Thursday, February 29, 2024

Leicester property investment company slashes pre-tax losses

Custodian Property Income REIT has improved its pre-tax losses, according to interim results for the six months ended 30 September 2023.

The Leicester-based firm posted a loss before tax of £2.7m, contracting from loss of £14.1m in the same period last year.

Revenue grew slightly to £22.8m from £22.3m.

Meanwhile portfolio valuation remained stable with a marginal 0.6% decline to £609.8m. The portfolio saw a £15.6m valuation decrease, driven by current investor and market sentiment around the UK’s economic outlook and high interest rates, tempered by a £6.1m uplift from asset management initiatives.

EPRA earnings per share increased 3.5% to 2.9p, which the property investment company says is due to rental growth and improvement in occupancy offsetting administrative cost inflation and higher finance costs.

During the period £12.2m was invested primarily in the refurbishment and redevelopment of seven properties, which is expected to enhance the assets’ valuations and environmental credentials and increase rents to give a yield on cost of more than 7%, ahead of the company’s marginal cost of borrowing.

David MacLellan, chairman of Custodian Property Income REIT, said: “The company’s diversified and well managed investment portfolio has shown its resilience during the period, mitigating the risks posed by volatility in real estate investment markets and driving a continued strong operational performance.

“In addition, the company’s conservative balance sheet and its longer-term fixed rate debt profile have provided insulation against the challenge of higher interest rates in the short to medium term.

“Negative sentiment towards real estate investment is currently weighing against capital performance. This sentiment is driven primarily by the potential for persistent inflationary pressure to mean ‘higher-for-longer’ interest rates, uncertainty around the future of offices and the impact of the UK’s general economic outlook on discretionary consumer expenditure.

“However, there is depth in occupational demand and latent rental growth in the portfolio which offers the prospect of growth for existing shareholders, as sentiment improves towards the sector and gives us confidence that the company will continue to perform well.”

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