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Picton Property Income
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== Investment summary == The strength of the FY22 result may be seen as exceptional, benefiting as it did from a bounce-back in property valuations as pandemic restrictions were progressively eased. Nonetheless, it was consistent with Picton’s track record of outperformance, driven by a total return strategy with a strong income focus. Despite growing headwinds from rising inflation, only partly explained by the war in Ukraine, Picton remains positive about the outlook. The underpinning for this optimism is covered throughout this report but in summary includes: * Picton provides diversified exposure to UK commercial real estate with a well-established track record of performance. * A significant 60% weighting to the industrial sector has been highly beneficial to recent performance and continues to benefit from a positive demand-supply balance and rising rents. * Successful asset management is underpinned by the group’s occupier focus whereby it seeks to work closely with tenants to understand their needs, enhance occupancy, improve tenant retention and maximise income. * Acquisitions made in FY22 (for an aggregate £23.5m before costs) and FY23 year to date (£13.7m) are yet to fully contribute to earnings and there is significant ‘reversionary’ growth potential embedded within the portfolio to support future income and capital values. * All structural debt is long term and fixed rate, providing protection against increasing interest rates. Shorter-term, flexible, floating rate debt capacity is available for opportunistic acquisitions. * Commercial real estate has traditionally provided a medium-term hedge against inflation as, at least in part, this is reflected in rental growth and valuations over time. Increasing building costs have a tendency to restrict new construction.
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