Custodian REIT’s results for the year ended 31 March 2016 show that its NAV per share rose by 0.2% to 101.5p resulting in an NAV total return of 6.2%. The share price total return was 3.5%. Dividends rose by 19% to 6.25p. Profit after tax rose by 28.7% and EPRA EPS was up 21.4% on the prior year to 6.8p. On the back of this Custodian REIT has increased the target dividend for the year ending 31 March 2017 by 1.6% to 6.35p per share.
The Company has historically targeted lot sizes below GBP7.5m and has benefitted from a significant NIY advantage as a result. However, it is increasingly clear that the market sets the small versus large threshold at GBP10m-15m and hence the Board recommends that shareholders approve an increase in the maximum target lot size to GBP10m at the Company’s next Annual General Meeting (“AGM”) on 26 July 2016.
Custodian REIT completed GBP66.7m of acquisitions in the last quarter of the financial year, bringing total investment in the 12 months to GBP109.8m. At 31 March 2016 the portfolio’s WAULT was 6.7 years (2015: 7.2 years). They say they are in active discussions with more than 20 tenants across the portfolio regarding various asset management initiatives, including new lettings, lease renewals, lease extensions, rent reviews, lease surrenders, refurbishment, development or a combination of the above.
The SDLT changes resulted in a 0.25% valuation decrease. (On 1 April 2016 the headline rate of SDLT for commercial property increased from 4% to 5%, with relief for smaller properties via a new SDLT-free band up to GBP0.15m and a 2% band from GBP0.15m to GBP0.25m, replacing the previous flat rate.)
On 6 June 2016, the Company and Scottish Widows Limited, with Lloyds Bank plc acting as agent, entered into an agreement for Scottish Widows Limited to provide the Company with a new term loan facility of GBP45 million, repayable on 6 June 2028 (“the New Loan”). Under the terms of the agreement, the Company will pay fixed interest of 2.987% per annum on the balance.
Part of the proceeds of the New Loan have been used to repay a GBP20 million, five year variable rate term loan plus an advance of GBP3.7 million drawn on the Company’s revolving credit facility (“RCF”), with no early exit costs incurred.
Following these transactions, the Company operates:
- A GBP35 million RCF with Lloyds Bank plc expiring in November 2020, with a maximum loan-to-value (“LTV”) of 50% and attracting annual interest of 2.45% above three-month LIBOR;
- A GBP20 million term loan facility with Scottish Widows Limited repayable in August 2025, with a maximum LTV of 45% and attracting fixed annual interest of 3.935%; and
- A GBP45 million term loan facility with Scottish Widows Limited repayable in June 2028, with a maximum LTV of 45% and attracting fixed annual interest of 2.987%.
The Company’s debt facilities have a weighted average term of 8.6 years, a weighted average cost of 3.2% per annum and 65% of the available facilities are at a fixed rate of interest.
The Company has cash and undrawn facilities of GBP60 million available to deploy, which will be used to acquire GBP13.7 million of properties currently under offer and in solicitors’ hands (“the Pipeline Properties”), with the balance expected to be significantly invested in other commercial properties within a period of three to six months.
CREI : Custodian REIT to target larger properties