Custodian REIT saw total return fall to 0.5% for the six months to 30 September 2019 as turmoil in the retail market dragged on its results.
Net asset value (NAV) per share total return of 0.5% for the period, was down from 4.3% at the same point last year. Share price total return was 8.7% for the period, down on the 10.3% reported last year.
Profit before tax plummeted from £16.6m in 2018 to just £700,000, which the group said was primarily due to property valuation decreases.
The company’s portfolio, which is split 41% industrial, 32% retail and 10% offices by value, was valued at £547.2m, a 2.3% decrease on a like-for-like basis.
Its high street retail portfolio lost 8.8% in value in the period, while its retail warehouse assets slumped 7.7%.
Basic and diluted earnings per share (EPS) were also hit, coming in at 0.2p, compared to 4.3p last year. On an EPRA basis, EPS was 3.4p.
The group declared an interim dividend per share of 3.325p, down from 3.275p in 2018.
David Hunter, chairman of Custodian REIT, said: “I am pleased to report that the company delivered a further positive total return for the period despite a struggling retail sector and continued UK political uncertainty. We continue to target sustainable growth to realise the potential economies of scale offered by the company’s relatively fixed administrative cost base.
“The challenges to physical retail compared to online retail have yet to reach a conclusion, but, across other sectors of the commercial property market, there remain supply and demand imbalances that should continue relatively low vacancy rates and further rental growth. These conditions are positive for the income focused strategy of Custodian REIT. It seems we are almost certainly destined for an extended period of low interest rates and in a low return environment the income returns offered by property look very attractive.
“We are well placed to meet our target of paying further quarterly dividends, fully covered by net income, to achieve an annual dividend for the year of 6.65p per share, and remain committed to both growing the dividend on a sustainable basis and delivering capital value growth for our shareholders over the long-term.”
CREI : Custodian REIT total returns hit by retail woes