Custodian REIT PLC (LSE:CREI) told investors it has sold its only high street shopping centre for £9.3mln and intends to invest the proceeds in its ongoing pipeline of building refurbishments to enhance rents and improve the environmental performance of its portfolio.
The 73,367 sq ft shopping centre in Gosforth, Newcastle-upon-Tyne, was bought in November 2021 as part of the acquisition of DRUM Income Plus.
With an £8.975mln value apportioned to the shopping centre at that time, the disposal price reflects a 3.5% premium.
Since taking it on, the company said it has increased occupancy from 93.6% to 95.7% and grown the rent roll by £78k (8.5%), with £0.9mln of rental income generated over the period of ownership.
Richard Shepherd-Cross, managing director of the company’s external fund manager, Custodian Capital, said: “Shopping centres as a sector have not performed well since the COVID-19 pandemic and do not fit comfortably within our investment objectives of selecting high quality, well located regional properties in areas where future rental growth is underpinned by strong supply/demand fundamentals.”
He said the asset management work completed since acquisition and the accretive terms of the DRUM deal allowed a profit to be made on the sale despite current market uncertainty.
“This disposal provides additional capital for our programme of improving assets we feel will better capture tenant demand over the long term as well as enhancing their environmental credentials,” he added.