Edison Investment Research Limited
London, UK, 24 June 2021
Custodian REIT (CREI): Robust FY21 with improving outlook
Although key elements of Custodian REIT's (CREI's) FY21 results had been previously disclosed, the detailed annual report includes additional details on its robust FY21 performance and prospects. In H221 rent collection strengthened, DPS increased and asset values recovered, delivering positive total returns. We expect these trends to carry over into the current year, with continuing occupier demand improving occupancy. A strong balance sheet provides support for potential accretive acquisitions.
The minimum 5.0p DPS targeted by CREI for FY22 represents an attractive yield of 5.1%, and our forecast DPS of 5.6p represents a yield of 5.7%. Both are a significant premium to risk-free rates (10-year UK government debt c 0.8%). Despite the pandemic, NTA total return has remained positive on an annual basis, driven by an unbroken pattern of quarterly DPS payments, albeit at a reduced level.
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