Custodian Property Income REIT plc: Active asset management and diversified portfolio continue to drive rental growth, underpinning fully covered dividend

DJ Custodian Property Income REIT plc: Active asset management and diversified portfolio continue to drive rental growth, underpinning fully covered dividend

Custodian Property Income REIT plc (CREI) 
Custodian Property Income REIT plc: Active asset management and diversified portfolio continue to drive rental growth, 
underpinning fully covered dividend 
02-Sep-2026 / 07:00 GMT/BST 
 
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2 September 2026 

Custodian Property Income REIT plc 

("Custodian Property Income REIT" or "the Company") 

Active asset management and diversified portfolio continue to drive rental 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, UK regional properties with strong income characteristics, today provides a trading 
update for the quarter ended 30 June 2026 ("Q1" or the "Quarter"). 

Commenting on the trading update, Richard Shepherd-Cross, Managing Director of the Investment Manager, said: "The 
Company has delivered another positive quarter of stable valuations and a fully covered dividend, which continues to 
offer investors an attractive yield of c.7%. Performance remains underpinned by rental growth, with Custodian Property 
Income REIT's portfolio now showing a reversionary potential of 15%, following a further 1% increase in the 
like-for-like ERV. We expect to capture this potential through our asset management approach and upcoming lease events. 

"Despite ongoing economic and geopolitical instability, the occupier market has remained extremely resilient with 
rental growth evident across all real estate sectors within our diversified portfolio, including on the high street and 
in regional offices, which is a positive shift in momentum from previous periods. There is a significant disconnect 
between the strong underlying fundamentals of UK real estate and current investor sentiment, where persistent discounts 
to NAV and increased levels of consolidation and takeover activity indicate that the widening window of opportunity 
remains underappreciated. Importantly, our diversified portfolio is well positioned to benefit from the upside of both 
the continued real estate recovery and the gradually improving sentiment towards listed markets. 

"Looking ahead, we will continue to pursue our hands-on approach to asset management, targeting opportunities to invest 
in the existing portfolio which will be accretive to earnings and deliver sustainable dividend growth for shareholders, 
while actively exploring opportunities to scale through selective corporate acquisitions." 

Highlights 

Strong leasing activity continues to drive rental growth and support a fully covered dividend 
  
 
   -- 1.5p dividend per share approved for the Quarter, fully covered by EPRA[1] earnings per share[2] ("EPS"), 
  in line with target of at least 6.0p for the year ending 31 March 2027 (FY26: 6.0p). This represents a 7.4% 
  dividend yield[3] and is in line with the Company's goal of being the REIT of choice for investors seeking high and 
  stable dividends from well-diversified UK real estate. 
   -- Q1 EPRA EPS of 1.5p (FY26 Q4: 1.5p) 
   -- 1.0% like-for-like[4] growth in the estimated rental value ("ERV") of the portfolio in Q1 driven by 1.6% 
  like-for-like growth in the industrial sector, which represents 42% of portfolio income 
   -- 15% further income growth already embedded within the portfolio with ERV of GBP56.1m (31 March 2026: 
  GBP55.6m) exceeding the current GBP49.0m passing rent (31 March 2026: GBP49.2m). Based on our track record and strong 
  occupier demand for space in our assets, we expect to both continue to capture this potential rental upside at 
  (typically) five-yearly rent reviews or on re-letting, and drive passing rent and ERV growth further through asset 
  management 
   -- Positive leasing activity during the Quarter comprised: 
   ? One lease re-gear 4% ahead of ERV; 
   ? Two new leases, with GBP0.2m of new annual income added to the rent roll, in line with ERV; and 
   ? Two rent reviews at an average of 16% ahead of previous passing rent, in line with ERV. 

Resilient valuations across the Company's GBP671.6m diversified portfolio 

   -- Issuance of 1.1m new shares during the Quarter, to settle deferred consideration from the corporate 
  acquisitions in FY26 of Grove Court and Scorpion ("the Transactions")[5], which helped drive Q1 net asset value 
  ("NAV") to GBP489.0m (31 March 2026: GBP486.7m) 
   -- NAV per share increased to 100.0p (31 March 2026: 99.7p) with valuation gains of GBP1.4m leading to a 1.8% 
  Q1 NAV total return per share[6] 
   -- 172 asset property portfolio valued at GBP671.6m (31 March 2026: GBP669.3m), with a Q1 like-for-like 
  valuation increase of 0.1%, net of GBP1.1m of capital expenditure.  
Ongoing capital investment programme continues to enhance the portfolio, and non-core asset recycling from corporate 
acquisitions continues to be accretive 

   -- During the Quarter, the Company sold: 
   ? An industrial asset in Scunthorpe from the Merlin Portfolio for GBP0.1m, in line with its allocated 
    purchase price and valuation; and 
   ? An industrial building in Coventry from the Scorpion Portfolio for GBP0.4m, in line with valuation and 
    GBP0.1m ahead of its allocated purchase price. 
 
   -- Post Quarter end, the Company sold: 
   ? Two non-core investment properties from the Merlin portfolio at auction for GBP0.9m, in line with 
    valuation and GBP0.3m ahead of their combined allocated purchase price; and 
   ? The final new-build residential property acquired with the Merlin portfolio at its allocated purchase 
    price of GBP0.5m. 
 
   -- GBP1.1m of capital expenditure primarily relating to the ongoing refurbishment of an industrial asset in 
  Warwick 
  
 
Prudent debt levels 

   -- Net gearing[7] was 26.1% loan-to-value at 30 June 2026 (31 March 2026: 25.9%) 
   -- GBP185.0m of drawn debt at 30 June 2026 (31 March 2026: GBP185.0m), comprising GBP120m (65%) of fixed rate debt 
  and GBP65m (35%) drawn under the Company's GBP75m variable rate revolving credit facility ("RCF") 
   -- Weighted average cost ("WAC") of aggregate borrowings remained at 4.1% (31 March 2026: 4.1%).  The 
  Company's remaining GBP120m of longer-term fixed-rate debt facilities have a weighted average term of 4.5 years and a 
  WAC of 3.3%, offering significant medium-term interest rate risk mitigation 
  
 
Dividends 

The Company paid an interim dividend per share of 1.5p on Friday 28 August 2026 relating to FY27 Q1 to shareholders on 
the register on 7 August 2026, fully covered by EPRA earnings and designated as a property income distribution ("PID"). 

The Board is targeting a dividend per share of no less than 6.0p for the year ending 31 March 2027. This target 
dividend is in line with the Company's goal of being the REIT of choice to investors seeking high and stable dividends 
from well-diversified UK real estate. 
 
  
Net asset value 

The Company's unaudited NAV increased to GBP489.0m, or approximately 100.0p per share, at 30 June 2026: 

                                Pence per share    GBPm 

NAV at 31 March 2026                     99.7          486.7 

Shares issued                         -           0.9 
 
                                99.7          487.6 

Net income for the Quarter                  1.5          7.3 
 
Interim quarterly dividend paid during the Quarter[8]     (1.5)         (7.3) 

Valuation movements                      0.3          1.4 
 
Profit on disposal                      -           - 

NAV at 30 June 2026                      100.0         489.0 

The unaudited NAV attributable to the ordinary shares of the Company is calculated under International Financial Reporting Standards and incorporates the independent portfolio valuation at 30 June 2026 and net income for the Quarter.

The movement in unaudited NAV reflects the payment of an interim dividend per share of 1.5p during the Quarter, but as usual this does not include any provision for the dividend of 1.5p per share for the Quarter under review paid on Friday 28 August 2026.

Market update

Unlike the consistently hot weather, the summer has provided a mixed economic picture with moderate growth, relatively low unemployment, easing labour pressures and lower inflation than in recent years. In contrast there has been weakness in the service sector and reduced construction activity as high financing costs and ongoing geopolitical risks continue to act as a constraint to consumer and investor sentiment.

This macro-economic backdrop has led to a slowing of investment activity in commercial investment property, which is exacerbated by the current longer-term gilt rate hovering around 5%. Cushman and Wakefield reported that the first half of 2026 saw GBP11.3bn of investment activity, 7% down in Q2 versus Q1, and 24% down compared to H1 2025.

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