A strong regional investment market helped to boost underlying pre-tax profit at Real Estate Investors (RLE) more than threefold to £5.2m for the year to December 2016. London has enjoyed 50 years of economic prosperity and now it's the turn of the Midlands to enter a golden age, according to chief executive Paul Bassi.
Rental income rose 25 per cent to a record £14.9m, and while the upward portfolio revaluation was smaller than the previous year, hence the drop in headline profit, adjusted net asset value was 2.7 per cent higher at 66.2p a share. The company continued to pick up smaller packaged assets ignored by larger operators, and spent £38.6m on acquisitions at a net initial yield of 8.98 per cent. Tenant numbers grew by 9.9 per cent to 232 and average occupancy was up from 89 per cent to 93 per cent.
Like-for-like rental income was marginally lower, reflecting the BHS closure. However, the vacant Walsall site has now been re-let and there are also plans to use the upper stories for residential development. Crucially, rental income is set to grow significantly as properties let out for soft rents during the recession come up for review, while further revenue will come from recent acquisitions including a £6.1m purchase made after the year-end, which alone will generate rent of nearly £500,000 a year.
Analysts at Liberum are forecasting diluted net asset value (NAV) at the December 2017 year-end of 61.3p from 66.2p in 2016.
| REAL ESTATE INVESTORS (RLE) | ||||
|---|---|---|---|---|
| ORD PRICE: | 60p | MARKET VALUE: | £112m | |
| TOUCH: | 58-62p | 12-MONTH HIGH: | 64p | LOW: 51p |
| DIVIDEND YIELD: | 4.4% | TRADING PROPERTIES: | nil | |
| DISCOUNT TO NAV: | 8% | NET DEBT: | 61% | |
| INVESTMENT PROPERTIES: | £198m | |||
| Year to 31 Dec | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 54.6 | 1.0 | 0.5 | 0.5 |
| 2013 | 58.6 | 5.0 | 5.0 | 1 |
| 2014 | 57.9 | 6.0 | 4.1 | 1.5 |
| 2015 | 63.1 | 12.2 | 7.5 | 2 |
| 2016 | 65.0 | 8.2 | 4.3 | 2.625 |
| % change | +3 | -33 | -42 | +31 |
Ex-div: 30 Mar Payment: 28 Apr | ||||
