Midlands property landlord Real Estate Investors (RLE) continued to benefit from the strong economic revival in Birmingham and surrounding areas. Even Brexit has been helpful by driving down property valuations, which, in some cases, has allowed REI to acquire assets off market at attractive prices.
So, in the year to December 2018 it made acquisitions of £15.4m, part financed by disposals of £5.7m. There is also significant value yet to be crystallised from change of use, or permitted rights development. Around 250,000 square feet has been identified for potential residential conversion from offices, and the first to be completed was an office block in Leicester which was sold with permitted development rights for £2.6m, representing a 40 per cent uplift on the December 2017 book value. And after the year-end, a further site of around 100 units received planning consent.
Contracted rental income rose 4.9 per cent to a record £17m, while underlying profits rose by 16.1 per cent to £7.2m. The decline in headline profits reflected a smaller upward portfolio valuation than in the previous year.
Subject to revision, analysts at Liberum are forecasting adjusted net asset value at the December 2019 year end of 75.2p a share, up from 71.7p a year earlier.
| REAL ESTATE INVESTORS (RLE) | ||||
| ORD PRICE: | 50.5p | MARKET VALUE: | £94m | |
| TOUCH: | 50-51p | 12-MONTH HIGH: | 62p | LOW: 49p |
| DIVIDEND YIELD: | 7.1% | TRADING PROPERTIES: | nil | |
| DISCOUNT TO NAV: | 27% | NET DEBT: | 68% | |
| INVESTMENT PROPERTIES: | £221m | |||
| Year to 31 Dec | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p)* |
| 2014 | 57.9 | 6.0 | 4.1 | 1.5 |
| 2015 | 63.1 | 12.2 | 7.5 | 2.0 |
| 2016 | 65.0 | 8.2 | 4.3 | 2.625 |
| 2017 | 68.2 | 11.3 | 6.0 | 3.125 |
| 2018 | 69.0 | 8.4 | 4.5 | 3.562 |
| % change | +1 | -26 | -25 | +14 |
| Ex-div: | 28 Mar | |||
| Payment: | 26 Apr | |||
| *Dividends paid quarterly. Ex-div and Payment dates refer to fourth-quarter dividend of 0.937p a share | ||||
