Custodian Property Income REIT plc (CREI) Earnings Call Transcript & Summary

Good afternoon, and welcome to the Custodian Property Income REIT plc Investor Presentation. [Operator Instructions] The company may not be in a position to answer every question received during the meeting itself. However, the company can review questions submitted today and publish responses, where it's appropriate to do so. Before we begin, I'd like to submit the following poll. And I'd now like to hand you over to Richard Shepherd-Cross,, Investment Manager. Good afternoon, sir.

Good afternoon, and good afternoon, everyone, who has joined on this last day of January. We've dealt with Blue Monday. I think for many, when you take a look at the economy, it's been a fairly blue January. So I hope to offer some more optimistic words as we look forward into 2025, and talk to you about Custodian Property Income REIT. We set out to be the REIT of choice for those private and institutional investors looking for high and stable dividends from well-diversified U.K. real estate. And I thought it would be good to start by looking at what other people have said. So not my thoughts, although I echo a lot of what I have seen in the property press and in the broad sheets, and because these are other people's words, I'm going to read some of these to you, if not all of them. The first says that, "We are forecasting stronger returns in 2025 compared with 2024." This is talking about the direct property market. "This is driven largely by resilient occupational markets, above-trend leasing, robust rental growth, improved investor sentiment and lower debt costs." And I think we are seeing, in Custodian Property Income REIT, all of those things, strong occupational markets, good rental growth, investor sentiment certainly picking up in the direct markets and the prospect of lower debt costs, although January has perhaps extended the time period over which we might expect to see those falling debt costs. The next quote is that, "I think that income return will likely remain a key factor." And linked to that, "There's a big need to focus on the quality of your income, especially in the softer macro environment." And again, those 2 thoughts both really chime with our strategy. We have always been unashamedly focused on income. And if you're focused on income, quality of income and the risk of your rent roll is really important to focus on, and we'll pick up some of those thoughts as we go through. Then even if rents -- if rates -- and we're talking about gilt rates here, I think. "Even if rates trend yet higher," and I don't think we're thinking that is likely, "I still think the majority of the correction has passed. And in a 5- to 7-year view, you would not regret investing today." And that quote picks up 3 really important points. I think we have reached the peak for gilt rates. In fact, they did peak at just under 5%, 4.9% this month, and we've seen them come back a bit from that peak. I think the second important point that this quotation makes is that you should be looking for real estate investment over a 5- to 7-year view. That's when real estate performs. Then we, as managers, will actively manage the portfolio. But typically, leases run for 5 years or 5 years to the first rent review. So we only have an opportunity once every 5 years in each and every tenancy to increase the rent or invest in the properties through refurbishment. So the long-term view, falling rates and, importantly, calling out the timing being very appropriate. Now you would not regret investing today. And I hope when I finished going through these slides, you might share that view. "Direct real estate is like a container ship. It takes a long time to turn, gather momentum and sail ahead. And now we're there, it would take a sizable shock to knock us off course." And we have seen property values fall from a peak in 2022 across the whole market by 20%. But through the course of 2024 and in the middle of the year, we started to see property valuations rise gently. But I think. Importantly, we have reached that turning point. And real estate investment, all investment rather, like comedy, it is all about timing. And it feels like now the timing is very appropriate. And there's more there that you can read. These 2 charts, I think particularly the one on the left are very key. This is looking at whole market data. It's looking at rental growth indexed back to 2019. And you can see that the standout performer for rental growth has been the industrial and logistics sector, really, really strong rental growth. And for the most part, and certainly in our subsector of the market, which is smaller regional assets, we feel that the dynamics that have led to that rental growth, the undersupply, lack of development, inflationary build costs, none of those pressures have really gone away, and we expect to see continued rental growth in that sector. But importantly, when you look at the other lines, and perhaps surprisingly, when you look at the red line, the office sector, there has been rental growth over the last 5 years. And the green line, retail, yes, it had a difficult start in this time period, but from 2022, rents have been stable and gently rising. And what you can see is an upward trajectory in those 3 main property sectors or those 3 main lines. And even in the other sector, pretty flat, slightly up, but it's a fairly diverse bunch of properties that are lumped into other. But for the most part, we are seeing good rental growth across all assets in our portfolio. And then the other chart just looks at total returns from real estate in the gold line set against base rates. And what you can see is that they are inversely correlated to each other, and that property has tended to move in advance of base rates in terms of that total return. You can see that sharp fall in total return, forecasting the continued rise in rates. What is extraordinary now is that although that it is -- the worse is forecast that we are going to see falling rates, the property market seems to be lagging a little bit. And I think all that means is that the window of opportunities to invest in real estate is still open. But I would expect to see that when the market moves and when money starts to be committed again to listed real estate, in a way that it really hasn't over the last 2 years, we will see things move quite quickly. So what does all this meant for Custodian Property Income REIT? Well, if we look at the graph first, this is a chart that shows the progression of rental growth over 10 years in the blue line. That is the difference between the rent we're collecting, the passing rent, and the estimated rental value of the portfolio. And you can see how rental growth really started to feed into our portfolio from 2020 onwards, sitting today at 11% reversionary potential. So that is a full estimated rental value of GBP 49 million against a passing rent, rent that we're collecting, of GBP 44 million. And you can see that GBP 44 million in the blue bar. And you can see also how we have been capitalizing on the rental growth from the portfolio to build the rent roll over the last few years, from GBP 41 million towards GBP 44 million through the last 2 years alone. The strength in the occupational market has also seen occupancy levels improve from 90% 2 years ago to 93.5% today. And all this rental growth and increased occupancy has given us sufficient earnings that we have been able to increase the dividend from 5.5p 2 years ago to 6p per share today. And importantly, that dividend is fully covered by earnings. And we've also brought down gearing a little bit. It peaked at just under 30%. And through some profitable sales last year, we brought down that loan-to-value to 28.5%. These next 2 slides are just looking really at some of the detail of the portfolio. So this is some of the industrial and logistics assets that we own that have seen either rent reviews, lease renewals or where we have granted reversionary leases in the last 12 to 18 months. And you can see the sort of rental increases that we have delivered, anything from 12% to 64%. So really meaningful rental growth. And as I touched on before, we see that continuing to flow through our portfolio. But it is not just about the industrial and logistics sector. And I think you could be forgiven for thinking that industrial and logistics was the only investable asset class over the last few years. But actually, there is a real benefit in diversification, spreading that risk, particularly when those other sectors are starting to show some really positive growth. Offices. Two office buildings that we have agreed lease renewals in the last 12 months: in Oxford, where we saw a 58% increase in the rent from the previous passing rent; and in Central Leeds, following a refurbishment, an increase of 45% in the rent. In the other sector, rather less activity over the period, but still strong rental growth: at a car showroom in Loughborough; and a real commitment to 2 buildings, one in Milton Keynes and one in Crewe, where Tenpin Bowling have taken 25-year leases, which, I think, again, shows great confidence in those assets. On the high street, yes, it was difficult 5 years ago, but more recently, and in the right locations, and this is really critical, you've got to be in the right sort of town or city. You're looking for cathedral cities, university cities, high tourist footfall, strong local catchment areas. And in those locations, you can see here 2 examples: the new letting in Shrewsbury, 38% ahead of the previous passing rent; and on George Street in Edinburgh at 26% ahead. The sector to watch, I think, is retail warehousing. And there's an example here of a unit that was previously let to Homebase. And before they went into administration, we had already agreed a new lease with Wickes at a 15% increase in rent. So this is a sector that is highly restricted on the supply side, good tenant demand from a range of occupiers, from the discounters, the likes of Home Bargains and The Range and B&M bargains, to the homeware stores and the DIY stores, pet stores and food, they all like being in large-format stores with free parking in out-of-town locations. They work for our consumers. They work for click and collect. And importantly, they work for the retailers. And rents are growing from a low base, and we think there is real capacity to see further rental growth in that sector. Of course, you can't consider the fortunes of the property market without also considering what's going to happen in debt markets. And again, I thought I would take my lead from what other people have said. And these first 2 quotes were from early January when Property Eye, according to a survey of 51 economists, felt that we were likely to see at least 4 rate cuts, suggesting rates could get as low as 3.75%. The Telegraph were a little less optimistic. I think on the back of the timing of this was probably close to the peak in gilt rates when they thought there might be only 2 to 3 rate cuts, taking us down to maybe 4% and 4.25%. But then more recently, this week, in the broad shoots, there was a forecast of up to 5 rate cuts. And people are now thinking that maybe we will see those rate cuts come in, maybe notwithstanding some slightly persistent inflation. I think there is an economic imperative to bring down rates, and I think we will see that. But this next quote makes, I think, a very valid point. "The rate cut thesis that the sector was waiting for in 2024 didn't play out. And whilst there's nothing wrong with hoping, it would be lazy to rely on this alone to come to the rescue in 2025." Notwithstanding that, we do think rates will fall. However, with the sector showing -- the property -- listed property sector showing an average 26% discount to net asset value, that is pricing in a yield expansion in the underlying valuation of the properties of 100 basis points. That doesn't feel like a realistic scenario when we've already seen values fall, as I said, up to 20% across the market, and that we've seen those valuations turn in the middle part of this year. So it feels like those discounts are too wide because that implied yield expansion in underlying valuations doesn't feel realistic. If you think bond yields have peaked, while yields may not be lower in the near future, they'd have to rise much more than anybody expects for U.K. REITs not to offer some value now. And in that scenario, probably due to high inflation, wouldn't you rather hold a real asset such as property rather than a bond? And when you think about that, yes, of course, you can get 4.5%, 4.75%, maybe even close to 5% returns from gilts, but net of inflation, that meant perhaps a real return of maybe only 2%. If you were to buy Custodian REIT stock today, the dividend yield is 8%, and that feels like far too wide a gap. So let's just pause before we go into some detail. In fact, we're just going to look at one more slide before we go into some detail of Custodian REIT. And this is looking at that very close correlation between U.K. total return from listed real estate. That's the FTSE EPRA U.K. total return, darker blue line, and then that greeny line, the long-term gilt index, you can see that there's a very close correlation. And we can't hide from the fact -- as much as it might be lazy to rely on gilt yields for the recovery, we can't ignore the fact that there is a very close correlation. And we are not going to see a meaningful recovery until we see a reduction in 10-year gilt rates. However, when you look at this chart, you can see that the volatility in the FTSE EPRA total return line is much greater than in the long gilt index line. And I think that suggests that there has been an overreaction to the impact of gilts. So let's just pause for a minute and remind ourselves, investing in -- making any investment should be about risk and return. And when we consider the risks from real estate, they are valuation risk, but currently, the share -- our shares are trading at a 20% discount to the net asset value. That feels like a very healthy buffer. And in our particular case, that implies over 125 basis point yield shift in the underlying property valuation, and that doesn't feel like a realistic scenario. So it feels like the current discounts are implying far too much downside risk. And we would say, in fact, there is probably upside potential in valuations. The next risk is income and the prospect of income reducing and, therefore, not covering the dividend. But as we've demonstrated, there's really strong rental growth. The underlying rent roll of the portfolio has been growing at over 5% per annum over the last 18 months, and the estimated rental value, the full potential rental value of the portfolio growing at 3%. So again, we don't see that income risk as weighing on the downside, more, it weighs on the upside. And the final and perhaps more technical thing to consider is the long-term risk premium for property. Going back to 1981, the market data would suggest that the risk premium for investing in real estate, so that is the premium over the 10-year gilt rate or the risk-free rate, is about 2.6%. If we consider Custodian today, the gilt rate of, call it, as well at the point of preparing this slide, was 4.85%. It's come off a bit, maybe call it 4.7%. Dividend yield of 8.2%, and that's come in a bit to about 8%. That suggests around about a 3.3%, 3.35% risk premium. And maybe that reflects the makeup of our portfolio versus whole market data that suggests a risk premium of 2.6%. However, in calculating that risk premium, you also have to take account of growth. There's no growth in gilt returns, it's fixed income. So the risk premium is not, in fact, 3.35%. You've also got to consider rental growth, and you take the growth in our ERV at 3%, then that's suggesting you've actually got a risk premium of 6% to 6.5% against a long-term risk premium of 2.6%. So while that's all quite technical, what's that suggesting? It's suggesting that, over time, you would expect to trend towards that long-term average. So the premium that people are demanding at the moment to invest in real estate will narrow as that premium narrows. So that is good for share prices. So against all these risks, the risk premium, income and valuation, it feels like there is much more upside opportunity than there is downside risk. And for taking that risk, you get an 8% dividend yield. That, to me, feels well out of balance. And I can see many reasons why we should see the share price improve. But if you lock in now, and this is where timing is so important, you're locking into that 8% dividend yield with capital upside. So then considering Custodian Property Income REIT in a little bit more detail, for those of you that don't know our strategy well, what we aim to do is to provide access to diversified regional U.K. commercial real estate but in an institutional-grade package, so a main market-listed Real Estate Investment Trust. And we invest in smaller regional diversified portfolio in order to benefit from the high risk return profile that we can deliver. We have over 150 properties, over 300 tenancies. We're paying a fully covered dividend, covered by earnings of 8%. And we have this rental reversion from GBP 44 million, potential ERV of GBP 49 million and 11% reversionary potential. So everything we do is focused on income and earnings to pay that dividend. That's absolutely our DNA. And diversification, while it might not have been as fashionable over the last 5 years, as I believe it should have been, has always been about mitigating risk. And our portfolio is spread across the principal commercial property sectors. You can see 40% of the income comes from industrial and logistics, 23% from retail warehousing. And we're weighted to those 2 sectors because we believe that's where the greatest rental growth potential is. But we also have some offices and tend to be focused in cities like -- and you can see there, Edinburgh and Birmingham, but also we have offices in Leeds and Glasgow, so big city center offices, Manchester, Oxford. And we've got a little bit on the high street, but we're starting to see some much more positive news coming from the high street. There is going to be a bit of a squeeze on the high street, with national insurance contributions and the minimum wage particularly impacting shop workers. But we've got low underlying rents. So we think that most high street locations remain very affordable, and it remains a very popular past time to go shopping at the weekend. In terms of spread of the portfolio, this map, I think, answers that question very clearly, broadly spread in the main commercial centers. And those of you who have a good mental map of the country, we'll be able to identify those strong commercial centers in the Northwest, in the Midlands, in the Central Belt of Scotland and broadly spread across the South and Southeast. But in all of these locations, we're looking for those micro commercial hotspots in wider regional markets. We don't really invest in London. We've got a couple of properties only inside the M25. And that's very specifically because, in the London market, there is much greater demand and that demand squeezes initial yields as a result of pushing up prices. And with a lower initial yield, you have less income, lower earnings, and that doesn't support our principal aim of delivering a relatively higher dividend yield. And again, a picture tells a very clear story. And this is the amount of income that is paid by any one tenant in the portfolio. And you can see that there is no one tenant in the portfolio in any single property that represents more than 1.5% of the rent roll. And amongst our largest tenants, Menzies, we've got 8 properties let to them; 4, I think, let to Wickes, might be 5 now with the recent letting we've done to Wickes. So there's further diversification amongst those larger chunks of the pie. One of the quotes that we mentioned at the start said, "You've really got to focus on the quality of your income." And I think one of the misconceptions that is sometimes held about our strategy of investing in smaller regional properties, that diverse portfolio, is that it means we will have lower-quality properties, lower-quality tenants. Certainly, we don't have lower-quality properties, and our website will reveal all the assets that we hold. You can see everything. And I think you would agree on clicking through our website that they are good quality properties, but the quality of the tenant, as measured by an Experian credit rating, will also demonstrate, with over 80% being considered lower-than-average risk, that this is good quality income. And if we do have some economic variability over the next few years, we think there's good quality tenants in those good quality properties. And importantly, and you all know the rules, so location, location, location, in the right location will protect cash flows and support -- continue to support dividends. This chart shows very simply, in the light blue line, the earnings per share, and the dark blue, the dividends per share. And what it can show you is that we have always lived within our means, paid out our dividends from earned income in any given year. We think that's really important. You will, I'm sure, be looking at this chart thinking, well, what happened in 2020? But also, you'll remember what happened in 2020. We had a global pandemic. And in the early stages of that, one of the first announcements was that tenants didn't need to pay their rent during the pandemic. It remained due, but it didn't need to be paid in that given year. And at the time, we didn't know whether, in the fullness of time, tenants would be excused that rent or whether they would, in fact, be asked to pay it. Well, as it turns out, they were asked to pay us, and we ended up, through that worst year of the pandemic, collecting 92% of the rent in the 12 months that it was due, and most of the rest was collected thereafter. So while we did feel a need to reduce the dividend, it was always with the expectation that we would grow it back in the fullness of time. But of course, as we moved into 2022, we started to see the increase in base rates and the rise in interest costs. And that, of course, has an impact on net earnings. So while we haven't been able to get the dividend back to its pre-pandemic level yet, we have grown the dividend every year since 2021, from 5p per share through various years to the current 6p per share that we're paying today, and that remains forecast to be fully covered by earnings. To understand why we do what we do, why do we buy a large portfolio of smaller diversified regional assets. Our portfolio looks quite unlike most of our peers, many of whom are thematic sector-specific funds. Many of the others buy much larger assets, multi-let portfolios, multi-let city office buildings, shopping centers, significantly larger assets. This chart explains why we can be bothered to buy those smaller properties and what the benefit is to you as shareholders. This whole market data, going back to 2000, it looks at the net initial yield or the transaction yield of properties that have sold in the market with lot sizes of over GBP 10 million, that's the light blue line, and under GBP 10 million, the dark blue line. And you'll see from 2000 to 2010, there was a pretty narrow and consistent margin, much more consistent than laterally, of about 65 basis points. Let's call that the risk premium for buying smaller regional property, except it's not all risk premium. We know that there is an amount of that margin that is simply investors not wanting to deal with a large portfolio of small properties when they can have a much simpler portfolio of large assets. So let's call, in order to keep the math simple, the risk premium 50 basis points, and there's 15 basis points of hassle factor on top. But then you're going to ask the question, what happened in 2010 to see that huge divergence in yields from larger assets versus smaller? The one thing it wasn't was a change in the risk profile of smaller properties. They didn't suddenly become higher risk. They didn't suddenly move location into higher-risk areas. The tenants didn't fundamentally change. What it actually demonstrates is that we saw a change in the buying patterns of the larger part of the market. Most investors pursuing strategies of relatively large, relatively prime property and with a restricted supply that pushed prices up, yields down and grew that margin from 65 basis points to an average of 150 basis points over the last 15 years. If we then remember that we were satisfied, or at least I hope you were satisfied with my explanation, that the risk premium for that smaller lot strategy was 50 basis points, but there has been 150 basis point margin. Does that suggest to you, it certainly does to me, that we can pursue that smaller lot strategy and get 100 basis points of margin for taking no additional risk. And that enables us to pay a higher dividend with that higher running yield. And as a reward for that higher running yield, we also have lower volatility. Now that feels back to front. It should be the case that if you pursue a larger lot, primer property strategy, you do so accepting that you're going to get a lower return in return for lower volatility. But as we saw interest rates rise from 2022 over the last 3 years, you can see on the chart and then the numbers explained on the left that, that sub-GBP 10 million lot size has seen a 15% volatility in yield but 29% volatility in the larger lot. So you haven't even been rewarded with lower volatility for pursuing that strategy. One of the other strengths of the -- that we get in that quest for higher income is we maintain a healthy margin over the cost of debt. And that's what this chart shows you. Our weighted average cost of debt in the light blue, going back 10 years, you can see since 2022 how that weighted average cost of debt has increased as we have one tranche of variable rate debt, our revolving credit facility, that has seen an increase in debt costs. And we sold some properties last year profitably, used those sale receipts to pay down our variable rate debt, and that has brought our weighted average cost of debt back down to 4%. But that needs to be seen in the context of the income return we're getting from the portfolio, which is the dark blue, that's 6.75%. That's that GBP 44 million of rent roll, delivering that income yield, but with also the prospect of rental growth on top, that's the gray shading on top. So we are maintaining a very healthy margin over the cost of debt, which means that having gearing, the portfolio remains accretive, supporting earnings and dividends and total return. Just to finish up the last couple of slides. This is looking at our 4 tranches of debt that I mentioned, 2 fixed rate tranches of debt that run out until 2028 and 2032 of GBP 45 million and GBP 75 million, respectively, a revolving credit facility with Lloyds, and a GBP 20 million facility that expires this summer. We're currently paying 3.94% fixed. We will expect to see an increase in debt service costs, but that increase, when set against the rental growth we've seen, is extremely affordable. And we don't see it impacting current dividend levels or indeed dividend cover. After 10 years of trading, we stopped and looked back at our strategy. These numbers are to September, so our interim results. The December results will be out in early February, and we'll be able to update these charts. But what it looks at is share price total return over quite a volatile period. in the dark blue, that's Custodian REIT versus the benchmark, which is that FTSE EPRA REIT index that we referenced earlier on in the slides, which is basically the whole listed property sector. And you can see over the period that Custodian has outperformed in the 10.5 years to September. Custodian had delivered a positive 55% total return versus the benchmark that had delivered 29%. Why did we outperform? We outperformed because we all operate in the same market. We've all seen yield compression and yield expansion, leaving us pretty much where we all were in 2014 in terms of valuation yields. So no one putting stock selection to one side, but on a whole market level. No one has seen any explicit growth from yield compression, yet each and every year, we've paid out a higher dividend. And it's that higher recurring dividend that's led to the outperformance. And I think that really underlines and demonstrates why we are committed to our strategy of pursuing a higher income return that comes from a diversified regional portfolio. So to conclude, income and income growth are going to underpin total returns. We do expect to see falling interest rates, and that is going to be positive for income-bearing assets. The direct property market turned in the middle of 2024. It's not racing away yet, but we don't also expect to see it fall back. So the opportunity to get invested now remains. We talked about that risk premium being longer than average for property and the expectation that, that will trend towards the long-term average, again, being positive for valuations. The discounts have a significant price buffer already priced into the discount. And with all those risks, the upside and downside potential with, in my view, much more emphasis on the upside, you can have an entry yield of 8%, and that feels very generous indeed. So there's the important bit. You don't need to read that for too long. It will come around with the slides.

And I'm going to take some questions. So thank you for submitting those. The first question is, you disposed of assets at an average 39% premium to valuation. How much of the remaining portfolio do you view as a right for similar profitable disposals? Well, I think if the rest of the portfolio was -- could be sold at a 39% premium to valuation, there would be something very wrong with the valuation process. The reason we were able to sell those properties ahead of valuation is because we sold to either to special purchasers to owner-occupiers, and typically, valuation wouldn't take account of special purchases. Or we have sold where we have secured an advantageous planning permission, and we've sold to developers. And again, our valuations invest -- value of the property on an investment basis, not on a redevelopment basis. So we were able to capture some real premium to valuation by finding those special purchase, the owner-occupiers and the developers. There will, of course, be other assets in the portfolio that have special purchases. And we came through the portfolio regularly trying to identify those positions. In terms of how much of the portfolio, not a significant amount. I think the valuation of the portfolio reasonably fairly reflects the sale values that we could get if we were to sell the properties in the open market. The next question. Do you expect the consolidation in the REIT sector is likely to continue? And are you still keen to get involved despite the disappointment of the API merger? Well, I'm glad you share my view that the API merger not happening was a disappointment. We certainly were disappointed by that. We thought there were some very strong benefits to all concerned in seeing that merger take place. I think we do expect to see further consolidation in the sector. There are many commentators writing about which funds might be exposed to a potential approach. There does seem to be a push, particularly amongst institutional investors, for scale and liquidity. But I worry whether that push for scale and liquidity is an at all-costs push. And maybe it is overlooking some of the very real benefits of risk and return in favor of liquidity and cost. And of course, it is about -- should always be about risk and return, not just about liquidity and cost. Yes, of course, they are both important factors, but they shouldn't be leading the decision-making process. And it's my concern that probably as a result of overregulation across all financial services that, that is where the market has moved too many institutional investors fixated on liquidity and cost. We see strong flows from retail investors through the usual platforms, the Hargreaves Lansdown, AJ Bell, interactive investors, you know who they are. And I think those retail investors collectively are making rational decisions, investing their own money. And I think there is a real value in a strategy like ours. So we would be interested in consolidating and growing the Custodian Property Income REIT portfolio, but it would have to be on the basis that it supported everything we've talked about today, that sensible property strategy focused on income. And hopefully, that would, if we were to achieve any consolidation, improve liquidity and squeeze cost, but it's going to be about risk and return first. The next question. You mentioned a brighter 2025 for real estate markets. What are the key catalysts that could drive net asset value? I hope I've answered some of those questions. But to recap, I think the catalysts are the properties being oversold, that risk premium is too broad, strong rental growth that we're seeing and falling rates. And any one of those 3, and there's a very strong chance that we could get all of those 3, could lead to a recovery in a famously cyclical market. Real estate has always been cyclical. It peaked in 2022. I think it troughed in 2024, and I feel that the next move is up. The next question. For investors who are badly hurt by holding regional REIT, what assurances can you give that you don't share any of the characteristics that's so badly impacted on regional REIT share price? I don't think it would be fair for me to comment on regional REIT, but what comfort can I give you? Ours is a different strategy. It's a diversified strategy. It is not focused on one sector. It's particularly not focused on one sector that had a really tough 3 to 5 years. So I think that the characteristics of our portfolio and the quality of income should protect investors and support earnings and dividends. And then I think the final question, unless answering it prompts anymore is, is the Board currently doing anything to reduce the discount to net asset value? The entire company works incredibly hard to promote Custodian Property Income REIT to see the share price grow to narrow that discount. I'm sure the question is particularly asking, are we considering any share buybacks? It is always on the Board's agenda. One of the problems with share buybacks is that they haven't really proved that they work. And when you look at evidence of companies that have bought their shares back in the past, you might get a short-term shot in the arm. But very quickly, all the same underlying drivers that are taking your share price to where it is return, and it is only a short-term benefit. And those short-term drivers are all the things we've been talking about this morning. And I think the other question that we have to ask ourselves is, is buying our shares back best use of shareholders' funds? If we buy the shares back, we can cancel the dividend that is, on the current share price, currently costing us 8%. If we invest in the bricks and mortar of the portfolio, or more particularly, at the moment, in the solar PV panels of the portfolio, we can see a 10% to 12% return from investing in solar PV. So it doesn't feel like a good trade to cancel an 8% dividend and use money that we could otherwise invest and get a 10% to 12% return. So while it's currently constantly on the agenda, then it's not something that we have done yet. And I think there's one more question that I can sense I don't quite understand. And again, it's asking about one of our competitors. I think it's probably not appropriate that I speak about one of them. I'm sure their fund manager can answer that question.

Richard. Thank you for answering all those questions that you got from investors today. And of course, the company can review all questions submitted today, and we'll publish those responses on the Investor Meet Company platform. Just before redirecting investors to provide you with their feedback, which I know is particularly important for the company, can I please just ask you for a few closing comments?

Yes. I've -- in the best way of all presentations, I told you at the start what I was going to talk about: income, timing, risk opportunity. I talked about it in detail. So it's probably best to close by reinforcing that we think there's a real opportunity now to buying at yields that I don't think will be repeated over the long term, with much greater upside potential than downside risk. And I look forward to seeing any or all of you again.

Richard, thanks for updating investors today. Can I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This may take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team of Custodian Property Income REIT plc, we'd like to thank you for attending today's presentation, and good afternoon to you all.

Many thanks.