Property investor homes in on strength of residential market

Paul Bassi, chief executive, Real Estate Investors

The strength of the region’s residential property market has caused Real Estate Investors (REI) to review its £200m-plus portfolio to assess the potential for conversion.

The Midlands-focused property investor believes up to 250,000 sq ft of its portfolio could be converted into residential.

REI has also revealed it has a £30m war chest in place to take advantage of any Brexit-related turbulence. In the months leading up to the EU referendum in 2016 it spent £37m as major property funds stopped investing in the regions.

Paul Bassi, chief executive of REI, said: “We anticipate further acquisition opportunities being made available to us and have £30m in cash and bank facilities to capture criteria compliant assets, particularly in the event of any ‘Brexit’ unrest in the market.”

REI has secured a new £10m loan facility with RBS, at 1.95% above LIBOR. It is also in “advanced” discussions with Lloyds Bank to restructure the company’s £20m facility and expects this to be completed over the summer.

The Midlands residential property has outperformed most other UK regions on a number of key factors, with further growth being forecast by industry analysts.

This is being driven by low prices, especially compared with London, the increased demand caused by major corporate investments led by HSBC as well as public sector-led projects including HS2 and the 2022 Commonwealth Games.

The AIM-listed company has told investors around 15% of its 1.5m sq ft portfolio has the potential for “permitted development” conversion to residential use.

“We believe this could provide significant capital uplift that is not presently recognised in the existing use of certain assets as office buildings,” said Bassi.

It said it is well positioned to gradually target vacant possession of certain assets, with the view to converting them for residential use, for resale or retention for rental income.

Bassi, who was named Ambassador of the Year at TheBusinessDesk.com’s 2018 Business Masters, added: “Our strategy of seeking residential conversions in a very strong residential market place, will positively enhance capital values and further diversify our portfolio on a low risk basis.”

REI has secured several deals recently, including the £4.0m purchase of Topaz Business Park near Bromsgrove and the £3.6m acquisition of Molineux House in Wolverhampton.

It has also completed the sale of 24 Bennetts Hill in Birmingham city centre and a parade of shops on High Street, West Bromwich for a total of £5.0m.

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