Picton offloads office-to-resi asset

Picton has sold another of its office-to-residential assets as its seeks to rebalance its portfolio. The group has exchanged contracts to sell Charlotte Terrace, W14, for £13.1m – a 5% premium to its latest valuation. Completion is due in January 2025.  Consent to convert the office block to residential was secured in August. The asset is around 50% vacant by estimated rental value and represents the second largest portfolio void for Picton. Proforma occupancy will rise to 93% on completion. Elsewhere, the group has bought a retail warehouse/trade counter unit at 90 Bristol Road in Gloucester for £500,000, funded through cash resources. The property comprises 5,100 sq ft and is adjacent to Picton’s Mill Place Trading Estate. Picton said the off-market transaction was structured as a sale-and-leaseback and reflected a net initial yield of 7.7%, increasing to 8.7% in year six, based on a fixed rental uplift. The purchase price reflects a low capital value of £98 per sq ft, which is less than half of the estimated replacement cost. At Mill Place Trading Estate the group has also enabled its largest occupier to expand and extend its lease by five years. This involved leasing a vacant unit, relocating another occupier, upgrading space and the demolition of a small unit, enabling open storage land to be leased and rentalised. The new lettings total £100,000 per annum, and combined with the regear of current leases, secures £300,00 per annum, subject to a minimum uplift in 2026 at an open-market rent review. The combined new rent is 8% ahead of the September ERV. Chief executive Michael Morris said: “This is further demonstration of the Picton team delivering on identified initiatives that will support earnings growth and create value for shareholders. Pleasingly, all bar one of these transactions completed following the recent Budget and show a depth of both investor and occupational demand across our portfolio.”