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Custodian REIT statement stresses benefits of diversification

Custodian REIT to reduce dividend as rent receipts fall

Custodian REIT statement stresses benefits of diversification – Custodian REIT has published results for the year ended 31 March 2019. Highlights are:

  • EPRA NAV of 107.1p down from 107.3p last year;
  • dividend per share of 6.55p (2018: 6.45p), 110.4% covered by net recurring income;
  • 2020 target dividend per share increased 1.5% to 6.65p;
  • NAV per share total return of 5.9%, comprising 6.1% income and a 0.2% capital decrease;
  • Portfolio value of GBP572.7m (2018: GBP528.9m);
  • Gearing higher at 24.1% (21.0%);
  • Vacancy rate higher at 4.1% (3.5%);
  • EPRA earnings per share of 7.3p;
  • GBP13.4m of new equity raised at average premium of 11% to dividend adjusted NAV;
  • GBP55.5m invested in 11 property acquisitions and GBP2.5m capital expenditure incurred primarily on one pre-let development and two significant refurbishments;
  • GBP6.4m property valuation uplift from successful asset management initiatives;
  • GBP5.3m property valuation decrease due to company voluntary arrangements*;
  • GBP4.3m profit on disposal of three properties for an aggregate consideration of GBP15.4m.

* Homebase, Office Outlet (formerly Staples), Paperchase and Carpetright. Since the year end, a further CVA has been proposed by Cotswold Outdoor.

The manager said “Custodian REIT’s investment strategy which has focused on income and maintaining a diversified portfolio that has proved to be robust in the face of falling retail rents and values, CVAs and Brexit uncertainty.”

“On a like-for-like basis the company’s high street retail portfolio has witnessed a GBP7.9m (11%) reduction in value. Some of this negative movement may be recovered following the conclusion of lease re-negotiations which are underway or under consideration, although we cannot rule out further falls in confidence in the property market from general economic or political turbulence.

However, this reduction in value has been more than offset by the strong performance of the industrial and logistics portfolio which increased in value by GBP11.5m, underscoring the strength of a diversified strategy. Despite many negative predictions for the UK economy in the face of Brexit uncertainty, to date the economy has defied the sceptics. GDP continues to grow and unemployment is at a 44 year low. Both of these indicators are positive for commercial property and the occupational market.”

CREI : Custodian REIT statement stresses benefits of diversification

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