Custodian Property Income REIT is hunting for takeover targets after a planned acquisition of Abrdn Property Income Trust fell apart earlier this year.
As the company announced interim results, chairman David MacLellan said the REIT would “continue to look for opportunities to grow the company through corporate acquisitions”.
He added: “While the economic and political picture is still uncertain, the outlook for 2025 is very much brighter for real estate than at the same time in both of the last two years. The indicators of an imminent but gradual recovery in capital values strongly outweigh the risks of continued malaise.
“Valuations have been flat, and slightly up since December 2023, while vacancy rates have continued to fall, and both passing rent as well as estimated rental values have improved, with private equity becoming increasingly active in the sector. Furthermore, the Bank of England has cut interest rates twice and the listed real estate sector has seen ratings improve as share prices narrow the discount to net asset value.”
Ed Moore at investment manager Custodian Capital said: “In the indirect market we have seen significant corporate activity, often led by private equity, and a narrowing of discounts to NAV. Both private equity activity and advancing share prices are lead indicators of a recovering direct market. It is disappointing to see publicly owned real estate being sold into private hands at this point in the cycle, but we believe it is still possible to access attractive income returns with the prospect of capital growth from listed UK real estate.”
In an interview with EG earlier this year, Custodian Capital managing director Richard Shepherd-Cross said the company would still look for deals despite not winning API.
“Someone asked me the other day, ‘Are you put off corporate activity on the back of it?’” he said then. “I said, ‘Absolutely not’. I feel like a terrier that’s been bitten by a rat. I’m now really angry and I really want to do one.”
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