Custodian Property Income REIT has purchased eight separate syndicated property investment vehicles managed by Lincoln Property Syndicates for £11m.
The portfolio, which comprises retail and industrial properties primarily located in the East Midlands, is fully let. It has an average lot size of £1.4m and generates an annual aggregate passing rent of £0.8m, with a net initial yield of circa 6.7% and a reversionary yield of 7.2%.
The average occupier tenure across the portfolio is nine years with a weighted average unexpired lease term of six years.
Richard Shepherd-Cross, managing director of Custodian Capital, the REIT’s investment manager, said: “We have been consistent in our ambition to scale the business and grow earnings through strategic portfolio acquisitions and disciplined consolidation. This latest transaction underscores the momentum we are building with a strategy and demonstrates precisely how our listed status and smaller lot size investment focus enable us to offer a genuine structural solution to syndicated property investors or owners of family portfolios seeking liquidity or simplification of their holdings.
“This innovative approach is particularly important as we seek to grow against a challenging capital markets backdrop. 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. 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.”
Andy Dyson, director of Lincoln Property Syndicates, added: “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. 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.
“This transaction with Custodian Property Income REIT has provided us with precisely the solution our investors needed. It addresses succession challenges for everyone, removes the operational and compliance burden of managing property in a syndicated structure, and gives our investors liquid shareholdings they can increase or reduce to suit their own circumstances.
“Critically, our investors can continue to benefit from exposure to these assets, now within a larger, more diversified portfolio, professionally managed with a strong track record of income delivery reducing investment risk. We have built an excellent working relationship with the Custodian team and, as incoming shareholders, we all look forward to continuing that partnership.”
