Custodian Reit keeps on paying

Gross rental income in the year to March 2017 grew from £18.6m to £27m, and an increased dividend payout, one of the highest in the real-estate sector, was covered by recurring income. The dividend target for the coming year has been increased to 6.45p a share. After taking into account acquisition costs, there was a net valuation increase of £2.9m on the portfolio compared with a £2.7m downshift last year, and this helped to lift net asset value (NAV) by 2 per cent.

Demand for commercial space held up despite a host of uncertainties, but the principal pillar underpinning rental growth once again was an almost complete absence of new supply. There have been some very early signs of speculative construction, although major lenders are still reluctant to lend. What's more, average rents of around £5 per sq ft are still well below the £6.50 level that makes it economical for developers to build.

Finances remain in good shape, with the loan-to-value ratio sitting at a modest 14.5 per cent. And the intention is to allow gearing to rise to 25 per cent LTV in line with portfolio growth. The average cost of debt remained at 3.1 per cent, with over three-quarters of all debt now on a fixed rate.