|Credit where credit is due - the BoD of CREI demonstrate both chutzpah and skill as they manage to convince another institution to pay 106.3p for 7m propco shares with an underlying value of 101.9p! A 4.3% premium.
Shares up to 109.5p, so looks like a good selling opportunity.|
|The Company has acquired a 105,757 sq ft distribution unit on Winsford Industrial Estate, located 10 miles from junctions 18 and 19 of the M6. Nearby occupiers include Henkel, Iveco and Jiffy Packaging.
The unit is let to H&M Hennes and Mauritz UK Limited on a lease expiring on 23 June 2025. Current passing rent is £423,000 per annum reflecting a net initial yield of 7.15%, with an expected reversionary yield of circa 8.5%.
The agreed purchase price of £5.55 million was funded from the Company's existing cash resources, resulting in net gearing1 increasing to 13.9% loan to value.
Commenting on the acquisition, Richard Shepherd-Cross, Managing Director of Custodian Capital Limited (the Company's discretionary investment manager), said:
"We are delighted to have secured this modern, well located unit let to a market leading high street retailer. This recently refurbished unit is one of H&M's three UK distribution locations and includes circa 1.8 acres of potential expansion land to meet future requirements."|
|Thought this comment in this morning's rns was interesting...
New Letting - HTTP://www.investegate.co.uk/custodian-reit-plc--crei-/rns/new-letting/201607080700056104D/
"The 'Brexit' vote, exacerbated by the largest Property Unit Trusts introducing a block on redemptions, has led to a heightened degree of uncertainty about the prospects for commercial property, particularly in Central London. Custodian REIT's performance is more closely linked to the underlying occupational property market than what is happening in capital markets. I believe a lack of supply, following many years of limited development, will continue to put pressure on rents to grow and positively impact occupancy rates in the diverse regional properties typical of the Custodian REIT portfolio."|
|The Company has let a retail unit on High Street, Colchester to Metro Bank plc following the surrender of the existing lease, at a passing rent of £200,000 subject to upward only rent reviews, on a 25 year lease with a tenant's break option in year 15 ("the New Letting").
The unit was acquired on 4 January 2016 as part of the Indigo Portfolio, let to Burton/Dorothy Perkins Properties Limited on a lease expiring on 24 June 2016, with passing rent of £145,600.
The New Letting is expected to result in a valuation uplift of circa £1.5 million.|
|Contained within the recent rns on 19/4...
Unaudited Net Asset Value as at 31 March 2016 and Intention to Issue Equity - HTTP://uk.advfn.com/stock-market/london/custodian-reit-CREI/share-news/Custodian-REIT-PLC-NAV-and-Intention-to-Issue-Equi/71163632
NAV per share of 101.5p as at 31 March 2016 (31 December 2015: 103.0p)
...Intention to issue equity at 104.9p per share implying a target yield(6) on new shares of 6.05% for the year ending 31 March 2017.
...In the absence of unforeseen circumstances, the Board intends to pay further quarterly dividends to achieve a target dividend of 6.35 pence per share for the financial year ending 31 March 2017.
...On 1 April 2016 the headline rate of SDLT for commercial property increased from 4% to 5%, with relief for smaller properties via a new SDLT-free band up to GBP0.15 million and a 2% band from GBP0.15 million to GBP0.25 million, replacing the previous flat rate. As a result, the increase in headline rate only impacts transactions above GBP1.05 million and then on a sliding scale as lot-size increases.
The Company's focus on properties with lot-sizes up to GBP7.5 million has partially insulated it against the one-off impact these changes have had on valuations, with its average lot size of GBP2.9 million seeing a valuation decrease of 0.25%. To put this into context, the costs of acquiring a GBP3 million property have increased by 0.61% and a GBP10 million property by 0.85%, and valuations are expected to adjust accordingly across the property market this quarter...
Reasons for the Placing and use of proceeds
Completion of the committed acquisition pipeline will increase loan-to-value to 20.6%, compared to target gearing of 25.0% loan-to-value, leaving limited headroom for further investment. The net proceeds of the Placing are expected to be used first to repay an element of the GBP26 million currently drawn under the Company's revolving credit facility ("RCF") at 31 March 2016. The remaining net proceeds are then expected to be used to acquire additional UK commercial real estate that can further diversify the portfolio and enhance income yield, such that the Placing is in Shareholders' interests. Net proceeds are expected to be fully invested within three to six months after admission of the New Shares, depending on the amount of net proceeds of the Placing.|
|Only just seen this divvy increase, but very happy! 4.17pm is a strange time to release good news too, feel they might have had an even bigger share price reaction if they'd released it at a more conventional 7am.|
|Custodian REIT (LSE: CREI), the UK property investment company, confirms its third quarterly interim dividend for the financial year ending 31 March 2016 of 1.5875 pence per share, to be paid on 31 March 2016 to shareholders on the register on 5 February 2016, will be designated as a property income distribution ("PID").|
|DIVIDEND INCREASE !!!!|
|I'm in as of this morning. Sold my CAL and switched into here.|
|Still waiting for confirmation on mine from iweb.|
|Received my full allocation.|
|Up slightly on completion of the successful placing. Don't know yet whether I was successful with my application.|
|Applied for a few in the open placing @ 104.2p. Sippdeal charge the full £29.95 for doing so - always thought placings were commission free! Seems not...|
|Yeah, thanks, Nielyb. I'm hoping the increased rent roll will indeed mean progressive increases to the dividend over the long term. NAV growth should also drive the share price, as CREI have a good geograhical spread and some of the provinces have yet to catch up with the SE.|
No probs. I like this company, and view todays RNS as a stepping stone to growing the div from the current 1.5p per quarter. More properties will mean more income and therefore more yield/share.
They have as you know been pretty active the past 12 months.|
|Thanks for the quick answer, Neilyb. Not sure if I'm interpreting the statement correctly, but would appear they're aiming to reach 6.25pa from 2016 onwards, so in effect a fixed rather than growing dividend from next year?
Trying to ascertain, so that I can decide how much to apply for in the open offer, ideally would like some inflation protection, but saying that 6.25pa on 104.2 is still a very respectable 6%.|
|Income is a major component of total return and the Board is committed to growing future dividends sensibly.
"The Board intends to pay a fourth interim dividend of 1.5 pence per share on 30 June 2015, meaning total dividends for the period ended 31 March 2015 will be in line with our target of 5.25 pence per share. The Company is well placed to meet its target of paying further quarterly dividends, fully covered by income, to achieve an annual dividend of 6.25 pence per share for the year ending 31 March 2016 and in subsequent years."
taken from 09/06/15 final results|
|Anyone know if the company has a progressive dividend policy here eg. increases in-line with RPI, or is it a fixed 6p pa, with most/any of the anticipated growth to come from increases in the NAV?|
you may want to look at KWE which reported this morning. It only launched a couple of years ago and so has taken a bit of time to get invested and to start generating income but it now pays 10p per quarter and has managed 18% capital growth since launch. All in commercial property, mainly in London but also in Spain, Dublin and a bit in Italy. It's big by the way (£2.5bn of gross assets).|
|The Company believes that the current property market dynamic supports its strategy of targeting a high income return, fully covered by income from smaller lot size properties across regional markets.
The Investment Manager anticipates that demand for property will continue from across the investor spectrum as interest rates stay ''lower for longer'' and that a competitive investment market has the potential to generate value growth.
The Company's focus on smaller lot sizes has allowed it to secure a strong pipeline of opportunities and it is expected that lesser levels of competition for these assets will endure, with many larger funds continuing to sell their smaller lots.
Given this market dynamic, and an expectation of continued growth in the regions, it is anticipated that the Company's typical investment in good quality secondary regional property will show value relative to larger lots. This value may be expressed through a higher initial income yield, but also through opportunities for future rental growth which are not ''priced-in'' to every deal.
Reasons for the Issue and use of proceeds
To capitalise on current opportunities to invest in commercial real estate properties in the UK, the Company proposes to raise further capital to make further investments. To ensure the Company's continued compliance with the Investment Policy and the Facilities Agreements, the Directors believe that the most effective method of raising such funds is to complete the Issue and the Placing Programme.
The net proceeds of the Issue and the Placing Programme are expected to be used first to repay amounts drawn under the RCF (approximately £3.9 million as at 31 October 2015) and then invested by the Company within a period of six to nine months after Admission (depending on the amount of net proceeds of the Issue) in the property pipeline (including the Target Portfolio discussed below) and additional UK commercial real estate properties to complement the properties in the Property Portfolio.
The Company recently entered into non-legally binding heads of terms to acquire a portfolio of 11 UK commercial properties for an aggregate consideration of approximately £69.4 million. The Target Portfolio is consistent with the Investment Policy, comprising smaller size, good quality, secondary offices, retail and industrial assets diversified by tenant and region. The tenant covenant profile also meets the minimum criteria set out in the Investment Policy.
It is intended, subject to the completion of due diligence and to contract, that the acquisition of the Target Portfolio will be completed in two tranches in early January 2016. First, it is intended that approximately £28 million of assets will be acquired through a combination of the Company's existing cash resources and capacity under the RCF. Second, it is intended that the balance of the Target Portfolio (or part thereof) will be acquired by the Company subject to the availability of net proceeds of the Issue and the Placing Programme.
Following the intended acquisition of the Target Portfolio, the weighted average unexpired lease term of the Property Portfolio as a whole would stand at approximately 6.1 years. The Board believes the acquisition will enhance returns to Shareholders while improving dividend cover and offering the potential for a number of asset management opportunities.
In addition to the Target Portfolio, the Company has committed pipeline investments in the form of the funding of pre-let industrial developments in Cannock and Stevenage, and the completion of the refurbishment of an industrial unit in Milton Keynes. This committed pipeline totals approximately £5 million of further investment. The Company also has a £6.6 million leisure park under offer and the Investment Manager continues to track other investment opportunities including a single let industrial property, a high street retail property adjoining an existing portfolio holding and a city centre office building. The combined value of these other opportunities is approximately £12.5 million.|
|1 for 5 OO, plus placing to raise upto £75 million. This company is definitely growing, love it.|
|Investec Wealth & Investment Limited over 5% holding.|
|Commenting on performance, Richard Shepherd-Cross, Managing Director of Custodian Capital Limited (the Company's external fund manager), said:
"We were delighted to complete GBP16.9 million of acquisitions in the Period, maintaining both the quality of property and length of income, demonstrating the success of the Company's strategy of focusing on smaller lots in strong, regional markets. As a result, I believe the potential for rental growth and further consequential NAV growth has increased.
"We have secured a pipeline of GBP9.5 million of pre-let development funding projects which, once complete, will improve the portfolio's weighted average unexpired lease term."
For details of all properties in the portfolio please see www.custodianreit.com/property/portfolio.php.|