Trading Update and Notice of Interim Results

Real Estate Investors PLC

31 July 2023

 

Real Estate Investors Plc

("REI", the "Company" or the "Group")

TRADING UPDATE AND NOTICE OF INTERIM RESULTS

ONGOING SALES, DEBT REPAYMENT & FULLY COVERED DIVIDEND

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 provide the following trading update:

DISPOSALS - DELIVERING ON SALES STRATEGY

·    Private investors and owner occupiers have remained active, allowing us to secure sales - breaking up parades and feeding demand for smaller assets, despite the challenging macro environment

·    Year to date disposals of £8.7 million (comprising of 11 retail units, 1 mixed retail and office asset and a piece of land for drive-thru pod development) at an aggregate uplift of 11.7%, pre-costs, to December 2022 book value

·    Further pipeline of sales in solicitors' hands and we intend to complete sales to generate receipts to reduce portfolio debt and execute our strategy

·    We have now achieved total sales of £46.55 million from 1 January 2021 to date

DEBT POSITION - INCREASED LIQUIDITY & RETURN ON DEPOSITS

·    Our priority has remained to repay debt with a view to reducing portfolio gearing levels

·    As at 28 July 2023, debt repayment of £7.3 million, reducing total drawn debt to £64.2m (FY 2022: £71.5 million)

·    Pro-forma loan to value (net of cash) now 34.7% (FY 2022: 36.8%) based on 31 December 2022 valuations

·    Company is maximising returns on cash reserves, with monies on deposit earning 3.4% at present

·    Average cost of debt maintained at 3.7% (FY 2022: 3.7%)

·    Company's debt is 100% fixed, with a blended debt profile term of 17 months. Plans agreed with Royal Bank of Scotland and Lloyds to begin facility negotiations in Q4 2023

·    As at 30 June 2023, hedge facility had improved by £388,000 year-to-date 

PORTFOLIO ACTIVITY - HEALTHY PIPELINE OF LETTINGS

·    We have experienced slow occupier decision making since the year end, however, due to our healthy pipeline of lettings, and with our further scheduled sales, we anticipate improved contracted rental income, WAULT and occupancy (over the remainder of the year), which will further reduce our void costs and support future covered dividend payments

·    Example key lease event in H1 2023 - AFH Private Wealth, with 18 months left on their lease, took out a new lease for 11.5-years at the passing rent of £396,077 per annum (at ERV) with no break, now occupying all 25,000 sq ft at Avon House, Bromsgrove

·    Robust rent collection levels for Q2 2023 (March-June) of 99.93%

·    Contracted rental income of £12.5 million per annum as at 30 June 2023, due to disposals in line with strategy (FY 2022: £12.6m)

·    Portfolio occupancy of 85.04% as at 30 June 2023 (FY 2022: 84.54%), with potential to rise further as key pipeline lettings are completed (subject to ongoing sales and ongoing portfolio lease activity)

ATTRACTIVE, FULLY COVERED DIVIDEND

·    Fully covered dividend for Q1 2023 of 0.625p per share (Q1 2022: 0.8125p per share) 

·    £47.4 million total declared/paid to shareholders since commencement of dividend policy in 2012

NOTICE OF INTERIM RESULTS

The Company will release its interim results for the six months ended 30 June 2023 on 25 September 2023.

PAUL BASSI, CHIEF EXECUTIVE, COMMENTED:

"During H1 we have seen unfavourable and unstable market conditions for the real estate market, including monthly interest rate rises, stubbornly high inflation and no end to the war in Ukraine. Despite these challenges, the REI portfolio remains stable and we have enjoyed high rent collection, sales of £8.7 million, debt reduction of £7.3 million and paid a fully covered Q1 dividend of 0.625p.

Continued interest rate rises, coupled with a poor investment market have the potential to negatively impact property values, though our asset management approach should combat some of this downward pressure. The portfolio is not exposed to large-scale city centre offices, assets that are particularly at risk.

In the absence of consolidation opportunities that meet the needs of shareholders and the necessary market conditions to support portfolio growth, the Company's strategy remains to make opportunistic and targeted sales and reduce debt further. The Company will maintain maximum flexibility when considering all future options, including a return of capital, special dividend to shareholders or further share buybacks, with the view to maximising shareholder returns. Alternatively, if the environment for acquisitions changes and opportunities offering significant value start to arise, then we may look to make opportunistic acquisitions, where there is scope to capture material upside through asset management. The Board evaluates the relative merits of these options on an ongoing basis."

Certain of the information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the UK version of the EU Market Abuse Regulation (2014/596) which is part of UK law by virtue of the European Union (Withdrawal) Act 2018, as amended and supplemented from time to time.

Enquiries:

Real Estate Investors Plc Paul Bassi/Marcus Daly	[phone]
Cenkos Securities (Nominated Adviser) Katy Birkin/Ben Jeynes	[phone]
Liberum (Broker) Jamie Richards/William King	[phone]

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 Company's strategy is to invest in well located, real estate assets in the established and proven markets across 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 its dividend policy. Further information on the Company can be found at www.reiplc.com.

 

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