REI sales success in challenging market with £10.4 million sold so far this year
Birmingham-based Real Estate Investors plc (REI) has been working the private investor market hard in the first half of its 2023 financial year to 30 June.
As institutional investor inertia continues, REI has focused on selling off individual properties within its portfolio, in particular those offering an uplift on previous book values.
Chief executive Paul Bassi said: “Despite a challenging property market, REI has sold £10.4 million of property in the year to date, at an aggregate uplift of 8.7% above the December 2022 year end book values.
“Since the start of 2021, we have operated a successful sales programme, with sales totalling £48.9 million and £38.3 million of debt repaid, with further pipeline sales in legals.”
He said that a further pipeline of sales is in solicitors’ hands which will further reduce portfolio debt.
REI’s first half performance to June 30, 2023, shows an underlying profit before tax of £2.2 million (2022 – £2.9 million) due to sales. A loss before tax of £779,000 is attributable to a £4.1 million on current portfolio revaluations (non-cash item).
REI has a total gross portfolio of £169.2 million with £8 million in cash at the bank. Loan to value is now down to 35.9% net of cash.
These half year results have enabled the board to announce the continuation of a covered dividend of 0.625p for the second quarter of 2023. This will bring total dividends declared and paid to shareholders since the commencement of the current policy in 2012 to £48.5 million.
Paul Bassi added: “Throughout 2023 investment and sales activity has been at its lowest level since the 2008 financial crisis, with corporate and institutional investors remaining dormant.
“With a lack of available assets for purchase and against the backdrop of an inactive investment marketplace, the diverse nature of our portfolio has allowed us to break-up and sell individual units, taking advantage of the ongoing demand for smaller lot sizes from private investors and owner occupiers.
“We will continue with this approach until we see a normalised market.
“We are confident that normalised market conditions will return once the trajectory of interest rates settles, allowing us to sell further assets where asset management initiatives have been completed. It is our intention to accelerate our sales programme and we will consider the sale of assets either on an individual or collective basis, on terms that represent value for shareholders.
“Subject to market conditions and our sales rate, REI intends to repay bank debt and, in due course, consider a share buyback or other form of capital return. Management remains open to evaluating any corporate transaction that is in the best interests of shareholders and in the meantime, we will continue to pay a fully covered dividend.”
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 – 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 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 dividend policy. Further information on the Company can be found at www.reiplc.com.