REG - Real Estate Investrs - Trading Update and Notice of Interim Results

Real Estate InvestorsAnnouncement

31/07/2023 07:00

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RNS Number : 6385H  Real Estate Investors PLC  31 July 2023

Real Estate Investors Plc

("REI", the "Company" or the "Group")

 

TRADING UPDATE AND NOTICE OF INTERIM RESULTS

 

ONGOING SALES, DEBT REPAYMENT & FULLY COVERED DIVIDEND

 

Real Estate Investors Plc (AIM: RLE), the UK's only Midlands-focused Real
Estate Investment Trust (REIT) with a portfolio of commercial property across
all sectors, is pleased to provide the following trading update:

 

DISPOSALS - DELIVERING ON SALES STRATEGY

·    Private investors and owner occupiers have remained active, allowing
us to secure sales - breaking up parades and feeding demand for smaller
assets, despite the challenging macro environment

·    Year to date disposals of £8.7 million (comprising of 11 retail
units, 1 mixed retail and office asset and a piece of land for drive-thru pod
development) at an aggregate uplift of 11.7%, pre-costs, to December 2022 book
value

·    Further pipeline of sales in solicitors' hands and we intend to
complete sales to generate receipts to reduce portfolio debt and execute our
strategy

·    We have now achieved total sales of £46.55 million from 1 January
2021 to date

 

DEBT POSITION - INCREASED LIQUIDITY & RETURN ON DEPOSITS

·    Our priority has remained to repay debt with a view to reducing
portfolio gearing levels

·    As at 28 July 2023, debt repayment of £7.3 million, reducing total
drawn debt to £64.2m (FY 2022: £71.5 million)

·    Pro-forma loan to value (net of cash) now 34.7% (FY 2022: 36.8%)
based on 31 December 2022 valuations

·    Company is maximising returns on cash reserves, with monies on
deposit earning 3.4% at present

·    Average cost of debt maintained at 3.7% (FY 2022: 3.7%)

·    Company's debt is 100% fixed, with a blended debt profile term of 17
months. Plans agreed with Royal Bank of Scotland and Lloyds to begin facility
negotiations in Q4 2023

·    As at 30 June 2023, hedge facility had improved by £388,000
year-to-date

 

PORTFOLIO ACTIVITY - HEALTHY PIPELINE OF LETTINGS

·    We have experienced slow occupier decision making since the year end,
however, due to our healthy pipeline of lettings, and with our further
scheduled sales, we anticipate improved contracted rental income, WAULT and
occupancy (over the remainder of the year), which will further reduce our void
costs and support future covered dividend payments

·    Example key lease event in H1 2023 - AFH Private Wealth, with 18
months left on their lease, took out a new lease for 11.5-years at the passing
rent of £396,077 per annum (at ERV) with no break, now occupying all 25,000
sq ft at Avon House, Bromsgrove

·    Robust rent collection levels for Q2 2023 (March-June) of 99.93%

·    Contracted rental income of £12.5 million per annum as at 30 June
2023, due to disposals in line with strategy (FY 2022: £12.6m)

·    Portfolio occupancy of 85.04% as at 30 June 2023 (FY 2022: 84.54%),
with potential to rise further as key pipeline lettings are completed (subject
to ongoing sales and ongoing portfolio lease activity)

 

ATTRACTIVE, FULLY COVERED DIVIDEND

·    Fully covered dividend for Q1 2023 of 0.625p per share (Q1 2022:
0.8125p per share)

·    £47.4 million total declared/paid to shareholders since commencement
of dividend policy in 2012

 

NOTICE OF INTERIM RESULTS

The Company will release its interim results for the six months ended 30 June
2023 on 25 September 2023.

 

PAUL BASSI, CHIEF EXECUTIVE, COMMENTED:

 

"During H1 we have seen unfavourable and unstable market conditions for the
real estate market, including monthly interest rate rises, stubbornly high
inflation and no end to the war in Ukraine. Despite these challenges, the REI
portfolio remains stable and we have enjoyed high rent collection, sales of
£8.7 million, debt reduction of £7.3 million and paid a fully covered Q1
dividend of 0.625p.

 

Continued interest rate rises, coupled with a poor investment market have the
potential to negatively impact property values, though our asset management
approach should combat some of this downward pressure. The portfolio is not
exposed to large-scale city centre offices, assets that are particularly at
risk.

 

In the absence of consolidation opportunities that meet the needs of
shareholders and the necessary market conditions to support portfolio growth,
the Company's strategy remains to make opportunistic and targeted sales and
reduce debt further. The Company will maintain maximum flexibility when
considering all future options, including a return of capital, special
dividend to shareholders or further share buybacks, with the view to
maximising shareholder returns. Alternatively, if the environment for
acquisitions changes and opportunities offering significant value start to
arise, then we may look to make opportunistic acquisitions, where there is
scope to capture material upside through asset management. The Board
evaluates the relative merits of these options on an ongoing basis."

 

Certain of the information contained within this announcement is deemed by the
Company to constitute inside information as stipulated under the UK version of
the EU Market Abuse Regulation (2014/596) which is part of UK law by virtue of
the European Union (Withdrawal) Act 2018, as amended and supplemented from
time to time.

 

Enquiries:

 

 Real Estate Investors Plc

 Paul Bassi/Marcus Daly                  +44 (0)121 212 3446

 Cenkos Securities (Nominated Adviser)   +44 (0)20 7397 8900

 Katy Birkin/Ben Jeynes

 Liberum (Broker)                        +44 (0)20 3100 2000

 Jamie Richards/William King

 

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 (http://www.reiplc.com/) .

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