Custodian REIT has sold its only high street shopping centre for €10.6m (£9.3m). The company purchased the 73,367ft² shopping centre in Gosforth as part of its acquisition of DRUM Income Plus REIT in November 2021 and the price reflects a 3.5% premium to the €10.1m (£8.9m) apportioned value of the asset at that time. Since the acquisition, the company has completed a number of asset management activities which have increased occupancy from 93.6% to 95.7% and grown the rent roll by £78k (8.5%), with the asset producing €1m (£0.9m) of rental income over the period of ownership. The company intends to invest the sale proceeds in its ongoing pipeline of building refurbishments, which is expected to enhance rents and improve the environmental performance of the company’s portfolio.
Commenting on the disposal, Richard Shepherd-Cross, Managing Director of Custodian Capital Limited (the Company’s external fund manager), said: “Shopping centres as a sector have not performed well since the COVID-19 pandemic and do not fit comfortably within our investment objectives of selecting high quality, well located regional properties in areas where future rental growth is underpinned by strong supply/demand fundamentals. The asset management work completed since acquisition and the accretive terms of the DRUM Income Plus REIT plc purchase have allowed us to achieve a profitable sale despite current market uncertainty. This disposal provides additional capital for our programme of improving assets we feel will better capture tenant demand over the long term as well as enhancing their environmental credentials.”
