REI half year results point to recovering Midlands property market 

Real Estate Investors plc, a long established barometer of the Midlands commercial property market, is reporting a steady recovery in valuations and occupier demand across its £195.2 million portfolio.

Reporting a half year uplift in pre-tax profits to £9 million, following a £3.8 million loss in the same period last year, chief executive Paul Bassi said the board of REI detected promising signs of market recovery.

“After an extremely volatile 18 months, both the investor and occupier markets are improving with little distress evident and enquiry levels gathering pace in the second quarter of this year.”

The half year results to 30 June 2021 show an uplift in pre-tax profit to £9 million, allowing for a 1.8% increase in property values and an interest hedging costs surplus of £716,000.

The company is to continue with its strong dividend policy, paying a fully covered quarterly dividend payment of 0.75p per share for the second quarter of 2021. The board anticipates this will also be the level of dividend for the third quarter of 2021 but is reserving the option to pay an uplifted final quarterly dividend at the year end.

Strong investor demand in the first half of 2021 has driven a disposals programme that has so far raised £10.55 million, with a further pipeline of £780,000 in legals.

Mr  Bassi said they were seeing particular demand for retail investment property that has proven Covid-resilient.

In addition, REI completed 15 value enhancing lease events, including five lease renewals, with 12 lettings currently in legals which will further improve occupancy.

Paul Bassi said: “Our diverse portfolio has continued to show resilience, shielding us from over exposure to specific sector downturn and supporting robust rent collection levels, with our like for like portfolio value increasing in the first half.

“While we are seeing opportunities and renewed interest in an invigorated investor market, the legacy of the pandemic is still visible, with our occupancy and income levels yet to fully recover and a small decrease in both our revenue to £7.7 million (H1 2020: £8.2 million) and underlying profit before tax to £3.8 million (H1 2020: £4.1 million).

“That said, with occupier demand and decisions rising, strong investor interest and a healthy pipeline of new lettings on our void space, we expect this activity to translate into rising occupancy, improved income and further valuation recovery over the coming months, contributing to a rise in our NAV and supporting our progressive dividend policy.

“We are already benefitting from this rising activity with the letting of one of our largest void properties, West Plaza, to a well-established hotel operator.

“We have taken advantage of the opportunity to make a number of portfolio disposals at attractive prices to a growing private investor market in the period, achieving an aggregate uplift of 14% above book value, demonstrating private investor appetite, market confidence and the break up ability of our portfolio to extract value, to satisfy the strong private investor demand.

“We will use some of our disposal proceeds to secure value-add acquisitions in strong subsectors, while also reducing our loan to value ratio.

“REI is extremely well-positioned in an active region, that continues to attract population migration from London and the South East along with global businesses such as Goldman Sachs.  We expect to benefit further from our locality once our already vibrant region is thrust into the global spotlight in 2022 when it hosts the highly anticipated Commonwealth Games.”

During the first half of 2021, REI announced the retirement of John Crabtree OBE as non-executive chairman who was replaced at the AGM by William Wyatt, chief executive officer of Caledonia Investments.

The board also announced the appointment of a new independent non-executive director to the Board, Ian Stringer, former non-executive chairman of GVA and current principal of Avison Young – a highly respected figure in the Midlands property market who brings a wealth of experience and a first-class reputation with him.

Ends (653 words)

For further information, please contact:

Paul Bassi, Chief Executive,

Real Estate Investors plc, 2nd Floor, 75/77 Colmore Row, Birmingham B3 2AP

0121 265 6406 or 0121 212 3446

Prepared and issued by Andy Skinner at ASAP – 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.