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Custodian REIT picks way through property uncertainties

Snapshot

  • Market valuation up considerably since IPO
  • Annual dividend growth
  • Recently gained new largest tenant
Custodian

Quick facts: Custodian REIT

Price: 97.6 GBX

LSE:CREI
Market: LSE
Market Cap: £409.97 m
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What it does

Custodian REIT PLC (LON:CREI) is a real estate investment trust with a portfolio of assets made of industrial, retail, office and other properties.

The company listed on the main market of the London Stock Exchange in 2014.

Since then, its market capitalisation has grown on the back of significant investment into UK regional real estate.

 

How’s it doing

In the quarter to December, net asset value (NAV) rose slightly to 104.4p and occupancy picked up to 95.6% as demand for industrial and office property in the regions offset the troubles on the high street.

Custodian repeated its dividend target for the year to March of 6.65p.

Richard Shepherd-Cross, the trust’s manager said the improvement reflected its defensive strengths as activity in the property market overall dropped significantly during the run-up to the UK general election.

Custodian REIT's share price maintained its premium to NAV during the period, reflecting its high dividend yield and the robustness of its closed-ended structure.” 

The trust also acquired eight 'last mile distribution' properties from Menzies Distribution Limited (MDL) for £24.7mln, in a ten year long sale-and-leaseback deal that makes MDL its largest tenant.

It added that it is “considering a pipeline of opportunities”, and championing a selective approach to buck the property market gloom.

 

What the boss says: Richard Shepherd-Cross, MD

"Demand continues for UK commercial property and the attractive income returns on offer.  However, demand is polarised between perceived low risk and perceived higher-risk assets.

"Those assets which the market perceives to be lower risk include most industrial properties and properties let on long leases, particularly those with RPI/CPI indexed rent reviews.”.

 

Video

 

 

Inflexion points

  • Dividend for 2020 forecast at 6.65p
  • NAV per share of 104.4p in last valuation
  • Value of portfolio now £571mln

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Watch

Custodian Reit results show increased fully-covered dividend

Proactive analyst Ed Stacey explains why Custodian REIT (LON:CREI) remains one of the best dividend/yield plays in the UK market going into 2020. Interim results indicate that their dividend is backed by net income from rental income. Stacey runs through how Custodian REIT manages funds, how...

on 17/1/20

2 min read