Real Estate Investors plc (REI) has turned in another healthy profit despite trading through the worst year for property transactions in the UK since the financial crisis.

The Birmingham-based Real Estate Investment Trust with a portfolio of 1.37 million sq ft of investment property has reported a profit before tax of £10.9 million in the year to 31 December 2022.

During the year, REI completed disposals totalling £20.9 million, an aggregate uplift before costs of 8.5% on the December 2021 valuation.

The disposal proceeds were used to pay down £18 million of debt in 2022, which has seen the company’s loan to value (net of cash) reduced to 36.8%, down from 42.2% in 2021.

The results indicate net tangible assets (NTA) per share of 62.2p, up 5.8% on 2021’s figure of 58.8p.

Paul Bassi, chief executive officer of Real Estate Investors plc, said: “Despite the worst property year for transactions since the financial crisis, REI has successfully disposed of £20.9 million of property and reduced debt by £18 million, which has contributed to pre-tax profits of £10.9 million and the continuation of an attractive covered dividend.

“Our like-for-like portfolio valuation has seen a 1.9% recovery during the year. Given that the UK investment property market suffered average valuation declines of 14.2% over the year, this outperformance by the REI portfolio is a clear indication of the portfolio’s stability and diversity.”

The year also saw REI complete a successful £2 million share buyback programme in the fourth quarter of 2022.

Bassi added: “Despite a sluggish and inactive corporate and institutional marketplace, we anticipate continued sales to a strong private investor market, which will allow us to execute our stated strategy and reduce our debt further.

“If the significant share price discount to NTA persists, we will consider a further share buyback, special dividend or other method of capital return.  In the event of a change in market conditions, we will also consider opportunistic acquisitions that will provide significant value via income and capital enhancement to our portfolio.”

He pointed out that 2022’s results included a revaluation gain of £3.2 million on investment properties, a gain of £948,000 on the sale of investment property, and a gain in the market value of REI’s interest rate hedging instruments of £2.2 million.

Since the start of 2023, REI is reporting additional significant pipeline sales are now in legals, with a healthy pipeline of new lettings in legals of £828,486 per annum.

As at 31 December 2022, REI had £7.8 million in cash at bank.

In March 2023, the group extended the £20 million facility with Lloyds for 6 months to 31 May 2024 and the £31 million facility with NatWest for 3 months to June 2024. REI’s average cost of debt is 3.7%, with 100% of debt fixed.

Since REI introduced its dividend policy in 2021, the company has paid out £46.3 million to shareholders. The total dividend for 2022 is 2.5p – a yield of 8.8% based on a mid-market opening price of 28.25p on 27 March 2023.

Mr Bassi concluded: “Notwithstanding the backdrop of economic uncertainty amid a cost-of-living crisis, there was still renewed occupier confidence experienced in 2022, with the asset management team completing 127 lease events.

“New lettings during the year totalled just under £1 million per annum, with notable lettings at Birchfield House in Oldbury, Titan House in Telford and Venture Court in Wolverhampton.

“Most recently, REI has agreed heads of terms on a forward sale of land at Topaz Business Park, near Bromsgrove, with Costa signed-up for a drive-through restaurant. An Agreement for Lease has been signed and REI is committed to developing the scheme, with completion scheduled for late 2023.”

On practical completion, Costa will enter into a 15 year lease on an initial rental of £85,000 per annum.

Ends (631 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

www.reiplc.com

Prepared and issued by Andy Skinner at ASAP, 01608 651203, mobile, 07990 978257

About Real Estate Investors Plc

Real Estate Investors Plc is a publicly quoted, internally managed property investment company and REIT with a portfolio of 1.37 million sq ft of mixed-use 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 across 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.

On 1st January 2015, the Company converted to a REIT.  Real Estate Investment Trusts are listed property investment companies or groups not liable to corporation tax on their rental income or capital gains from their qualifying activities.  The Company aims to deliver capital growth and income enhancement from its assets, supporting its progressive dividend policy.  Further information on the Company can be found at www.reiplc.com.