Property group prepares £30m war chest

Paul Bassi, chief executive, Real Estate Investors

Property group Real Estate Investors (REI) is preparing itself to go on the attack in the months ahead as it expects attractively-priced properties to become available.

The AIM-listed group, which is almost entirely focused on the Midlands market, has created a £30m war chest to “capitalise on market opportunities” it expects to emerge in the next year from Brexit-related issues.

Paul Bassi was named Ambassador of the Year at the 2018 Business Masters

REI chief executive Paul Bassi, who was named Ambassador of the Year at’s Business Masters earlier this year, said: “Our belief is that market sentiment and unrest over the next 12 months will provide us with the opportunity to make strategic and beneficial acquisitions.”

REI went on a spending spree in the run-up to the EU referendum, when institutional investors largely withdrew from the regional markets, while Bassi has often said that his biggest regret of the financial crisis was that REI did not spend more.

Bassi added: “Our understanding of the property market place indicates that there is a strong likelihood that criteria compliant opportunities will become available during Q4 2018 and H1 2019, and that our market reputation and network, coupled with our financial resources will allow us to capture these at attractive entry points.”

Those resources have been created through a mixture of strategic sales and built up cash and agreed bank facilities, which combined “provide £30m of firepower”.

It has also largely kept its powder dry during the first half of 2018, saying it has “not been prepared to pay the prices that assets are attracting”.

Office buildings at Topaz Business Park

REI’s purchases in that period included buying Topaz Business Park in Bromsgrove for £4m and city centre offices in Wolverhampton, let to the Department for Communities and Local Government, for £3.6m.

Since June 30, REI has acquired a retail neighbourhood scheme in Kings Heath, Birmingham, for £4.8m.

REI’s results for the six months to June showed it increased underlying pre-tax profits by nearly 10%, to £3.4m. This figure doesn’t include revaluations, property sales and interest rate swaps.

Occupancy rates dipped slightly, down two percentage points to 92%, as part of its plans to refurbish and re-let space on superior terms. Its current void space has an estimated rental value of £1.6m.

“The results are in line with management’s expectations and have been achieved during a period of preparation for any market downturn that we may experience due to Brexit discussions,” said Bassi.

“We have added income to our rent roll, grown the portfolio and delivered on our commitment of a progressive dividend policy.”

Its dividend payments, of 1.75p, were up by one-sixth and the group said its “main focus continues to be the growth of our dividends to our shareholders on a sustainable and progressive basis”.