19th Sep 2016 08:33
LONDON (Alliance News) - UK property investment firm Real Estate Investors PLC said demand for property is still greater than supply in the Midlands and it had taken the opportunity to acquire new assets after the UK's vote to leave the European Union, even as property revaluation led the company to swing to an interim loss.
Real Estate Investors booked a pretax loss of GBP560,000 for the first-half of 2016, swinging from a GBP8.1 million profit year on year. Results were hit by a GBP1.8 million property revaluation loss, swinging from a GBP5.9 million surplus, and a GBP1.2 million loss on interest rate swaps, compared to a GBP690,000 surplus the year prior.
The company said its property values had received a GBP1.6 million hit from the collapse of BHS which occupied one of its units in Walsall and GBP1.3 million of stamp duty land tax paid on new acquisitions. Like for like valuation was up by 0.4% to GBP158.1 million from GBP157.5 million.
Real Estate Investors said it intended to continue quarterly dividend payments of 0.625 pence made for the financial year, with the first having been paid out in July and the second due in October. Therefore the interim dividend will be a total of 1.25p, up from 1.0p in 2015.
Chief Executive Officer Paul Bassi said although the EU referendum result drove the interest rate swap loss, it also provided a "window of opportunity" in which the company acquired GBP37.3 million in new assets, increasing contracted rental income by 31% from the end of 2015 to GBP15.6 million.
"Demand for investment property continues to outstrip supply. A variety of investors from institutions, funds and overseas investors are seeking to capitalise on the fall in value of sterling. We are also seeing competition for assets from private property companies and high net worth individuals who have banking support and confidence to invest in property as an asset class, as it provides significantly higher yields than many alternative opportunities. This investment demand is enhanced by investors looking outside the traditionally safer market of London," said Bassi.
Shares in Real Estate Investors were up 1.8% at 57.00 pence Monday.
By Adam Clark; [email protected]
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