H1 Trading Update

8 July 2019

Real Estate Investors Plc

(“REI” the Company)

H1 Trading Update

Real Estate Investors Plc (AIM:RLE), the AIM listed Real Estate Investment Trust (REIT) with a portfolio of 1.53 million sq ft of commercial property in the Midlands property market across all sectors, is pleased to provide the following trading update for the six months to 30 June 2019:

Highlights

·    The portfolio is 96.2% occupied (H1 2018: 92%) and currently generates an annualised contracted rental income of £17.0 million (H1 2018: £15.6m) up 9%

·    8 lease renewals and 14 new lettings covering 69,586 sq ft were completed during the period with new tenants including: Colmore Bid, Nush Marlin Developments, Bargain Buys (Poundstretcher), One Below and Likewise Plc

·    Additionally, we have agreed terms on two larger renewals at Westgate House, Warwick and Kingston House, West Bromwich both let to the NHS on 5-year lease extensions, for a combined rental income of £553,258 p.a

·    Land at Coseley, upon which we secured planning permission for 100 units has received strong interest and is now in legals at above book value

In June 2019, the Government announced its plans to invest £778 million in Birmingham and the West Midlands in advance of staging the 2022 Commonwealth Games.  As the UK’s only Midlands-focused and Birmingham-based Real Estate Investment Trust, REI is well positioned to capitalise on any opportunities that major events, infrastructure and development projects bring to the already vibrant Midlands region.

We have monitored the availability of criteria compliant assets to add to our portfolio, yet have seen limited opportunities over the last 6 months.  REI has £25 million of cash and available bank facilities and is therefore well positioned to secure further assets during H2, to add to the existing £225 million portfolio (as at 31 December 2018). With the benefit of our network, we are confident in our ability to add to our Midlands ownership.

The portfolio is diversified with no reliance on any single asset, occupier or sector.  The office element of the portfolio, which represents 39% of the total value, is performing well and, coupled with management’s strategy to invest in the thriving sector of neighbourhood and convenience retail, REI continues to mitigate against the issues faced by the traditional retail sector.  Despite market sentiment, we are experiencing steady demand from occupiers and our discount retailers continue to trade well, with rents received promptly from our occupiers.

We have had no material impact from the highly publicised UK CVA’s; there are two Bathstore units in administration in Nottingham and Newcastle-under-Lyme which represent just 0.58% of our total contracted rental income.  We are confident that these two units will either be part of the administrator’s sale or re-let at market rents. We can also confirm that we have no exposure to the recently announced William Hill store closures.

Paul Bassi, CEO commented: “We are diversified, stable and opportunistic with strong occupancy across the portfolio.  Significant permitted development opportunities for conversion to residential have been identified within the portfolio and we remain focused on extracting these embedded and undervalued opportunities, against a continuously strong regional housing market.  Existing revenues, combined with income from opportunistic value-add acquisitions will further underpin dividend growth, which has now enjoyed 6 consecutive years of growth.”

Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.

Enquiries:

About Real Estate Investors Plc

Real Estate Investors Plc is a publicly quoted, internally managed property investment company and REIT with a portfolio of 1.53 million sq ft of commercial property, managed by a highly-experienced property team with over 100 years of combined experience of operating in the Midlands property market across all sectors.

The Company’s strategy is to invest in well located, real estate assets in the established and proven markets of central Birmingham and the Midlands, with income and capital growth potential, realisable through active portfolio management, refurbishment, change of use and lettings. The portfolio has no material reliance on a single asset or occupier.

On 1st January 2015, the Company converted to a REIT.  Real Estate Investment Trusts are listed property investment companies or groups not liable to corporation tax on their rental income or capital gains from their qualifying activities.

The Company aims to deliver capital growth and income enhancement from its assets, supporting a progressive dividend policy. Further information on the Company can be found at www.reiplc.barques.dev.