Real Estate Investors swings to a loss
Birmingham-based Real Estate Investors has posted a loss on the back of a portfolio revaluation deficit.
The REIT made a loss before tax of £9.4m in the year ending December, compared with £10.9m profit in the previous year, driven by a £13.2m revaluation deficit on its investment properties.
The value of REI’s portfolio fell by 8.4% to £143m on a like-for-like basis in the year ending December. Against the macro climate, the owner said it was a “relatively mild” reduction caused by the “nature of [its] stock”, combined with the “intensive management carried out across the portfolio by our asset management team”.
Birmingham-based Real Estate Investors has posted a loss on the back of a portfolio revaluation deficit.
The REIT made a loss before tax of £9.4m in the year ending December, compared with £10.9m profit in the previous year, driven by a £13.2m revaluation deficit on its investment properties.
The value of REI’s portfolio fell by 8.4% to £143m on a like-for-like basis in the year ending December. Against the macro climate, the owner said it was a “relatively mild” reduction caused by the “nature of [its] stock”, combined with the “intensive management carried out across the portfolio by our asset management team”.
EPRA NTA per share shrank to 54.9p, from 62.2p in the previous year.
Underlying profit before tax for the period was £4.5m, down slightly from £4.6m in the previous year.
During the year, REI sold 30 properties for a combined £18m at a 2.9% uplift to December 2022 book value.
REI said it remained “open to a corporate transaction including selling the whole of the portfolio on terms that are in the best interests of shareholders”.
The board reaffirmed its commitment to pursuing an orderly strategic sale of its portfolio over the next three years. It said the pace of the disposal programme will be dictated by market conditions, with an initial focus on repaying debt.
This month, the group extended a £20m facility with Lloyds Banking Group for a further 12 months to 31 May 2025, a £28m facility with NatWest for a further year to June 2025 and a £7m facility with Barclays Bank for a further six months to 30 June 2025.
REI said it will prioritise the repayment of debt from property sales proceeds, reflected by the short-term nature of the facilities.
Chief executive Paul Bassi said: “Despite a backdrop of negative market sentiment, higher interest rates and political instability, coupled with very low levels of property transactions, we have secured underlying profits of £4.5m, whilst paying a continued fully-covered dividend.
“Having finalised and announced our strategic plan in January 2024, our priority is to continue disposing of assets and maximising returns to shareholders, within the stated timeframe.
“We have a healthy pipeline of sales in legal proceedings with completions anticipated in H1 2024 and we will continue to capitalise on ongoing demand for smaller lot sizes from private investors and special purchasers. We will be holding our larger assets for income until corporate and institutional buyers return to the market. In the meantime, the business is operationally robust and we will continue intensively managing assets to maximise income and reduce vacancy levels.
“We are committed to maximising shareholder returns, whilst remaining open to a corporate transaction that is in the best interest of shareholders. In the meantime, we are focused on further sales and a full repayment of our debt, with the board’s intention to continue paying a fully covered quarterly dividend.”
