Custodian REIT (CREI)

Business description

CREI is a London Main Market listed REIT focused on commercial property in the UK outside London. It is income focused, with a commitment to pay a high but sustainable and covered dividend.

Investment summary

Custodian REIT (CREI) continued to grow its asset base, income earnings, and NAV per share in H118, with a well-controlled cost base. NAV and share price total returns were 4.2% and 5.3%, respectively. We have adjusted our estimates, primarily for property acquisitions and equity issuance since the first quarter, with a positive full year impact on forecast FY19 EPRA EPS (+6.0%) and DPS (+0.8%). Management’s focus is on secure income, to deliver the earnings to cover a sustainable long-term growth in dividends and generate less volatile returns. We believe the 9% premium to FY18e NAV is justified by the conservative gearing and one of the highest dividend yields in the sector.

Last updated on 05/12/2017

Y/E Mar Revenue (£m) EBITDA (£m) PBT (£m) EPS (p) P/E (x) P/CF (x)
2016A 19.0 N/A 11.2 6.80 17.2 17.2
2017A 27.6 N/A 24.2 6.59 17.8 15.2
2018E 33.8 N/A 28.3 6.81 17.2 15.0
2019E 37.6 N/A 36.7 7.30 16.1 14.0

Last updated on 05/12/2017

Latest research

Diversified income focus

Update | Property | 05/12/2017

Forecasts revised after FY17 results

Update | Property | 11/07/2017

It's all about income

Initiation | Property | 22/03/2017

Latest video

Executive interview - Custodian REIT

Industry outlook

Regional occupier demand is generally firm, driven by continuing economic growth and business relocation away from London, while new supply remains limited. Meanwhile, the yield spread between the regions and London remains historically wide at c 2% compared with a 2008 market peak of c 0.5%, representing a clear potential for narrowing.

Last updated on 02/11/2017

Key management

David Hunter, Chairman
Richard Shepherd-Cross, MD

Company address

Penman Way
Grove Park
Enderby
Leicester
LE19 1SY
United Kingdom
0116 240 8740
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