Custodian Property Income REIT plc: Final results for the year ended 31 March 2025

12 June 2025

Custodian Property Income REIT plc

(“the Company” or “Custodian Property Income REIT”)

Final results for the year ended 31 March 2025

Strong operational performance driving earnings growth and portfolio valuation uplift

Custodian Property Income REIT (LSE: CREI), which seeks to deliver an enhanced income return by investing in a diversified portfolio of smaller regional properties with strong income characteristics across the UK, today announces its final results for the year ended 31 March 2025.

Commenting on the final results, Richard Shepherd-Cross, Managing Director of the Investment Manager, said: “The Company has delivered another strong year of operational performance. Our strategy of investing in smaller lot sized properties leased to institutional quality and household name occupiers has again led to our diversified portfolio delivering the income growth it is designed to achieve. Against challenging market conditions, we have delivered an average 29% rental increase at review, helping drive growth in like-for-like rent of 2.3%. This has led to a 4.9% increase in earnings per share and underpinned our fully covered dividend which offered an attractive yield of 7.9% at 31 March 2025.  With the portfolio’s estimated rental value 14% ahead of its current passing rent, there remains a clear opportunity to continue to grow income.

“Throughout the year we continued to make disposals, achieving an average 5% premium to the most recent valuation and 38% ahead of the assets’ pre-offer valuation, which both supports the portfolio valuation and allows us to continue to recycle capital and increase NAV.” 

Commenting on the final results, David MacLellan, Chairman of the Company, said:

“Custodian Property Income REIT remains one of only a few active and genuinely diversified property investment companies, and the Company’s differentiated property strategy positions it well to continue to deliver for long-term investors seeking an income focused opportunity.

“We have continued to look for ways to grow the portfolio in an environment where raising capital via the stock exchange remains challenging and last week were pleased to announce the acquisition of a meaningful commercial property portfolio that is highly complementary to our own, both in terms of geographical spread and sector diversity. The share based and net asset value (“NAV”)-for-NAV nature of this transaction allowed the vendor to resolve a succession issue and a potentially significant capital gains tax liability and, we believe, has provided a blueprint for other high net worth and family offices to follow, while helping the Company achieve its ambitions for growth.

“As short-term interest rates fall and investors reconnect with real estate investment for its attractive income credentials, the Company’s share price is well-placed to re-rate back towards NAV and enhance total returns. In addition, with asset prices showing signs of recovery and following the recent announcement of an all-share portfolio acquisition, the Board looks to the future with confidence.”

Highlights of the year:

• 4.9% growth in EPRA earnings per share to 6.1p (FY24: 5.8p) with a 3.5% increase in fully covered dividend per share to 6.0p reflecting a 7.9% dividend yield at 31 March 2025 (2024: 5.8p dividend, 7.2% yield)
• IFRS profit after tax increased to £38.2m (2024: £1.5m loss)
• 2.3% growth in like-for-like contractual rent to £43.9m
• Estimated rental value (“ERV”) grew 2.4%, with ERV 14% ahead of passing rent, providing a significant opportunity to unlock further rental growth through asset management and at lease events
• 15 rent reviews completed during the year across all sectors at an average 29% ahead of previous passing rent, with 64 new lettings, lease renewals and lease regears completed reflecting continued occupier demand
• Occupancy marginally decreased by 0.6% to 91.1% during the year (31 March 2024: 91.7%) but with lettings since the year end adding 0.4%
• Like-for-like valuation of the Company’s portfolio of 151 properties increased by 2.2% to £594.4m supporting a 2.9% NAV increase and contributing to a 9.5% NAV total return (2024: -0.4%). Encouragingly valuations have improved at an accelerating rate, quarter-on-quarter, as decreasing interest rates and real estate market sentiment started to be reflected
• £8.2m of capital investment during the year into the refurbishment of offices in Leeds and Manchester and industrial units in Livingston, Plymouth and Aberdeen, and solar panel installations
• £15.1m proceeds from selective disposals achieved at an aggregate 38% premium to pre-offer valuation, with a further £6.9m of disposals since year end at an aggregate 12% premium to pre-offer valuation
• Net gearing remains low at 27.9% (31 March 2024: 29.2%) with 80% at a fixed rate of interest.  Since the year end the Company’s RCF limit has been increased from £50m to £60m to maintain headroom following expected repayment of a £20m loan expiring in August 2025
• Post year end, the Company completed the purchase of a £22.1m portfolio via the all-share acquisition of a family property company. The ‘Merlin’ acquisition provides the Company with a £19.4m portfolio of 28 smaller lot-size regional UK investment properties which are highly complementary to the Company’s existing assets, as well as c. £2.7m of newly built housing stock, the ongoing sale of which is expected to conclude in the next few months, generating additional cash for the Company.

Further information:

Further information regarding the Company can be found at the Company's website custodianreit.com or please contact:

Custodian Property Income REIT plc Annual Report and Accounts for the year ended 31 March 2025

Custodian Property Income REIT is a UK real estate investment trust (“REIT”) which seeks to deliver an enhanced income return by investing in a diversified portfolio of smaller, regional properties with strong income characteristics let to predominantly institutional grade tenants across the UK.

Property highlights

Financial highlights and performance summary

*Alternative performance measures (“APMs”) - the Company reports APMs to assist stakeholders in assessing performance alongside the Company’s results on a statutory basis, set out above.  APMs are among the key performance indicators used by the Board to assess the Company’s performance and are used by research analysts covering the Company.  The Company uses APMs based upon the EPRA Best Practice Recommendations Reporting Framework which is widely recognised and used by public real estate companies.  Certain other APMs may not be directly comparable with other companies’ adjusted measures and APMs are not intended to be a substitute for, or superior to, any IFRS measures of performance.  Supporting calculations for APMs and reconciliations between APMs and their IFRS equivalents are set out in Note 22.

Business model and strategy

Purpose

Custodian Property Income REIT offers investors access to a diversified portfolio of UK commercial real estate through a closed-ended fund.  The Company seeks to provide investors with an attractive level of income and the potential for capital growth from a portfolio with strong environmental credentials, becoming the REIT of choice for private and institutional investors seeking high and stable dividends from well-diversified UK real estate.

Stakeholder interests

The Board recognises the importance of all stakeholder interests, not just those of investors, and keeps these at the forefront of business and strategic decisions, ensuring the Company:

• Understands and meets the needs of its occupiers, owning fit for purpose properties with strong environmental credentials in the right locations which comply with regulations;

• Protects and improves its stable cash flows with long-term planning and decision making, implementing its policy of paying dividends fully covered by recurring earnings and securing the Company’s future; and

• Adopts a responsible approach to communities and the environment, actively seeking ways to minimise the Company’s impact on climate change and providing the real estate fabric of the economy, giving employers a place of business.

Investment Policy summary

The Company’s investment policy[15] is summarised below:

• To invest in a diverse portfolio of UK commercial real estate, principally characterised by smaller, regional, core/core-plus[16] properties that provide enhanced income;
• The property portfolio should be diversified by sector, location, tenant and lease term, with a maximum weighting by income to any one property sector or geographic region of 50%;
• To acquire modern buildings or those considered fit for purpose by occupiers, focusing on areas with:

• High residual values;
• Strong local economies; and
• An imbalance between supply and demand.

• No one tenant or property should account for more than 10% of the rent roll at the time of purchase, except for:

• Governmental bodies or departments; or
• Single tenants rated by Dun & Bradstreet as having a credit risk score worse than two[17], where exposure may not exceed 5% of the rent roll.

• Not to undertake speculative development, except for the refurbishment or redevelopment of existing holdings;
• To seek further growth, which may involve strategic property portfolio acquisitions and corporate consolidation; and