Picton Property Income (PCTN ) has increased its dividend after slashing it by 30% at the height of the pandemic, although it has not been restored to pre-crisis levels.
The £333m real estate investment trust (Reit) cut its quarterly dividend from 0.875p to 0.625p, lowering the annual dividend from 3.5p to 2.5p, in April as it fretted over the uncertainty caused by the coronavirus outbreak and subsequent lockdown. Property trusts felt the lockdown intensely as some tenants saw revenues drop to zero, or close to it, leaving them unable to pay rent, and stymieing cashflows.
However, better-than-expected rent collection in the first two quarters means the Reit has made the decision to bump the dividend back up 12% to deliver an annual dividend of 2.8p.
Nick Thompson, chair of the trust’s board, said he and his fellow non-executive directors had had ‘sufficient time’ to assess the performance of tenants, the portfolio, and judge the current market conditions.
‘The board believes it is appropriate to take the first step in restoring the dividend to pre-Covid-19 levels,’ he said.
‘Our decision was influenced by our rent collection performance, leasing activity and progress on asset management initiatives.’
In the first quarter, which saw the outbreak of Covid-19 in the UK and a widespread global sell-off, the Reit received 90% of rent which is expected to rise to 96% under agreed payment plans. The same amount was received in the second quarter, with 93% of rent expected to be collected under payment plans.
A total of 88% of third quarter rent has been collected, with 12% of that paid through agreed monthly payment plans.
‘This figure is expected to increase further over time and is comparable to the corresponding rent collection during the previous two quarters,’ said the board.
Picton, winner of three successive Citywire performance awards, said it entered the market volatility ‘from a position of strength’ with a covered dividend and borrowing or loan-to-value of just 22%.
The trust has managed to grow its net asset value (NAV) 0.8% year-to-date after it pursued a number of asset management transactions and refinanced its revolving credit facility. However, shares in the 4.5% yielder stand on a wide 32% discount below NAV after a 34% slide this year.
Investment company news brought to you by Citywire Financial Publishers Limited.