Last close As at 22/08/2026
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Market capitalisation
GBP396m
Research: Real Estate
Custodian Property Income REIT (CREI) and abrdn Property Income Trust (API) have announced a proposed all-share merger, recommended by both boards. This recommendation reflects the increased diversification of income that the combined company will provide, with potential to benefit from increased scale and share liquidity, and the opportunity for cost savings. The investment strategy will remain income focused, emphasising below institutional-sized regional assets, typically offering a yield premium. The combined portfolio offers 24% reversionary potential.
Custodian Property Income |
Proposed merger |
Proposed merger |
Real estate |
24 January 2024 |
Share price performance
Business description
Analyst
For the purposes of the Takeover Code, Edison Investment Research is deemed to be connected with Custodian Property Income. Custodian Property Income is a research client of Edison Investment Research Limited |
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Custodian Property Income REIT (CREI) and abrdn Property Income Trust (API) have announced a proposed all-share merger, recommended by both boards. This recommendation reflects the increased diversification of income that the combined company will provide, with potential to benefit from increased scale and share liquidity, and the opportunity for cost savings. The investment strategy will remain income focused, emphasising below institutional-sized regional assets, typically offering a yield premium. The combined portfolio offers 24% reversionary potential.
Year end |
Net rental income (£m) |
EPRA earnings* (£m) |
EPRA |
NAV/** |
DPS |
P/NAV** |
Yield |
03/21 |
33.1 |
23.7 |
5.6 |
97.6 |
5.00 |
0.73 |
7.0 |
03/22 |
35.6 |
25.3 |
5.9 |
119.7 |
5.25 |
0.59 |
7.4 |
03/23 |
37.1 |
24.8 |
5.6 |
99.3 |
5.50 |
0.72 |
7.7 |
Note: *Excludes revaluation gains/losses and other exceptional items. **Defined as EPRA net tangible assets (EPRA NTA) per share.
CREI presents the details and rationale for the merger in this presentation: Presentations – Custodian Property Income REIT plc (custodianreit.com).
Under the merger terms, holders of API shares are entitled to 0.78 new CREI shares. The exchange ratio is based on the last reported respective EPRA NTA, rolled forward to 31 December 2023, subject to certain adjustments and post balance sheet asset disposals. Assuming completion, anticipated in April 2024, subject to court sanction and shareholder approvals, existing CREI shareholders will hold c 60% of the enlarged company and existing API shareholders the balance.
CREI expects recurring administrative cost and management fee savings of £1.0m pa for the combined company with an additional £2.1m of transitional cost synergies during the first two years after completion of the merger. The enlarged company will be managed by Custodian Capital, the existing external investment manager for CREI.
Since it launched 10 years ago, the two key elements of CREI’s investment strategy have been a focus on smaller-sized properties (generally less than £10m at the point of acquisition), which typically provide a yield premium over larger properties, within a well-diversified portfolio to manage risks. This will continue to be the case and a higher risk-adjusted property yield is a key plank of the company’s income-led return strategy. As of 31 December 2023, the combined portfolio has a gross value of more than £1bn, comprising c 200 properties, further diversified by tenant and geography. The average value of properties across the combined portfolio is c £5m. With a combined estimated rental value of £84.3m pa compared with passing rents of £68.1m pa, there is the opportunity to grow income, primarily from void reduction and rental growth, providing support to capital values.
The combined pro forma loan to value ratio as of 31 December 2023 is 30.2% with a weighted average maturity of 3.8 years, and a weighted average cost of 5.0%, well below the portfolio EPRA topped-up net initial yield of 6.2%.
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