Custodian Reit – It always pays to ask

A note from Mark Bentley:

I have been a shareholder in the Custodian REIT (AIM:CREI) since its original flotation in March 2014. It has “done what it says on the tin”, investing in numerous small sized, high yielding commercial properties, to generate income, resulting in an attractive and growing dividend stream for investors. Given the low level of target gearing (25% of NAV), this is a low-risk strategy I find attractive, in this era of negligible interest rates. In January 2015 the company held its first AGM, which was a formality, as the period it related to was before the iPO, when the business was not yet trading. Nevertheless, I attended the meeting, as my first opportunity to meet the REIT’s management and to discuss its plans: I was the only individual shareholder to attend. This was helpful, both in improving my understanding of the company’s business plans and prospects, and also as a means of introducing myself to management.

The value of that became apparent recently, when the company issued a notice of its preliminary results: http://www.investegate.co.uk/custodian-reit-plc–crei-/rns/notice-of-results—9-june-2015/201505181646155578N/ .  In common with similar announcements from many other companies (but against ShareSoc’s recommended best practice), the announcement included mention of a conference call, intended to be exclusive to City analysts. ShareSoc deprecates this practice and encourages all companies to make their analyst calls available to all investors, to ensure a level playing field whereby all investors have access to the same information at the same time. It is my experience that valuable information/explanation, not immediately apparent in the results announcement, is often gleaned from such calls, especially during the Q&A. In the US this issue has been recognised and enshrined in law as “Regulation FD” (Fair Disclosure), which means that all such calls are made available to all investors, often via web conferencing. I therefore contacted the company, to ask to be included in the call, relying on my contact with the company’s management at that earlier AGM. There was some initial reluctance, with the company stating that the call was intended for analysts only (a frequent reaction, in my experience), but the company conceded, when I pointed out the fairness issue and ShareSoc’s stance on this. I am pleased to report that I have today received details of the call and will participate. Kudos to the company for their understanding on this.

There are two morals from this tale:

– It often pays to make the effort to attend company meetings, sometimes for reasons that may not be immediately apparent at the meeting itself.

– A little gentle pressure and the use of ShareSoc’s name can yield results, when trying to get better treatment as an individual shareholder.

ShareSoc will continue to press for UK regulation similar to the US regulation FD , to level the playing field in favour of individual investors. If you run into a similar problem, and are met with a refusal, please let us know. We may well highlight this issue to the press, to help further our campaign for fairness, as well as to increase the pressure on companies to improve their treatment of individual shareholders.”

Mark Bentley

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One thought on “Custodian Reit – It always pays to ask

  1. I must say if you are not an Analyst I don’t know who is or what the definition of an Analyst might be. If the reaI definition is a person who can move more than £xMM into a listed company’s shares we should be told!

    Glad you gained access to the call in any case.

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