Half-year Report

Real Estate Investors Plc

(“REI”, the “Company” or the “Group”)

Half Year Results

For the six months ended 30 June 2025

STRATEGIC FOCUS IN A CHALLENGING MARKET

TO POSITION BUSINESS FOR DEBT CLEARANCE AND CAPITAL RETURNS

Real Estate Investors Plc (AIM: RLE), the UK’s only Midlands-focused Real Estate Investment Trust (REIT) with a portfolio of commercial property across all sectors, is pleased to report its unaudited half year results for the six-month period ended 30 June 2025 (“H1 2025”).

FINANCIAL PERFORMANCE

·      REVENUE: H1 2025 revenue was £4.8 million (H1 2024: £5.6 million) due to sales

·      PROFIT: Underlying profit before tax* stood at £1.5 million (H1 2024: £1.8 million); with a profit before tax of £0.3 million (H1 2024: £3.2 million loss), largely driven by a non-cash revaluation loss of £0.8 million (H1 2024: £4.9 million loss)

·      EPRA MEASUREMENTS: EPRA** Net Tangible Assets (“NTA”) per share of 50.6p (FY 2024: 51.3p) and EPRA** EPS of 0.85p (H1 2024: 1.04p)

·      FULLY COVERED DIVIDEND: Q2 2025 fully covered dividend payment of 0.4p per share (Q2 2024: 0.5p per share) reflecting a yield of 5% based on a mid-market opening price of 32.00p on 22 September 2025

·      SHAREHOLDER VALUE: Since inception in 2012, total dividends paid/announced amount to £55.3 million

DISPOSALS, DEBT REPAYMENT & BANKING

·      DISPOSALS: Contracted or completed on disposals of £2.4 million (before costs) in H1 2025 and a further £5.3 million since the period end, totalling £7.7 million year to date at 95.93% of December 2024 valuations (on an aggregate basis).  Additional sales of £3.9 million in pipeline legals as REI continues to target the private investor market and owner occupier demand

·      DEBT REDUCTION: £1.3 million of debt repayment in H1 2025, reducing total borrowings to £37.9 million (FY 2024: £39.2 million) and a further £3 million repaid since the period end, with total debt now at £34.9 million

·      HEDGE CLOSURE: Hedge facility closed in March 2025, at a cost of £25,000 in the period, with a total liability of £174,000. All debt now on variable rates

·      REDUCED DEBT COSTS:  Current cost of debt is 6.0% (FY 2024: 6.5%)

·      CONSERVATIVE GEARING: Loan to value (net of cash) is 26.6% (FY 2024: 26.4%)

·      CASH AT BANK: £6.1 million cash at bank – the Company is maximising returns on cash reserves, with monies on deposit earning an average of 3.5% on instant access

OPERATIONAL STABILITY

·      PORTFOLIO RESILIENCE: Rent collection for H1 2025 stood at 99.75% (H1 2024: 99.6%) with contracted rental income of £8.9 million p.a. (FY 2024: £9.0 million p.a.) and occupancy at 82.25% (FY 2024: 82.04%). WAULT*** at 30 June 2025 was 5.65 years to break and 6.95 years to expiry (FY 2024: 5.76 years/6.99 years)

·      ACTIVITY: 14 lease events completed, offsetting income loss associated with H1 2025 disposals

·      STABLE VALUATIONS: £121.8 million gross portfolio valuation (FY 2024: £124.6 million). Like-for-like, the portfolio valuation has reduced by 0.63% to £119.4 million (FY 2024: £120.1 million)

POST PERIOD STRATEGY PROGRESS

·      STABLE OCCUPANCY: Occupancy of 81.20%

·      WAULT & INCOME: WAULT now sits at 6.12 years to break and 7.64 years to expiry and contracted rental income is at £8.4 million p.a, reflecting loss of income from recent disposals

·      ASSET MANAGEMENT: Letting legal pipeline of £127,800 p.a (£107,800 p.a of new income to the portfolio) reduced since August trading update as lettings complete

·      FURTHER DISPOSALS: £5.3 million completed/contracted sales since 30 June 2025, bringing total year-to-date contracted/completed disposals to £7.7 million

·      REDUCING DEBT:  Further £3.0 million of debt repaid since the period end, with total debt now at £34.9 million

·      SALES PIPELINE: £3.9 million of sales in pipeline legals

·      ON THE MARKET:  The remainder of our private investor stock of £13.6 million is on the open market (based on Dec 24 year end valuations)

·      PREPARED FOR SALE: £54.0 million of larger assets prepared for disposal in 2026, offering a clear path to full debt repayment and enabling future capital returns to shareholders (based on Dec 24 year end valuations)

·      BALANCE OF PORTFOLIO:  Subject to ongoing asset management initiatives to maximise disposal value

 
PAUL BASSI, CHIEF EXECUTIVE, COMMENTED:

“As anticipated, H1 2025 presented challenging conditions, which has dictated the pace of our disposals.  Whilst we have refrained from placing larger assets on the market until more suitable buyers emerge, our diverse portfolio and the ongoing demand from smaller private investors has delivered completed and contracted disposals of £7.7 million year to date, reducing debt by £4.3 million, while preserving rental income and occupancy.

In addition to £3.9 million in our disposal legal pipeline, we have the remainder of our private investor stock of £13.6 million on the open market and a further £54.0 million of our larger assets primed for sale in 2026. 

Recent UK government borrowing cost increases and the uncertainty around the forthcoming budget in November are dampening sentiment and we expect some paralysis in the property market until the year end. However, the interest rate reductions year to date and the relaxation in bank lending criteria provides a more favourable environment for small, private investor demand.  We will look to initiate capital returns, the timing and method of which will be announced once our debt has been fully repaid.

We are at a crucial midway point in our three-year orderly sales programme and we remain resolutely focused on delivering on our strategy whilst continuing with covered dividend payments, subject to the pace of sales.

We will also continue to evaluate portfolio and corporate options that align with shareholder interests.”

FINANCIAL & OPERATIONAL RESULTS

Definitions

*      Underlying profit before tax excludes profit/loss on revaluation, sale of properties, interest rate swaps and Short-Term Incentive Plan (STIP) provision

**     EPRA = European Public Real Estate Association

***    WAULT = Weighted Average Unexpired Lease Term

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 mixed-use 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 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 announced in January 2024 that it would be undertaking an orderly strategic sale of the Company’s portfolio over three years, disposing of assets individually or collectively, at or above book value, to optimise returns to shareholders.  The pace of the disposal programme will be dictated by market conditions, with an initial focus on repaying the Company’s debt.  In the meantime, it is the Board’s intention to continue paying a fully covered quarterly dividend. Further information on the Company can be found at www.reiplc.com.

CHAIRMAN’S & CHIEF EXECUTIVE’S STATEMENT

As we have become accustomed to over the last few years, 2025 so far has been marked by subdued sentiment as the property market reacts to wider economic, political and global headwinds.  Overall investment activity is below recent levels with UK commercial real estate transactions for H1 2025 totalling £21.9 billion, representing a 18% reduction on the same period last year (CBRE).

As stated in our recent trading update, despite these conditions, we continue to benefit from the robust regional economy in which our assets are located. Regional office markets recorded their strongest first half since 2019, with take-up of 3.7m sq ft, 6% above the 10-year average. While the office investment market and valuations continue to face pressure, retail and other sectors are seeing renewed investor interest, supported by positive occupier demand and rental growth.  According to new research from JLL, Birmingham leads the UK’s Big Six cities in housing growth, with new build apartment prices rising 5.6% and rents climbing 6% in the year to June 2025, outpacing the overall average of 1.7% and supported by a pipeline of more than 14,000 build-to-rent homes.

Whilst reflecting our strategy to maximise shareholder value and also being mindful of market sentiment and the absence of the larger institutional investors and funds, we have refrained from placing larger assets on the open market during H1 2025.  Marketing such assets at an inappropriate time would be detrimental and counterproductive to our ongoing strategy.  Instead, we have focused on the private investor and owner-occupier market, where demand remains positive and to which we can more easily promote our smaller assets.  The downside of this type of portfolio disposal method is the slow pace at which these transactions progress through pipeline to completion due to the nature of the buyers and the due diligence involved.  The benefit however, is that we can steadily achieve sales in an otherwise dormant market and in some cases, retain income post exchange of contracts to support our ongoing dividend payments, until such time that the purchaser is able to complete.

Employing this method, during H1 2025, we contracted and completed sales of £2.4 million.  Combining this with the contracted and completed sales achieved post 30 June 2025 of £5.3 million (namely Kingston House), takes our total disposals to £7.7 million year-to-date.  These sales, once fully completed, represent 95.93% of our December 2024 valuations, on an aggregated basis.

Proceeds from sales that have legally completed in the year to date have been used to repay £4.3 million of debt, reducing total borrowings to £34.9 million (FY 2024: £39.2 million). Once contractually deferred sales complete, these receipts will be used to reduce debt further and bring us closer to becoming debt free.

In line with its cost reduction strategy, in March 2025, the Company closed out its hedge facility at a total cost of £174,000, resulting in all debt moving to variable rates.  This has allowed us to benefit from falling interest costs in H1 2025, with the cost of debt now at 6.0% (FY 2024: 6.5%). The Company remains multi-banked and compliant with all covenants and is conservatively geared with a Loan to Value (net of cash) of 26.6% (FY 2024: 26.4%), a slight increase in the half year, due to a 0.63% portfolio valuation decline.

The portfolio has continued to perform well operationally, with rent collection of 99.75% in H1 2025. At the period end, contracted rental income stood at £8.9 million per annum, occupancy was 82.25%, and WAULT was 5.65 years to break and 6.95 years to expiry.

Our asset management team completed 14 lease events during the period, securing £188,726 p.a. of additional annual income. These lettings have helped to offset the income lost through disposals and lease events.  Numerous asset management initiatives remain underway to support occupancy, income, and capital values ahead of future sales.

As a result of the ongoing rigorous asset management activity, our remaining assets have proven resilient with a gross portfolio valuation of £121.8 million (FY 2024: £124.6 million).  Like-for-like, the portfolio valuation has reduced by 0.63% to £119.4 million (FY 2024: £120.1 million).

Revenue for H1 2025 was £4.8 million (H1 2024: £5.6 million), with underlying profit before tax of £1.5 million (H1 2024: £1.8 million). The Company recorded a pre-tax profit of £0.3 million (H1 2024: £3.2 million loss), primarily due to a 0.63% non-cash revaluation adjustment of £0.8 million (H1 2024: £4.9 million loss).  Our portfolio void costs have reduced by a further £250,000 p.a. since the period end, predominantly due to the sale of Kingston House.

A provision of £0.2 million (H1 2024: £0.3 million) has been made in respect of the STIP announced in January 2024, with payment deferred until completion in line with the STIP scheme rules.

Despite the loss of income associated with sales during the period, the performance of the business resulted in an uninterrupted, fully covered dividend of 0.4p per share for Q2 2025.  A total of £55.3 million has been paid/declared to shareholders since the commencement of the dividend policy in 2012.

The recent rise in UK government borrowing costs and the upcoming budget delayed until late November is likely to cause paralysis across the property market.  However, our priority will continue to be the stated strategy.  To support this further, with £3.9 million of sales in our legal pipeline and £13.6 million on the open market, we now have £54.0 million of larger assets prepared for disposal in 2026, an increase from our recent trading update, providing a clear path to full repayment of borrowings which will, in turn, enable the commencement of capital returns to shareholders.

Management remain committed to paying a fully-covered quarterly dividend to shareholders, throughout the disposal programme, subject to the pace of the disposals.

BUSINESS PERFORMANCE/RESULTS

Profit before tax of £0.3 million (H1 2024: £3.2 million loss) includes a £0.8 million loss on property revaluations (non-cash item) representing a 0.63% portfolio valuation decline (H1 2024: £4.9 million loss), a £160,000 loss on sale of investment property (H1 2024: £80,000 loss) and a £25,000 deficit on the close out of the hedge position (H1 2024: £271,000 surplus).

Underlying profit for the period was £1.5 million (H1 2024: £1.8 million), the reduction being due to the fall in income of £0.8 million due to strategic sales, offset by the decrease of £0.4 million in finance costs, as a result of repayment of bank loans.

Administrative expenses for the period were £1.2 million (H1 2024: £1.3 million) and include a provision of £0.2 million (H1 2024: £0.3 million) for the Company’s STIP which was approved following a comprehensive review and in line with the strategic programme.  No STIP payment will be due until completion of the corporate strategy, consistent with the rules of the plan.

BANKING & FINANCING

Following completed contracted sales of £2.4 million in H1 2025 and with management committed to lowering gearing levels through debt repayment, £1.3 million of debt was repaid utilising proceeds from asset disposals during H1 2025. As at 30 June 2025, total drawn debt reduced to £37.9 million (H1 2024: £48.0 million), with £6.1 million cash at bank earning an average of 3.5%. 

Post period end, an additional £5.3 million of sales have contracted or completed and subsequent receipts were used to pay down an additional £3 million of debt, reducing total drawn debt to £34.9 million.

In March 2025, the Group extended the £12.6 million facility with Lloyds Banking Group Plc for a further 12 months to 29 May 2026 and the £22.9 million facility with National Westminster Bank Plc for a further 12 months to 1 June 2026.  In June 2025 the Group extended the £2.4 million facility with Barclays for a further 6 months until 30 December 2025.  The facilities were extended on a short term basis to reflect the Group’s priority of repaying debt as per the stated strategy and it is the Board’s intention to extend the reduced bank facilities as required in Q1 2026.

Cost of debt at 30 June 2025 was 6.5%, reducing to 6.0% in August 2025, following the UK interest rate reduction.

The Group’s loan to value (LTV) net of cash at the half year was 26.6% (FY 2024: 26.4%) and the hedge facility was closed out and settled during the period, with all debt now on variable rates.

The business continues to be multi-banked across 3 lenders:

DIVIDEND

The Board is pleased to announce a Q2 2025 fully-covered dividend of 0.4p reflecting a yield of 5% based on a mid-market opening price of 32.00p on 22 September 2025.

Subject to the pace of the ongoing sales programme, the Board remains committed to paying a fully-covered dividend.  The proposed timetable, for the dividend, which will be paid as an ordinary dividend, is as follows:

ASSET MANAGEMENT & OCCUPANCY

Rent collection in H1 2025 remained robust at 99.75%. Activity levels across the portfolio built steadily throughout H1 2025, with the focus of asset management initiatives on delivering lease events that will materialise in H2 2025.

During H1 2025, 14 lease events were completed, comprising lettings, lease renewals and break removals.  While volumes were lower than in H1 2024, new lettings delivered £188,726 p.a. of additional rental income. Contracted rental income as at 30 June 2025 stood at £8.9 million p.a., reflecting the combined impact of lease events and disposals (H1 2024: £10.3 million p.a.).

Occupancy at the half year was 82.25% (FY 2024: 82.04%), supported by successful leasing activity with WAULT at 5.65 years to break and 6.95 years to expiry.  

Since the period end, occupancy has remained robust at 81.20% and contracted rental income is now £8.4 million p.a. despite sales and the reduction in rental income associated with known lease expiries at Gateway House, Kingswinford, Brandon Court & 75-77 Colmore Row and the loss of rent from the River Island CVA.  These losses were partially offset by new lettings at Westgate House and occupancy has remained robust due to the sale of assets such as Kingston House where a high proportion of our void space was located.  WAULT is also stable at 6.12 years to break and 7.64 years to expiry. 

Currently, 62.5% of void space is concentrated in 7 properties, of which 3 have a number of leases progressing through legals; once completed, these will meaningfully reduce both portfolio void levels and associated holding costs, whilst enhancing rental income and capital values.

Example key lease events year-to-date include:

Peat House

·      Fairfield School of Business – (existing tenant on fourth floor) took a new 15-year lease at £158,992 p.a, representing a small increase on the passing rent.  The new letting eliminates void costs and increases the WAULT and capital value

Westgate House

·      Moore & Tibbetts – (existing Tenant at £30,610 p.a.) has surrendered their existing space and moved to the third floor at £146,220 p.a. on a new 10-year lease

·      Clive Mark Schoolwear Limited – has taken part of the ground floor unit vacated by M&S at £38,880 p.a. on a 5-year lease

PORTFOLIO MIX TABLE

PORTFOLIO SUMMARY TABLE

*Our land holdings are excluded from the yield calculations

ENVIRONMENTAL & SOCIAL GOVERNANCE (“ESG”)

Despite the primary focus being directed towards the stated Group strategy since the start of 2024, the asset management team continue to ensure that our remaining portfolio assets meet necessary environmental criteria and compliance with applicable governance.

We continue to behave as a responsible landlord, respecting the communities within which our business and assets operate.

In an effort to reduce the portfolio’s carbon footprint we continue to work alongside Systemslink, (a leading energy management software provider), to collect, track and report carbon emissions data across REI’s landlord-controlled areas.  We will continue to report carbon emission data in our year-end reporting. 

Similar to 2024, where possible, as energy contracts expire, they are being replaced with 100% green-only electricity contracts.

PORTFOLIO ENERGY PERFORMANCE CERTIFICATION

In accordance with government guidelines, REI also continues to ensure its assets meet the UK statutory regulations and timeframes for Energy Performance Certificates (“EPCs”).

An overview of the asset EPC ratings across the portfolio is noted below, showing the progress since 31 December 2024 to date:

OUTLOOK

Following the interest rate reductions year to date, we anticipate a more normalised investment market in 2026. However, the recent spike in UK government borrowing rates and the uncertainty created by the forthcoming budget in November could cause negative sentiment and market paralysis to persist through the remainder of 2025. 

With the short term uncertainty behind us, we expect H1 2026 to see the return of UK funds, property companies, private equity and overseas buyers to the market.  This should provide a favourable backdrop for the disposal of our larger assets at positive pricing levels. 

We remain firmly committed to acting in the best interests of our shareholders and will continue to monitor market conditions carefully, pursue sales with a view to repaying debt, and, once debt has been fully eliminated, return capital to shareholders. Importantly, we recognise that the timing of our larger sales is fundamental in order to maximise shareholder value.

In the meantime, our shareholders will continue to benefit from a fully covered dividend (subject to the pace of disposals). 

OUR STAKEHOLDERS

The Executive and Management team extend their gratitude to all shareholders, advisors, occupiers, and staff for their continued support and guidance throughout the disposal programme.

William Wyatt                                                                Paul Bassi CBE D.UNIV

Chairman                                                                       Chief Executive

22 September 2025                                                        22 September 2025

NOTES TO THE INTERIM FINANCIAL INFORMATION

for the 6 months ended 30 June 2025

1.   BASIS OF PREPARATION

Real Estate Investors Plc, a Public Limited Company, is incorporated and domiciled in the United Kingdom.

The interim financial report for the period ended 30 June 2025 (including the comparatives for the year ended 31 December 2024 and the period ended 30 June 2024) was approved by the board of directors on 22 September 2025. 

It should be noted that accounting estimates and assumptions are used in preparation of the interim financial information. Although these estimates are based on management’s best knowledge and judgement of current events and action, actual results may ultimately differ from these estimates. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the interim financial information are set out in note 3 to the interim financial information.

The interim financial information contained within this announcement does not constitute statutory accounts within the meaning of the Companies Act 2006. The full accounts for the year ended 31 December 2024 received an unqualified report from the auditor and did not contain a statement under Section 498 of the Companies Act 2006.

2.   ACCOUNTING POLICIES

The interim financial information has been prepared under the historical cost convention. 

The principal accounting policies and methods of computation adopted to prepare the interim financial information are consistent with those detailed in the 2024 financial statements approved by the Board on 24 March 2025.

Some accounting pronouncements which have become effective from 1 January 2025 and have therefore been adopted do not have a significant impact on the Group’s financial results or position.

3.   CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

Critical accounting estimates and assumptions

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next accounting year are as follows:

Investment property revaluation

The Group uses the valuations performed by its independent valuers or the directors as the fair value of its investment properties. The valuation is based upon assumptions including future rental income, anticipated maintenance costs, anticipated purchaser costs and the appropriate discount rate. The valuer and the directors also make reference to market evidence of transaction prices for similar properties.

Interest rate swap valuation

The Group carries the interest rate swap as a liability at fair value through the profit or loss at a valuation. This valuation has been provided by the Group’s bankers.

Critical judgements in applying the Group’s accounting policies

The Group makes critical judgements in applying accounting policies.  The critical judgement that has been made is as follows:

REIT Status

The Group elected for REIT status with effect from 1 January 2015.  As a result, providing certain conditions are met, the Group’s profit from property investment and gains are exempt from UK corporation tax.  In the Directors’ opinion the Group has met these conditions.

4.   SEGMENTAL REPORTING

Primary reporting – business segment

The only material business that the Group has is that of investment in commercial properties. Revenue relates entirely to rental income from investment properties.

5.   INVESTMENT PROPERTIES

The carrying amount of investment properties for the periods presented in the interim financial information is reconciled as follows:

6.   EARNINGS AND NAV PER SHARE

The calculation of the basic earnings per share is based on the profit attributable to ordinary shareholders divided by the weighted average number of shares in issue during the period. The calculation of the diluted earnings per share is based on the basic earnings per share adjusted to allow for all dilutive potential ordinary shares.

The calculation of the basic NAV per share is based on the balance sheet net asset value divided by the weighted average number of shares in issue during the period. The calculation of the diluted NAV per share is based on the basic NAV per share adjusted to allow for all dilutive potential ordinary shares.

The European Public Real Estate Association (“EPRA”) earnings and NAV figures have been included to allow more effective comparisons to be drawn between the Group and other businesses in the real estate sector.

EPRA EPS per share

NET ASSET VALUE PER SHARE

The Group has adopted the new EPRA NAV measures which came into effect for accounting periods starting 1 January 2020. EPRA issued new best practice recommendations (BPR) for financial guidelines on its definitions of NAV measures. The new NAV measures as outlined in the BPR are EPRA net tangible assets (NTA), EPRA net reinvestment value (NRV) and EPRA net disposal value (NDV).

The Group considered EPRA Net Tangible Assets (NTA) to be the most relevant NAV measure for the Group and we report this as our primary NAV measure, replacing previously reported EPRA NAV and EPRA NNNAV per share metrics. EPRA NTA excludes the intangible assets and the cumulative fair value adjustments for debt-related derivatives which are unlikely to be realised.

The adjustments made to get to the EPRA NAV measures above are as follows:

• Real estate transfer tax: Gross value of property portfolio as provided in the Valuation Certificate (i.e. the value prior to any deduction of purchasers’ costs).

• Fair value of derivatives: Exclude fair value financial instruments that are used for hedging purposes where the company has the intention of keeping the hedge position until the end of the contractual duration.