Trading Update

8 January 2020

Real Estate Investors Plc

(“REI” or the “Company” or the “Group”)

Trading Update

Real Estate Investors Plc (AIM: RLE), the UK’s only Midlands-focused Real Estate Investment Trust (REIT), with a portfolio of 1.59 million sq. ft. of commercial property, is pleased to provide the following positive trading update for 2019 and outlook for 2020.

Chief Executive Paul Bassi, commented, “Despite high levels of economic and political uncertainty creating a relatively static market in 2019, we have increased our revenues and covered our dividend payments, with contracted rents rising to £17.66 million, up 3.85% over the year. Looking ahead into 2020, we anticipate the pent-up requirement to trade that has been accumulating over the last 12 months being released which is likely to stimulate our markets and create further opportunities for REI.”

2019 highlights

·    With 280 occupiers across 53 assets the portfolio remains well-balanced with additional value being created via asset management initiatives: in 2019, REI completed 53 lease events (44 new lettings and 9 lease renewals)

·    Maintained a diversified portfolio, with no material reliance on any single occupier, asset or sector and this has provided REI with excellent occupancy levels in excess of 96%

·    Strong occupier demand for offices in a vibrant regional economy with this sector representing the largest component within the REI portfolio (37%). Low levels of new build and existing stock being squeezed by conversion to residential under Permitted Development rights leading to strong rental increases e.g. Topaz Business Park, Bromsgrove which achieved an 18.6% per annum rental increase

·    Continued retail focus on convenience and neighbourhood shopping (a strong sub-sector), no department stores/indoor shopping centres or out of town stand-alone retail and only two small retail units affected by insolvency in the year, representing 0.56% of income

·    Excellent embedded value with 250,000 sq. ft. of space with the potential for conversion to residential within the portfolio under Permitted Development rights

·    Acquired prime mixed-use investment properties for £9.25 million with a net initial yield of 8.13%, in Leamington Spa, Warwickshire, with established occupiers (including O2, Toni & Guy, McDonald’s, Tiger UK, Moss Bros, Timpson) and significant potential to improve rental income and capital valuations

·    Overall cost of debt has reduced to 3.4%, with 72% of the Company’s debt now fixed.  The Company remains multi-banked across 6 funders, including a new Barclays Bank £8.5 million 4-year facility at 1.95% above LIBOR, secured against a portfolio of assets, drawn down on 30 December 2019

Dividend

The Company’s fully covered dividend, paid quarterly, has now seen year-on-year growth for 7 consecutive years, with total dividends paid to date of £27.3 million.  During 2019, we paid a pro-rata dividend of 3.75p per share and anticipate announcing an increase in our final dividend payment, thereby setting the level for our 2020 dividend.

Paul Bassi commented further: “We have tended to trade well during periods of instability by having the flexibility to respond to opportunities. With £15 million of cash and bank facilities to deploy, we are well placed to continue to do so and we also anticipate further growth in our portfolio and revenues to support our progressive dividend policy, whilst maintaining our diverse portfolio.

Consolidation within the real estate sector is likely to create corporate activity during 2020, to follow the recent acquisitions of Mucklow and Hansteen and we remain alert to opportunities that are in the best interests of our shareholders.”

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 1.59 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 1 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 which is paid quarterly. Further information on the Company can be found at www.reiplc.barques.dev

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.