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REI reveals sales of £10.4 million of property despite challenging market

Birmingham-based Real Estate Investors plc has been working the private investor market hard in the first half of its 2023 financial year.

REI's Birmingham head office

The company has focused on selling off individual properties within its portfolio, in particular those offering an uplift on previous book values.

REI’s first-half performance to June 30, showed an underlying profit before tax of £2.2 million, compared to £2.9 million last year, due to sales.

The company said a loss before tax of £779,000 is attributable to a £4.1 million on current portfolio revaluations.

REI has a total gross portfolio of £169.2 million with £8 million in cash at the bank. Loan to value is now down to 35.9% net of cash.

The half year results enabled the board to announce the continuation of a covered dividend of 0.625p for the second quarter of 2023.

This will bring total dividends declared and paid to shareholders since the commencement of the current policy in 2012 to £48.5 million.

Chief executive Paul Bassi said: “Despite a challenging property market, REI has sold £10.4 million of property in the year to date.

“Since the start of 2021, we have operated a successful sales programme, with sales totalling £48.9 million and £38.3 million of debt repaid, with further pipeline sales in legals.”

He said that a further pipeline of sales is in solicitors’ hands which will further reduce portfolio debt."

Mr Bassi added: “Throughout 2023, investment and sales activity has been at its lowest level since the 2008 financial crisis, with corporate and institutional investors remaining dormant.

“With a lack of available assets for purchase and against the backdrop of an inactive investment marketplace, the diverse nature of our portfolio has allowed us to break-up and sell individual units, taking advantage of the ongoing demand for smaller lot sizes from private investors and owner occupiers. We will continue with this approach until we see a normalised market.

“We are confident that normalised market conditions will return once the trajectory of interest rates settles, allowing us to sell further assets where asset management initiatives have been completed. It is our intention to accelerate our sales programme and we will consider the sale of assets either on an individual or collective basis, on terms that represent value for shareholders.

“Subject to market conditions and our sales rate, REI intends to repay bank debt and, in due course, consider a share buyback or other form of capital return. Management remains open to evaluating any corporate transaction that is in the best interests of shareholders and, in the meantime, we will continue to pay a fully covered dividend.”

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