Investors seeking exposure to the UK’s massive property market may want to consider real estate investment trusts (REITs). These investment vehicles offer a foot on the property ladder without a huge initial downpayment.
I’ve recently discovered an under-the-radar REIT that looks like a rare opportunity. While most investors obsess over FTSE 100 mega-caps, this small but promising stock is sitting in the bargain bin — and 2026 could be its breakout year.
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Custodian Property Income
With an enterprise value of £557m, Custodian Property Income REIT (LSE:CREI) is a trust that invests in smaller, regional UK commercial properties. It’s unglamorous, it’s unfamiliar, and, right now, it looks attractively undervalued.
Trading at an 11% discount to its underlying asset value (NAV), investors essentially get shares worth almost 100p for just 86p each. That’s like buying a £100 coat for £86 simply because the shop is not very well known. REITs across the sector average a 13%-21% discount, so its gap to true value is already narrow – and closing.
But the real attraction is the juicy 7% yield — nearly double the FTSE 100 average. And with a payout ratio of only 52.8%, it’s well-covered by actual earnings. In other words, the company generates more than enough profit to pay every penny of that dividend.
And it’s been doing so consistently for 11 years.
The catalysts that look promising in 2026
The Bank of England has already cut rates twice and is expected to cut them at least three more times in 2026. Lower interest rates mean lower borrowing costs, so more money left over for dividends. Custodian Income has 85% of its debt on fixed rates averaging 3.4%, giving it serious protection if rates stabilise. That’s fortress-level stability.
On top of that, its portfolio has £51.9m in estimated rental value against £45.9m in actual rent being collected. That 13% gap represents a potential future earnings growth through lease renewals, rent reviews, and lettings of vacant space. Essentially, the company is perfectly positioned to capitalise on an improving housing market.
When interest rates fall and property market sentiment improves (as expected in 2026), REIT share prices historically converge toward NAV. Should the stock’s 11% discount compress to 5%-7%, it could deliver instant 5%-7% capital gains on top of the 7.4% yield.
Meanwhile, management isn’t sitting idle. Interim results show earnings per share up 3.3%, driven by leasing activity, refurbishments, and strategic disposals. The team is actively upgrading its assets, installing solar panels, refurbishing warehouses, and renoegotiating rents. For instance, its Tamworth warehouse saw annual rent jump from £359k to £1.3m after a 2024 refurbishment.
The one area where it faces risk is office space. Remote working means office space valuations are falling, which could impact Custodial’s earnings. The division is smaller than its industrial and retail assets but still, it must manage it carefully to avoid losses.
Why REITs can beat buying property
For £50 a week, you can’t buy a commercial property. But it’s worth considering a REIT like Custodial Income, where you can own a slice of over 140 diversified regional properties across the UK.
From offices in Leeds and Manchester to warehouses in Tamworth, shareholders gain exposure to high-income retail units scattered nationwide.
That’s professional-grade diversification — and it comes with a meaty 7% yield paid quarterly on each share owned.
