Custodian Property Income REIT plc

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

Active asset management continues to drive income and valuation growth, underpinning fully covered dividend

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 provides a trading update for the quarter ended 31 March 2025 (“Q4” or the “Quarter”) and the year ended 31 March 2025 (“FY25”).

Commenting on the trading update, Richard Shepherd-Cross, Managing Director of the Investment Manager, Custodian Capital Limited, said: “This Quarter’s performance further emphasised the benefits of portfolio diversification, which combined with our hands on approach to generating strong income growth, has helped support three consecutive quarters of capital appreciation. We believe the current discount provides an attractive entry point for investors, especially given our long track record of fully covering the dividend, with shares currently yielding around 8%. The 17 lettings, lease renewals, re-gears and rent reviews we completed during the Quarter were achieved at significant aggregate premiums to ERV and previous rent, and our ongoing investment in solar panels at our properties has begun to prove its worth as a potential source of future revenue and value creation.

“We also believe that during periods of trade uncertainty such as the one the world now finds itself in, it would not be unreasonable to view UK real estate as a relatively safe haven for investors seeking stable asset backed income in established and secure jurisdictions. This should be particularly true for the Company’s diversified investment strategy that generally targets sub £10m, higher yielding, regional assets across the UK, that principally serve a local and/or domestic market.”


Highlights

Strong leasing activity continues to support rental growth, underpinning fully covered dividend

  • 1.5p dividend per share approved for the Quarter, achieving aggregate FY25 dividends per share of 6.0p, in line with target, and fully covered by unaudited EPRA earnings per share
  • Target dividends per share of no less than 6.0p for the year ending 31 March 2026.  This target dividend represents a 7.9% yield based on the prevailing 76p share price
  • EPRA earnings per share of 1.6p for the Quarter (Q3: 1.5p)
  • EPRA occupancy decreased to 91.1% (31 Dec 2024: 93.4%), primarily due to a previously flagged industrial unit becoming vacant in Biggleswade, which provides an opportunity to refurbish and improve the rental rate, and an office in Sheffield where we are assessing the options.  The industrial asset in Biggleswade is already under offer to let subject to a refurbishment.  4.0% of estimated rental value (“ERV”) is vacant and being or about to be refurbished or under offer to let or sell (31 Dec 2024: 1.8%)
  • During the Quarter, this decrease in occupancy resulted in a 1.2% decrease in like-for-like passing rent.  However, like-for-like ERV increased by 1.5%, primarily driven by 2.1% like-for-like growth in the industrial sector
  • Significant potential for further income growth with the portfolio’s ERV of £50.2m exceeding the current passing rent of £43.9m by 14% (31 Dec 2024: 11%).  Approximately 30% of this reversion is available from leasing events with the remainder from letting vacant space.  Based on our track record and occupier demand for space, we expect to capture this potential rental upside at (typically) five-yearly rent reviews or on re-letting, with an opportunity to do so across c. 17% of the portfolio’s income in FY26.  We expect to also continue to drive passing rent and ERV growth further through asset management initiatives
  • Leasing activity during the Quarter comprised the completion of two rent reviews at an average 31% increase in annual rent, nine lease renewals and regears in aggregate 11% ahead of ERV and 13% ahead of the previous rent, and letting six vacant units


Valuations growing across the Company’s c.£594m portfolio, with a 1.2% uptick on a like-for-like basis

  • Q4 net asset value (“NAV”) total return per share of 3.4%
  • NAV per share grew by 1.8% to 96.1p (31 Dec 2024: 94.4p) with a NAV of £423.5m (31 Dec 2024: £416.1m)
  • The value of the Company’s portfolio of 151 assets at the Quarter end was £594.4m (31 Dec 2024: £586.4m), a like-for-like increase of 1.2% during the Quarter, net of £0.8m of capital expenditure. Benefitting from a diversified portfolio, during FY25, the Company has seen a like-for-like portfolio valuation increase of 2.2%