Birmingham-based Real Estate Investors PLC has revealed record occupancy levels and rental income for its £200 million-plus property portfolio in an end-of-year trading update released on Monday.
The company has reported that occupancy levels stood at 96.01% on 31 December 2018, up 2.2% from the 94% recorded a year previously, while contracted rental income rose to £17.01 million, up 5% from £16.2 million.
Meanwhile, the number of REI’s tenants grew to 269 by the end of 2018, up 4.26% from 258, while total property ownership was 1.55 million sq ft, up 3.3% from 1.5 million sq ft at the end of 2017.
Chief Executive Officer Paul Bassi said: “Amidst a challenging environment, it’s pleasing to be reporting an increase in tenant demand for REI 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 and offices.
“We will continue to capitalise on existing opportunities within the portfolio, in particular where we have potential permitted development and other planning opportunities.”
A recent example of acting on permitted development opportunities was REI’s exchange contracts on the sale of Citygate House in Leicester for £2.6m, a 40% uplift on its December 2017 book valuation.
Meanwhile, the company acquired The Quadrant in Redditch during December 2018, a well located, mixed-use, freehold property of 39,065 sq ft with retail, leisure, gym and office space and a large car park.
REI paid £2.989 million for The Quadrant, which represented a net initial yield of 12.24%.
Mr Bassi said: “We secured The Quadrant favourably by carefully applying our market intelligence, cash resources and our ability to transact quickly.
“We believe this asset has considerable capital upside, with prospects for residential development and the ability to break the asset up to generate further capital value through individual sales at premium values.”
REI’s trading update stated it remained alert to the current economic and political uncertainties and had retained £25 million in cash and banking facilities to capitalise on any opportunities.
Mr Bassi said: “We are pleased to confirm the business is trading well and our diverse portfolio, spread across 52 assets, continues to remain stable and robust with no material reliance or exposure to any single sector, asset or occupier.
“We are very fortunate to operate in a vibrant, strong and expansive regional economy.
“Major transformational infrastructure projects such as HS2, Birmingham becoming the host City for the 2022 Commonwealth Games and Coventry winning the City of Culture for 2021, along with the relocation of national and international businesses such as HSBC and HMRC, are all having a significantly positive impact on the region’s economy.
“REI is very much poised to continue benefiting from the positive market conditions generated by this regional activity. Our core portfolio, in particular, of out-of-town office assets are performing well with strong occupancy, renewals and upward rent reviews.”
Mr Bassi added: “We remain committed to our progressive dividend policy and growing the company’s Net Asset Value through asset management. Our cash and banking facilities will allow us to capitalise on market conditions and grow the business further during 2019.
“We look forward to announcing our full year results in March together with our final dividend.”