REI committed to ‘opportunistic’ sales strategy
Birmingham’s Real Estate Investors says it’s committed to its strategy to make “opportunistic and targeted sales and reduce debt further” as the property sector continues to face “unfavourable and unstable market conditions”.
Despite these conditions, REI has seen private investors and owner occupiers driving demand for its assets in the first half of the year.
The UK’s only Midlands-focused Real Estate Investment Trust, led by Paul Bassi reported year-to-date disposals of £8.7m, including the sale of 11 retail units, one mixed retail and office asset and an area of land for a drive-thru pod development.
Since 2021, the firm has achieved sales of £46.55m with a further pipeline of sales ready to go in solicitors hands.
REI hopes the sales will be completed to repay the portfolios debt with a of view of reducing its gearing levels. As of July 28, REI has reduced debt by £7.3m reducing its total drawn debt to £64.2m (FY 2022: £71.5 million).
The company paid a fully covered dividend for the first quarter of 2023 of 0.625p per share, giving a total of £47.4m to shareholders since the commencement of the current dividend policy in 2012.
Paul Bassi, CEO of REI said: “During the first half of 2023, we have seen unfavourable and unstable market conditions for the real estate market, including monthly interest rate rises, stubbornly high inflation and no end to the war in Ukraine.
“Continued interest rate rises, coupled with a poor investment market have the potential to negatively impact property values, though our asset management approach should combat some of this downward pressure. The portfolio is not exposed to large-scale city centre offices – assets that are particularly at risk.
“In the absence of consolidation opportunities that meet the needs of shareholders and the necessary market conditions to support portfolio growth, REI’s strategy remains to make opportunistic and targeted sales and reduce debt further.
“The company will maintain maximum flexibility when considering all future options, including a return of capital, special dividend to shareholders or further share buybacks, with the view to maximising shareholder returns.
“Alternatively, if the environment for acquisitions changes, and opportunities offering significant value start to arise, then we may look to make opportunistic acquisitions, where there is scope to capture material upside through asset management. The board evaluates the relative merits of these options on an ongoing basis”.
