Custodian REIT (LSE: CREI), the UK property investment company, is pleased to announce the disposal of a property from its portfolio.
The Company has sold a 119,600 sq ft industrial warehouse unit in Wolverhampton for £6.6 million, in line with the 30 June 2019 valuation, representing a net initial yield1 of 7.27%.
The property was purchased in June 2016 for £4.5 million as part of a three-property portfolio. Following the disposal, net gearing2 has decreased to 21.3%. The Company intends to use the proceeds from the disposal to fund acquisitions better aligned to its stated investment strategy.
Commenting on the disposal, Richard Shepherd-Cross, Managing Director of Custodian Capital Limited (the Company’s external fund manager), said:
“Our ongoing commitment to portfolio management has led to a 42% rental increase and a significant valuation increase since acquisition. While the property has delivered consistent cash flow, we felt that with four years remaining on the lease and current market sentiment to the industrial sector, the time was right to dispose of the asset and crystallise the 47% valuation gain since acquisition.”
1 Passing rent divided by sale price plus estimated purchasers’ costs.
2 Gross borrowings less unrestricted cash divided by last published property portfolio valuation.