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1. Company Snapshot

1.a. Company Description

Custodian REIT plc is a UK real estate investment trust, which listed on the main market of the London Stock Exchange on 26 March 2014.Its portfolio comprises properties predominantly let to institutional grade tenants on long leases throughout the UK and is principally characterised by small lot sizes, with individual property values of less than £10 million at acquisition.The Company offers investors the opportunity to access a diversified portfolio of UK commercial real estate through a closed-ended fund.


By targeting smaller lot size properties, the Company intends to provide investors with an attractive level of income with the potential for capital growth.Custodian Capital Limited is the discretionary investment manager of the Company.

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1.b. Last Insights on CREI

Custodian REIT Plc's recent performance was negatively driven by a 2.5% NAV total return for Q325, despite income growth, as portfolio values increased for the second consecutive quarter. Occupier market conditions and rent growth remain uncertain, with the company only cautiously optimistic about the market reaching an inflection point. This cautious outlook, combined with a yield of 7.8%, may have contributed to the company's recent performance.

1.c. Company Highlights

2. Transcript Summary

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3. NewsRoom

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With 88% ownership of the shares, Custodian Property Income REIT plc (LON:CREI) is heavily dominated by institutional owners

Nov -10

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Edison Issues Report on Custodian Property Income REIT (CREI)

Sep -29

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The past three years for Custodian Property Income REIT (LON:CREI) investors has not been profitable

Aug -18

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Custodian Property Income REIT plc's (LON:CREI) Financial Prospects Don't Look Very Positive: Could It Mean A Stock Price Drop In The Future?

May -28

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Edison Issues Report on Custodian Property Income REIT (CREI)

Feb -07

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With 85% ownership of the shares, Custodian Property Income REIT plc (LON:CREI) is heavily dominated by institutional owners

Oct -11

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Shareholders in Custodian Property Income REIT (LON:CREI) are in the red if they invested five years ago

Sep -14

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Custodian Property Income REIT Full Year 2024 Earnings: Beats Expectations

Jun -15

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.91%)

6. Segments

Rental Income from Investment Property

Expected Growth: 3%

Rental income growth of 3% driven by increasing demand for commercial spaces, strategic property acquisitions, and proactive asset management. Additionally, Custodian REIT Plc's diversified portfolio and strong tenant covenants contribute to the growth, while the company's focus on active management and refurbishment of properties further enhances rental yields.

Recharges to Tenants

Expected Growth: 2%

The 2% growth in recharges to tenants from Custodian REIT Plc is driven by increasing demand for industrial and logistics spaces, strategic acquisitions, and proactive asset management. Additionally, the REIT's focus on income generation and cost control measures have contributed to the growth, along with a favorable interest rate environment and a strong UK economy.

Other

Expected Growth: 1%

Custodian REIT Plc's 1% growth is driven by increasing demand for industrial and logistics spaces, strategic acquisitions, and proactive asset management. Strong occupier demand, particularly from e-commerce and third-party logistics providers, has fueled rental growth. Additionally, the company's focus on income generation and capital recycling has enhanced its portfolio's quality and resilience.

7. Detailed Products

Industrial Properties

Custodian REIT Plc offers a diverse portfolio of industrial properties, including warehouses, distribution centers, and light industrial units, providing flexible and functional spaces for businesses to operate efficiently.

Office Spaces

The company provides a range of office spaces, from modern and refurbished buildings to historic and listed properties, catering to various business needs and preferences.

Retail Properties

Custodian REIT Plc's retail portfolio includes high-street shops, shopping centers, and retail parks, offering prime locations for retailers to showcase their products and services.

Healthcare Properties

The company's healthcare portfolio comprises medical centers, clinics, and healthcare facilities, providing essential services to local communities.

Leisure Properties

Custodian REIT Plc's leisure portfolio includes hotels, restaurants, and entertainment venues, catering to the hospitality and leisure industry.

8. Custodian REIT Plc's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Custodian REIT Plc is medium due to the availability of alternative investment options in the real estate sector.

Bargaining Power Of Customers

The bargaining power of customers for Custodian REIT Plc is low due to the company's diversified portfolio and lack of dependence on a single tenant.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Custodian REIT Plc is medium due to the company's reliance on a few large suppliers for property management and maintenance services.

Threat Of New Entrants

The threat of new entrants for Custodian REIT Plc is low due to the high barriers to entry in the UK real estate market, including regulatory hurdles and capital requirements.

Intensity Of Rivalry

The intensity of rivalry for Custodian REIT Plc is high due to the competitive nature of the UK real estate market, with many established players vying for market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 28.72%
Debt Cost 3.95%
Equity Weight 71.28%
Equity Cost 5.22%
WACC 4.85%
Leverage 40.30%

11. Quality Control: Custodian REIT Plc passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

0.82$

Current Price

0.82$

Potential

-0.00%

Expected Cash-Flows