Mailbox REIT delivers rising profit – but warns of headwinds
Mailbox REIT, owner of the eponymous office-led development in Birmingham, has posted a sharp rise in profits.
The company, which listed on the IPSX stock exchange last year, turned a pre-tax profit of £1.25m over the six months to 30 June, up from £320,000 a year earlier.
The value of the building rose by almost 3.5% year-on-year to £192.3m – the REIT pinned the growth on the easing of lockdown measures, the conversion of retail space to offices, and new lettings.
Mailbox REIT, owner of the eponymous office-led development in Birmingham, has posted a sharp rise in profits.
The company, which listed on the IPSX stock exchange last year, turned a pre-tax profit of £1.25m over the six months to 30 June, up from £320,000 a year earlier.
The value of the building rose by almost 3.5% year-on-year to £192.3m – the REIT pinned the growth on the easing of lockdown measures, the conversion of retail space to offices, and new lettings.
Earlier this year the BBC said it will leave the Mailbox and move to a new scheme in the Digbeth area. Mailbox REIT has argued that the departure of what it once called an “anchor tenant” is a welcome opportunity to improve the building.
“The ability to offer up to 120,000 sq ft of newly refurbished office suite in the heart of the city presents us with a great opportunity to drive the rental value and capture the Mailbox’s reversionary potential,” said non-executive chairman Stephen Barter. “We now have four years to develop our ideas and are fully confident that we will be able to prelet the space ahead of that time.”
Barter said the Birmingham office market had enjoyed “a steady first half” of the year. “Office vacancy remains below the five-year average, with the vacancy rate for new build space also falling back, as the flight to quality trend points to continued demand for good quality space with strong ESG credentials,” he said.
Barter added: “The board is acutely aware of the shorter-term economic and political headwinds, which have triggered higher inflation, energy costs and interest rates. These factors have led us to accelerate our consideration of the group’s borrowing arrangements, both in terms of the absolute interest rate and hedging costs.”
The company said interest rates for secured lending “have increased materially and may continue to do so”. It added: “While there is a hedge in place to mitigate short-term impacts, higher rates are expected to make refinancing of the Mailbox more challenging, although two one-year extension options are available to the group [on its £108.5m loan from Deutsche Bank] in 2023 and 2024, which helps mitigate this risk.”
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