New Letting

8 July 2016

Custodian REIT plc

("Custodian REIT" or "the Company")

New Letting

Custodian REIT (LSE: CREI), the UK property investment company, is pleased to announce the letting of a property in its portfolio.

The Company has let a retail unit on High Street, Colchester to Metro Bank plc following the surrender of the existing lease, at a passing rent of £200,000 subject to upward only rent reviews, on a 25 year lease with a tenant's break option in year 15 ("the New Letting").

The unit was acquired on 4 January 2016 as part of the Indigo Portfolio, let to Burton/Dorothy Perkins Properties Limited on a lease expiring on 24 June 2016, with passing rent of £145,600.

The New Letting is expected to result in a valuation uplift of circa £1.5 million.

Commenting on the New Letting, Richard Shepherd-Cross, Managing Director of Custodian Capital Limited (the Company's discretionary investment manager), said:

"We are delighted to have completed this extremely positive asset management initiative which we identified during the Indigo Portfolio acquisition due diligence. The New Letting delivers a significant boost to the Company's net asset value ("NAV") whilst improving its lease expiry profile and securing another high quality tenant.

"The 'Brexit' vote, exacerbated by the largest Property Unit Trusts introducing a block on redemptions, has led to a heightened degree of uncertainty about the prospects for commercial property, particularly in Central London. Custodian REIT's performance is more closely linked to the underlying occupational property market than what is happening in capital markets. I believe a lack of supply, following many years of limited development, will continue to put pressure on rents to grow and positively impact occupancy rates in the diverse regional properties typical of the Custodian REIT portfolio.

"The New Letting demonstrates our focus on enhancing cash flow from the portfolio through careful asset management and we continue to work closely with tenants to extend leases and remove short-term risk from lease expiries. Following the New Letting, the portfolio has an occupancy rate of 96.9% and a weighted average unexpired lease term (to first break) of 6.4 years, providing long-term stable income.

"It is our careful asset management and focus on securing rental growth that underpin the security of the Company's dividends, which remain fully covered by net rental income. While we can never rule out that falling confidence in the property market might impact NAV, we believe the medium-term picture for sustainable dividends is secure and there remains realistic long-term potential for NAV growth."

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Notes to Editors

Custodian REIT plc is a UK real estate investment trust, which listed on the main market of the London Stock Exchange on 26 March 2014. Its portfolio comprises properties predominantly let to institutional grade tenants on long leases throughout the UK and is characterised by small lot sizes, with individual property values of less than £7.5 million at acquisition.

The Company offers investors the opportunity to access a diversified portfolio of UK commercial real estate through a closed-ended fund. By targeting smaller lot size properties, the Company intends to provide investors with an attractive level of income with the potential for capital growth.

Custodian Capital Limited is the discretionary investment manager of the Company.

For more information visit www.custodianreit.com and www.custodiancapital.com.