Property investor sees ‘signs of normalisation’ in Midlands market

Midlands property group Real Estate Investors (REI) is seeing “early signs of market normalisation” with deal activity, rent collections and occupancy rates all providing cause for optimism.

REI has sold eight sites for £10.7m since the year end, with a further £5.5m due to be completed.

The very strong demand from the investor market, particularly private investors, has prompted the board of REI to consider the break up value of certain assets to take advantage of the high demand.

REI chief executive Paul Bassi said: “Private investors, in particular, are looking for the value in the market, and that is currently to be found in the Midlands where they can achieve strong returns.

“The demand for assets is strong and we are seeing improving occupier interest with new tenants in our portfolio and the changes in planning attracting new users.”

The Birmingham-based Real Estate Investment Trust has reported strong rent collection of 97.2%, adjusted for monthly and deferred agreements, for the first half of 2021.

Occupancy levels have also been improving. It currently has 83.4% occupancy across its 1.6m sq ft portfolio with deals in the pipeline that would increase this to 88.2%.

It said the reduction in occupancy has been dominated by the loss of Npower in Oldbury and Premier Inn in West Bromwich.

Bassi added: “Following a very uncertain 2020, we are beginning to see some early signs of market normalisation coupled with a strong investor marketplace.

“While we are not immune to the ongoing impact of Covid-19 on the wider UK property market, we are very well positioned in an active regional Midlands market, with a healthy exposure to resilient and sought-after community assets.”

REI’s share price is also continuing to show signs of recovery after a tough period. It has traded around 50-55p in the year before the first lockdown but hit a low of 26p last October.

Since then it has gained more than 50% and closed on Friday at 41p.