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Custodian Property Income REIT PLC on Monday announced it has bought a £22.1 million portfolio via the acquisition of family property firm Merlin Properties Ltd. The Leicester, England-based real estate investment trust said the portfolio comprised of £19.4 million in 28 smaller lot-size regional UK investment properties, plus around £2.7 million of newly-built housing stock, the ongoing sale of which is expected to complete in the next few months. The investment portfolio with an average lot-size of £700,000 is located primarily in the East Midlands, and will generate an annual aggregate passing rent of £1.7 million. This reflects a net initial yield of around 8.1% from a 99% occupancy. The portfolio is 46% weighted by income towards the industrial sector, Custodian added, which is in line with the trust’s existing portfolio. The remaining income is spread between offices and retail properties. Custodian will acquire Merlin Properties through the issuance of 22.9 million new shares as an initial consideration, on an adjusted net asset value for NAV basis. Around 1.7 million further shares are expected to be issued upon completion of the acquisition, within the next six months. The total consideration represents around 5.6% of Custodian’s current issued share capital. When the deal completes, the Merlin board will resign as directors with immediate effect. Merlin’s Property Manager Rob Field will transfer to Custodian’s investment manager, Custodian Capital Ltd. ‘We have been clear that a key element of our strategy is to seek opportunities to scale the business through corporate and/or portfolio acquisitions. In an environment where current market conditions make further capital raisings through the stock market challenging, this strategic transaction via an all-share acquisition on an adjusted NAV-for-NAV basis allows us to circumnavigate that issue and continue to grow,’ said Custodian Capital Managing Director Richard Shepherd-Cross. ‘In addition to enhancing earnings per share and decreasing net gearing, the transaction provides us with a portfolio that is both a strong fit with our income-focused strategy and highly complementary to our existing property portfolio, augmenting our regional, industrial bias and adding further diversification by tenant.’ Shares in Custodian Property were down 1.2% at 82.00 pence each in London on Monday morning. The stock is up 11% over the past year. Copyright 2025 Alliance News Ltd. All Rights Reserved.
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