Custodian REIT plc : Custodian REIT sells industrial unit for £8.5 million, 73% ahead of valuation

3 August 2022

Custodian REIT plc

(Custodian REIT or the Company)

Custodian REIT sells industrial unit for £8.5 million, 73% ahead of valuation

Custodian REIT (LSE: CREI), the UK property investment company focused on smaller lot-sized regional property, is pleased to announce the disposal of an industrial unit in Milton Keynes for £8.5 million at a 73% premium to its 31 March 2022 valuation.

Custodian REIT acquired the 44,187 sq ft warehouse and distribution unit in January 2015 for £2.1 million and subsequently invested a further £0.9 million to fully refurbish the property.  This refurbishment included re-cladding the exterior, replacing the roof, restoring the yard and renovating the interior which in aggregate improved the propertys energy performance certificate (EPC) rating from E to C.  As a result the property was let at a higher rent to Saint Gobain Building Distribution for six years before a tenant break option was exercised in June 2022.  The sale of the unit to a special purchaser was then negotiated which required the property with vacant possession.

This disposal decreases the industrial weighting by valuation1 within the Companys highly diversified portfolio of 164 properties to 47%, with the balance comprising 21% retail warehouse, 13% office, 12% other and 7% high street retail, all of which are in strong economic areas across the UK.

Commenting on the disposal, Richard Shepherd-Cross, Managing Director of Custodian Capital Limited (the Companys external fund manager), said: We acquired this property having clearly identified an opportunity to create value by investing in the asset and bringing it up to modern standards.  As a result we were able to let the property promptly and generate a healthy and growing level of income during our seven years of ownership.  When the tenant exercised its break option we took the opportunistic decision to dispose of the property to a special purchaser.  This sale has allowed us to crystallise a significant profit for shareholders and further demonstrates the benefits of a smaller regional property strategy, where in certain circumstances the vacant possession value fully supports and sometimes exceeds the investment value.

1 Portfolio weighting by income: industrial 38%, retail warehouse 24%, office 16%, 11% high street and 11% other.

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Notes to Editors

Custodian REIT plc is a UK real estate investment trust, listed on the main market of the London Stock Exchange.  Its portfolio comprises properties predominantly let to institutional grade tenants on long leases throughout the UK and is principally characterised by properties with individual values of less than £10 million at acquisition.

The Company offers investors the opportunity to access a diversified portfolio of UK commercial real estate through a closed-ended fund.  By targeting sub £10 million lot size, regional properties, the Company intends to provide investors with an attractive level of income with the potential for capital growth. 

Custodian Capital Limited is the discretionary investment manager of the Company. 

For more information visit www.custodianreit.com and www.custodiancapital.com.