Trading Update

7 January 2019

Real Estate Investors Plc

(“REI” or the “Company”)

TRADING UPDATE

‘Well positioned with record contracted rents and occupancy’

Real Estate Investors Plc (AIM: RLE), the Birmingham based, Midlands focused, AIM listed Real Estate Investment Trust (REIT) is pleased to provide the following trading update (as at 31 December 2018):

·     Record portfolio contracted annual rental income £17.0m – up 5.0% (31/12/2017: £16.2m)

·     Record occupancy level of 96.1% – up 2.2% (31/12/2017: 93.9%)

·     Number of tenants 269 – up 4.3% (31/12/2017: 258)

·     Total portfolio ownership 1.55m sq ft – up 3.3% (31/12/2017: 1.50m sq ft)

·     Opportunistic acquisition of The Quadrant, Redditch (mixed use scheme) in December 2018 for £3.0m, representing a net initial yield of 12.24%

·     Contracts exchanged on the sale of Citygate House, Leicester for £2.6m, 40% above December 2017 book value

Management are pleased to confirm that the business is trading well and the Company’s diverse property portfolio, spread across 52 assets, continues to remain stable and robust with no material reliance on or exposure to any single sector, asset or tenant.

The Company will continue to capitalise on the existing opportunities within the portfolio, in particular where it has potential permitted development and/or other planning opportunities.  Indeed, with regards to permitted development, the Company has recently exchanged contracts on the sale of Citygate House, Leicester for the sum of £2.6m, representing a 40% uplift on its December 2017 book valuation.

During December 2018 the Company acquired The Quadrant, Redditch, which is a well located freehold mixed-use property comprising 39,065 sq ft of retail/leisure/gym/office and a 143-space car park for the sum of £3.0m, representing a net initial yield of 12.24%.  REI secured the asset favourably with market intelligence, cash resources and its ability to transact expeditiously.  Management believe this asset has considerable capital upside, with prospects for residential development and the ability to break the asset up to generate additional capital value through individual sales at premium values.

REI remains alert to the current economic and political uncertainty and has retained £25 million in cash and banking facilities to capitalise on any criteria compliant opportunities that may reveal themselves.

Paul Bassi, CEO, commented: “Amidst a challenging environment, it is pleasing to be reporting an increase in tenant demand for REI with occupancy up to a record 96.1% driven by our diversified approach to investment and the clear strength of the Midlands by comparison to many other parts of the UK.   

Our existing portfolio remains strong and stable, with significant opportunity to add value and generate additional income.  REI does not have any material exposure to the CVA’s and insolvencies impacting the retail sector and continues to focus on convenience and neighbourhood retail stores and offices.

We are very fortunate to operate in a vibrant, strong and expansive regional economy.  Major transformational infrastructure projects such as HS2, wins such as host City for the 2022 Commonwealth Games and the award of City of Culture for Coventry 2021, along with the relocation of national and international businesses/organisations such as HSBC and HMRC are all having a significantly favourable impact on the region’s economy and REI is very much poised to continue benefiting from the positive market conditions generated by this regional activity.  Our core portfolio, in particular our out of town office assets, are performing well with strong occupancy, renewals and upward rent reviews.

We remain committed to our progressive dividend policy and growing the Company’s Net Asset Value through active asset management.  Our cash and banking facilities will allow us to capitalise on market opportunities and grow the business further during 2019.

We look forward to announcing our full year results in March together with our final dividend.”

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 1.55 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.