Custodian Property reports strong leasing activity

8th Aug 2024 11:04

(Sharecast News) - Custodian Property Income REIT reported strong leasing activity for the June quarter on Thursday, underpinning its fully covered dividend and supporting a yield of about 7.7%.

The London-listed real estate investment trust approved a quarterly dividend of 1.5p per share, consistent with its annual target of at least 6.0p per share for the year ending 31 March 2025.

That reflected a solid performance, with EPRA earnings per share of 1.5p for the quarter.

Leasing activity during the period contributed an additional £0.7m in annual rent.

Highlights included three rent reviews on industrial assets that achieved rents 11% above the estimated rental value (ERV) and 41% higher than previous passing rents.

The company also secured seven new leases across various sectors, generating £0.3m in new rent, in line with estimated rental values.

It said its property portfolio, valued at £579.6m, remained stable on a like-for-like basis during the quarter, with a £0.8m increase from asset management initiatives.

Custodian said its portfolio included 153 assets, adding that its net asset value (NAV) per share was 93.1p at the end of June, slightly down from 93.4p in March.

The portfolio's total return per share for the quarter was 1.6%.

Custodian REIT said it continued to manage its assets effectively, with a stable EPRA occupancy rate of 92%, expected to rise to 95% as properties currently under offer were let or sold.

Additionally, its active asset recycling strategy generated £11.3m from the sale of a former car showroom in Redhill and an industrial property in Warrington, achieving a 49% premium over their December valuations.

The company also invested £1.9m in capital expenditure, primarily on office refurbishments in Leeds and Manchester, expected to yield a return on cost of about 7%.

Moreover, Custodian REIT generated £0.1m in revenue from solar panel arrays, with new installations in Swansea and Warrington contributing to its sustainability efforts.

Custodian REIT said it maintained prudent debt levels, with a loan-to-value ratio of 28.8% at the end of the quarter, closer to its medium-term target of 25%.

The company reduced its weighted average cost of borrowings to 3.9% from 4.1% in March, benefiting from the repayment of its revolving credit facility with proceeds from property disposals.

"The company paid total dividends per share of 1.675p on 31 May, comprising the 2024 fourth-quarter target dividend of 1.375p and a fifth interim special dividend of 0.3p, resulting in aggregate dividends relating to the year ended 31 March of 5.8p, fully covered by EPRA earnings," the board explained in its statement.

"The board has approved a fully covered interim dividend per share of 1.5p for the quarter payable on 30 August to shareholders on the register on 12 July, which will be designated as a property income distribution."

At 1218 BST, shares in Custodian Property Income REIT were down 0.13% at 78.1p.

Reporting by Josh White for Sharecast.com.