Bassi’s Real Estate Investors back in profit

REAL Estate Investors, the commercial property company run by Birmingham and Black Country entrepreneur Paul Bassi, has seen a spectacular reverse in its fortunes – converting a £15.7m loss into a pre-tax profit of £4.3m.

The performance was revealed as the company announced its preliminary results for 2009.

Real Estate Investors (RLE) said its property assets had increased £6.3m on 2008 to £54.8m, despite the squeeze on property prices instigated by the onset of recession.

Mr Bassi revealed last week that the company had a £10m war chest, raised through a share offer, which would be invested in suitable property opportunities in Birmingham and the Black Country.

It is also looking ahead with confidence, sparked by renewed hope that banks were loosening their purse strings and beginning to loan money again.

REI’s investment property assets rose 12.8% to £48m while rental income was up 8% to £3.2m, compared with £3m in 2008.

Its net assets have been reported as £27.3m, up from £24.2m in 2008, while cash in the bank amounted to £10.8m, down slightly on the £11.4m in the comparable period.

Chairman Peter Lewin said: “I stated last year that these unprecedented market conditions would reveal winners and losers and I firmly believe that the company, with the recent fundraising, coupled with its existing cash, banking arrangements, experienced and focussed management team, has a very positive outlook for 2010, revealing REI to have a winning business and strategy.”

Mr Lewin, who revealed he would be stepping down from his position at the company’s forthcoming AGM,  said the results reflected signs of an improving situation in the commercial property sector locally.

“It is our view that these improving values are driven by limited property stock and a thirst for income, coupled with significant cash reserves from international, institutional and corporate investors,” he said.

He said the group’s strategy continued to be focussed on creating value through lettings, change of use and refurbishment.

In 2009, the group completed nearly all of its refurbishment programme while it said the final quarter had seen renewed occupier interest and tenant confidence, which it hoped would deliver additional rental income during the remainder of this year.

“This will result in improved profitability and if values remain at present levels, increased capital growth,” said Mr Lewin.

The group said that while it been reluctant to make new purchases during  2009 because it had not seen adequate or potential value due to the shortage of sites, 2010 was shaping up to be far better.

“Through our network across the West Midlands, our relationships with the professional community and our privileged relationship with Bond Wolfe and Bigwood Chartered Surveyors, we have great confidence in investing our resources during 2010,” said Mr Lewin.

“We will be active in all sectors (other than industrial), with a focus on retail and residential as an investor, trader and will take on refurbishment projects where we see good value.

“Our focus will remain in the Midlands and at all times, we will be opportunity, value and profit driven.”

He said the £10m raised last month demonstrated the confidence of investors and the strength of the group’s business model.

Speaking about his own position, Mr Lewin said: “I have been chairman of REI since June 2006 when, as chief executive, I handed over the reins to Paul Bassi. I am delighted at the way Paul has expanded the business and steered it through the recent economic turbulence.

“However, I have now come to the view that the next phase of REI’s development can be better achieved if the role of chairman passes to an individual with a strong regional and West Midlands background and accordingly, I will be stepping aside at the forthcoming AGM.”

He will remain on the board as a non-executive director.

Details of his successor are expected to be announced in due course.