4th Nov 2014 09:38
LONDON (Alliance News) - Custodian REIT PLC Tuesday reported a 0.4% increase in its unaudited net asset value over the second quarter, helped by a valuation uplift in its property portfolio.
In a statement, the real estate investment trust said its unaudited NAV rose to GBP131.4 million at the end of September, or 99.6 pence per share. Since its shares were admitted to trading on the London Stock Exchange in March under its initial public offering, NAV has increased by 1.4%.
"Activity has continued to be focused on acquisitions, with the aim of deploying monies raised at IPO and increasing gearing towards the target level of 25%. This investment impacts NAV to the extent that acquisition costs have largely offset the upward movement in valuations at the reporting date," the real estate investment trust said.
Custodian REIT said the improvement in NAV is in line with its expectations. While the quarterly portfolio valuation uplift of GBP1.9 million, or 1.3%, was in line with board expectations, it was below the IPD UK quarterly property index capital growth benchmark of 3.0%. The REIT said IPD index growth has been primarily driven by Central London and larger lot sizes in key regional centres.
"Overall growth in yields in these markets has been driven down by competition from institutional investors and open-ended funds to a level significantly below that at which the company's target dividends can be fully covered," Custodian REIT said. "While there is yet to be a broad hardening of investment yields amongst smaller regional properties, which typically lag the Central London market and larger lots, the board believes this offers the company a continued buying opportunity."
Custodian REIT said it intends to pay further quarterly dividends to achieve the forecast annual dividend of 5.25 pence per share for the financial period ending March 31 2015 and 6.25 pence per share in subsequent years, in the absence of unforeseen circumstances.
"We have a strong pipeline of opportunities under offer which will add further industrial and distribution units to the portfolio as well as bolstering the 'other' sector of the fund. These acquisitions will strengthen the portfolio mix and add some long-term income to the fund. While the property market remains very competitive for larger lot sizes we are continuing to identify good quality, smaller lots which we believe represent good value in current market context and fair value on a longer term basis."
Custodian REIT shares were untraded on Tuesday. They were last traded at 108 pence.
By Samuel Agini; [email protected]; @samuelagini
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