LONDON (ShareCast) - (Sharecast News) - Midlands-focussed Real Estate Investors said in its final results on Tuesday that despite a challenging market, its net tangible assets increased 5.7% through 2022 to 62.2p per share, up from 58.8p in the previous year.
The AIM-traded real estate investment trust said revenue for the year decreased to £13.3m, from £14.7m, due to a loss of income associated with sales.

However, its profit before tax of £10.9m, which included a revaluation gain of £3.2mon investment properties, a gain of £0.95m on the sale of investment property, and a gain in the market value of the company's interest rate hedging instruments of £2.2m, remained "strong".

Underlying profit before tax was reported as £4.6m, a decrease from the previous year's £6.4m.

Despite that, the firm reduced its loan-to-value ratio to 36.8%, from 42.2% at the end of 2021, by using disposal proceeds of £20.9m to pay down £18m of debt.

Real Estate Investors had £7.8m in cash at the bank on 31 December, with an average cost of debt of 3.7%.

The company announced a final dividend of 0.4375p per share for 2022, payable in April, describing it as uninterrupted.

It said the total fully-covered dividend per share for 2022 was 2.5p, down from 3.0625p in 2021, reflecting a yield of 8.8% based on a mid-market opening price of 28.25p on 27 March.

Real Estate Investors said it had declared or paid a total of £46.3m in dividends to shareholders since the start of its dividend policy in 2012.

It also reported positive valuations and strong lettings activity, with a like-for-like portfolio valuation increase of 1.9% to £173m, and rent collection levels of 99.54% for 2022.

The company's weighted average unexpired lease term (WAULT) was reported as 4.98 years to break, and 6.29 years to expiry.

Since the end of 2022, the board said the firm's activity had shown continued demand from the private investor market, with additional significant pipeline sales in legals and a "healthy pipeline" of new lettings in legals of £0.83m per annum.

In March, the firm extended its £20m facility with Lloyds for six months to 31 May 2024, and its £31 million facility with NatWest for three months to June of the same year.

"Despite the worst property year for transactions since the financial crisis, REI has successfully disposed of £20.9m of property and reduced debt by £18m, which has contributed to pre-tax profits of £10.9m and the continuation of an attractive covered dividend," said chief executive officer Paul Bassi.

"Our like-for-like portfolio valuation has seen a 1.9% recovery during the year.

"Given that the UK investment property market suffered average valuation declines of 14.2% over the year, this outperformance by the REI portfolio is a clear indication of the portfolio's stability and diversity."

Bassi said that, despite a "sluggish and inactive" corporate and institutional marketplace, the company expected continued sales to a strong private investor market, which would allow it to execute its stated strategy and reduce its debt further.

"If the significant share price discount to net tangible assets persists, we will consider a further share buyback, special dividend or other method of capital return.

"In the event of a change in market conditions, we will also consider opportunistic acquisitions that will provide significant value via income and capital enhancement to our portfolio."

At 1522 BST, shares in Real Estate Investors were down 0.53% at 28.35p.

Reporting by Josh White for Sharecast.com.

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