Custodian REIT Plc - Interim Results

Financial highlights and performance

 

·     NAV per share total return1 of 4.2% (2016: 3.3%)

·     EPRA2 earnings per share3 3.4p (2016: 3.0p)

·     Portfolio value of £474.3m (2016: £385.3m4)

·     Profit after tax of £13.2m (2016: £8.3m)

·     £24.8m5 of new equity raised at an average premium of 11.0% to dividend adjusted NAV

·     Dividends of 3.2p per share paid in the Period6 

·     Dividend approved for the quarter ended 30 September 2017 of 1.6125p per share

·     £56.1m7 invested in 12 acquisitions during the Period

·     £1.7m valuation uplift from successful asset management initiatives, £0.3m net valuation increase8

·     £1.0m profit on disposal of three properties for an aggregate consideration of £6.1m

·     EPRA occupancy9 96.7% (2016: 97.8%)

 

1. Net Asset Value ("NAV") movement including dividends paid and approved relating to the Period on shares in issue at 31 March 2017.

2. The European Public Real Estate Association ("EPRA").

3. Profit after tax excluding net gain on investment property divided by weighted average number of shares in issue.

4. Restated to reclassify the value of deferred lease incentives from receivables to investment property.

5. Before costs and expenses of £0.3m.

6. Dividends per share of 1.5875p and 1.6125p paid during the Period relating to the quarters ended 31 March 2017 and 30 June 2017 respectively.

7. Before acquisition costs of £3.4m.

8. Comprising £1.7m (2016: £3.3m) of valuation uplift from successful asset management initiatives and £2.0m (2016: £0.2m) of other valuation increases, less £3.4m (2016: £3.8m) of acquisition costs.

9. Estimated rental value ("ERV") of let property divided by total portfolio ERV.

 

 

 

Unaudited

6 months to
30 Sept 2017

Unaudited

6 months to
30 Sept 2016

Audited

12 months to 31 Mar 2017

Total return

 

 

 

NAV per share total return

4.2%

3.3%

8.5%

Share price total return10

5.3%

0.9%

10.3%

EPRA earnings per share (p)

3.4

3.0

6.6

 

 

 

 

Capital values

 

 

 

NAV (£m)

378.6

297.1

351.9

NAV per share (p)

104.9

101.7

103.8

Share price (p)

114.75

105.0

112.0

Portfolio valuation (£m)

474.3

385.34

418.54

Market capitalisation (£m)

414.1

306.7

379.7

 

 

 

 

Premium to NAV per share

9.4%

3.2%

7.9%

Net gearing11

19.7%

21.0%4

14.4%4

 

10. Share price movement including dividends paid and approved for the period.

11. Gross borrowings less unrestricted cash, divided by portfolio value.  Net gearing at 30 September 2017 was reported as 22.4% in the Q2 NAV statement due to incorrectly using a prior period property valuation.

 

Alternative performance measures, including EPRA Best Practice Recommendations, are used to assess the Company's performance.  Explanations as to why alternative performance measures give valuable further insight into the Company's performance are given in the Company's Annual Report.  Supporting calculations for alternative performance measures and reconciliations between non-statutory performance measures and their IFRS equivalents are set out in the Additional disclosures section of the interim financial statements.

 

David Hunter, Chairman of Custodian REIT, said:

 

"I am pleased to report another successful period of capital raising and investment.  We continue to target growth to realise the potential economies of scale offered by the Company's relatively fixed cost base and the amendment to the Investment Manager's charging structure announced in June, while maintaining the quality of both properties and income. 

 

"Occupational demand remains healthy and we are witnessing rental growth and low vacancy rates across the portfolio, giving us comfort that there is still an opportunity to invest.  I believe the current market supports our strategy of targeting high quality properties across regional markets, with the type of institutional grade property targeted by the Company showing value relative to larger lots through a higher net income return and opportunities for future rental growth. 

 

"We remain well placed to meet our target of paying further quarterly dividends, fully covered by income, to achieve an annual dividend for the year of 6.45p per share.  I expect occupational demand, combined with a limited supply of new development, to drive rental growth and lower vacancy rates across regional markets, which will support our objectives to both grow the dividend on a sustainable basis and deliver capital value growth for our shareholders over the long-term."