LONDON, UK: Custodian REIT (LSE: CREI), which seeks to deliver a strong income return by investing in a diversified portfolio of smaller regional properties across the UK, announced the disposal of an industrial unit in Kilmarnock at auction for £1.4 million at a 12% premium to its 30 June 2022 valuation.

The environmental credentials of the 18,424 sq ft warehouse and distribution unit no longer fit with the Company’s ESG objectives and it was not considered practical to mitigate these risks. Having recently increased the lease term by 10 years it was considered the right time to sell and crystallise a valuation uplift.

Commenting on the disposal, Richard Shepherd-Cross, Managing Director of Custodian Capital Limited (the Company’s external fund manager), said: “The sale of this industrial unit at a premium to valuation demonstrates the ongoing liquidity in the market for smaller lot sized commercial real estate, underscoring our investment thesis.

Having acquired this property as part of our IPO portfolio eight years ago and having recently increased the lease term until 2032, we felt that now was an opportune time to crystallise the value we have created.

The proceeds of the disposal will be recycled into identified improvements to the remaining portfolio which we believe will be more accretive and better support the strategy of providing shareholders with strong income returns.”

Custodian REIT plc is a UK real estate investment trust, listed on the main market of the London Stock Exchange. Its portfolio comprises properties predominantly let to institutional grade tenants on long leases throughout the UK and is principally characterised by properties with individual values of less than £15 million 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 £15 million lot size, regional properties, 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.