Custodian Reit (LON:CREI) continued to grow its asset base, income earnings, and NAV per share in H118, with a well-controlled cost base. NAV and share price total returns were 4.2% and 5.3%, respectively. We have adjusted our estimates, primarily for property acquisitions and equity issuance since the first quarter, with a positive full year impact on forecast FY19 EPRA EPS (+6.0%) and DPS (+0.8%). Management’s focus is on secure income, to deliver the earnings to cover a sustainable long-term growth in dividends and generate less volatile returns. We believe the 9% premium to FY18e NAV is justified by the conservative gearing and one of the highest dividend yields in the sector.
H118 results: Income and NAV growth
H118 EPRA earnings of £12.0m or EPS of 3.4p compared with 3.0p per share in H117 and DPS paid in the period under review of 3.2p. IFRS earnings of £13.2m or EPS of 3.8p (H117: 3.0p) included net gains on investment properties of £1.3m. After dividends paid, NAV per share increased 1.1p to 104.9p compared with end-FY17, representing a 4.2% NAV total return in the six-month period. The portfolio value increased c 13% from end-FY17 to £474.3m, including 12 acquisitions for an aggregate consideration of £51.6m at an average 6.8% net initial yield. Three non-core assets were sold for an aggregate £6.1m, generating a gain of c £1m.
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