Offices and retail warehouse revaluations affect real estate investor

Chairman David MacLellan (Credit: Custodian Property Income Reit)

Falling values of offices and retail warehouses caused a £27m devaluation in the portfolio of regional property investor Custodian.

The Leicester-based REIT recorded a pre-tax loss of £1.5m, which was a huge improvement on the previous year which had been hit by much larger losses on investment property and depreciation.

“The company’s portfolio is well placed to benefit from any upward rerating in sector valuations as the economy improves,” said chairman David MacLellan.

“In an inflationary environment and with a lack of supply of modern, smaller regional properties we expect to see continued rental growth over the year ahead and it will be this income growth that is likely to form the greater component of total return over the next phase of the property market and we believe that Custodian Property Income REIT’s strong income yielding portfolio, supported by higher-than-peer group recurring earnings per share, will continue to underpin shareholder returns.”

In the year to March, rental revenue increased by 4 % to £42.2m, while its portfolio’s estimated rental value (ERV) rose by 3.6%, now 15% ahead of passing rent. The company completed 15 rent reviews at an average of 23% above the previous passing rent, with 47 new lettings and lease renewals adding £9.5m to the valuation.

Occupancy increased to 91.7%, up from 90.3% last year and further improved to approximately 93% since April 2024.

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