Custodian scoops up East Midlands industrial portfolio

A Leicester-based REIT has acquired eight retail and industrial properties across the East Midlands in an £11m deal with Lincoln Property Syndicates.

Custodian Property Investments has paid £400,000 up front, with the remaining £10.6m raised via a share issue.

The portfolio is fully occupied and generates annual passing rent of £788,000, with a net initial yield of approximately 6.7%. Its tenants include the Co-op, which accounts for 51% of rental income, Home Bargains (20%) and Costa Coffee (9%), alongside other retail and industrial occupiers.

Custodian Property Investments has a diverse portfolio of around 150 properties across the UK, valued at around £670m.

Richard Shepherd-Cross, managing director of Custodian Capital, said the acquisition underscored the REIT’s momentum.

“We believe many UK property syndicates face the same structural challenges: liquidity, succession and the growing burden of compliance, and that the listed REIT structure offers the most effective solution to retain their investment exposure to UK property,” he said.

“The transaction delivers a high-quality, complementary portfolio that will grow earnings per share and improve dividend cover as the portfolio reversion is captured, while keeping net gearing within our target range. It is a further demonstration of our commitment to generating shareholder value through disciplined consolidation.”

The properties have an average lot size of £1.4m, an average occupier tenure of nine years and a weighted average unexpired lease term of six years.

Andy Dyson, director of Lincoln Property Syndicates, said the transaction addressed succession challenges and gave investors liquid shareholdings they could increase or reduce to suit their circumstances.

“This portfolio has been curated and managed under private ownership for over 10 years, and as syndicate managers, we had started to contemplate succession, acknowledging that many of our investors require greater liquidity,” he said.

“It has become increasingly difficult to manage the portfolio within a syndicate structure as our investor base ‘matures’ and next generation engagement is, by its nature, different and a growing concern.

“We have built an excellent working relationship with the Custodian team and, as incoming shareholders, we all look forward to continuing that partnership.”