REI diverse and stable with underlying profits up again
Real Estate Investors plc (REI), the Birmingham-based real estate investment trust, has reported an increase in underlying profits before tax and reiterated its commitment to its revised dividend strategy in its half year figures to 30 June 2020.
The board also believes that an investment in REI’s ordinary shares at the prevailing price and discount to net asset value offers attractive value for its shareholders. If the discount to net asset value persists, then the board will consider using proceeds from selective sales to fund share buy backs as part of its overall capital allocation strategy.
REI chief executive Paul Bassi said: “For over a decade we have traded through a financial crisis, numerous elections, Scottish and European Referendums plus the Brexit fiasco and as a result we believed that our business model had been fully tested.”
He added: “Covid-19 has presented a new level of challenge and tested our business model even further. We are pleased to say that we remain a stable and secure business, with a diversified income stream and the ability to add value through lease events, planning gains and new lettings.”
Despite economic pressures from the coronavirus pandemic, REI has continued to make progress with revenue up by 1.2% to £8.2 million on the first half of 2019, with the overall portfolio valuation stable at £221.8 million as at 30 June 2020.
The first half of 2020 saw a 2.4% increase in underlying profits before tax to £4.1 million.
Rent collection for the March quarter of 2020 was 90.7% and for the June quarter is currently 86.9%.
Against extremely challenging circumstances, the business model has proved itself to be resilient as shown in REI’s trading performance, delivering increases to both revenues and underlying profit before tax.
The business has taken a cautious approach to dividend payments in the short term in case of a second lockdown, however, remains committed to a progressive dividend policy.
Mr Bassi pointed out that the diversity of the portfolio, managed on a regional basis by an experienced team, remains the foundation of REI.
“This has allowed us to continue to pay dividends, while others have withdrawn their payments. We have now delivered £31.9 million in dividend payments to our shareholders since the commencement of our dividend policy, against a series of unprecedented events and the present global pandemic.”
He added: “We continue to operate without any exposure to prime fashion retail and department stores. Occupancy at our convenience, town centre and neighbourhood retail has been excellent during the first six months of 2020 and our office exposure, which is predominantly outside City centres and generally multi-let (between 1,000-5,000 sq ft), has seen renewed interest as occupiers look for locations closer to home with minimal travel and exposure to public transport for their employees.
“Additionally, recent government planning legislation will almost certainly provide opportunities to make capital gains from change of use to residential.”
He concluded: “We remain confident in our ability to operate a profitable regional property company, committed to a dividend policy, based in the heart of the Midlands, where we expect activity to prosper over the coming months and welcome the further economic benefits of Coventry City of Culture year in 2021 and the Commonwealth Games in 2022.”
Ends (540 words)
For further information, please contact:
Paul Bassi CBE, Chief Executive Officer,
Real Estate Investors plc, 2nd Floor, 75/77 Colmore Row, Birmingham B3 2AP
0121 265 6406 or 0121 212 3446
Prepared and issued by ASAP, 01608 651203, mobile, 07990 978257
About Real Estate Investors Plc
Real Estate Investors Plc (REI Plc) is a publicly quoted, internally managed property investment company and REIT with a portfolio of 1.59 million sq ft of commercial property, managed by a highly-experienced property team with over 100 years of combined experience of operating in the Midlands property market across all sectors.
The Company’s strategy is to invest in well located, real estate assets in the established and proven markets of central Birmingham and the Midlands, with income and capital growth potential, realisable through active portfolio management, refurbishment, change of use and lettings. The portfolio has no material reliance on a single asset or occupier.