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Custodian REIT shares continue to trade at a premium to NAV, says chairman

Snapshot

  • Market valuation up considerably since IPO
  • Annual dividend growth
  • NAV per share total return of 5.9% last year
Custodian

Quick facts: Custodian REIT

Price: 117.4 GBX

LSE:CREI
Market: LSE
Market Cap: £480.4 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 July, Custodian cautioned the retail market was tough but a diversified portfolio was helping to mitigate the challenges.

Overall, the value of its portfolio stood at £568mln at the end of June 2019, down from £572.2mln at the end of March.

A number of retailers closed stores and negotiated lower rents as part of an insolvency process known as a company voluntary arrangement (CVA).

Pressure on retail rents is coming from the flood of company voluntary arrangements or CVAs, said Richard Shepherd-Cross, managing director.

Direct retail accounts for just 12% of Custodian’s portfolio and Industrial and office are still going well and offsetting the retail weakness.

The net asset value (NAV) total return per share for the period was 0.5% while the net asset value per share fell to 106.0p from 107.1p.

For the 2020 financial year, the company aims to pay a dividend of 6.65p per share.

 

 

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 longer leases, particularly those with RPI/CPI indexed rent reviews.”.

 

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Inflexion points

  • Dividend for 2020 forecast at 6.65p
  • That gives a yield of 5.7% at 116p
  • Shares stand at a 9% premium to NAV
  • Value of portfolio now £568mln and gearing 23%

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Watch

Proactive Research analyst discusses Custodian REIT's refinancing and...

Proactive Research analyst Ed Stacey says Custodian REIT (LON:CREI) is continuing to pursue its strategy of low-churn buy-and-hold rental income. In October 2019, Custodian announced the acquisition of a portfolio of eight distribution warehouses under a sale and leaseback deal with Menzies...

1 week, 5 days ago

2 min read