Custodian Reit (LON:CREI) reported a 2.2% increase in FY17 EPRA NAVPS, boosted by revaluation gains and disposal profits. With a dividend of 6.35p (+1.6%), the share price total return for the year was 10.3%. We have made minor changes to our forecasts following the results. Our EPRA NAV forecasts have increased by 1% in both FY18 and FY19, as CREI has made acquisitions worth £19m in the year to date, with another £19m under offer. Management’s focus is on long-term secure income, to deliver the earnings to cover a sustainable 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.
FY17 results: NAV boosted by valuation gains
FY17 EPRA NAV was up 2.2% to 103.8p per share, as the portfolio value increased 30% to £416m, following the investment of £105m in 25 acquisitions. There was a 3% fall in EPRA EPS to 6.6p per share, but reported EPS were up 48%, as net profit more than doubled to £24m, boosted by a £9m valuation gain and profits on disposal. The dividend was raised 1.6% to 6.35p per share, which was 101% covered and the target for FY18 was increased 1.7% to 6.45p.
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