The board of investment firm Custodian REIT may review its strategy in the wake of the General Election, although its top team says it is hopeful that the result will unleash an “upsurge in confidence”.
As voters head to the polls, Custodian announced interim results for the six months to the end of September. Net asset value per share dropped about 4% year-on-year to 104.3p, with NAV per share total return at 0.5%. Pre-tax profit plummeted to £700,000 from £16.6m a year ago.
The value of the REIT’s property portfolio was flat year-on-year at £547m, but down from £572.7m in March 2019.
The company noted that acquisition targets have been “in very short supply”, highlighting that the six-month period has been the first since its listing in 2014 during which it has made no purchases.
In a summary of the REIT’s portfolio risk, investment manager Custodian Capital said it is “too early to understand the full impact of Brexit on revenues and the property portfolio valuation while the terms of the UK’s future trading arrangement with the EU remain unclear”.
It added: “If appropriate, the board will review strategy following the General Election, but the company’s focus on diversified and income producing assets is intended to be resilient to political change.”
For now, the team does not expect any “meaningful change” in demand for UK property in the coming months.
“We anticipate the impact of the General Election and the conundrum of Brexit will continue to occupy investors’ thoughts and we anticipate a period of continued relative inaction while investors wait to see what happens next,” its report said.
“However, we believe a clear outcome from the General Election could produce an upsurge in confidence and activity and we remain ready with available undrawn debt facilities to exploit any opportunities which may arise. Meanwhile, the occupational market in the regions remains short of supply, which continues to support rental growth in office and industrial markets.”
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