Bassi could go shopping for retail bargains
The chief executive of Birmingham-based Real Estate Investors (REI) says his firm could swoop for retail bargains in the near future.
Paul Bassi says REI is eyeing up forced sellers and mispriced assets from retail funds.
“Cash is king and we have the ability to buy, but in the short term we are taking a pause. Those funds who have closed shop are not going to release assets into a frozen market,” he said.
He believes that activity in the real estate market will return to something like normal in the final quarter of 2020 and into the first quarter of 2021, and REI will be ready to respond.
Meanwhile, Bassi has called on banks and big business to take on their fair share of the burden wrought by the COVID-19 virus on the UK economy.
He says it is vital for the economy to avoid a “real estate disaster”, emphasising how many thousands of people are involved in the industry in Birmingham and the West Midlands as surveyors, valuers, agents, lawyers and administrators.
He stresses it is equally important for developers to be encouraged, particularly in the regions, to continue to invest and be active.
Bassi said that with commercial tenants being given various protections by the government, it is exposing building owners to the largest share of the risk.
And he expresses surprise that a small number of the firm’s occupiers had asked for rent waivers, despite having strong balance sheets and being eligible for substantial government funding.
He said: “Landlords are facing a tough time at present. What would help enormously is if the government would give the banking community some guidance on freezing covenants and capital repayments for 12 to 24 months.”
He believes a freeze on debt would provide property businesses the space to breathe without adding further costs to the public purse.
He speaks from a position of strength with REI’s underlying profits up 11.1% to £8m in the latest annual results to 31 December 2019.
The AIM-listed Real Estate Investment Trust has paid out £29m in dividends in the past seven years.
He feels strongly that the support offered to the property industry has so far been overly one-sided.
“Occupiers have been bolstered by billions in support packages and the security of a government moratorium on commercial evictions, leaving landlords to pick up the bill,” he said.
His comments come after the property industry’s quarterly rent day when REI declared it would not be offering rent-free periods or rent waivers to occupiers during lockdown.
Bassi added: “As a landlord we have taken a very responsible and mature approach. Tenants have to understand this isn’t a moment for them to try and take advantage of anybody. It is a moment for them to shoulder their share of the responsibility.”
In the end, REI collected what he describes as a “high percentage of rents”, offering flexibility in monthly rents but no deferrals or waivers.
Bassi points out that REI has no cause for commercial concern and that the business is not overly exposed in any one area.
REI’s £230m portfolio includes 53 buildings totalling 1.6 million square feet, with 280 occupiers and a current occupancy of 96.1%.
Bassi said he is firmly committed to investing in the Midlands.
“There is more than enough for us to do here. The reason we are in good shape is because we live and work among our assets.”
