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Research: Real Estate
Custodian REIT (CREI) delivered an 8.5% Q322 NAV total return, taking the year-to-date total to more than 20%. Strong Q322 capital growth mirrored the general market trend and was supported by asset management and the acquisition of DRUM REIT at a discount to its portfolio value. As previously guided, the rate of quarterly DPS was increased by 10%.
Custodian REIT |
Strong capital growth with increasing income |
Quarterly update |
Real estate |
25 February 2022 |
Share price performance
Business description
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Analyst
Custodian REIT is a research client of Edison Investment Research Limited |
Custodian REIT (CREI) delivered an 8.5% Q322 NAV total return, taking the year-to-date total to more than 20%. Strong Q322 capital growth mirrored the general market trend and was supported by asset management and the acquisition of DRUM REIT at a discount to its portfolio value. As previously guided, the rate of quarterly DPS was increased by 10%.
Year end |
Net rental |
EPRA |
EPRA |
NAV**/ |
DPS |
P/NAV** |
Yield |
|
03/20 |
38.1 |
28.7 |
7.0 |
101.6 |
6.65 |
0.98 |
6.7 |
|
03/21 |
33.1 |
23.7 |
5.6 |
97.6 |
5.00 |
1.02 |
5.0 |
|
03/22e |
36.0 |
25.9 |
6.0 |
114.7 |
5.50 |
0.87 |
5.5 |
|
03/23e |
39.4 |
28.5 |
6.5 |
116.7 |
6.00 |
0.86 |
6.0 |
Note: *EPRA earnings excludes revaluation gains/losses and other exceptional items.
** Defined as EPRA net tangible assets per share (EPRA NTA).
Q322 returns boosted by strong capital growth
The 8.5% Q322 total return comprised a 7.3% increase in NAV per share to 113.7p plus dividends paid. A Q322 DPS of 1.375p was declared and CREI targets an aggregate DPS of at least 5.25p for FY22 and 5.50p for FY23. Our forecasts remain above these minimum targets (5.5p in FY22 and 6.0p in FY23). Q322 returns were boosted by portfolio gains of 7.7p, including 0.9p related to the November 2021 acquisition of DRUM REIT (DRUM) at a discount to its portfolio value. The investment portfolio increased by 5.2% on a like-for-like basis, with performance still driven by industrial assets and retail warehouses (together c two-thirds of the portfolio) but showing signs of broadening. We have increased our NAV per share forecasts in line with the Q322 performance (FY22 from 109.0p to 114.7p with a knock-on to FY23/24), but otherwise leave our forecast unchanged.
Organic and inorganic growth opportunities
CREI’s portfolio value increased by £73m (c 13%) to £638m in Q322, split between revaluation gains and net acquisitions, including the acquisition of DRUM and its portfolio. At IPO in 2014 the portfolio value stood at £95m. A full period contribution from DRUM and occupancy increases (Q322: 90.9%, down from 91.6% at end-Q222, primarily reflecting the DRUM acquisition) provide organic growth opportunities. CREI also seeks further accretive acquisitions while preserving its differentiating focus on smaller lot size assets to drive income returns, taking advantage of opportunities that have arisen due to the pandemic, and driving additional scale efficiencies. With low gearing (LTV of c 19.5%) CREI is well placed for further growth and we assume c £30m of acquisitions in our forecasts, taking LTV closer to CREI’s medium-term 25% target.
Valuation: Consistent, income-focused returns
The minimum 5.25p DPS targeted by CREI for FY22 represents an attractive yield of 5.25%, a significant premium to risk-free rates (10-year UK government debt remains below 1.5%). Our forecasts for DPS growth exceed CREI’s minimum targets for both FY22 and FY23. The c 12% discount to H122 EPRA NTA per share compares with an average 5% premium since IPO.
Strong capital growth with increasing income
Strong Q322 NAV total returns boosted by strong capital growth
The early stages of the pandemic and the first lockdown had a negative impact on the UK commercial property market but the recovery that started during the second half of calendar 2021 (reflected in CREI’s Q221 performance to end-September 2021) has continued to gather pace. Reflecting this market backdrop, CREI’s Q322 NAV total return of 8.5% was the strongest quarter in the year to date and takes the NAV total return in the first nine months of the year to 20.9%. NAV total return has been positive in each year since IPO in March 2014, despite the impact of the pandemic, with an average annual return of 6.4% pa up to 31 December 2021. Reflecting CREI’s strong income focus, dividends have represented the majority of the total. Until end-FY21, dividends had represented all of the total return since IPO but the strong growth in property values and NAV in FY22 year to date (including the acquisition of the DRUM assets at a discount to valuation) has reduced this to 75%.
Exhibit 1: NAV total return has accelerated
Period ending |
Mar-20 |
Jun-20 |
Sep-20 |
Dec-20 |
Mar-21 |
Mar-21 |
Jun-21 |
Sep-21 |
Dec-21 |
Dec-21 |
Financial year period |
Q420 |
Q121 |
Q221 |
Q321 |
Q421 |
FY21 |
Q122 |
Q222 |
Q322 |
9M22 |
Opening NAV per share (p) |
104.4 |
101.6 |
95.7 |
95.2 |
96.4 |
101.6 |
97.6 |
101.7 |
106.0 |
97.6 |
Closing NAV per share (p) |
101.6 |
95.7 |
95.2 |
96.4 |
97.6 |
97.6 |
101.7 |
106.0 |
113.7 |
113.7 |
DPS paid (p) |
1.7 |
1.7 |
1.0 |
1.1 |
1.3 |
4.9 |
1.8 |
1.3 |
1.3 |
4.3 |
NAV total return |
-1.1% |
-4.2% |
0.5% |
2.4% |
2.5% |
0.9% |
6.0% |
5.5% |
8.5% |
20.9% |
Source: CREI data, Edison Investment Research
Exhibit 2 shows a reconciliation of the Q322 movement in NAV. The 7.7p (7.3%) increase in NAV was driven by net revaluation gains of 6.8p (£30.0m, of which £1.1m was realised on disposal) and 0.9p of accretion resulting from the acquisition of DRUM at a discount to NAV. DPS was effectively covered by EPRA.
Exhibit 2: Reconciliation of Q322 NAV movement
£m |
Pence per share |
|
NAV at 30 September 2021 |
445.9 |
106.0 |
Issue of equity* |
19.1 |
(0.5) |
Valuation increase having acquired DRUM REIT at a discount to valuation |
7.3 |
1.6 |
Corporate acquisition and equity issuance costs |
(0.9) |
(0.2) |
Net increase from DRUM REIT acquisition |
25.5 |
0.9 |
Valuation movements relating to: |
||
- Asset management activity |
6.2 |
1.4 |
- General valuation increases |
22.7 |
5.2 |
- Profit on disposal |
1.1 |
0.2 |
Net valuation movement |
30.0 |
6.8 |
Asset acquisition costs |
(0.2) |
0.0 |
EPRA earnings for the period |
5.7 |
1.3 |
Interim dividend paid** |
(5.5) |
(1.3) |
NAV at 31 December 2021 |
501.4 |
113.7 |
Source: CREI. Notes: *20.2m new CREI shares were issued to former DRUM REIT shareholders at the 3 November 2021 market value of 94.5p. **Dividends paid in the period (in November 2021) relate to the Q222 DPS declared of 1.25p.
EPRA earnings and DPS
EPRA earnings of c £5.7m during Q322 were lower than the £7.3m generated in Q222 (H122: £13.2m) due to several factors that we do not expect to repeat. These include the timing of disposals and reinvestment and lower occupancy (90.9% at end-Q322 vs 91.6% at end-Q222, primarily due to the acquisition of DRUM with its lower occupancy rate). The DRUM acquisition (financed by equity issuance) contributed for less than two months, while the cash proceeds of profitable disposal remain available for reinvestment. Net gearing of 19.5% at end-Q322 compares with CREI’s 25% target and our forecasts anticipate future capital deployment of £30m, adding c £1.8m to annualised rents, as discussed below. The Q222 DPS paid of 1.25p was nonetheless fully covered by EPRA earnings and year to date DPS declared of 3.875p is 109% covered by EPRA earnings in the period (H122: 1.2%). As previously indicated by CREI, the Q322 DPS declared increased by 10% to 1.375p and the board targets aggregate DPS declared for FY22 of at least 5.25p and for FY23 at least 5.50p. We forecast aggregate FY22 DPS of 5.50p (implying a further increase in Q422 to 1.625p1) and aggregate FY23 DPS of 6.0p.
In FY21 CREI declared five interim dividends amounting to 5.0p including a fifth (‘top up’) interim DPS of 0.5p.
Valuation gains still driven by industrials but with increasing signs of broadening
During Q322, the value of CREI’s investment portfolio increased c 13% to £637.9m. In addition to net investment activity (including the acquisition of DRUM), the like-for-like unrealised gain was £28.9m or 5.2% This excludes the £1.1m net gain on disposals and £7.3m uplift from acquiring the DRUM assets at a discount to NAV.
Exhibit 3: Q322 valuation movements
Sector |
Valuation (£m) |
Weighting |
Valuation movement (£m)* |
|
Industrials |
302.4 |
47% |
21.8 |
8.3% |
Retail warehouse |
120.9 |
19% |
4.8 |
4.5% |
Office |
88.4 |
14% |
(0.3) |
-0.5% |
Other** |
75.0 |
12% |
2.2 |
2.6% |
High street retail |
51.2 |
8% |
0.4 |
1.1% |
Total |
637.9 |
100% |
28.9 |
5.2% |
Source: CREI. Note: *Excludes the £7.3m increase from acquiring the DRUM REIT portfolio at a discount to NAV. **Other comprises drive-through restaurants, car showrooms, trade counters, gymnasiums, restaurants and leisure units.
Positive momentum in the UK commercial property market continued through the final quarter of 2021. The industrial sector, with limited supply and strong demand, and an accelerated shift to online purchasing and supply chain concerns, continues to lead performance, driven by strong rent growth and valuation increases. The office sector has shown signs of benefiting from the gradual ‘return to the office’ with rents increasing for high-quality, flexible office space, with strong environmental credentials in prime regional city centres. Having been hard hit during the pandemic, there are clear signs of improvement in the retail and leisure sector, although it is highly variable across subsectors and retail warehousing continues to drive performance with good growth in capital values. The retail warehouse subsector is benefiting from restricted supply, generally free parking and the convenience that is complementary to growth in online sales, both for click-and-collect and customer returns.
CREI’s portfolio valuation movements reflect these market trends, with its strong weighting of industrials and retail warehouses being particularly beneficial. Asset management initiatives (such as lettings, lease renewals and regears) added £6.2m.
Acquisitions and disposals
CREI’s agreed acquisition of DRUM became effective on 3 November 2021 and is covered in detail in our December update note. Consideration for the acquisition was settled by the issue of c 20.2m new CREI shares, calculated on an ‘adjusted NAV-for-NAV basis’ with each company’s 30 June 2021 net asset value (NAV) being adjusted for respective acquisition costs and adjusting DRUM’s portfolio valuation to the agreed purchase price of £43.5m (end-Q322 valuation: £49.0m). CREI and DRUM are a good fit, with both companies focusing on smaller lot size regional commercial property assets, and both aiming to provide shareholders with an attractive level of dividend, fully covered by earnings.
Additionally, during Q322, CREI invested £7.5m in the following assets:
■
An industrial unit in York for £3.0m occupied by Menzies Distribution reflecting a net initial yield (NIY) of 5.9%.
■
A retail warehouse in Cromer for £4.5m occupied by Homebase reflecting a NIY of 6.3%.
Three assets were sold for an aggregate consideration of £14.8m, generating £1.1m of disposal gains (before costs) on the end-Q222 valuation, comprising:
■
A car showroom in Stockport for £9.0m, £1.14m (18%) ahead of the 30 June valuation.
■
A car showroom in Stafford for £4.9m, £1.2m (31%) ahead of the 30 June valuation.
■
High street retail units in King’s Lynn and Cheltenham at valuation for an aggregate £0.9m.
Since end-Q322, CREI has sold a high street retail unit in Norwich for £1.3m, in line with valuation.
Focused on premium yield smaller lot size assets
CREI’s focus on properties with smaller individual values (lot sizes of less than £10m at the point of investment) differentiates it from most of its peers. Properties of this size typically provide a yield premium over larger assets, in part the result of a broader range of potential occupiers, while attracting less competition from larger institutional investors. The end-Q322 portfolio, valued at £637.9m, reflected a net initial yield of 6.1% and comprised 160 different properties, at an average lot size of c £4.0m.
Exhibit 4 compares the transaction net initial yields for properties below £10m versus those above, on a two-year rolling average basis. On this basis, over a 20-year period the spread of sub-£10m transactions over those of more than £10m has averaged c 1.1%. The most recent data show a spread of c 1.9% compared with c 1.4% immediately before the pandemic. In part, this widening may reflect investor perceptions of relative risk to the extent that smaller properties may be disproportionately let to smaller tenants, perhaps more exposed to the impacts of the pandemic. However, this is not always the case and CREI’s targeting of ‘institutional-quality’ tenants, portfolio diversification, active asset management and relatively low cost base all mitigate the potential increased risks and management costs associated with smaller lot sizes. In this way, CREI has harnessed the yield premium to deliver attractive total returns since IPO, driven by dividends paid. In addition to the income premium, with capital values across the broad commercial market recently driven by strong institutional investment, primarily into larger assets, there appears to be ‘catch up’ potential in smaller assets, as has occurred historically.
Exhibit 4: Comparison of transaction yields on assets of less than £10m and those greater than £10m* |
Source: CREI. Note: *Two-year rolling average basis. |
Forecasts and valuation
The Q322 revaluation gains were well above the level assumed in our forecasts and we have lifted our NAV per share estimates accordingly. Otherwise, our forecasts, set out in detail in our December update note are unchanged other than our FY24 DPS assumption. Reflecting on our previous assumption of a 6.65p aggregate FY24 DPS, 101% covered, we are more prudently assuming 6.50p, 103% covered. We continue to assume acquisitions of £30m (including costs) by the end of FY22, at a yield of 6%, adding £1.8m to annual contracted rent. On a pro forma basis, this would take Q322 net loan to value (LTV) to c 23% from 19.5%, utilising existing debt and cash resources.
CREI’s target of aggregate DPS of at least 5.25p per share in FY22 represents a prospective yield of 5.25%. As noted above, we forecast higher DPS than the minimum targeted by CREI in both FY22 (5.50p versus a targeted minimum 5.25p) and FY23 (6.00p versus a targeted minimum 5.50p). Our FY22 DPS forecast represents a 5.50% prospective yield. The share price has not kept pace with the growth in NAV and the c 12% discount to Q322 NAV (113.7p) compares with an average c 5% since IPO in March 2014.
In Exhibit 5, we show a summary performance and valuation comparison of Custodian and what we consider to be its closest diversified income-oriented peers. For comparative purposes, the yield and P/NAV data are shown on a trailing basis. CREI’s share price performance is below the peer group average over 12 months, reflecting the fact that it was more stable during the pandemic sell-off in early 2020 and has therefore shown a lesser rebound. CREI trades on a higher P/NAV than the average of the group, as it has done for most of the period since IPO, and its trailing yield is slightly above average. Factors supporting CREI’s valuation include its strong income focus and uninterrupted quarterly DPS during the pandemic (albeit at a reduced level), moderate gearing and a focus on smaller lot size properties with a yield premium that has historically supported risk-adjusted income returns.
Exhibit 5: Peer performance and valuation comparison
Price |
Market |
P/NAV* |
Trailing |
Share price performance |
||||
One month |
Three months |
12 months |
From 12-month high |
|||||
Ediston Property |
76 |
161 |
0.85 |
6.3 |
-13% |
-3% |
12% |
-14% |
BMO Real Estate Investments |
85 |
205 |
0.70 |
4.3 |
-8% |
-4% |
10% |
-11% |
BMO Commercial Property Trust |
106 |
788 |
0.78 |
4.0 |
-8% |
3% |
49% |
-11% |
Picton |
95 |
519 |
0.84 |
3.6 |
-11% |
-5% |
9% |
-11% |
Regional REIT |
86 |
444 |
0.87 |
7.6 |
-4% |
-6% |
14% |
-10% |
Schroder REIT |
50 |
247 |
0.76 |
5.3 |
-10% |
-5% |
23% |
-12% |
Standard Life Investment Property |
76 |
300 |
0.75 |
4.9 |
-9% |
0% |
23% |
-14% |
UK Commercial Property REIT |
76 |
981 |
0.74 |
3.6 |
-7% |
-3% |
9% |
-13% |
Average |
0.79 |
5.1 |
-9% |
-3% |
19% |
-12% |
||
Custodian |
100 |
440 |
0.88 |
5.1 |
-7% |
2% |
7% |
-8% |
UK property sector index |
1,795 |
-6% |
-9% |
10% |
-12% |
|||
UK equity market index |
4,016 |
-3% |
-4% |
6% |
-7% |
Source: Company data, Refinitiv price data at 24 February 2022. Note: *Based on last reported NAV. **Based on trailing 12-month dividends declared.
Exhibit 6: Financial summary
Year end 31 March, £m |
2017 |
2018 |
2019 |
2020 |
2021 |
2022e |
2023e |
2024e |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
|
PROFIT & LOSS |
||||||||
Gross rental income |
27.0 |
34.1 |
39.1 |
40.0 |
38.7 |
39.1 |
41.8 |
42.4 |
Non-recoverable property costs |
(1.2) |
(0.9) |
(1.5) |
(1.5) |
(2.0) |
(2.9) |
(2.4) |
(2.4) |
Rent receivables provisions/write |
0.0 |
0.0 |
0.0 |
(0.3) |
(3.6) |
(0.2) |
0.0 |
0.0 |
Net rental income |
25.7 |
33.2 |
37.6 |
38.1 |
33.1 |
36.0 |
39.4 |
40.0 |
Administrative expenses |
(3.6) |
(4.4) |
(4.9) |
(4.8) |
(4.6) |
(5.2) |
(5.6) |
(5.7) |
Operating Profit before revaluations |
22.1 |
28.8 |
32.7 |
33.4 |
28.5 |
30.8 |
33.9 |
34.3 |
Revaluation of investment properties |
9.0 |
11.9 |
(5.5) |
(25.9) |
(19.6) |
71.4 |
6.7 |
7.9 |
Costs of acquisitions |
(6.1) |
(6.2) |
(3.4) |
(0.6) |
(0.7) |
(3.1) |
0.0 |
0.0 |
Profit/(loss) on disposal |
1.6 |
1.6 |
4.3 |
(0.1) |
0.4 |
5.3 |
0.0 |
0.0 |
Operating Profit |
26.6 |
36.1 |
28.0 |
6.8 |
8.6 |
104.4 |
40.5 |
42.3 |
Net Interest |
(2.4) |
(3.7) |
(4.4) |
(4.7) |
(4.8) |
(4.9) |
(5.3) |
(5.3) |
Profit Before Tax |
24.2 |
32.4 |
23.6 |
2.1 |
3.7 |
99.5 |
35.2 |
37.0 |
Taxation |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
Profit After Tax |
24.2 |
32.4 |
23.6 |
2.1 |
3.7 |
99.5 |
35.2 |
37.0 |
Net revaluation of investment property/costs of acquisition |
(2.9) |
(5.6) |
8.9 |
26.4 |
20.3 |
(68.3) |
(6.7) |
(7.9) |
Gains/(losses) on disposal |
(1.6) |
(1.6) |
(4.3) |
0.1 |
(0.4) |
(5.3) |
0.0 |
0.0 |
EPRA earnings |
19.7 |
25.2 |
28.5 |
28.7 |
23.7 |
25.9 |
28.5 |
29.6 |
Average Number of Shares Outstanding (m) |
298.7 |
362.4 |
391.9 |
409.7 |
420.1 |
428.8 |
440.9 |
440.9 |
IFRS EPS (p) |
8.10 |
8.9 |
6.0 |
0.5 |
0.9 |
23.2 |
8.0 |
8.4 |
EPRA EPS (p) |
6.59 |
6.9 |
7.3 |
7.0 |
5.6 |
6.0 |
6.5 |
6.7 |
Dividend per share (p) |
6.35 |
6.45 |
6.55 |
6.65 |
5.00 |
5.50 |
6.00 |
6.50 |
Dividend cover (x)* |
1.01 |
1.06 |
1.10 |
1.04 |
1.13 |
1.09 |
1.08 |
1.03 |
Ongoing charges ratio (excluding property expenses) |
0.32% |
0.33% |
0.34% |
1.11% |
1.12% |
1.17% |
1.15% |
1.16% |
BALANCE SHEET |
||||||||
Fixed Assets |
418.5 |
528.9 |
572.7 |
559.8 |
551.9 |
669.1 |
680.3 |
692.9 |
Investment properties |
418.5 |
528.9 |
572.7 |
559.8 |
551.9 |
669.1 |
680.3 |
692.9 |
Other non-current assets |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
Current Assets |
10.3 |
12.9 |
6.1 |
30.7 |
9.9 |
21.1 |
20.3 |
17.1 |
Debtors |
4.5 |
7.9 |
3.7 |
5.3 |
6.0 |
6.0 |
7.6 |
7.7 |
Cash |
5.8 |
5.1 |
2.5 |
25.4 |
3.9 |
15.1 |
12.8 |
9.4 |
Current Liabilities |
(12.6) |
(12.8) |
(14.2) |
(14.9) |
(12.8) |
(15.3) |
(16.7) |
(16.8) |
Creditors/Deferred income |
(12.6) |
(12.8) |
(14.2) |
(14.9) |
(12.8) |
(15.3) |
(16.7) |
(16.8) |
Short term borrowings |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
Long Term Liabilities |
(64.4) |
(113.9) |
(138.1) |
(148.9) |
(139.2) |
(169.1) |
(169.5) |
(169.8) |
Long term borrowings |
(63.8) |
(113.4) |
(137.5) |
(148.3) |
(138.6) |
(168.6) |
(168.9) |
(169.2) |
Other long-term liabilities |
(0.6) |
(0.6) |
(0.6) |
(0.6) |
(0.6) |
(0.6) |
(0.6) |
(0.6) |
Net Assets |
351.9 |
415.2 |
426.6 |
426.8 |
409.9 |
505.7 |
514.5 |
523.3 |
NAV/share (p) |
103.8 |
107.3 |
107.1 |
101.6 |
97.6 |
114.7 |
116.7 |
118.7 |
EPRA NAV/share (p) |
103.8 |
107.3 |
107.1 |
101.6 |
97.6 |
114.7 |
116.7 |
118.7 |
NAV total return |
8.5% |
9.6% |
5.9% |
1.1% |
0.9% |
23.5% |
7.0% |
7.2% |
CASH FLOW |
||||||||
Operating Cash Flow |
23.1 |
28.4 |
36.0 |
31.0 |
23.8 |
31.5 |
32.1 |
32.8 |
Net Interest |
(2.2) |
(3.5) |
(4.2) |
(4.4) |
(4.5) |
(4.6) |
(5.0) |
(5.0) |
Tax |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
Net additions to investment property |
(92.1) |
(105.9) |
(46.2) |
(12.2) |
(10.1) |
0.3 |
(3.0) |
(3.0) |
Ordinary dividends paid |
(18.5) |
(23.0) |
(25.5) |
(27.0) |
(20.6) |
(24.5) |
(26.5) |
(28.1) |
Debt drawn/(repaid) |
(1.0) |
49.4 |
24.0 |
10.5 |
(10.1) |
7.0 |
0.0 |
0.0 |
Proceeds from shares issued (net of costs) |
91.1 |
53.9 |
13.3 |
25.0 |
0.0 |
0.6 |
0.0 |
0.0 |
Other cash flow from financing activities |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.8 |
0.0 |
0.0 |
Net Cash Flow |
0.4 |
(0.7) |
(2.6) |
22.9 |
(21.5) |
11.2 |
(2.3) |
(3.3) |
Opening cash |
5.5 |
5.8 |
5.1 |
2.5 |
25.4 |
3.9 |
15.1 |
12.8 |
Closing cash |
5.8 |
5.1 |
2.5 |
25.4 |
3.9 |
15.1 |
12.8 |
9.4 |
Debt as per balance sheet |
(63.8) |
(113.4) |
(137.5) |
(148.3) |
(138.6) |
(168.6) |
(168.9) |
(169.2) |
Unamortised loan arrangement fees |
(1.2) |
(1.6) |
(1.5) |
(1.7) |
(1.4) |
(1.1) |
(0.8) |
(0.4) |
Total debt |
(65.0) |
(115.0) |
(139.0) |
(150.0) |
(140.0) |
(169.7) |
(169.7) |
(169.7) |
Restricted cash |
(1.3) |
(1.3) |
(1.4) |
(0.9) |
(1.2) |
(1.1) |
(1.1) |
(1.1) |
Closing net debt |
(60.5) |
(111.3) |
(137.9) |
(125.5) |
(137.3) |
(155.7) |
(158.0) |
(161.3) |
Net LTV |
14.4% |
21.0% |
24.1% |
22.4% |
24.9% |
23.3% |
23.2% |
23.3% |
Source: CREI historical data, Edison Investment Research forecasts
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Research: Real Estate
Regional REIT (RGL) has declared a Q421 DPS of 1.7p, taking the total for the year to 6.5p, which we forecast will be fully covered by EPRA earnings reported when the results to 31 December 2021 (FY21) are reported on 29 March. The attractive dividend yield of 7.4% is one of the highest in the UK REIT sector and RGL believes the office sector is poised for recovery.
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