dividend preference shares ("ZDPs"). The Company's advisors have consulted with a number of existing holders of its ZDPs and several have indicated an interest in an extension to the term. The Company is currently investigating potential options for a mechanism which would allow investors to elect to extend the maturity of their ZDPs. Any extension would be subject to sufficient liquidity in the extended ZDPs, with a target rollover amount in the order of £20m. The Company will continue to engage with its investors on this matter and will make a further announcement to the market in due course.
Commenting, Nick Thompson, Chairman of Picton, said:
"We are delighted to have secured long term financing from such established lenders in the market. This successful refinancing, together with the internalisation of the management, are two strategic aims we set some 18 months ago and the delivery of these now provides clear financial benefits."
Michael Morris, Chief Executive of Picton Capital, said:
"These new debt facilities provide the Company with a much more balanced debt exposure and staggered maturity profile. With the increased financial stability and flexibility that this transaction provides, we are now able to focus on the active management of the underlying portfolio."
For further information:
Jeremy Carey/James Verstringhe, 020 7920 3150, firstname.lastname@example.org
Picton Capital Limited
Michael Morris, 020 7011 9978, email@example.com
Northern Trust International Fund Administration Services (Guernsey) Limited
St Peter Port
Tel: 01481 745529
Fax: 01481 745085
Note to Editors
Picton Property Income Limited ('Picton') is an income focused, internally managed Investment Company listed on the London and Channel Islands Stock Exchanges. It was established in 2005 to invest both directly and indirectly in commercial property across the United Kingdom.
With Net Assets of GBP 196.1 million at 31 March 2012 and approximately 850 investors, the Company's objective is to provide shareholders with an attractive level of income, together with the potential for capital growth by investing in the principal commercial property sectors.