DJ Custodian Property Income REIT plc: Interim results for the period ended 30 September 2025
Custodian Property Income REIT plc (CREI)
Custodian Property Income REIT plc: Interim results for the period ended 30 September 2025
05-Dec-2025 / 07:01 GMT/BST
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5 December 2025
Custodian Property Income REIT plc
("the Company" or "Custodian Property Income REIT")
Interim results for the period ended 30 September 2025
A strong operational performance with active asset management driving valuation and earnings growth, underpinning fully
covered dividend
Custodian Property Income REIT (LSE: CREI), which seeks to deliver an enhanced income return by investing in a
diversified portfolio of smaller regional properties with strong income characteristics across the UK, today announces
its interim results for the period ended 30 September 2025 ("the Period").
Commenting on the interim results, Richard Shepherd-Cross, Managing Director of the Investment Manager, said: "The
direct property market is continuing its recovery in the UK, with valuations improving quarter-on-quarter, driven by
rental growth across all sectors. The strong performance of the underlying assets should be expected to steadily flow
through to listed property companies' share prices, but a further shift in market sentiment is required along with a
willingness to consider the longer-term opportunity that exists in real estate.
"At a property level, Custodian Property Income REIT is delivering on all fronts to provide shareholders with strong
income returns by capturing portfolio reversion and driving sustainable earnings growth. During the Period, our
targeted asset management programme grew the rent roll from GBP43.9m to GBP45.9m, primarily driven by lease renewals
picking up ongoing rental growth, as well as the new lettings of vacant units and positive rent review results. In line
with the growth of the rent roll and estimated rental value of the portfolio, we have witnessed continued valuation
growth for the fifth consecutive quarter, with NAV per share increasing by 2.9% since 31 March 2025.
"The portfolio has continued to deliver a fully covered dividend of 6.0p per share, with future rental growth potential
of 13% embedded, and offering a road map to further earnings growth. Simultaneously, undertaking profitable sales ahead
of pre-offer valuations has helped to fund various refurbishment initiatives within the existing portfolio, as well as
proving valuations. Our ongoing share buyback programme has executed the timely acquisition of shares at a discount to
NAV.
"In the inflationary environment that is likely to persist, real assets that can be enhanced to deliver rental and
capital growth will protect the real value of both shareholders' investment and income. At the same time, we will
continue to look for opportunities to grow through corporate acquisitions similar to the Merlin transaction we
announced at the start of the Period."
Highlights of the Period:
-- 3.3% growth in EPRA earnings per share to 3.1p (30 September 2024: 3.0p) with a fully covered dividend per share of
6.0p, reflecting a 7.4% dividend yield as at 30 September 2025
-- Estimated rental value ("ERV") increased by 3.4% from GBP50.2m to GBP51.9m, with ERV 13% ahead of passing rent,
providing a significant opportunity to unlock further rental growth through asset management and at lease events
-- Leasing activity during the Period included eight new lettings and four rent reviews, helping grow the rent roll
from GBP43.9m as at 31 March 2025 to GBP45.9m as at 30 September 2025
-- Occupancy increased by 1.1% to 92.2% (31 March 2025: 91.1%)
-- Like-for-like valuation of the Company's portfolio of 175 properties increased by 1.9% to GBP625.0m, supporting a
2.9% NAV per share increase and contributing to a 6.0% NAV total return (30 September 2024: 3.6%). Encouragingly,
valuations have improved at an accelerating rate, quarter-on-quarter, reflecting falling interest rates and the
recovery of real estate market sentiment
-- GBP1.6m of solar panel valuation increases represent a 124% uplift on the cost of five of the Company's operational
arrays
-- GBP6.2m of capital investment during the Period, primarily relating to the refurbishment of industrial units in
Plymouth and Biggleswade
-- GBP8.9m of proceeds from selective disposals achieved at an aggregate 12% premium to pre-offer valuation, with a
further GBP2.4m of disposals since the Period end
-- Net gearing remains low at 26.3% (31 March 2025: 27.9%) with 69% at a fixed rate of interest
-- During the Period, the Company completed the purchase of a GBP22.1m portfolio via the all-share acquisition of a
family property company. The 'Merlin' acquisition comprised a GBP19.4m portfolio of 28 smaller lot-size regional UK
investment properties which are highly complementary to the Company's existing assets, as well as c. GBP2.7m of newly
built housing stock, the ongoing sales of which are expected to conclude by the end of the financial year,
generating additional cash for the Company.
Further information:
Further information regarding the Company can be found at the Company's website custodianreit.com or please contact:
Custodian Capital Limited
Richard Shepherd-Cross - Managing Director
Ed Moore - Finance Director Tel: +44 (0)116 240 8740
Ian Mattioli MBE DL - Chairman
www.custodiancapital.com
Deutsche Bank AG, London Branch
Hugh Jonathan / George Shiel Tel: +44 (0)20 7260 1000
www.dbnumis.com
FTI Consulting
Richard Sunderland / Ellie Sweeney / Andrew Davis / Oliver Parsons Tel: +44 (0)20 3727 1000
custodianreit@fticonsulting.com
Property highlights
30 Sept
2025
GBPm
Comments
31 March 2025: GBP594.4m, 30 September 2024: GBP582.4m
Portfolio value[1] 625.0
-- GBP13.8m investment property, representing a 1.9% like-for-like increase,
Valuation increases[2]: 15.4 explained further in the Investment Manager's report
-- GBP1.6m solar panels[3], representing a 124% uplift on the cost of five of the
Company's operational arrays
Primarily comprising:
Capital investment 6.2
-- GBP3.6m refurbishing industrial assets in Plymouth and Biggleswade
-- GBP0.7m combining two units to facilitate a letting at a retail warehouse in
Southport
At an aggregate 12% premium to pre-offer valuation[4] comprising:
Disposal proceeds 8.9
-- Two office buildings in Cheadle for an aggregate GBP6.9m
-- A retail unit in Guildford for GBP1.6m
-- A retail unit in Leicestershire for GBP0.4m
Disposal proceeds since 2.4 Six assets in Leicestershire, acquired as part of the Merlin Portfolio
the Period end
Occupancy 92.2% Increased 1.2% since 31 March 2025 through letting eight vacant units across seven
assets in the retail warehouse, industrial and office sectors
Financial highlights and performance summary
6 months 6 months 12 months
ended ended ended
30 Sept 30 Sept
2025 2024 31 Mar 2025
Comments
Returns
EPRA[5] earnings per 3.1p 3.0p 6.1p The impact of an improvement in occupancy and increase in
share[6] income from solar panels have exceeded cost inflation
Basic and diluted 6.1p 3.4p 8.7p
earnings per share[7]
Current period profit reflects improving valuations
Profit before tax 27.6 14.9 38.2
(GBPm)
Target dividend per share for the year ended 31 March 2026 of
Dividends per share not less than 6.0p,
[8] 3.0p 3.0p 6.0p
in line with the Company's policy of paying fully covered
dividends
Dividend cover[9] 101% 100% 101%
NAV per share[10] 6.0% 3.6% 9.5% 3.1% dividends paid and a 2.9% capital increase
total return
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Share price total 10.2% 8.8% 1.2% Share price increased from 76.2p to 81.0p during the Period
return[11]
Capital values
NAV and EPRA NTA[12] 456.3 412.7 423.5
(GBPm) NAV increased during the Period due to GBP15.4m of valuation
increases and the all-share acquisition of Merlin Properties
Limited
NAV per share and NTA 98.9 93.6 96.1
per share
Borrowings
Decreased due to disposal proceeds exceeding capital expenditure,
valuations increasing during the Period and acquiring the
ungeared Merlin Portfolio in an all-share transaction
Net gearing[13] 26.3% 28.5% 27.9%
Weighted average cost of 4.0% 4.0% 3.9% Majority fixed rate debt insulating the Company from higher base
drawn debt facilities rate
Costs
Ongoing charges ratio ("OCR")
excluding direct property 1.34% 1.28% 1.30% Fixed cost inflation exceeding rate of valuation increases
expenses[14]
Environmental
Weighted average energy EPCs updated across 12 properties demonstrating continuing
performance certificate B (49) C (52) C (51) improvements in the environmental performance of the portfolio
("EPC") rating[15]
The Company presents alternative performance measures ("APMs") to assist stakeholders in assessing performance alongside the Company's results on a statutory basis.
APMs are among the key performance indicators used by the Board to assess the Company's performance and are used by research analysts covering the Company. The Company uses APMs based upon the EPRA Best Practice Recommendations Reporting Framework which is widely recognised and used by public real estate companies. Certain other APMs may not be directly comparable with other companies' adjusted measures, and APMs are not intended to be a substitute for, or superior to, any IFRS measures of performance. Supporting calculations for APMs and reconciliations between APMs and their IFRS equivalents are set out in Note 19.
Business model and strategy
Purpose
Custodian Property Income REIT offers investors the opportunity to access a diversified portfolio of UK commercial real estate through a closed-ended fund. The Company seeks to provide investors with an attractive level of income and the potential for capital growth, with a focus on improving the environmental credentials of the portfolio, to become the REIT of choice for private and institutional investors seeking high and stable dividends from well-diversified UK real estate.
Stakeholder interests
The Board recognises the importance of stakeholder interests and keeps these at the forefront of business and strategic decisions, ensuring the Company:
-- Understands and meets the needs of its occupiers, owning fit for purpose properties with strong environmental
credentials in the right locations which comply with regulations;
-- Protects and improves its stable cash flows with long-term planning and decision making, implementing its policy of
paying maintainable dividends fully covered by recurring earnings and securing the Company's future; and
-- Adopts a responsible approach to communities and the environment, actively seeking ways to minimise the Company's
impact on climate change and providing the real estate fabric of the economy, giving employers a place of business.
Investment Policy summary
The Company's investment policy[16] is summarised below:
-- To invest in a diverse portfolio of UK commercial real estate, principally characterised by smaller, regional, core
/core-plus[17] properties that provide enhanced income; -- The property portfolio should be diversified by sector, location, tenant and lease term, with a maximum weighting
to any one property sector or geographic region of 50%; -- To acquire modern buildings or those considered fit for purpose by occupiers, focusing on areas with:
-- High residual values; -- Strong local economies; and -- An imbalance between supply and demand;
-- No one tenant or property should account for more than:
-- 5% of the rent roll for Governmental bodies or departments and single tenants with an 'above average risk' credit
rating[18] risk; and -- 10% of the rent roll at the time of purchase for other tenants or properties.
-- Not to undertake speculative development, except for the refurbishment or redevelopment of existing holdings; -- To seek further growth, which may involve strategic property portfolio acquisitions and corporate consolidation;
and -- The Company may use gearing provided that the maximum loan-to-value ("LTV") shall not exceed 35%, with a
medium-term net gearing target of 25% LTV.
The Board reviews the Company's investment objectives at least annually to ensure they remain appropriate to the market in which the Company operates and in the best interests of shareholders.
Differentiated property strategy
The Company's portfolio is focused on smaller, regional, core/core-plus assets which helps achieve our target of high and stable dividends from well-diversified real estate by offering:
-- An enhanced yield on acquisition - with no need to sacrifice quality of property, location, tenant or environmental
performance for income and with a greater share of value in 'bricks and mortar' rather than the lease; -- Greater diversification - spreading risk across more assets, locations and tenants and offering more stable cash
flows; and -- A higher income component of total return - driving out-performance with forecastable and predictable returns.
Richard Shepherd-Cross, Managing Director of the Company's discretionary investment manager, commented: "Our smaller-lot specialism has consistently delivered significantly higher yields without exposing shareholders to additional risk. We believe the recent narrowing of the margin between lot sizes is in large part due to a smaller sample set of transactions, as investment volumes are down, disproportionately impacted by a number of large, higher yielding office and shopping centre assets. We will watch the data with interest but expect a wider margin to be maintained in normalised markets."
by income
30 September 2025
Weighting by income
30 September 2025 Location
Sector West Midlands 19%
North-West 17%
Industrial 43% East Midlands 16%
Retail warehouse 22% Scotland 14%
Office 14% South-East 10%
Other 14% South-West 10%
High street retail 7% North-East 9%
Wales 1%
Our environmental, social and governance ("ESG") objectives
-- Improving the energy performance of our buildings - investing in carbon-reducing technology, infrastructure and
onsite renewables and ensuring redevelopments are completed to high environmental standards which are essential to
the future leasing prospects and valuation of each property -- Reducing energy usage and emissions - liaising closely with our tenants to gather and analyse data on the
environmental performance of our properties to identify areas for improvement -- Achieving positive social outcomes and supporting local communities - engaging constructively with tenants and
local government to ensure we support the wider community through local economic and environmental plans and
strategies and playing our part in providing the real estate fabric of the economy, giving employers safe places of
business that promote tenant well-being -- Understanding environmental risks and opportunities - allowing the Board to maintain appropriate governance
structures to ensure the Investment Manager is appropriately mitigating risks and maximising opportunities -- Complying with all requirements and reporting in line with best practice where appropriate - exposing the Company
to public scrutiny and communicating our targets, activities and initiatives to stakeholders -- Governance - maintaining high standards of corporate governance and disclosure to ensure the effective operation of
the Company and instil confidence amongst our stakeholders. We aim to continue to focus on our levels of
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governance and disclosure to maintain industry best practice
Investment Manager
Custodian Capital Limited ("the Investment Manager") is appointed under an investment management agreement ("IMA") to provide property management and administrative services to the Company. Richard Shepherd-Cross is Managing Director of the Investment Manager. Richard has 30 years' experience in commercial property, qualifying as a Chartered Surveyor in 1996 and until 2008 worked for JLL, latterly running its national portfolio investment team.
Richard established Custodian Capital Limited as the Property Fund Management subsidiary of Mattioli Woods Limited ("Mattioli Woods") and in 2014 was instrumental in the launch of Custodian Property Income REIT from Mattioli Woods' syndicated property portfolio and its 1,200 investors. Following the successful IPO of the Company, Richard has overseen the growth of the Company to its current property portfolio of c. GBP600m.
Richard is supported by the Investment Manager's other key personnel: Ed Moore - Finance Director and Alex Nix - Assistant Investment Manager, along with a team of seven other surveyors and five accountants.
Chairman's statement
Custodian Property Income REIT's strategy is to invest in a diversified, regional portfolio which, at 30 September 2025, comprised 175 properties geographically spread throughout the UK and across a diverse range of sectors, with a portfolio yielding 6.7%[19] (31 March 2025: 6.6%). With an average property value of c.GBP4m and no one tenant per property accounting for more than 1.8% of the Company's rent roll, property specific risk and tenant default risk are significantly mitigated.
This diversified strategy and strong focus on income has served to deliver continued and relatively stable returns and puts the Company in a strong position against a background of improving sentiment towards commercial property investment. For the six months to 30 September 2025 share price total return was 10.2%, supported by NAV per share total return of 6.0% with a fully covered dividend providing a significant and defensive component of total returns.
The Company's weighted average cost of debt has remained at c. 4% and earnings have been resilient with EPRA EPS of 3.1p (2024: 3.0p) for the Period, buoyed by rental growth and the letting of vacant space, increasing occupancy since 31 March 2025 from 91.1% to 92.2%. The rent roll has grown from GBP43.9m at 31 March 2025 to GBP45.9m and the estimated rental value ("ERV") of the portfolio has increased by GBP1.7m to GBP51.9m during the Period, providing a reversionary potential[20] of 13%.
Dividends
In line with the Company's objective to be the REIT of choice for institutional and private investors seeking high and stable dividends from well diversified UK commercial real estate, we were pleased to announce dividends per share of 3.0p (2024: 3.0p) relating to the six months to 30 September 2025. The Board expects to continue to pay quarterly dividends per share of 1.5p to achieve a fully covered target dividend per share for the year ending 31 March 2026 of no less than 6.0p.
The Board acknowledges the importance of income for shareholders and its objective remains to grow the dividend at a rate which is fully covered by net rental income and does not inhibit the flexibility of the Company's investment strategy.
Portfolio
During the Period and since the Period end the Company has generated sale proceeds of GBP11.3m which have been recycled into investments in accretive asset improvements whilst paying down variable rate debt to support net earnings. The Company's property investment strategy, which targets smaller regional properties, often provides strategic options to re-lease or to sell at lease expiry. This optionality exists because there is an active owner-occupier market for smaller regional properties, which is much less the case for larger assets.
Net asset value
The NAV of the Company at 30 September 2025 was GBP456.3m, approximately 98.9p per share:
Pence per share GBPm NAV at 31 March 2025 96.1 423.5 Share repurchases 0.1 (1.7) Acquisition of Merlin Properties Limited (0.1) 21.2 Acquisition costs (0.2) (1.0) Valuation increases[21] and depreciation 2.8 13.1 Profit on disposal 0.2 0.8 Net gains on investment property 3.0 13.9 Net earnings 3.0 14.0 Quarterly interim dividends paid during the Period (3.0) (13.6) NAV at 30 September 2025 98.9 456.3
Borrowings
The Company's net gearing decreased from 27.9% LTV at 31 March 2025 to 26.3% during the Period.
The proportion of the Company's drawn debt facilities with a fixed rate of interest decreased to 69% at 30 September 2025 (31 March 2025: 80%) due to a GBP20m fixed rate loan expiring in August 2025 and being repaid using the revolving credit facility ("RCF"). However, the Company's majority fixed rate debt still significantly mitigates interest rate risk for the Company and maintains a beneficial margin between the weighted average cost of debt of 4.0% (31 March 2025: 3.9%) and income returns from the property portfolio. The Company's debt is summarised in Note 14.
Board
As previously reported, Nathan Imlach will retire from the Board on 31 December 2025. On behalf of the Board I would like to thank Nathan for his contribution and wish him well in the future. Following Nathan's retirement, the Board will be fully independent and will meet the FCA's target for 40% female Board representation.
Share buyback programme
During the Period the Company implemented a share buyback programme with a maximum aggregate consideration of GBP5.0m ("the Buyback Programme"). During the higher interest rate environment since 1 April 2023 the Company has prioritised re-investment of proceeds from selective disposals in funding capital expenditure ("capex") to improve the quality and environmental credentials of the portfolio and to pay down variable rate debt, aligning with the Company's strategy of providing shareholders with strong income returns. The Board believes the current share price materially undervalues the Company and its portfolio, including the security and quality of income offered through the fully covered dividend. Under the Buyback Programme shares will only be purchased if the Directors believed it would result in an increase in earnings per share or an increased NAV per share (or both) for remaining shareholders. At the current share price and given the latest expectations for future interest rates, the Directors believe the Buyback Programme is an attractive use of property disposal proceeds that will create value for shareholders.
To date the Company has purchased 5,495,732 (30 September 2025: 2,210,000) shares under the Buyback Programme, which are held in treasury. Aggregate consideration for these buybacks was GBP4.3m (30 September 2025: GBP1.7m) at a weighted average cost per share of 79.0p (30 September 2025: 78.4p), representing an average 17.7% (30 September 2025: 18.5%) discount to prevailing dividend adjusted NAV per share.
Acquisitions
On 30 May 2025 the Company acquired 100% of the ordinary share capital of Merlin Properties Limited ("Merlin") for initial consideration of 22.9m new ordinary shares in the Company ("the Transaction"). A final tranche of consideration, comprising 1.2m shares, was issued on 23 October 2025. The aggregate consideration was calculated on an 'adjusted NAV-for-NAV basis', with each company's NAV being adjusted for respective acquisition costs and Merlin's investment property portfolio valuation adjusted to the agreed purchase price of GBP19.4m.
The Transaction provides the Company with a portfolio that is both a strong fit with our income-focused strategy and highly complementary to our existing property portfolio, augmenting our regional, industrial bias and adding further diversification by tenant. We have also successfully disposed of seven non-core properties from the Merlin portfolio since acquisition at an aggregate premium to allocated purchase cost, supporting the overall acquisition value.
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Custodian Property Income REIT remains committed to growth and over the first 11 years of trading the Company has grown, largely organically, but also via corporate acquisitions, with an over six-fold increase in the size of the portfolio from GBP90m of property assets at IPO to GBP625m at 30 September 2025. This growth has improved shareholder liquidity and increased diversification, mitigating property specific and tenant risk while stabilising earnings.
Following the Merlin acquisition, the Board of Custodian Property Income REIT and the Investment Manager are actively exploring further opportunities to purchase complementary portfolios via mergers or corporate acquisitions.
ESG
The Company has made further pleasing progress implementing its environmental policy during the Period, improving its floor area weighted average EPC score from C (51) to B (49) due primarily to completing refurbishments at two large industrial units. The Board was pleased to publish its Asset Management and Sustainability report in June which is available at:
custodianreit.com/environmental-social-and-governance-esg/
This report contains details of the Company's asset management initiatives with a clear focus on their impact on ESG, including case studies of recent positive steps taken to improve the environmental performance of the portfolio.
Outlook
Sentiment towards real estate investment has been dominated by economic and political uncertainty, most particularly in the run up to the Budget on 26 November 2025. No Budget measures are expected to have a direct, negative impact on commercial real estate investment and, as summarised by Knight Frank, a relatively 'bond-friendly' budget has resulted in gilt yields edging down leaving the door firmly open for future base rate cuts. This further supports the existing positive outlook for real estate, with rental growth across all sectors, albeit not all properties. Valuations have been increasing, largely in line with rental growth, and vacancy rates have fallen during the Period. We have seen continued buying of our shares through the retail investor platforms which have committed a further GBP8m during the Period and a total of GBP39m over the last two years.
Custodian Property Income REIT continues to provide shareholders with an income focused investment opportunity, with earnings supporting a fully covered dividend. We believe the twin drivers of interest rate cuts and continued rental growth will attract capital back to listed real estate and lead to a sustained share price recovery. In the meantime, we are making best use of our ability to buy-back shares, to support earnings per share, at prices that we believe undervalue the Company. We continue to look for opportunities to grow through corporate acquisitions while at the same time expect to progress selective and profitable disposals to further manage our revolving debt and support asset enhancing capex.
David MacLellan
Chairman
4 December 2025
Investment Manager's report
Property market
The direct property market is continuing its recovery in the UK, with valuations improving quarter-on-quarter, driven by rental growth across all sectors. The strong performance of the underlying assets should be expected to steadily flow through to listed property companies' share prices, but a further shift in market sentiment is required along with a willingness to consider the longer-term opportunity that exists in real estate.
At a property level, Custodian Property Income REIT is delivering on all fronts to provide shareholders with strong income returns by capturing portfolio reversion and driving sustainable earnings growth. During the Period, our targeted asset management programme grew the rent roll from GBP43.9m to GBP45.9m, primarily driven by lease renewals picking up ongoing rental growth, as well as the new lettings of vacant units and positive rent review results. In line with the growth of the rent roll and estimated rental value of the portfolio, we have witnessed continued valuation growth for the fifth consecutive quarter, with NAV per share increasing by 2.9% since 31 March 2025.
The portfolio has continued to deliver a fully covered dividend of 6.0p per share, with future rental growth potential of 13% embedded, and offering a road map to further earnings growth. Simultaneously, undertaking profitable sales ahead of pre-offer valuations has helped to fund various refurbishment initiatives within the existing portfolio, as well as proving valuations. Our ongoing share buyback programme has executed the timely acquisition of shares at a discount to NAV.
Strong recent leasing activity demonstrates the resilience of Custodian Property Income REIT's well-diversified investment portfolio. 15 lease renewals/regears with GBP2.0m of annual rent have been signed during the Period. GBP2.1m of new rent has been added to the rent roll from:
-- Completing four rent reviews on assets in the retail warehouse, industrial and retail sectors at an aggregate 8%
above previous passing rent and in line with ERV, adding GBP0.5m of new rent; and -- Letting eight vacant units across seven assets in the retail warehouse, industrial and office sectors, in
aggregate, 4% ahead of ERV.
EPRA occupancy[22] has improved to 92.2% (31 Mar 2025: 91.1%) due to the new lettings above and the sale of vacant, or part vacant, units in Cheadle and Guildford.
Property portfolio performance
30 Sept 30 Sept 31 Mar
2025 2024 2025
Property portfolio value GBP625.0m GBP582.4m GBP594.4m
Separate tenancies 430 338 349
EPRA occupancy rate 92.2% 93.5% 91.1%
Assets 175 152 151
Weighted average unexpired lease term to first break or expiry 5.0yrs 4.9yrs 5.0 yrs
EPRA topped-up net initial yield ("NIY") 6.7% 6.9% 6.6%
Weighted average EPC rating B (49) C (52) C (51)
The property portfolio is split between the main commercial property sectors in line with the Company's objective to maintain a suitably balanced investment portfolio. The Company has a relatively low and highly targeted exposure to office and high street retail combined with a relatively high exposure to industrial and to alternative sectors, often referred to as 'other' in property market analysis. The current sector weightings are:
Valuation Weighting by Valuation
income[23]
Valuation
movement
30 September 31 March
2025 30 September 2025
GBPm
Weighting by value 30 Weighting by value 31
GBPm 2025 GBPm September 2025 March 2025
Sector
Industrial 319.2 43% 298.3 8.9 51% 50%
Retail 135.8 22% 127.3 2.8 21% 21%
warehouse
Other 82.4 14% 78.2 2.0 13% 13%
Office 54.3 14% 57.7 (0.2) 9% 10%
High street 33.3 7% 32.9 0.3 6% 6%
retail
Total 625.0 100% 594.4 13.8 100% 100%
For details of all properties in the portfolio please see custodianreit.com/property/portfolio.
Acquisitions
We completed the GBP22.1m acquisition of the Merlin portfolio on 30 May 2025. Since then, the Merlin properties have integrated well into the Company's portfolio, with Merlin occupancy remaining strong at almost 100% and a number of opportunities identified to drive value from increased rental income from upcoming lease events.
A key element of our growth strategy is to seek select opportunities to scale the business and enhance earnings through corporate and/or portfolio acquisitions. The strategic all-share acquisition of the Merlin portfolio provides a strong blueprint of how we can achieve that aim, despite a challenging capital markets backdrop. Looking ahead, we hope to position the Company for further growth by targeting similar opportunities for increased scale, which offer a more liquid investment and attractive income returns, while providing tax efficient solutions for family property companies in the UK.
Disposals
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Owning the right properties at the right time is a key element of effective property portfolio management, which necessarily involves periodically selling properties to balance the property portfolio. Custodian Property Income REIT is not a trading company but identifying opportunities to dispose of assets ahead of valuation to crystallise profit or that no longer fit within the Company's investment strategy is important.
During the Period the Company sold the following assets for an aggregate GBP8.9m, 12% ahead of the pre-offer valuation:
-- 5500 Lakeside, Cheadle, which was 66% let, for GBP4.0m; -- Wienerberger House, Cheadle, which was fully let, for GBP2.9m; -- A vacant retail unit in Guildford for GBP1.6m; and
-- A retail unit in Leicestershire for GBP0.4m.
Since the Period end six further Leicestershire assets, acquired as part of the Merlin Portfolio, were sold for an aggregate GBP2.4m.
ESG
The sustainability credentials of both the building and the location have become ever more important for occupiers and investors. As Investment Manager we are absolutely committed to achieving the Company's ambitious goals in relation to ESG and believe the real estate sector should be a leader in this field.
The weighted average EPC across the portfolio achieved a weighted average B rating (equivalent to a score of between 25 and 50) during the Period. With energy efficiency a core tenet of the Company's asset management strategy and with tenant requirements aligning with our energy efficiency goals we see this as an opportunity to secure greater tenant engagement and higher rents.
During the Period the Company has updated EPCs at 23 units across 12 properties where existing EPCs had expired or where works had been completed, improving the weighted average EPC rating from C (51) at 31 March 2025 to B (49).
The Company's EPC profile is illustrated below:
Number of EPCs Weighted average EPC rating[24]
EPC rating 30 Sept 2025 31 Mar 2025 30 Sept 2025 31 Mar 2025
A 30 21 8% 6%
B 164 143 42% 41%
C 136 121 35% 35%
D 52 39 13% 11%
E 6 17 2% 5%
F - 8 - 2%
G - - - -
388 349 100% 100%
The table shows that the weighted average 'C' or better ratings has increased from 82% to 85% during the Period.
At 31 March 2025 the Company had eight 'F' rated units in two properties (Aberdeen and Arthur House, Manchester), both of which have undergone refurbishment which has improved individual unit ratings to A/B as well as significantly increasing rents.
Of the Company's 'E' rated assets, one is earmarked for disposal and three are within the Merlin portfolio, with improvements expected to be implemented as part of the portfolio integration plans.
Outlook
The asset management of our carefully curated portfolio of regional property continues to deliver rental growth, income security and refurbished buildings with improved environmental credentials. Current refurbishment and capex plans should see all properties achieve an EPC rating of A-D over the next 12 months, thus making good progress towards our stated environmental targets. The current floor area weighted average EPC for the whole portfolio is B (49). Importantly, this work is also enhancing rents and capital values while keeping properties fit for purpose and in line with tenant demand.
In the inflationary environment that is likely to persist, real assets that can be enhanced to deliver rental and capital growth will protect the real value of both shareholders' investment and income. At the same time, we will continue to look for opportunities to grow through corporate acquisitions similar to the Merlin transaction we announced at the start of the Period
Valuations have improved quarter on quarter for Custodian Property Income REIT since September 2024, driven by consistent rental growth. With rental growth potential in all sectors, the diversified nature of our portfolio is well positioned to benefit from the upside of both the real estate recovery and the improving market sentiment towards listed markets.
Richard Shepherd-Cross
for and on behalf of Custodian Capital Limited
Investment Manager
4 December 2025
Financial review
A summary of the Company's financial performance for the Period is shown below:
Period ended
Period ended 30 Sept 2024 Year ended
Financial summary 30 Sept 2025 31 Mar 2025
GBP000 GBP000
GBP000
Rental revenue 21,741 20,731 42,828
Other income 420 242 476
Expenses, dilapidations and net tenant recharges (4,620) (4,087) (9,159)
Net finance costs (3,478) (3,683) (7,359)
EPRA profits
14,063 13,203 26,786
Net gain on investment property and depreciation 13,573 1,700 11,369
Profit before tax 27,636 14,903 38,155
EPRA EPS (p) 3.1 3.0 6.1
Dividend cover 101% 100% 101%
OCR excluding direct property costs 1.34% 1.28% 1.30%
During the Period the Company's rent roll increased by 4.6% from GBP43.9m at 31 March 2025 to GBP45.9m at 30 September 2025 primarily due to the Merlin acquisition. Rental revenue was 4.9% higher than the period ended 30 September 2024 as the impact of ongoing rental growth and acquisitions exceeded a 1.3% decrease in occupancy and the impact of property disposals.
Other income, which primarily comprises income from solar panels, also known as photovoltaics ("PV"), has increased by 74% compared to the period ended 30 September 2024, driven by the GBP1.4m invested in PV installations over the last 18 months.
In August 2025, the Company used its variable-rate RCF, with a prevailing interest rate of c.5.8%, to repay a GBP20m loan on expiry which had a 3.9% fixed-rate of interest. However, the Company's weighted average cost of debt only increased by 0.1% during the Period to 4.0% due to SONIA decreasing by 0.25% on both 8 May and 7 August 2025, and this expired loan only represented 11% of total drawn debt at 31 March 2025.
Overall, rental growth and an increase in PV income increased EPRA earnings per share to 3.1p (2024: 3.0p) to continue to fully cover this year's dividend. This increase in recurring earnings demonstrates the robust nature of the Company's diverse property portfolio despite economic headwinds.
Debt financing
The Company's debt profile at 30 September 2025 is summarised below:
30 Sept 2025 30 Sept 2024 31 Mar 2025 Gross debt GBP173.5m GBP174.0m GBP175.0m Net gearing 26.3% 28.5% 27.9% Weighted average cost 4.0% 4.0% 3.9% Weighted average maturity 4.3 years 4.8 years 4.5 years Percentage of facilities at a fixed rate of interest 69% 80% 80%
Of the Company's GBP173.5m of drawn debt facilities 69% are at fixed rates of interest. The Company's weighted average term and cost of drawn debt at 30 September 2025 were 4.3 years and 4.0% respectively (fixed rate only: 5.3 years and 3.3%). This high proportion of fixed rate debt significantly mitigates medium-term interest rate risk for the Company and provides shareholders with a beneficial margin between the fixed cost of debt and income returns from the property portfolio.
The Company operates with a conservative level of net gearing, with target borrowings over the medium-term of 25% of the aggregate market value of all properties at the time of drawdown. The Company's net gearing decreased from 27.9% LTV at 31 March 2025 to 26.3% during the Period primarily due to disposals and acquiring the ungeared Merlin Portfolio for all-share consideration.
At the Period end the Company had the following facilities available:
-- A GBP60m RCF with Lloyds Bank plc ("Lloyds") with interest of between 1.62% and 1.92% above SONIA, determined by
reference to the prevailing LTV ratio of a discrete security pool of assets, and expiring on 10 November 2027. The
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facility was GBP52m drawn at the Period-end. Options remain in place to extend the term by a further year to 2028,
and to increase the facility limit to GBP75m, both subject to Lloyds' consent.
-- A GBP45m term loan facility with Scottish Widdows ("SWIP") repayable in June 2028, with fixed annual interest of
2.987%; and -- A GBP75m term loan facility with Aviva Real Estate Investors ("Aviva") comprising:
-- A GBP35m tranche repayable on 6 April 2032, with fixed annual interest of 3.02%; -- A GBP15m tranche repayable on 3 November 2032 with fixed annual interest of 3.26%; and -- A GBP25m tranche repayable on 3 November 2032 with fixed annual interest of 4.10%.
Each facility has a discrete security pool, comprising a number of the Company's individual properties, over which the relevant lender has security and covenants:
-- The maximum LTV of each discrete security pool is either 45% or 50%, with an overarching covenant on the Company's
property portfolio of a maximum of either 35% or 40% LTV; and -- Historical interest cover, requiring net rental income from each discrete security pool, over the preceding three
months, to exceed either 150% (RCF) or 250% (fixed rate loans) of the facility's quarterly interest liability.
The Company's debt facilities contain market-standard cross-guarantees such that a default on an individual facility will result in all facilities falling into default.
At the Period end the Company had GBP183.7m (29% of the property portfolio) of unencumbered assets which could be charged to the security pools to enhance the LTV and interest cover on the individual loans, of which a further GBP4.5m is in the process of being charged.
On 13 August 2025 the Company increased the limit on the RCF from GBP50m to GBP60m and repaid a GBP20m loan from SWIP on its expiry using its RCF facility.
Dividends
The Company has declared dividends per share of 3.0p relating to the Period, 101% covered by EPRA earnings. The Company paid dividends per share of 3.0p during the Period relating to FY25 Q4 and FY26 Q1.
The Company paid an interim dividend per share of 1.5p relating to FY26 Q2 on Friday 28 November 2025 to shareholders on the register on 7 November 2025, which was designated as a property income distribution ("PID").
Ed Moore
for and on behalf of Custodian Capital Limited
Investment Manager
4 December 2025
Principal risks and uncertainties
The Company's assets consist of direct investments in UK commercial property. Its principal risks are therefore related to the UK commercial property market in general, the particular circumstances of the properties in which it is invested and their tenants. The Company's Annual Report for the year ended 31 March 2025 set out the principal risks and uncertainties facing the Company at that time, and the way in which they are mitigated and managed, which are summarised below.
-- Loss of contractual revenue; -- Decreases in property portfolio valuations; -- Reduced availability or increased costs of debt and complying with loan covenants; -- Inadequate performance, controls or systems operated by the Investment Manager; -- Non-compliance with regulatory or legal changes; -- Business interruption from cyber or terrorist attack, or pandemics; -- Failure to meet environmental compliance requirements or occupier market expectations, and physical risks to
properties due to environmental factors and extreme weather; and -- Unidentified risk and liabilities associated with the acquisition of new properties (whether acquired directly or
via a corporate structure)
The following emerging risks were added to the Company's risk register during the year ended 31 March 2025, but are not considered by the Board to be principal risks:
-- Increases in yields of long-term fixed-rate government bonds impacting demand for the Company's shares; and -- Shareholder activists in the Investment Company sector become shareholders and do not act in the best interests of
all shareholders.
The Company's share price has also been impacted by geo-political risk relating to the conflicts in Ukraine and Gaza, tensions between the USA and its trading partners and its volatile political climate, and UK specific factors including apparent declining health of public markets and a 'cost of living crisis'. However, these factors are not considered direct emerging risks because of the Company's diverse property portfolio covering all sectors and geographical areas in the UK with over 400 individual tenancies.
We do not anticipate any changes to the other risks and uncertainties disclosed over the remainder of the financial year.
Condensed consolidated statement of total comprehensive income
For the six months ended 30 September 2025
Unaudited
Audited
Unaudited 6
months 6 months
to 30 Sept 2025 to 30 Sept 2024 12 months
GBP000 to 31 Mar
2025
GBP000
GBP000
Note
Revenue 4 25,703 24,757 47,997
Investment management fee (1,849) (1,692) (3,417)
Operating expenses of rental property
-- rechargeable to tenants (2,418) (2,942) (3,562)
-- directly incurred (2,315) (2,413) (4,891)
Professional fees (371) (369) (823)
Directors' fees (182) (172) (345)
Other expenses (1,149) (409) (1,099)
Expenses (8,284) (7,997) (14,137)
Operating profit before net gains on investment property
17,419 16,760 33,860
Unrealised gains on revaluation of investment property:
-- relating to property revaluations 9 13,831 1,699 11,211
-- relating to acquisition costs (953) - (1)
Profit on disposal of investment property 818 127 444
Net gains on investment property 13,696 1,826 11,654
Operating profit 31,115 18,586 45,514
Finance income 5 64 56 127
Finance costs 6 (3,543) (3,739) (7,486)
Net finance costs (3,478) (3,683) (7,359)
Profit before tax 27,636 14,903 38,155
Income tax 7 - - -
Profit for the Period, net of tax 27,636 14,903 38,155
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