Custodian REIT plc
(“Custodian REIT” or “the Company”)
Interim Results
Custodian REIT (LSE: CREI), the UK commercial real estate investment company focused on smaller lot-sizes, today reports its interim results for the six months ended 30 September 2021 (“the Period”).
Property highlights
- Property portfolio value of £565.3m (31 March 2021: £551.9m, 2020[1]: £532.3m)
- £32.3m aggregate valuation increase comprising a £2.3m property valuation uplift from asset management initiatives and £30.0m of general valuation increases, primarily due to hardening yields in the industrial and logistics sector
- £12.5m[2] invested in three property acquisitions
- £4.2m profit on disposal[3] from the disposal of 10 properties for aggregate consideration of £38.5m comprising:
- A portfolio of seven industrial assets for £32.6m, £5.1m (19%) above the properties' 31 March 2021 valuation, when terms of the sale were agreed, and £2.9m (10%) above the 30 June 2021 valuation, representing a net initial yield (“NIY”) on sale price of 5.9%;
- A retail warehouse in Galashiels to a special purchaser for £4.5m, £1.8m (67%) ahead of the 30 June 2021 valuation, representing a NIY on sale price of 5.73%; and
- Two smaller assets in the retail and other sectors £0.1m above valuation for aggregate consideration of £1.4m
- Since the Period end:
- An aggregate £46.5m invested in a portfolio of 10 office, retail and industrial assets through the corporate acquisition of DRUM Income Plus REIT plc (“DRUM REIT”), and separately, an industrial unit in York; and
- Three properties sold for consideration of £14.1m
Financial highlights and performance summary
- 95% of rent collected relating to the six-month period, adjusted for contractual rent deferrals (year to 31 March 2021: 91%, 2020: 88%)
- EPRA[4] earnings per share[5] for the six-month period increased to 3.0p (2020: 2.6p) due to the movement in the doubtful debt provision during the six-month period changing from a £2.9m increase in 2020 to a £0.1m decrease during the Period
- Basic and diluted earnings per share[6] increased to 11.4p (2020: -3.8p) primarily due to property portfolio valuation increases of £32.3m (2020: £27.4m decrease)
- Profit before tax of £48.1m (2020: loss of £16.1m)
- Aggregate dividends per share of 2.5p declared for the Period (2020: 2.0p)
- Target quarterly dividend per share increased by 10% to 1.375p commencing from the quarter ending 31 December 2021, resulting in target dividends per share of no less than 5.25p for the year ending 31 March 2022 and 5.5p for the year ending 31 March 2023, based on rent collection levels remaining in line with expectations
- NAV per share 106.0p (31 March 2021: 97.6p, 2020: 95.2p)
- NAV per share total return[7] of 11.7% (2020: -3.7%) comprising 3.1% income (2020: 2.6%) and a 8.6% capital change (2020: -6.3% capital change)
- £0.6m of new equity[8] raised at a premium of 5.9% to dividend adjusted NAV
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Unaudited 6 months to |
Unaudited 6 months to |
Audited 12 months to 31 Mar 2021 |
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Total return |
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|
|
|
Share price total return[9] |
4.7% |
(7.7%) |
2.3% |
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Capital values |
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NAV and EPRA NTA[10] (£m) |
445.9 |
399.7 |
409.9 |
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NAV per share and EPRA NTA per share (p) |
106.0 |
95.2 |
97.6 |
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Share price (p) |
93.1 |
88.8 |
91.8 |
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Net gearing[11] |
19.6% |
23.4% |
24.9% |
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EPRA vacancy rate[12] |
8.4% |
7.1% |
8.4% |
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|
|
|
|
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Weighted average energy performance certificate (“EPC”) rating[13] |
C (62) |
C (66) |
C (63) |
The Company presents alternative performance measures (“APMs”) to assist stakeholders in assessing performance alongside the Company's results on a statutory basis.
APMs are among the key performance indicators used by the Board to assess the Company's performance and are used by research analysts covering the Company. Certain other APMs may not be directly comparable with other companies' adjusted measures, and APMs are not intended to be a substitute for, or superior to, any IFRS measures of performance. Supporting calculations for APMs and reconciliations between APMs and their IFRS equivalents are set out in Note 18.
David Hunter, Chairman of Custodian REIT, said:
“The UK property market has shown significant resilience since the outbreak of the COVID-19 pandemic. The subsequent recovery, in certain sectors, since the successful vaccination roll-out has been marked with the Company's rent collections improving to 95%, net of contractual deferrals, and EPRA earnings per share increasing to 3.0p (2020: 2.6p) reflecting this improvement and the stabilisation of the Company's rent roll.
“As a result of this recovery I was very pleased to be able to declare dividends per share of 2.5p (2020: 2.0p) for the Period and, from the quarter ending 31 December 2021, the Board intends to increase quarterly dividends per share to 1.375p to achieve an annualised target dividend per share of no less than 5.5p, based on rent collection levels remaining at least in line with expectations.
“The COVID-19 pandemic has reinforced Custodian REIT's strategy which, over and above decisions in relation to investment approach, has always placed income and financial resilience at the heart of the Company's objectives. When allied to the appropriate property strategy this focus underpins sustainable dividends, which in turn support long-term total return.”