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Picton Property Income
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== Inflation protection from predominantly long-term fixed rate debt == Picton’s balance sheet is strong and substantially protected against further interest rate increases. Following a late-FY22 debt refinancing, both the company’s long-term credit facilities are fixed rate with a blended average cost of 3.7% and a blended average maturity of c 10 years. A shorter term, floating rate revolving credit facility8 of £50m, providing flexibility to take advantage of further growth opportunities when identified, was c £5m drawn at end-FY22. The £13.7m acquisition of a mixed use property in London announced on 16 May was funded by existing cash resources (£38.5m at end-FY22). The refinancing included the extension of Picton’s Canada Life facility from £80m to £129m. The new £49m tranche was priced at 3.25% and the cost of the original £80m tranche was reduced to a similar level from 4.1%, a reduction of c 20%. Out of the proceeds, the £31m that had been drawn from the shorter-term, floating rate NatWest RCF to fund recent acquisitions was substantially repaid (£4.9m outstanding at end-FY22), although the entire £50m facility remains available to the company. As a result, total debt facilities increased to £264m, with £222m drawn at end-FY22. The redemption fee to reset the interest rate on the £80m tranche was £4m, equivalent to a modest 0.8p reduction in NAV per share. {| class="wikitable" |+Exhibit 12: Summary of debt portfolio<ref>Source: Picton Property Income, as at 31 March 2022.</ref> !Lender !Canada Life !Aviva !NatWest RCF |- |Amount drawn |£129m |£85m |£4.9m |- |Undrawn |Fully drawn |Fully drawn |£45.1m |- |Maturity |Jul-31 |Jul-32 |May-25 |- |Interest rate |Fixed 3.25% |Fixed 4.38% |SONIA +1.5% |- |Commitment fee |N/A |N/A |0.60% |- |LTV covenant |65% |65% |55% |- |Interest cover covenant |1.75x |N/A |2.5x |- |Debt service cover ratio covenant |N/A |1.4x |N/A |}
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