Birmingham-based property group Real Estate Investors (RLE) spent £37.3m on acquisitions in the first half, generating rental income of £3.6m and driving annualised contracted rental income up by nearly a third to £15.6m since December 2015. This helped to drive adjusted earnings per share ahead by 160 per cent to 1.3p, more than enough to cover a 25 per cent increase in the dividend payout.
Headline figures were distorted by two non-cash items. The interest rate environment delivered a £1.2m revaluation loss on the company's swaps, while the previous year's £5.9m property valuation uplift was turned into a deficit of £1.8m. This included a negative £1.6m movement following the collapse of BHS, which had occupied the site at Park Street, Walsall. However, there are ongoing discussions to relet the property.
Tenant demand remained strong despite the referendum, and assets and rental growth are expected to continue. Overall occupancy rose to 92.6 per cent from 89 per cent for the whole of 2015, while the number of tenants grew from 211 to 241. New tenants included Iceland, J Sainsbury and Premier Inn.
Ahead of these numbers, analysts at Liberum were forecasting adjusted net asset value of 61.1p for the December year-end, although this is expected to be revised down to reflect higher administration costs and a slower acquisition spend.
| REAL ESTATE INVESTORS (RLE) | ||||
|---|---|---|---|---|
| ORD PRICE: | 58.5p | MARKET VALUE: | £109m | |
| TOUCH: | 57-60p | 12-MONTH HIGH: | 71p | LOW: 51p |
| DIVIDEND YIELD: | 3.8% | DEVELOPMENT PROP: | nil | |
| DISCOUNT TO NAV: | 5% | |||
| INVESTMENT PROP: | £191m | NET DEBT: | 63% | |
| Half-year to 30 Jun | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p*) |
|---|---|---|---|---|
| 2015 | 61.9 | 8.07 | 4.93 | 1 |
| 2016 | 61.5 | -0.56 | -0.31 | 1.25 |
| % change | -1 | - | - | +25 |
Ex-div: 29 Sep Payment: 28 Oct *Dates refer to 0.625p second-quarter dividend, as dividend now paid quarterly | ||||
