Custodian Property Income (CREI) has struck its second deal for a family-held property portfolio in under a year with the acquisition of Grove Court Properties, a £35.9m mixed‑use site on the eastern outskirts of London.

The £408m trust, which targets smaller, regional UK properties, is funding the purchase by issuing 24.9m new shares at adjusted net asset value (NAV), plus £9.3m in cash - around 5.4% of its current market value.

The seven assets, located near London’s M25 motorway, are 97% occupied and will generate £2.7m in annual income, adding roughly 6% to CREI’s current rent roll. 

The portfolio has a net initial yield of 6.8%, with the largest tenant slotting in as the trust’s eleventh largest contributor of annualised rent across 430 tenancies. On purchase, its 25% gearing matched CREI’s own 26% borrowing level, keeping the trust’s balance sheet conservative.

The Grove Court board has stepped down, while the property manager, assistant manager, and maintenance manager have all been transferred to Custodian Capital. 

CREI pivoted its focus to family office portfolios after a planned merger with Aberdeen Property Income fell through in 2024, using its listed status and smaller-lot strategy to provide a simple, tax-efficient exit or streamlining solution for families.

The Grove Court acquisition follows a similar move to purchase the Merlin portfolio in May last year, described by managers as a ‘blueprint’ for its new strategy. CREI noted the deal had generated ‘a number of enquiries from similar potential vendors’, with manager Richard Shepherd-Cross today highlighting a ‘healthy pipeline of similar opportunities’ being progressed.

He said the deal was ‘particularly important’ as the trust seeks to gain scale against ‘a challenging capital markets backdrop.’

‘The acquisition we are announcing today gives us another high quality and complementary portfolio which enhances earnings per share and improves dividend cover without impacting net gearing. It is a further demonstration of our commitment to generating shareholder value and the benefits of disciplined consolidation,’ he said.

CREI chair David MacLellan, added: ‘The ability of the company to use its shares as consideration, issued at adjusted NAV, is an endorsement of the Company’s long-term strategy and the appeal of the income it is able to generate from a diversified portfolio of commercial property.’

As of yesterday, CREI trades on a 7.9% discount and yields 6.7%.