Real Estate Investors plc, the Birmingham-based property group, has reported record results across the board for the first half of 2016.
The UK-listed real estate investment trust benefitted from uncertainty leading up to the European Referendum and the Brexit vote.
Chief executive Paul Bassi said: “This uncertainty created a window of opportunity during which we secured £37.3 million of new assets, increasing our contracted rental income to £15.6 million, up 31 per cent since the year end.”
Other notable highlights include half year revenue up 58 per cent to £6 million, profit before tax up 60 per cent to £2.4 million and portfolio growth of 23.5 per cent to £194.5 million.
He said that the latest acquisitions, which included Market Square Shopping Centre in Crewe for £20 million, provided no material benefit in the first half of the year, and therefore there would be significant benefits in the second half of the year.
Dividend growth, now paid quarterly, continued with a 25 per cent increase to 1.25p.
“Our portfolio has grown to almost £200 million and we remain well positioned to grow our property portfolio, rental income and dividend payments, while maintaining prudent gearing levels and capitalising on the historically low interest rate environment,” Mr Bassi said.
“Additionally, the existing portfolio has significant capital growth potential from new lettings, planning approvals and rental growth, and is set to benefit from the £3.6 million of annualised new income secured in the first six months of 2016.”
He said “There remained a positive appetite for quality income producing assets across the Midlands, and we will consider sales at a surplus to existing valuations, subject to acquiring further property to maintain our income levels,”
His optimism is also buoyed up by the continuing support REI is receiving from its bankers.
As at June 30, 2016, REI had cash and undrawn facilities of £14 million with a £20 million facility with Lloyds Banking Group due to be renewed shortly.
He said: “We continue to receive excellent support from our bankers, who are open to us increasing our facilities. Banks have remained ‘open for business’ with healthy competition among banks to secure new lending to experienced management teams with diversified portfolios and prudently geared balance sheets.
“REI comfortably meets these criteria,” he said.
Looking forward, he said that the EU referendum vote had provided REI with opportunities that they had capitalised upon, but further opportunities were likely to diminish as investment demand remains strong and there is little evidence of distressed vendors or sales at discounts.
“REI has an acquisition pipeline of criteria compliant assets, that are suitable for cash buyers like ourselves, where we would implement asset management initiatives to generate capital growth and income
“We are seeing a variety of investors from institutions, funds and overseas investors who are seeking to capitalise on the fall in value of Sterling.
“We are also seeing competition for assets from private property companies and high net worth individuals who have banking support and confidence to invest in property as an asset class, as it provides significantly higher yields than many alternative opportunities.
“This investment demand is enhanced by investors looking outside the traditionally safer market of London,” he said.
The REI portfolio remains stable and secure, he pointed out, with significant opportunity to deliver further growth from asset management activity, with a strong and growing rental income and improving occupancy.
“We will continue to make criteria compliant acquisitions and consider sales where we have completed our asset management objectives at a premium to existing valuations.
“Our progressive dividend policy is secure and looking forward, we expect to deliver another year of positive results across all aspects of our business, with the growth of our rental income, portfolio and dividend payment to shareholders,” he said.
