Custodian Property Income REIT plc (LSE:CREI) has completed the purchase of Grove Court Properties (Holdings) Limited in a transaction valued at £35.9 million, adding a family-owned portfolio of seven mixed-use assets located around the M25 corridor.
The newly acquired properties are approximately 97% let and generate a net initial yield of about 6.8%. The portfolio spans motor trade, residential, leisure, office and high street retail uses. Tenants include Vertu Motors, BP Collins and Marks & Spencer (M&S Simply Food). The addition is expected to increase Custodian’s annual rental income by roughly 6%.
The acquisition was funded primarily through the issue of new shares, alongside a cash element. Management expects the deal to be earnings accretive, improving earnings per share and strengthening dividend cover, while keeping net gearing steady at around 26%. By structuring the transaction as a corporate acquisition, the company avoided stamp duty land tax on the underlying properties and secured cost efficiencies. The arrangement also introduces the selling family as shareholders, aligning with Custodian’s strategy of consolidating diversified regional portfolios from private property owners.
From an investment standpoint, the outlook is underpinned by an attractive valuation profile, including a relatively low price-to-earnings ratio and a high dividend yield. Technical indicators remain supportive, with the share price trading above key moving averages and a positive MACD signal. Operationally, cash generation is solid and leverage remains moderate, although earnings volatility remains a constraint. Ongoing share buybacks and consistent dividend payments provide additional support.
More about Custodian REIT
Custodian Property Income REIT plc is a UK-listed real estate investment trust focused on generating enhanced income returns from a diversified portfolio of smaller, regional commercial properties. The company typically targets assets valued below £10 million and leverages its listed REIT platform to attract acquisitions from family offices and privately held property portfolios across the UK.
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