Custodian Property Income REIT has completed the sale of one property and unconditionally exchanged on another, for a combined total of £15m.
The holdings – the former an industrial unit in Weybridge, and the other a vacant industrial unit in Warrington – were sold at premiums of 5.2% and 61% respectively, relative to their valuations at the end of December last year.
The investment company’s board said the intention to sell the assets was first stated in an announcement on 28 February 2024.
The sale of the Warrington unit is expected to complete during the middle of this month. The sale of both properties will reduce to REIT’s loan-to-value ratio by approximately 2%.
Richard Shepherd-Cross, managing director of the trust’s fund manager Custodian Capital Limited, said: “While planning consent has been received to redevelop the Warrington site we believe that, due to a lack of occupier demand and the ability to crystallise a substantial profit for our shareholders, now is the best time to sell. Selling vacant property is particularly accretive to earnings by both saving void costs and reducing interest expense.
“The Weybridge asset has provided a healthy level of income over its four years of ownership and having re-let the unit in 2022 at an increased level of rent, we believe future rental growth may not meet our income growth expectations going forwards so we have made the decision to sell.”
Failed merger
The sale of both properties comes less than one week after its failed merger with Abrdn Property Income Trust (API). While 98% of Custodian REIT’s shareholders had previously approved the merging of both trusts, API failed to gain sufficient shareholder backing at its annual general meeting.
One week before the AGM, API had sold two properties at book value, which led to some analysts suggesting the merger may not be in the best interests of shareholders.
