Custodian REIT sees Q3 NAV fall 12.2% to £440m

Custodian Property Income REIT has revealed its Net Asset Value (NAV) fell 12.2% from £501.4m to £440m during the third quarter of the year ended 31 December 2022. Custodian said the decrease comes amid a 9.1% like-for-like valuation decrease across its diversified portfolio of 162 assets to £612.8m following a “market wide rerating of UK commercial property driven by sentiment around the UK’s economic outlook”. Meanwhile, it revealed a 7% increase in EPRA earnings per share to 1.5p for Q3 (Q2: 1.4p), due to £18m of net investment into acquisitions during the previous quarter and recent positive asset management outcomes. During the period it also secured 10 new lease agreements signed across a range of property sectors during the quarter at an aggregate 7% ahead of ERV, adding £1.2m of annual rent for a weighted average of 7.3 years to first break. It added that occupancy improved to 89.9% due to the letting of five vacant properties during the quarter. Richard Shepherd-Cross, managing director of Custodian Capital Limited, said: “Our active asset management has enabled us to capture occupational demand, lease vacant space across all sectors and deliver rental growth which will support earnings and underpins the company’s fully covered dividend. “This strong recent leasing activity demonstrates the resilience of Custodian Property Income REIT’s well-diversified investment portfolio and the depth of the occupational market for space in high quality, well located and affordable assets such as ours.” He added: “Despite recent market wide valuation decreases, Custodian Property Income REIT’s prudent approach to investment and the management of its balance sheet, with low gearing and a longer-term fixed rate debt profile, has left the company well insulated from the negative impact of interest rate rises continuing in the short to medium-term. “More broadly, despite investment market volatility during 2022 and the threat of an imminent recession, I believe the real estate market is in a much better place than it has been for the last 18 months. Rent collection levels remain very strong, the restrictions and impact of Covid-19 on tenants’ businesses are largely resolved and unlike in previous recessions we are not faced with an over-supply of real estate and rising vacancy rates at the outset.” Shepherd-Cross concluded: “As a result, we remain confident that our ongoing intensive asset management of the portfolio, which still offers a number of wide-ranging opportunities to add value, will maintain cash flow and support consistent returns. Coupled with the strength of the company’s balance sheet, this will continue to support our high income return strategy.”

Custodian REIT sees Q3 NAV fall 12.2% to £440m

During the period it also secured 10 new lease agreements signed across a range of property sectors during the quarter at an aggregate 7% ahead of ERV

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