Custodian Property Income acquires £36m mixed-use portfolio

Custodian Property Income REIT has acquired a mixed-use portfolio of properties for £35.9m.

The transaction was completed through the acquisition of Grove Court Properties, a family property company.

The portfolio comprises seven assets with an average lot size of £5.3m, each of which are located in Beaconsfield and Gerrards Cross, in close proximity to the M25 motorway.

The properties generate an annual aggregate passing rent of £2.7m, adding around 6% to Custodian Property Income’s annual rent roll, and has a net initial yield of 6.8%.

The portfolio’s tenant lineup includes 18% high street retail, 5% leisure, and 26% motor trade. Residential and office properties make up the remainder.

Custodian Property Income said its investment manager has identified a number of opportunities to drive further value from the portfolio by utilising its asset and portfolio management expertise to increase rental income from lease events.

David MacLellan, chair of Custodian Property Income, said: “The addition of this portfolio will enhance tenant diversification and provide further defensive income to drive earnings, while reducing our ongoing charges ratio and maintaining the balance sheet strength.  In a short space of time, this innovative strategy of using our shares to acquire family held property holdings has proved to be an effective way to achieve scale.  We will continue to pursue further opportunities in this space, enabling family-owned businesses to benefit from our income focused strategy alongside existing shareholders.

“The ability of the Company to use its shares as consideration, issued at adjusted NAV, is an endorsement of the company’s long-term strategy and the appeal of the income it is able to generate from a diversified portfolio of commercial property.”

Dan Pilling, outgoing director of Grove Court Properties, added: “While the GCP portfolio has been curated and maintained under family ownership for the last 40 years, it has become increasingly difficult to manage this investment both in today’s environment and as we start to plan to pass it on to the next generation.  This transaction with Custodian Property Income REIT has provided us with a tax efficient solution and simplified ownership structure that ensure our family can continue to benefit from our property investments but within a larger, more diversified portfolio and through a professionally managed fund with a strong track record of income returns.  We have built an excellent working relationship with the Custodian team and we look forward to continuing this in the future.”