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 2024 (“Q4” or the “Quarter”) and the year ended 31 March 2024 (“FY24”).

Q4 dividend level maintained, with continued strong leasing performance and confidence in outlook enabling a special dividend relating to FY24 and an increase in the FY25 target dividend

Strong leasing activity, with 15% reversion available, continues to support rental growth and underpins higher fully-covered dividends

• Like-for-like[3] ERV has increased by 0.8% since 31 December 2023, driven primarily by rental growth in the industrial sector. Portfolio ERV (£49.4m) exceeds passing rent (£43.1m) by 15% (31 December 2023: 15%) demonstrating the portfolio’s significant reversionary potential
• Like-for-like passing rent increased by 1.7% during the Quarter driven by resilient occupier demand for space across all sectors of the Company’s portfolio.
• Three rent reviews were settled during the Quarter, on average, 7% ahead of ERV and 29% above previous passing rent.
• Thirteen new leases and regears were also signed securing £1.4m of annual rent which increased property capital value by £2.0m
• EPRA occupancy[4] has increased to 92% (31 December 2023: 91%), rising to 94% when the 2% of ERV vacant that is currently under offer to let or sell is excluded. A further 1% of ERV is subject to refurbishment.

Valuations now stabilised across the Company’s c.£590m portfolio

• The valuation of the Company’s diversified portfolio of 155 assets of £589.1m remained flat on a like-for-like basis during the Quarter, net of a £2.0m valuation increase from active asset management activity (Q3: £1.0m increase from asset management)
• Q4 net asset value (“NAV”) total return per share[5] of 1.6%
• NAV per share of 93.4p (31 Dec 2023: also 93.3p) with a NAV of £411.8m (31 Dec 2023: £411.2m)

Asset recycling continues to generate aggregate proceeds in excess of valuation

• During the Quarter an office building in Derby and industrial units in Weybridge and Milton Keynes were sold for an aggregate £16.1m, 11% ahead of their 31 December 2023 valuations
• Since the Quarter end, a former car showroom in Redhill and an industrial property in Warrington have been sold for £11.3m, 49% ahead of their 31 December 2023 valuations
• Proceeds of all disposals are being used to reduce variable rate borrowings

You can read the full trading update here.

[1] Profit after tax excluding net gains or losses on investment property divided by weighted average number of shares in issue.

[2] Price on 30 April 2024. Source: London Stock Exchange.

[3] Adjusting for property acquisitions, disposals and capital expenditure.

[4] Estimated rental value (“ERV”) of let property divided by total portfolio ERV.

[5] NAV per share movement including dividends paid during the Quarter.