Custodian REIT plc

10/02/2019 | Press release | Distributed by Public on 10/02/2019 02:41

Custodian REIT plc : Acquisition of Property Portfolio

2 October 2019

Custodian REIT plc

('Custodian REIT' or 'the Company')

Acquisition ofProperty Portfolio

Custodian REIT (LSE: CREI), the UK property investment company, is pleased to announce the acquisitionof a £24.65million portfolio of properties ('the Portfolio')via a sale and leaseback transaction with Menzies Distribution Limited('MDL').

The Portfolio

The Portfolio comprises eight 'last mile'distribution units spread throughout the UKwith a passing rent of £1.61 million,reflectinga net initial yield of 6.4%1. The Portfolio's weighted average unexpired lease termto first break or expiry ('WAULT') is 8.8years.

The Company acquired the Portfolio by purchasing the entire issued share capital of John Menzies Property 4 Limited which owns the Portfolio. Alleight properties are let on new 10 year leaseswith only one unit having a second-yearbreak option. The leases provide for a 13.1% fixed rental uplift at year five. The Portfolio is let to MDL,one of the UK's leading print medialogistics companies, servicing 1,700 routes per day from over 50 sites across the UK and Ireland. The acquisition was funded usingthe Company's existing debt facilities, increasing the Company'sborrowings to 23.2%loan-to-value2.

Commenting on the acquisition, Richard Shepherd-Cross, Managing Director of Custodian Capital Limited (the Company's discretionary investment manager), said:

'The Portfolio is strongly aligned to Custodian REIT'sinvestment strategy and complementary to its existing property portfolio. The pricing advantage of pursuing a smaller lot size, regional strategy is evident when compared with pricing inthe highly competitive market for logistics assets. This acquisition enhances the WAULT of the Company's property portfolio, supplementsregional diversification and additionally provides secure cash flow with the certainty of fixed rental upliftsin 2024.

'Following this transaction, MDL willbecome Custodian REIT's largest tenant, but still representing only3.9% of the rent roll. No one property in the Portfolio will account for more than 0.7% of the Company's rent roll, supporting the continued drive to mitigate risk through diversificationand stock selection. We are very pleased to enter into a long term relationshipwith MDL, a dynamic company offering a strong tenant covenant.

'Thecorporate transaction offered compelling economic benefitsfor the Company and the vendor, compared tothe Companyacquiring the properties directly, demonstrating our commitmentto enhance shareholder value and secureeconomies of scalethrough growth in the fund.'

1 Passing rent divided by purchase pricepluspurchaser's costs.

2 Gross borrowings less unrestricted cash divided by last published property portfolio valuation.

-Ends-

For further information, please contact:

Custodian Capital Limited

Richard Shepherd-Cross / Nathan Imlach/ Ian MattioliMBE

Tel: +44 (0)116 240 8740

www.custodiancapital.com

Numis Securities Limited

Hugh Jonathan/ Nathan Brown

Tel: +44 (0)20 7260 1000

www.numiscorp.com

Notes to Editors

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 propertieswith individual values of less than £10million 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 sub £10 millionlot size, regionalproperties, 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.

For more information visit www.custodianreit.comand www.custodiancapital.com.