LONDON (ShareCast) - (Sharecast News) - Midlands-focussed real estate investment trust Real Estate Investors updated the market on its first half trading on Monday, reporting "strong" rent collection at 97.22%, adjusted for monthly and deferred agreements.
The AIM-traded firm completed eight asset disposals totalling £10.7m in the period, making for an aggregate uplift of 10.3% above book value.

Pipeline disposals of £5.53m were also made, with £5.35m of that exchanged unconditionally and £0.18m on a conditional basis.

Occupancy levels stood at 83.43%, with the board reporting the near-term potential to rise to 88.15%, based on 4.72% in pipeline lettings, with the reduction in occupancy dominated by the loss of Npower in Oldbury and Premier Inn in West Bromwich.

The company said its weighted average unexpired lease term (WAULT) Improved to 5.01 years to break and 6.7 years to expiry, from 4.84 years and 6.54 years at the end of the 2020 financial year, respectively.

Real Estate Investors secured a renewal of its £51m facility with NatWest for three years in March, at 2.25% above LIBOR, with £4.1m repaid since the end of that month.

It fixed £35m of that facility at "competitive" rates, and as at 1 July, it said its hedge facility had improved by £0.72m for the half-year ended 30 June.

Real Estate Investors said all banking covenants were still being met, with headroom available, as it confirmed a dividend payment of 0.75p per share for the first quarter.

"Following a very uncertain 2020, we are beginning to see some early signs of market normalisation coupled with a strong investor marketplace," said chief executive officer Paul Bassi.

"Whilst we are not immune to the ongoing impact of Covid-19 on the wider UK property market, we are very well positioned in an active regional Midlands market, with a healthy exposure to resilient and sought-after community assets.

"As we apply our extensive local market knowledge and utilise our unrivalled property network, we continue to achieve strong pricing on our disposals."

Bassi said the company intended to use the cash generated from the disposals to continue its focus on "resilient and emerging" sub-sectors, and would look to secure opportunistic acquisitions which offered the prospect of capital growth and rental income, with a view to improving net asset value and further support the progressive dividend policy.

"Occupier demand is beginning to strengthen across the marketplace, with decision makers less cautious and naturally eager to move forward after a uniquely challenging 18 months.

"We have a healthy pipeline of new lettings on our void space, which is expected to improve our occupancy levels and support our valuation recovery.

"The diversity of our portfolio continues to underpin our strong rental collection in an unstable environment and it is this resilience, combined with numerous initiatives rolled out by our specialist in-house asset management team on specific assets, that we expect to lead to some recovery in our property valuations over 2021 and 2022 as transactional evidence becomes apparent, which will contribute to a rise in our net asset value and a reduction in our gearing."

At 1520 BST, shares in Real Estate Investors were up 2.8% at 41.12p.

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