Custodian Reit (LON:CREI) recently provided an update on the three months ended 31 December 2017 (Q318). NAV total return in the period was a healthy 2.6%, including a 1% increase in EPRA NAV per share, in addition to a quarterly dividend paid of 1.6125p. Management’s aim is to sustainably grow the fully covered dividend and generate less volatile returns than is typical for the sector over time. Its strategy is to maintain high levels of occupancy and grow income through rental growth and accretive acquisitions. The 8% premium to FY18e NAV has proven robust, justified by the conservative gearing and one of the highest dividend yields in the sector.
Attractive total return continued in Q3
EPRA NAV per share increased to 106.0p at 31 December 2017 (30 September: 104.9p). Total valuation gains of £4.2m were driven by asset management initiatives, which contributed £2.6m, and the sale of one property, which locked in a £0.7m gain. Six assets were acquired for £43.0m (before costs), at an average net initial yield of 6.8% and adding c £3m to the annualised rent roll, which ended the period at £37m. Gearing remains low at 22.3% net as strong continuing investor demand for the shares allowed the issue of 17.5m shares in the period at an average premium of 11.8% to the September NAV per share. Share issuance has continued on similar terms, while the manager sees a good pipeline of further accretive acquisition opportunities.
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