Custodian REIT - Income and capital growth supporting valuation

Custodian REIT recently provided an update on the three months ended 31 December 2017 (Q318). NAV total return in the period was a healthy 2.6%, including a 1% increase in EPRA NAV per share, in addition to a quarterly dividend paid of 1.6125p. Management’s aim is to sustainably grow the fully covered dividend and generate less volatile returns than is typical for the sector over time. Its strategy is to maintain high levels of occupancy and grow income through rental growth and accretive acquisitions. The 8% premium to FY18e NAV has proven robust, justified by the conservative gearing and one of the highest dividend yields in the sector.