Custodian Property Incom... Share Discussion Threads

[nickrl] 20/12/2022 20:34

Just got around on looking at interims. Increased interest costs starting to weigh in here as c22% of borrowing is linked to SONIA +1.5-1.8% 40m RCF. Since interims annual interest bill up another 0.5m although recent disposal will take it down a tad but they have a few mil committed to capex so will go up again. Whilst the rest of debt is on fixed rates with earliest refi Aug 24 it has a relatively low LTV of 35% covenant vs 25.5% current LTV (has dropped slightly to 24% with recent disposal). CREI have always been focussed on covering dividend so possible it will come under pressure next year if IR keep creeping up.

[nickrl] 30/11/2022 19:51

If it was earning 9% and fully rented seems a bit odd to off load to me.

[spectoacc] 30/11/2022 10:14

They did well to offload it, tho I assume "..In line with the recent valuation.." was a massage job. Goes to show there are still a few deals going through, and that last-reported NAVs aren't far off for the moment.

[petewy] 30/11/2022 09:58

This asset was acquired as part of the Company’s IPO portfolio in 2014. It has been fully let since, delivering an average yield of 9% per annum but has seen no rental or valuation growth over our period of ownership and this trend is expected to continue. We expect to invest the sale proceeds in the Company’s remaining assets which have greater prospects for income and capital growth, better supporting the Board’s objective of increasing dividends in a sustainable way and enhancing the portfolio’s environmental credentials.


Getting rid of deadwood?

[skyship] 12/11/2022 14:47

An excellent and informative presentation - thnx RAM....

[nickrl] 12/11/2022 13:24

@rambutan very useful had missed this did they advertise it?

not sure they adequately explain why OCR has nearly double over the last 12mths mind you from 1.1% to 2.2% just calling it compliance costs and inflation

anyhow good presentation and questions always illuminating

says everything is for sale from open ended funds but not much sign of distressed selling yet and reckons it will 6mths before true direction of mkt is known

doesn't rate inflation linked rates

ESG costs are adding to overall costs but have to do to keep buildings rentable

[rambutan2] 12/11/2022 04:51

Very informative presentation:

Custodian REIT - What's Happening In The Commercial property Market? - 10th November 2022

[petewy] 09/11/2022 11:38

Thanks, Nic

[nickrl] 09/11/2022 10:22

@petewy I like CREI transparency on asset mgt from their updates so you know whats going on unlike some who just want to generalise with the positive headlines and not reveal the data. You could say that much of the positive news was tailwinds from the pre Kwasi fiasco but there post Q3 updates are positive as well although one has to surmise things will slow down surely from now. So how sustainable are things moving forward? CREI have generally always covered the divi at the cash level even when they able to flog chunks of extra shares at premia on almost a weekly basis pre covid. LTV has crept up a tad and they do have other committed CAPEX, on whats looks to be largely speculative developments but maybe the good EPC ratings will be enough to attract tenants, but recent sales should cover that. However, they are exposed on the RCF as its floating at SONIA+1.5-1.8% so interest costs will creep up if IR keep going up by 400k/%. So with divi cover close to 1 already an increase looks unlikely for sometime but current divi looks supportable for next few qtrs but i don't believe CREI policy would allow the divi to go uncovered for very long so have to see how the economic environment develops.
I would have some more but feel i need to wait out and see want Hunt has to say first.

[petewy] 09/11/2022 09:26

Very healthy trading update. Dividend guaranteed

[nickrl] 28/9/2022 21:18

Now back on 6% yield although at 25% discount to NAV maybe not low enough! Anyhow on a modest LTV of 24% although was sub 22% until week or so back they acquired a logistics asset with nothing to refinance until Sept 24.

[spectoacc] 13/9/2022 06:57

Lol.

On a serious note - I see there's a ban on both evictions and rent increases in Scotland now, on resi. Something that has singularly failed to work anywhere (Berlin a recent good example).

You don't solve a supply problem by enacting policies that restrict supply. If you want to tackle the rents crisis, tackle AirBnb'ing.

Hopefully not a sign of things to come on commercial up there.

[skyship] 13/9/2022 06:52

Reversionary yield on today's acquisition seems fair enough; however don't like more exposure to wee Krankie's Scotland!

CREI have pulled back from a recent over-valuation; but far better value remains elsewhere in the sector: API/CTPT/SREI/UKCM for instance - all on discounts in mid 30s or above. Only SREI on a higher yield however - 6.4%. If you take the special div into account then UKCM yield 7.8%.

[nickrl] 10/8/2022 13:36

CREI NAV update and qtrly review was out yesterday. As usual they provide one of the better overviews of whats happened across their portfolio. NAV up 3.2% but starting to run out of steam in some asset classes so i do wonder when we get Q3 updates how many REITs will still be sustaining NAV growth. Also despite reporting plenty of renewal or new lets they are down another 1% in vacancy levels. Anyhow they seem adept and recycling the portfolio well currently with yield still just shy of 5%.

[nickrl] 03/8/2022 21:33

Specto its bloomin extraordinary and not the first sale that surprised massively on the upside across various reits this year. Wonder who thought it was worth that much and how the valuers were so far adrift.

[spectoacc] 03/8/2022 08:42

Can't knock this:

"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 GBP8.5 million at a 73% premium to its 31 March 2022 valuation."


Yes, we generally only get to see the big uplifts (why sell, if something's fallen & is still yielding income). But the property market is still strong IMO. Interest rates may be rising, but still hugely negative in real terms.

[nickrl] 11/7/2022 07:47

drive thru restaurants seem to command a pretty high rent/sq ft of land take though and a few others (SREI) have done deals with operators on their sites.

[spectoacc] 11/7/2022 06:27

@rambutan2 - interesting, wonder if Superdrug had previously been on a long lease, eg 15 years, & the halving of the rent just reflected how the market has changed in that time?

If it was previously 5 years or less, then wow.

Also - a 5 year lease to a strong covenant, and they've sold it at a 10% yield? Compare to the purchases they've announced this morning, at 5.1%. Even stronger covenant & duration, but is 5.1% enough?

(I know the assets, and this is taking the p*ss:
"The Company has acquired two drive-through restaurants on Clifton Moor Retail Park, York, adjacent to York’s northern bypass which connects to both the A1(M) and M62.."
They're absolutely nowhere near the A1 or M62. You might as well say the York bypass connects to the M25 - which strictly speaking, it does. Or Rome.).

[rambutan2] 06/7/2022 20:13

Reassures on port valuations, but check out that drop in rent!

Disposal of Properties

Custodian REIT (LSE: CREI), the UK property investment company focused on smaller lot sizes, is pleased to announce the disposal of a property from its portfolio.

The Company has sold a retail unit in Weston-super-Mare at auction for GBP0.7m, in line with the most recent valuation. A five year lease renewal had recently been completed with Superdrug with annual rent decreasing from GBP124k to GBP60k.

Commenting on the disposal, Richard Shepherd-Cross, Managing Director of Custodian Capital Limited (the Company's external fund manager), said:

"This asset was not aligned with the strategy of the Company as we did not anticipate rents recovering and continues our planned disposals programme of non-prime high street retail assets. We expect to invest the sale proceeds in higher quality assets with greater prospects for income and capital growth, better supporting the Board's objective of increasing dividends in a sustainable way."

[petewy] 23/6/2022 08:07

The Company has acquired a 70,160 sq ft retail park in Nottingham consisting of four units occupied by Wickes, Matalan, Poundland and KFC, with nearby retailers including Tesco, Morrisons, Lidl and McDonald’s.
Raised comment on other boards

[rambutan2] 21/6/2022 19:48

Results were released last fri. As we knew, they were good. Commentary is worth a read:

[...]

[petewy] 08/6/2022 12:23

Bought in today. Pipe me aboard Sky.

[skyship] 08/6/2022 08:21

Good to see evidence of conservative valuation(s). Chart suggests downtrend resistance c. current level of 101.5p; but indicators pointing in the right direction so should break through in time, then back up to the 106p level:


free stock charts from uk.advfn.com

[nickrl] 07/6/2022 12:53

Huge that is an impressive commitment puts most of their peers to shame with the limited or non existent director purchases we see there.

[hugepants] 07/6/2022 11:04

Director buys 800K. That's quite the vote of confidence.