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Midlands-focused Real Estate Investors Sanguine on 2020 outlook

Real Estate Investors RLE1

Real Estate Investors (RLE) has released a trading update with CEO Paul Bassi, commenting, “Despite high levels of economic and political uncertainty creating a relatively static market in 2019, we have increased our revenues and covered our dividend payments, with contracted rents rising to £17.66m, up 3.85% over the year. Looking ahead into 2020, we anticipate the pent-up requirement to trade that has been accumulating over the last 12 months being released which is likely to stimulate our markets and create further opportunities for RLE.”

RLE says it is the UK’s only Midlands-focused REIT, with a portfolio of 1.59m sq ft of commercial property. Highlights from its trading update for 2019 and outlook for 2020 include:

  • With 280 occupiers across 53 assets RLE says the portfolio remains well-balanced with additional value being created via asset management initiatives: in 2019, the company completed 53 lease events (44 new lettings and 9 lease renewals);
  • Maintained a diversified portfolio, with no material reliance on any single occupier, asset or sector and this has provided RLE with excellent occupancy levels in excess of 96%;
  • Strong occupier demand for offices in a vibrant regional economy with this sector representing the largest component within the RLE portfolio (37%);
  • Continued retail focus on convenience and neighbourhood shopping (a strong sub-sector), no department stores/indoor shopping centres or out of town stand-alone retail and only two small retail units affected by insolvency in the year, representing 0.56% of income;
  • Embedded value with 250,000 square feet of space with the potential for conversion to residential within the portfolio under permitted development rights;
  • Acquired prime mixed-use investment properties for £9.25m with a net initial yield of 8.13%, in Leamington Spa, Warwickshire, with established occupiers (including O2, Toni & Guy, McDonald’s, Tiger UK, Moss Bros, Timpson) and significant potential to improve rental income and capital valuations;
  • Overall cost of debt has reduced to 3.4%, with 72% of the company’s debt now fixed.

RLE: Midlands-focused Real Estate Investors Sanguine on 2020 outlook

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