REI opens war chest to fund £25m spending spree
BIRMINGHAM-based property group Real Estate Investors has opened its war chest to fund a £25m spending spree.
The company, the winner in the Listed Business category of the 2015 West Midlands Business Masters Awards run by TheBusinessDesk.com, has splashed out on six investments which significantly enhance the group’s commercial property portfolio in the region.
The acquisitions (see below) follow a successful £45m share placing in April and REI said the deals were in line with its strategy to invest in well located real estate assets in established commercial markets in central Birmingham and the wider Midlands.
“The investment properties are criteria compliant and will allow the company to benefit from immediate rental income and provide asset management opportunities that will generate capital growth potential,” it said.
The initial rental income from the investment properties is £2,259,583 p.a., with an estimated rental value of £2,370,260 p.a., offering a net initial yield of 8.89% and a reversionary yield of 9.32%.
Paul Bassi, CEO of REI, said: “Despite the anticipated ‘pause’ in property market activity due to the General Election, we have capitalised on our pipeline opportunities and secured £24,950,000 of new investments. The new purchases provide excellent prospects for capital upside and immediate rental income to enhance profitability.
“We remain on course to grow our portfolio and continue to deliver on our commitment of a progressive dividend policy. The new properties complement REI’s portfolio, which is benefitting from a healthy regional property market, and we anticipate record contracted rental income and property portfolio valuations for 2015.
“We are in advanced discussions regarding further sales and acquisitions and are fully on track to deploy the remaining capital from the April 2015 placing, as well as utilise our significant available bank facilities to grow our portfolio to over £200m within the next 12 months.”
The investment properties acquired are:
• 40 St Paul’s Square, Birmingham: a prime office investment in the city’s historic Jewellery Quarter, producing income of £399,824 p.a. Tenants include Willis Group, ISG Regions, BHP Design, OLR (UK) Ltd and Coltham Developments.
• Bearwood Shopping Centre, Bearwood: a prominent retail investment comprising a large food store and nine retail units plus a 120-vehicle surface car park. The property generates an income of £685,650 p.a. with a current ERV of £690,956 p.a. Tenants include Aldi Stores, Poundland, Greggs, Scrivens, Sportswift, Lloyds Pharmacy and Store Twenty One.
• Virginia House, Worcester: a well located multi-let office within the city centre, producing £132,900 p.a. with an ERV of £184,000 p.a. Tenants include 3AAA, CAFCASS, Worcester College of Technology, Remploy and the Wheelchair Basketball Association.
• 1062-1104 Warwick Road, Acocks Green: a busy shopping parade producing income of £806,000 p.a. with an ERV of £886,000 p.a. Tenants include Wilkinson, Boots, Argos, Post Office and Lloyds Bank. Additionally, the purchase includes 25,000 sq ft of vacant offices, which have the potential for conversion to residential use.
• Castlegate House, Dudley: a modern office scheme situated close to the town centre and Castlegate Business Park. Let in its entirety to Towergate Underwriting Group, trading as Footman James, the classic car insurance specialist, the building provides a rent income of £235,125 p.a.
The group has also acquired 150 Birmingham Road, West Bromwich, the former head office of builder Anglo Holt, which lapsed into receivership earlier this year. The self-contained office building and warehouse with parking comprises 15,840 sq ft and has an ERV of £130,000 p.a.
Allowing for the above acquisitions, and after sales made this year to date, the group’s contracted annual rental income has grown to £9.68m (£7.7m at year-end December 2014), a rise of 25.7% for the year to date, with a further £338,650 p.a. of lettings from the existing portfolio currently with solicitors.
