Real Estate Investors plc (REI), the Birmingham-based property group, has posted record revenue, profits and dividends for the financial year to December 31, 2014.
Chief executive Paul Bassi has also announced that as part of the firm’s progressive and growing dividend policy, they are considering a move to quarterly dividend payments from 2016.
Revenue was a record for REI, up by 19 per cent to £8 million from £6.7 million in 2013.
Profits before tax soared by 21 per cent from £5 million in 2013 to £6 million this year.
Dividends have been increased by 50 per cent to 1.5p per share.
Paul Bassi said: “Record profits, gross property assets and dividend payments reveal an excellent year of progress that provides the basis for continued growth and delivery of a progressive dividend policy.
“Acquisition opportunities remain healthy and will continue to grow our portfolio. We will also make selected sales where we consider we have maximised our management and will capitalise upon our status as a Real Estate Investment Trust.
“We anticipate further rental growth and improved occupancy levels, benefiting from a growing regional economy that is clearly emerging as a major economic powerhouse in the UK.”
Other highlights include contracted rental income up 33 per cent to £7.7 million from £5.8 million in 2013.
Overall occupancy currently stands at 84.6 per cent – up one per cent year-on-year.
But the biggest leap comes in the total of acquisitions made by REI in 2014 – £29.5 million against £2.6 million in 2013.
This was aided in part by a £20 million fund raising exercise in March 2014.
This resulted in record gross assets up by 34 per cent to £104.4 million with contracted rental income reflecting a similar rise of 33 per cent from £5.8 million in 2013 to £7.7 million.
Paul Bassi said: “The acquisition pipeline remains healthy, as does the potential to make opportunistic, tax free sales, due to our REIT status, but only where we consider we have achieved maximum asset management.”
He believes the acquisition pipeline for 2015 is excellent with REI identifying more than £100 million in further opportunities, notwithstanding an expected “pause” in the market around the General Election in May 2015.
Since the year end REI has acquired 36 Great Charles Street, a 24,516 sq ft office building which is part let, producing £214,709 with an estimated rental value of £360,000 for the sum of £1.85 million in February 2015. This building is located in the heart of the new City centre Masterplan and nearby to the Paradise development.
During the year REI invested a total of £29.4 million in new acquisitions including Warwick (£7.3 million), Walsall (£7.7 million), Bromsgrove (£0.5 million), Leicester (£1.8 million), Birmingham City centre (totalling £3.6 million) and Leamington Spa (£2.3 million).
New tenants include HSBC, West Bromwich Building Society, Lunn Poly, First Secretary of State, Royal College of Surgeons, WH Smith, WH Ireland, Thomas Cook, Thomson Travel, Sharps Bedrooms, Boots UK Ltd, Marks and Spencer Simply Foods Ltd, NHS Property Services, Loungers, BHS, Wallis, Waterstones, Punch Taverns and Burtons.
Most of REI’s acquisitions have been either fully let or part income producing, but as an example of the company’s ability to manage assets and add value, the business acquired 33 Bennetts Hill, the old Midland Bank offices, for £1.6 million.
This listed building has since been granted a restaurant planning consent, secured a letting to Loungers Ltd on a new 25 year lease at a rental of £135,000 per annum, and REI has let the office space above which has provided a total rental income of £180,000 per annum.
Even after an approximate capital spend of £200,000, the property has provided REI with an excellent return.
During the year REI sold property in Birmingham city centre, Edgbaston and land in Smethwick and Bilston, proceeds totalling £7 million. These sales were all achieved above book values.
Paul Bassi added: “In 2015 we have a very strong and growing regional economy and in REI a company that has a scalable platform with the ability to manage larger portfolio of assets.
“Our rigorous focus on asset management is delivering added value across the portfolio and driving rental growth.”
He pointed out that local confidence in the property market was high with Birmingham being named number one property investment hot spot in the UK and the sixth-best in Europe.
“Investment demand in the West Midlands is varied, and includes international buyers from China, Singapore, the Middle East and the USA, as well as the traditional UK based institutional funds, insurance companies, public and private property companies.
“Investors are attracted by the relatively high yields in comparison to London and the South East, the strong economic recovery of the region and the prospect of rising rental values,” he said.