LONDON (ShareCast) - (Sharecast News) - Custodian Property Income REIT reported higher earnings and portfolio valuation gains for the year ended 31 March on Thursday, underpinned by strong asset management activity and favourable market sentiment.
EPRA earnings per share rose 4.9% to 6.1p, with a fully covered dividend of 6.0p, up from 5.8p the previous year, equating to a 7.9% yield.

Profit after tax under IFRS rebounded to £38.2m from a £1.5m loss in the prior year.

The London-listed real estate investment trust said its diversified portfolio of smaller regional UK properties saw like-for-like contractual rent grow 2.3% to £43.9m.

Estimated rental value increased 2.4% and remains 14% ahead of current passing rent, offering scope for further rental uplift.

Asset management drove a 2.2% increase in portfolio valuation to £594.4m, supporting a 2.9% rise in net asset value and a total NAV return of 9.5%.

The board said 15 rent reviews during the year delivered an average 29% uplift, with 64 lease events were completed across all sectors, reflecting ongoing occupier demand.

Occupancy slipped slightly to 91.1% but had since improved to 91.5% following new lettings.

Custodian said it invested £8.2m in refurbishments and solar panel installations and completed £15.1m of disposals at a 38% premium to valuation.

A further £6.9m of assets were sold post year-end, achieving a 12% premium.

Net gearing remained conservative at 27.9%, with 80% of debt at fixed rates.

The company expanded its revolving credit facility from £50m to £60m to maintain liquidity ahead of the August maturity of a £20m loan.

Post year-end, Custodian said it completed the £22.1m all-share acquisition of a private property company, bringing in 28 regional assets valued at £19.4m and a further £2.7m in new housing stock expected to be monetised in the coming months.

"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," said chairman David MacLellan.

"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-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."

MacLellan said that as short-term interest rates fell and investors reconnected with real estate investment for its "attractive" income credentials, the firm's share price was "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."

At 1202 BST, shares in Custodian Property Income REIT were down 0.48% at 83.6p.

Reporting by Josh White for Sharecast.com.

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