£24.95m of Property Acquisitions

18th June 2015

Real Estate Investors Plc (AIM:RLE), the Birmingham based property group, is pleased to give an update on acquisitions made since its successful £45m placing in April 2015 (the “Placing”).

Since the Placing, the Company has acquired five new investment properties for an aggregate consideration of £24,025,000, plus a vacant property for £925,000, giving a total investment of £24,950,000.

In line with REI’s strategy to invest in well located real estate assets in the established and proven commercial markets of central Birmingham and the 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. The initial rental income from the investment properties is £2,259,583 p.a., with an estimated rental value (“ERV”) of £2,370,260 p.a., a net initial yield of 8.89% and a reversionary yield of 9.32%.

The investment properties acquired are as follows:

40 St Paul’s Square, Birmingham: a prime office investment in the Jewellery Quarter of Central Birmingham, producing £399,824 p.a. Tenants include Willis Group, ISG Regions, BHP Design, OLR (UK) Limited and Coltham Developments.

Bearwood Shopping Centre, Bearwood: a prominent retail investment situated in the Birmingham suburb of Bearwood in Edgbaston, comprising a large food store and nine retail units and 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 Plc, Scrivens Limited, Sportswift Limited, Lloyds Pharmacy Limited and Store Twenty One.

Virginia House, Worcester: a well located multi-let office within the centre of Worcester, producing £132,900 p.a. with an ERV of £184,000 p.a. Tenants include 3AAA Limited, CAFCASS, Worcester College of Technology, Remploy Limited and Wheelchair Basketball Association.

1062-1104 Warwick Road, Acocks Green: a busy shopping parade within an expanding suburb of Birmingham, on the outskirts of prosperous Solihull. The property produces £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 excellent potential for conversion to residential use.

Castlegate House, Dudley: a secure modern office, situated close to Dudley Town Centre and Castlegate Business Park, one of the local area’s premier mixed use business parks. Let in its entirety to Towergate Underwriting Group Limited, trading as Footman James, the classic car insurance specialist, at a rent of £235,125 p.a.

Overall, the weighted average unexpired lease term of the investment properties is 7.30 years and 4.02 years to break.

We have also acquired 150 Birmingham Road, West Bromwich, from the receivership of Anglo Holt Limited. This is a high quality, self-contained office building and warehouse with parking (15,840 sq ft) and 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 £9.68 million (£7.7 million at 31 December 2014), a rise of 25.7% year to date, with a further £338,650 p.a. of lettings from the existing portfolio currently with solicitors.

Paul Bassi, CEO of REI, commented:

“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 £200 million within the next 12 months.”