Real Estate Investors: robust portfolio performance
Birmingham’s Real Estate Investors “outperformed” in 2022, revealing a profit before tax of £10.9m.
The real estate investment trust said this was thanks to the “stability and diversity” of its portfolio of 1.37 million sq ft, amid the worst year for property transactions since the financial crisis.
During the year, REI completed disposals totalling £20.9m, an aggregate uplift before costs of 8.5% on the December 2021 valuation, with disposal proceeds were used to pay down £18m of debt in 2022.
This has seen the company’s loan to value reduced to 36.8%, down from 42.2% in 2021.
Paul Bassi, chief executive officer of REI said: “Our like-for-like portfolio valuation has seen a 1.9% recovery during the year. Given that the UK investment property market suffered average valuation declines of 14.2% over the year, this outperformance by the REI portfolio is a clear indication of the portfolio’s stability and diversity.”
The year also saw REI complete a successful £2m share buyback programme in the fourth quarter of 2022.
Bassi added: “Despite a sluggish and inactive corporate and institutional marketplace, we anticipate continued sales to a strong private investor market, which will allow us to execute our stated strategy and reduce our debt further.
“If the significant share price discount to NTA persists, we will consider a further share buyback, special dividend or other method of capital return. In the event of a change in market conditions, we will also consider opportunistic acquisitions that will provide significant value via income and capital enhancement to our portfolio.”
As at 31 December 2022, REI had £7.8m in cash at bank.
In March 2023, the group extended its £20m facility with Lloyds for 6 months to 31 May 2024 and the £31m facility with NatWest for 3 months to June 2024. REI’s average cost of debt is 3.7%, with 100% of debt fixed.
Since REI introduced its dividend policy in 2021, the company has paid out £46.3m to shareholders. The total dividend for 2022 is 2.5p – a yield of 8.8% based on a mid-market opening price of 28.25p on 27 March 2023.
