Join our community of smart investors

Real Estate Investors on the move

A renaissance in the regional property market is proving good news for West Midlands based Real Estate Investors
September 19, 2014

A steady increase in regional property values helped West Midlands-based Real Estate Investors (RLE) to deliver a strong increase in first-half profits. The group did suffer a £68,000 hit from revaluing interest rate swaps, but this was more than offset by a £2.4m property revaluation surplus. Crucially, rental income rose nearly 4 per cent to £2.7m.

IC TIP: Buy at 54p

Gross property assets grew 15 per cent to £86m and, since the half-year ended, further property and land worth £7.7m has been acquired. Indeed, chief executive Paul Bassi reckons that assets will soon exceed £100m. The group now owns nearly 696,000 square feet of space, a rise of 7 per cent in the period. While rising capital values helped reduce the loan-to-value ratio from 58.6 per cent in December to 48.8 per cent.

The fall in the dividend payment isn't what it seems, either. A 1p per share half-year dividend was paid last year, but no final dividend. This year, as well as the 0.75p half-year payout, the company also expects to pay a final dividend of 0.75p, which will represent a 50 per cent increase on the total payout from last year.

Broker Liberum expects adjusted net asset value of 63p for the full-year.

REAL ESTATE INVESTORS (RLE)
ORD PRICE:54pMARKET VALUE:£60m
TOUCH:52-55p12-MONTH HIGH:55pLOW: 43p
DIVIDEND YIELD:1.4%TRADING STOCK:nil
DISCOUNT TO NAV:5%
INVESTMENT PROP:£79mNET DEBT:37%

Half-year to 30 JunNet asset value (p)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201355.40.80.81
201457.02.62.40.75
% change+3+225+200-25

Ex-div: 24 Sep

Payment: 24 Oct