Custodian Property Income REIT plc: Interim Results
Custodian Property Income REIT plc (CREI)
Custodian Property Income REIT plc: Interim Results
14-Dec-2022 / 07:00 GMT/BST
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14 December 2022
Custodian Property Income REIT plc
(“Custodian Property IncomeREIT” or “the Company”)
Interim Results
DISPOSALS AHEAD OF VALUATION AND ACTIVE MANAGEMENT OF DIVERSIFIED PORTFOLIO UNDERPIN STRONG PERFORMANCE
Custodian Property IncomeREIT (LSE: CREI), which seeks to deliver a strong income return by investing in a diversified portfolio of smaller regional properties across the UK, today reports its interim results for the six months ended 30 September 2022 (“the Period”).
Commenting on the results, David Hunter, Chairman of Custodian Property Income REIT, said: “The Company’s well-diversified investment portfolio has shown its resilience during the Period and this diversification has mitigated the risks posed by volatility in real estate investment markets. In addition, the Company’s conservative balance sheet and its longer-term fixed rate debt profile have provided insulation against the challenge of rising interest rates in the short to medium term.
“Our dividend remains fully covered and, in line with our objectives, I was very pleased to announce 2.75p of aggregate dividends (2021: 2.5p) for the Period. The Board expects to continue to pay quarterly dividends per share of 1.375p to achieve a target dividend per share for the year ending 31 March 2023 of no less than 5.5p.
“Over the last five years, shareholders have received an income return of 29.7p per share, or an annual average of 5.93p per share, always fully covered by earnings, supported by both a diverse, smaller regional property strategy and a conservative gearing policy. There is depth in occupational demand and latent rental growth in the portfolio which offers the prospect of growth for existing shareholders, despite the current difficult economic circumstances.”
Property highlights
Portfolio valuation increased to £685.4m (31 March 2022: £665.2m, 2021: £551.9m), due to an £8.4m uplift from asset management initiatives and income growth, £47.8m of asset recycling within the portfolio and capex, and a £36.1m valuation decrease driven by current investor and market sentiment around the UK’s economic outlook
£52.7m invested in seven property acquisitions, which aligned with the Company’s investment policy, targeting smaller regional property with a strong income focus and potential for asset management
£4.7m profit from the disposal of three properties for a combined consideration of £14.9m at an aggregate 46% premium to valuation, comprising:
An industrial unit in Milton Keynes to a special purchaser for £8.5m, reflecting a 73% premium to valuation;
An Audi car dealership in Derby for £5.7m, £1.2m or 27% ahead of valuation; and
A high street retail unit in Weston-Super-Mare at valuation for £0.7m
Continued improvement in the environmental performance of the portfolio with all F and G ratings removed, improved or under redevelopment and the weighted average energy performance certificate (“EPC”) rating improving to a C (58) from C (61) at 31 March 2022
Since the Period end three properties sold for a consideration of £13.5m
Financial highlights
EPRA earnings per share for the Period decreased to 2.8p (2021: 3.0p) due to administrative cost inflation, rising interest rates and additional ESG compliance costs
10% increase in aggregate dividends per share declared for the Period to 2.75p (2021: 2.5p), which remains fully covered (102.0%), in line with Company policy, with the target dividend per share remaining at 1.375p per quarter and no less than 5.5p for the year ending 31 March 2023
Fixed rate agreed debt facilities increased from 61% to 74%, significantly mitigating interest rate risk and maintaining a beneficial margin between the aggregate cost of debt of 3.5% and income returns from the property portfolio
NAV per share 113.7p (31 March 2022: 119.7p, 2021: 106.0p)
Further information
Further information regarding the Company can be found at the Company's website www.custodianreit.comor please contact:
Custodian Capital Limited
Richard Shepherd-Cross / Ed Moore / Ian Mattioli MBE
Across all sectors and driven by current investor and market sentiment around the UK’s economic outlook
(27.7)
Property acquisitions
52.7
£15.0m retail park in Nottingham
£11.1m distribution unit near Glasgow
£8.9m for two DFS retail warehouses in Droitwich and Measham
£7.5m industrial facility in Grangemouth
£3.7m high street retail units in Winchester
£3.5m industrial unit in Chesterfield
£3.0m drive-through restaurants in York
Capital expenditure
5.3
Primarily relating to significant refurbishment work on two industrial assets in Avonmouth and Manchester and a retail warehouse in Swindon, with £0.7m invested in electric vehicle chargers at various sites
Increased due to deployment during the Period, but reduced to 24.0% by disposals since the Period end
Weighted average cost of drawn debt facilities
3.45%
2.88%
3.06%
Majority fixed rate debt insulating the Company from a 2.25% rise in base rates during the Period
Costs
Ongoing charges ratio (“OCR”) excluding direct property expenses[12]
1.20%
1.19%
1.20%
Environmental
Weighted average energy performance certificate (“EPC”) rating[13]
C (58)
C (62)
C (61)
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