Commonwealth Games ‘will be crucial for recovery of region’

The chief executive of a West Midlands property investment business expects the approaching Commonwealth Games to boost activity in the industry in the region.

Paul Bassi of Real Estate Investors said; “We remain confident in our ability to operate a profitable regional property company, committed to a dividend policy, based in the heart of the Midlands, where we expect activity to prosper over the coming months and welcome the further economic benefits of Coventry City of Culture year in 2021 and the Commonwealth Games in 2022.”

The Birmingham-based real estate investment trust slipped to a pre-tax loss in the first six months of this year.

It went from a £1.7 million profit a year before to a £3.8m loss, but there was a 2.4 per cent increase in underlying profits before tax to £4.1m.

REI chief executive Paul Bassi said: “For over a decade we have traded through a financial crisis, numerous elections, Scottish and European referendums plus the Brexit fiasco and as a result we believed that our business model had been fully tested.”

He added: “Covid-19 has presented a new level of challenge and tested our business model even further. We are pleased to say that we remain a stable and secure business, with a diversified income stream and the ability to add value through lease events, planning gains and new lettings.”

Despite economic pressures from the coronavirus pandemic, REI continued to make progress, with revenue up by 1.2 per cent to £8.2m on the first half of 2019, with the overall portfolio valuation stable at £221.8m at the end of June.

Covid-19 coverage:

Rent collection for the March quarter of 2020 was 90.7 per cent and for the June quarter is currently 86.9 per cent.

The business has taken a cautious approach to dividend payments in the short term in case of a second lockdown, but remains committed to a progressive dividend policy.

Mr Bassi pointed out that the diversity of the portfolio, managed on a regional basis by an experienced team, remains the foundation of REI.

“This has allowed us to continue to pay dividends, while others have withdrawn their payments. We have now delivered £31.9m in dividend payments to our shareholders since the commencement of our dividend policy, against a series of unprecedented events and the present global pandemic.”

He added: “We continue to operate without any exposure to prime fashion retail and department stores. Occupancy at our convenience, town centre and neighbourhood retail has been excellent during the first six months of 2020 and our office exposure, which is predominantly outside City centres and generally multi-let (between 1,000 and 5,000 sq ft), has seen renewed interest as occupiers look for locations closer to home with minimal travel and exposure to public transport for their employees.

"Additionally, recent government planning legislation will almost certainly provide opportunities to make capital gains from change of use to residential.”

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