15 January 2014
Real Estate Investors Plc
(“Real Estate Investors” or “the Company”)
Real Estate Investors (AIM: RLE.L), the West Midlands based property investment company, announces the following pre-close trading update for the year ended 31 December 2013:
· Completed significant lettings during the second half with a strong pipeline for 2014
· Disposals in the second half included further non-core historical assets realising £6.2m
· Banking support for the Company has been excellent, and we are seeing a much improved lending market
· As long term interest rates begin to normalise, the Company has benefitted from a recovery in the fair value movement charge on a financial instrument of £2 million, which is non-cash item
· In December 2013, the Company acquired the building comprising 37a Waterloo Street/Bennetts Hill Birmingham and Bridge Street Walsall. The Company’s property portfolio in Birmingham, now at 180,000 sq ft, has been acquired during the economic downturn
· Further acquisitions are anticipated during 2014 as the Company continues to build its core portfolio
· Additional lettings have been completed with a strong pipeline for 2014
· Progressive dividend policy
Real Estate Investors confirms that, in addition to the sale of a portion of Southgate Retail Park to Lidl for the sum of £4.25 million, and in accordance with its strategy to dispose of non-core historical assets, the Company has sold investment properties in Crawley and Wakefield for a total consideration of £1.95m. The combined sale proceeds of these three properties are significantly in excess of their book value.
The Company has also completed significant lettings to the Royal College of Surgeons, Shaw Trust and Sandwell Inspired Partnership Services Limited. The Royal College of Surgeons of Edinburgh has taken a 10 year lease for the fifth floor at 85-89 Colmore Row, at a rental of £74,320 p.a. Sandwell Inspired Partnership Services Limited has taken just under 25,000 sq ft on a 10 year lease at Guardian House in West Bromwich, which the Directors believe represents one of the largest deals in West Bromwich for a number of years, at an annual rental of £251,792.
A number of additional lettings have also been completed and the Company has a strong pipeline going into 2014.
The regional economy has gained in confidence and activity, in particular the motor trade, exemplified by the recent news issued by Jaguar Landrover, which is to create 1,700 new jobs with a £1.5 billion investment in Solihull. Automotive strength will see the West Midlands outstrip Germany in export growth, growing three times faster than Germany, led by Jaguar Landrover achieving record-breaking global sales of 425,000 new vehicles.
House prices in the West Midlands saw the biggest annual increase in the English regions, after London and the South East, with a 4.4% increase.
The latest figures released show the annual take up of office space in Birmingham in 2013 was 664,147 sq ft. This is an increase of almost 33% on the 2012 figure of 500,955 sq ft and confirms the view of Real Estate Investors that occupier demand was up in 2013, pointing the way for a better 2014.
It is anticipated that the Company’s results for the year ended 31 December 2013 will be announced in March 2014.
Paul Bassi, Chief Executive, commented:
“We are experiencing an improving regional investment and occupier market, resulting in an excellent year of progress in 2013, when we increased our dividend by 100%. In 2014, we intend to move to a more normal dividend payout strategy, with twice yearly payouts post the interim and full year results.
“During 2014/15, we anticipate continued activity across our portfolio, capitalising on our market reputation and knowledge, with further opportunistic acquisitions, sales and lettings. Our portfolio remains stable, secure and full of capital and income enhancing opportunities.
“With improved demand and negligible new supply, we anticipate good rental growth, and look forward to 2014/15 with optimism, with the view to a continuation of our progressive dividend policy.”
Real Estate Investors Plc
T: +44 (0)121 265 6400
Smith & Williamson Corporate Finance Limited
Azhic Basirov / Siobhan Sergeant
T: +44 (0)20 7131 4000
Chris Bowman / Richard Bootle
T: +44 (0)20 3100 2000
Gable Communications Limited
John Bick / Justine James
T: +44 (0)20 7193 7463
M: +44 (0)7872 061007
Notes to Editors
Real Estate Investors is an AIM listed property investment company with a £76.8m (as at 30 June 2013) commercial and residential portfolio principally in the West Midlands and central England.
Real Estate Investors is focused on delivering shareholder value through returns generated from strong yields and capital enhancements. This is achieved by targeting investments in orphaned, distressed, part-let and underperforming commercial and residential property assets.
Real Estate Investors is led by respected property investor Paul Bassi CBE, who has over 30 years of property experience in the West Midlands. Mr Bassi is also founder and non-executive chairman of Bond Wolfe and non-executive chairman of CP Bigwood Chartered Surveyors. Real Estate Investors was admitted to trading on AIM in June 2004. Further information on Real Estate Investors can be found at www.reiplc.barques.dev.