Custodian Property Income REIT saw the value of its portfolio fall by £91.6m (11.8%) to £613.6m in the full year to the end of March 2023.
The REIT, which invests in a diversified portfolio of smaller regional, core/core-plus properties across the UK, said that despite the fall there was room room for optimism.
David Hunter, chairman of Custodian Property Income REIT, said: “Our strategy of investing in smaller, regional, core/core-plus property demonstrated its relative resilience and defensive qualities this year as the market corrected to the new interest rate environment, with the company’s portfolio experiencing a 11.8% like-for-like decline in valuations compared to a 17% market decrease.
“Since the year end we are beginning to see some optimism returning to real estate markets following six months of economic turbulence. Valuations appear to have largely stabilised and the company saw a return to a positive quarterly NAV total return per share in Q4.”
Hunter said that although capital values have fluctuated over the last 12 months the underlying occupational property market remained strong.
He added: “Capturing rental growth to support earnings is a key focus of the investment manager in the coming year. In an inflationary environment and with a lack of supply of modern, smaller regional properties we expect to see continued rental growth.
“It will be this growth in income that is likely to form the greater component of total return over the next phase of the property market and we believe that Custodian Property Income REIT’s strong income yielding portfolio, supported by higher-than-peer group EPRA earnings, will underpin shareholder returns.”
