Real Estate Investors plc (REI), the only Midlands-focused Real Estate Investment Trust, has reported a strong overall rental collection performance for 2020 of 95.29%.
In a year beset by Covid-19 and Brexit concerns, REI has benefitted from a range of diverse and ongoing asset management initiatives across the company’s portfolio of 1.59 million sq ft of commercial property.
REI chief executive officer Paul Bassi said: “Rent collection has been the key focus of our business against the backdrop of Covid-19.”
“Our strong result of 95.29% is expected to improve over the coming weeks and months as occupiers who have the ability to pay but have previously taken advantage of government legislation on overdue rents, begin to pay and tenants who are currently closed, commence re-trading later in 2021.”
“Further collections generated will be attributed to the relevant current or historic quarters, resulting in improvements in the overall rental collection performance.”
He added that with 262 occupiers across 53 assets, REI’s portfolio remained stable and robust with ongoing opportunities being realised via asset management initiatives.
“A diversified portfolio, with no material reliance on any single occupier, asset or sector has underpinned the positive rent collection.”
Against a challenging backdrop in 2020, REI completed 34 value-add lease events, including seven lease renewals. As a result of proactive asset management initiatives in 2020, REI’s WAULT has improved to 4.8 years to break and 6.54 years to expiry (Year ending 2019: 3.82 years to break and 5.79 years to expiry)
Mr Bassi said: “Our occupancy at the year-end is 91.60% against a 2019 figure of 96.3%. This reduction is almost entirely due to known lease events predominantly in our office sector that, in a normalised marketplace, would provide opportunities to increase lease terms and improve our average lease length (WAULT), along with the potential for capital uplifts within our portfolio.”
“We already have space under offer to the NHS/CO-OP/ Department for Work and Pensions.”
“While we are seeing some delay in tenant occupancy decisions, we note the strength of demand for our convenience and neighbourhood portfolio, with increases in occupier requirements from national c-store and essential services operators.”
“The pandemic-driven increase in turnover experienced by these businesses has seen many seek to rapidly expand their presence. Our focus on convenience and neighbourhood assets will continue as opportunities emerge.”
REI announced a share buyback on 20 October 2020, to purchase an aggregate market value up to £2 million of the Company’s ordinary shares. In aggregate, between 20 October 2020 and 27 November 2020, the Company repurchased 7,042,700 ordinary shares at an average purchase price of 28.40 pence per share.
The company’s income, despite challenges faced throughout the pandemic, has supported the continuation of REI’s dividend payments which were paid at a level of 0.50p per quarter in 2020. The level of the final dividend payment will be confirmed with REI’s year end results in March 2021.
Mr Bassi added: “The diversity of our portfolio and intensive asset management, has resulted in resilient levels of rent collection, and has allowed us to combat much of the impact of COVID19, which has devastated many other businesses.”
“With a growing occupier demand resulting in new pipeline lettings for our void space, combined with portfolio lease renewals, we believe that we will move forward with a stable and secure property business, to make opportunistic sales and acquisitions that support a continued progressive dividend policy.”