TIDMRLE
RNS Number : 3701U
Real Estate Investors PLC
28 March 2023
Real Estate Investors Plc
("REI" or the "Company" or the "Group")
Final Results
For the year ended 31 December 2022
Robust Portfolio Performance, Disposals & Debt Reduction
Real Estate Investors Plc (AIM: RLE), the UK's only
Midlands-focused Real Estate Investment Trust (REIT) with a
portfolio of 1.37 million sq ft of investment property, is pleased
to report its final results for the year ended 31 December
2022:
Growing NTA in a challenging market
-- Revenue* of GBP13.3 million (FY 2021: GBP14.7 million)
(decrease in the main due to loss of income associated with
sales)
-- Profit before tax of GBP10.9 million (FY 2021: GBP13.9
million), including a revaluation gain of GBP3.2 million on
investment properties (FY 2021: gain of GBP4.9 million), a gain of
GBP948,000 on the sale of investment property (FY 2021: gain of
GBP1.2 million) and a gain in the market value of our interest rate
hedging instruments of GBP2.2 million (FY 2021: gain of GBP1.4
million)
-- Underlying profit before tax** of GBP4.6 million (FY 2021: GBP6.4 million)
-- EPRA*** Net Tangible Assets ("NTA") per share of 62.2p (FY 2021: 58.8p) up 5.7%
-- Completed disposals totalling GBP20.9 million (an aggregate
uplift, before costs, of 8.5% above December 2021 valuation)
-- Disposal proceeds used to pay down GBP18 million of debt in 2022
-- LTV (net of cash) reduced to 36.8% (FY 2021: 42.2%)
-- GBP7.8 million cash at bank as at 31 December 2022
-- Average cost of debt of 3.7%
-- 100% of debt fixed with a weighted average debt maturity of 2 years
-- EPRA*** EPS of 2.7p (FY 2021: 3.7p)
-- Successful GBP2 million share buyback programme launched and
completed in Q4 2022, in line with Company strategy announced on 6
July 2022
Uninterrupted Fully Covered Dividend
-- Final dividend of 0.4375p per share, payable in April 2023 as
a Property Income Distribution (PID)
-- Total fully covered dividend per share for 2022 of 2.5p (FY
2021: 3.0625p) (which would be the basis for the dividend for
FY2023, subject to the pace of further disposals) reflecting a
yield of 8.8% based on a mid-market opening price of 28.25p on 27
March 2023
-- GBP46.3 million total declared/paid to shareholders since
commencement of dividend policy in 2012
Positive valuations and strong lettings activity
-- Like-for-like portfolio valuation up by 1.9% to GBP173.0
million (FY 2021: GBP169.8 million)
-- Gross property assets of GBP175.4 million (FY 2021: GBP190.8
million) with 42 assets and 201 occupiers
-- Rent collection levels for 2022 of 99.54% (2021 overall
collection: 97.81%) and Q1 2023 rent collection to date of 99.80%
(adjusted for monthly/deferred agreements)
-- Completed 127 lease events during the year
-- WAULT**** of 4.98 years to break and 6.29 years to expiry (FY 2021: 5.03 years /6.76 years)
-- Contracted rental income of GBP12.6 million (FY 2021: GBP14.3 million) net of disposals
-- Portfolio occupancy of 84.54% (FY 2021: 85.75%) with
potential to rise further as key pipeline lettings are completed
(subject to ongoing sales and ongoing portfolio lease activity)
Post year end activity - continued demand from private investor
market
-- Additional significant pipeline sales in legals
-- Healthy pipeline of new lettings in legals of GBP828,486 p.a.
-- In March 2023, the Group extended the GBP20 million facility
with Lloyds for 6 months to 31 May 2024 and the GBP31 million
facility with NatWest for 3 months to June 2024
Paul Bassi, CEO of Real Estate Investors Plc, commented:
"Despite the worst property year for transactions since the
financial crisis, REI has successfully disposed of GBP20.9 million
of property and reduced debt by GBP18 million, which has
contributed to pre-tax profits of GBP10.9 million and the
continuation of an attractive covered dividend. 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.
Despite a sluggish and inactive corporate and institutional
marketplace, we anticipate continued sales to a strong private
investor market, which will allow us to execute our stated strategy
and reduce our debt further. If the significant share price
discount to NTA 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."
Financial and Operational Results
31 Dec 2022 31 Dec 2021
Revenue* GBP13.3 million GBP14.7 million
----------------- ----------------
Pre-tax profit GBP10.9 million GBP13.9 million
----------------- ----------------
Underlying profit before GBP4.6 million GBP6.4 million
tax**
----------------- ----------------
Contracted rental income GBP12.6 million GBP14.3 million
----------------- ----------------
EPRA EPS*** 2.7p 3.7p
----------------- ----------------
Basic EPS*** 6.3p 7.8p
----------------- ----------------
Dividend per share 2.5p 3.0625p
----------------- ----------------
Average cost of debt 3.7% 3.5%
----------------- ----------------
Like-for-like rental GBP12.6 million GBP12.6 million
income
----------------- ----------------
31 Dec 2022 31 Dec 2021
----------------- ----------------
Gross property assets GBP175.4 million GBP190.8 million
----------------- ----------------
EPRA NTA per share 62.2p 58.8p
----------------- ----------------
Like-for-like capital GBP125.97 psf GBP123.67 psf
value psf
----------------- ----------------
Like-for-like valuation GBP173.0 million GBP169.8 million
----------------- ----------------
Tenants 201 256
----------------- ----------------
WAULT to break**** 4.98 years 5.03 years
----------------- ----------------
Total ownership (sq 1.37 million 1.49 million sq
ft) sq ft ft
----------------- ----------------
Net assets GBP109 million GBP105 million
----------------- ----------------
Loan to value 42.2% 47.4%
----------------- ----------------
Loan to value net of
cash 36.8% 42.2%
----------------- ----------------
Definitions
* Excludes land sale
** Underlying profit before tax excludes gain on revaluation and
sale of properties and interest rate swaps
*** EPRA = European Public Real Estate Association
**** WAULT = Weighted Average Unexpired Lease Term
Certain of the information contained within this announcement is
deemed by the Company to constitute inside information as
stipulated under the UK version of the EU Market Abuse Regulation
(2014/596) which is part of UK law by virtue of the European Union
(Withdrawal) Act 2018, as amended and supplemented from time to
time.
Enquiries:
Real Estate Investors Plc
Paul Bassi/Marcus Daly +44 (0)121 212 3446
Cenkos Securities (Nominated Adviser)
Katy Birkin/Ben Jeynes +44 (0)20 7397 8900
Liberum (Broker)
Jamie Richards/William King +44 (0)20 3100 2000
About Real Estate Investors Plc
Real Estate Investors Plc is a publicly quoted, internally
managed property investment company and REIT with a portfolio of
1.37 million sq ft of mixed-use commercial property, managed by a
highly-experienced property team with over 100 years of combined
experience of operating in the Midlands property market across all
sectors. The Company's strategy is to invest in well located, real
estate assets in the established and proven markets across the
Midlands, with income and capital growth potential, realisable
through active portfolio management, refurbishment, change of use
and lettings. The portfolio has no material reliance on a single
asset or occupier. On 1st January 2015, the Company converted to a
REIT. Real Estate Investment Trusts are listed property investment
companies or groups not liable to corporation tax on their rental
income or capital gains from their qualifying activities. The
Company aims to deliver capital growth and income enhancement from
its assets, supporting its progressive dividend policy. Further
information on the Company can be found at www.reiplc.com .
CHAIRMAN'S AND CHIEF EXECUTIVE'S STATEMENT
Corporate and institutional buyers remained cautious throughout
2022, with limited demand for larger lot sizes. However, despite
negative market sentiment, rising interest rates and high
inflation, private investor and overseas buyer activity has
remained healthy, resulting in a strong year of sales and debt
reduction for REI.
To take advantage of private investor appetite for smaller lot
sizes and, in line with the Company strategy (outlined in July
2022), REI identified a number of assets with break-up potential
that met this investor demand, successfully disposing of 25
assets/units totalling GBP20.9 million during the year, at an
aggregate uplift, before costs, of 8.5% on 2021 year end book
values and a net initial yield of 6.84%, demonstrating a robust
underlying portfolio value.
Portfolio disposals contributed towards a pre-tax profit of
GBP10.9 million (FY 2021: GBP13.9 million profit) and supported a
fully-covered, uninterrupted dividend payment of 2.5p for the year,
taking the total declared/paid to shareholders since the
commencement of our dividend policy in 2012 to GBP46.3 million.
During the year, GBP18 million of debt was repaid, reducing
overall total drawn debt to GBP71.4 million (FY 2021: GBP89.4
million) and LTV (net of cash) to 36.8% (FY 2021: 42.2%). Our
average cost of debt increased marginally to 3.7% due to the
repayment of low-cost debt, with 100% of our remaining debt fixed
as at 31 December 2022. Management's priority remains to repay
further debt, via additional sales to a strong private investor
market, with a view to maintaining portfolio gearing below 40%,
and, supporting further improvement in the Group's Net Tangible
Assets ("NTA").
In addition to substantial debt repayment, the accelerated sales
rate in 2022 allowed the Company to fund a share buyback of GBP2
million, further supporting the Company's ongoing capital return
strategy, aimed at reducing the unwarranted discount between the
share price and NTA.
As well as reducing debt, the Company is looking to target
GBP300,000 plus of savings in FY 2023 by identifying services that
are no longer required as the portfolio reduces in size. More than
50% of this target saving has already been actioned.
REI's resilient regional portfolio, underpinned by a diversified
tenant and sector spread and consisting of 201 occupiers across 42
assets, has gross property assets of GBP175.4 million (FY 2021:
GBP190.8 million). 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. With limited
exposure to sectors that are undergoing a sharp yield correction
and value reduction, conservative portfolio gearing and the benefit
of significant underlying break-up potential demonstrated by recent
sales, the portfolio is well placed to weather ongoing economic
instability. However, should interest rates rise further than
presently anticipated, this could have a negative impact on future
valuations.
Intensive asset management during the year resulted in 127 lease
events, and a WAULT of 4.98 years to break and 6.29 years to expiry
(FY 2021: 5.03 years to break and 6.76 years to expiry). Occupancy
across the portfolio is stable at 84.54% (FY 2021: 85.75%) despite
disposals of fully occupied assets, however, market sentiment and
cost pressures from rising interest rates have resulted in a
slowing down in occupier decisions. A shift in employee working
habits, a legacy of the pandemic, has also contributed to the
hesitation from office occupiers who have not yet seen a full
return of their workforce and are now seeking smaller quality
spaces 'a flight to quality' that will entice employees back to
their desks, whilst also meeting relatively new sustainability
objectives. We anticipate, in light of market sentiment that
occupancy will increase, particularly as we have witnessed an
improvement in occupier demand (albeit decision making remains
slow) in the first quarter of 2023. We are buoyed by the interest
levels in the type of space we have available, much of which is
non-City centre and accessible for those who wish to avoid heavy
commutes and public transport.
Contracted rental income is at GBP12.6 million p.a. (FY 2021:
GBP14.3 million p.a.), with the majority of this reduction due to
the loss of income associated with disposals during the year,
combined with lease terminations and other known lease events which
we would expect to see in any normal trading period.
We currently have a significant pipeline of lettings totalling
GBP828,486 rent p.a. in solicitors hands, including large
government-backed lettings that, once completed, have the potential
to positively impact our occupancy levels, leading to improved
income and WAULT and supporting future valuation recovery.
In another sign of market normalisation and in line with the
easing of Covid 19 related government restrictions in early 2022,
overall rent collection levels for the year were a very healthy
99.54% translating into EPRA earnings per share of 2.7p. For Q1
2023, rent collection levels are currently at 99.80%, signalling
that occupiers are continuing to trade well, despite inflationary
and interest rate pressure.
Ongoing Strategy
The Board renews its commitment set out in the July 2022 Trading
Update and Capital Return Strategy, to deliver maximum value to our
shareholders. The Board believes that the share price discount to
the net tangible assets ("NTA") continues to be unwarranted and
that it is in the best interests of all shareholders to continue to
take steps to reduce this discount.
During 2022, the Company disposed of GBP20.9 million of
portfolio assets at levels exceeding book value and a proportion of
the subsequent disposal receipts, were used to repay GBP18 million
of debt.
In Q4 2022 the Company utilised further disposal receipts to
fund a share buyback, acquiring a total of 7,142,857 shares at an
average cost of 28p per share during November and December 2022.
All 7,142,857 buyback shares purchased under the programme were
cancelled. Therefore, the total number of Ordinary Shares in issue
and carrying voting rights is 172,651,577 with no Ordinary Shares
held in treasury.
Our strategy remains as previously stated and the Board looks to
maintain maximum flexibility when considering how best to allocate
surplus capital, including a return of capital to shareholders,
whether in the form of a further share buyback, special dividend or
other method of capital return. The quantum of any return of
capital will be set to ensure that we maintain a prudent
loan-to-value ("LTV") ratio and will be subject to market
conditions. Alternatively, if the environment for acquisitions
changes and opportunities offering significant value start to
arise, then we may look to make opportunistic acquisitions where
there is scope to capture material upside through asset management.
The Board evaluates the relative merits of these options on an
ongoing basis.
Market commentators suggest that 2023 may see a more normalised
investment market, with corporate and institutional investors
returning to the market, having remained inactive for much of the
last 24 months. If this interest and activity materialises as
predicted, we expect the quantum of REI sales in both volume and
monetary terms to significantly increase, which would see an
acceleration in REI's debt repayment objectives. Likewise, should
market conditions change dramatically and acquisition opportunities
reveal themselves, management will consider acquisitions, should
they offer our portfolio value and income enhancement for
shareholders.
Dividend
The Company's dividend payments continued uninterrupted
throughout 2022, despite unfavourable market conditions and an
ongoing sales programme by REI. The first two quarterly dividend
payments in respect of 2022 were paid at a level of 0.8125p per
share, fully covered. The Q3 2022 dividend was reduced to 0.4375p
per share due to the acceleration of disposals. The final dividend
in respect of 2022 is confirmed as 0.4375p per share, reflecting a
total fully-covered dividend payment for 2022 of 2.5p (FY 2021:
3.0625p) (which would be the basis for the dividend for FY2023,
subject to the pace of further disposals) and a yield of 8.8% based
on a mid-market opening price of 28.25p on 27 March 2023. The Board
remains committed to paying a covered dividend, subject to business
performance and the pace of further disposals.
The proposed timetable for the final dividend, which will be a
Property Income Distribution ("PID") is as follows:
Ex-dividend date: 6 April 2023
Record date: 11 April 2023
--------------
Dividend payment 28 April 2023
date:
--------------
Outlook for 2023
We anticipate continued sales in 2023, with private investor
appetite remaining strong in Q1 2023. Until clarity is available
around interest rates, larger buyers will likely remain inactive.
Sales to private investors are piecemeal and slow but nevertheless
are value enhancing and worth pursuing. Receipts from these
selective disposals will be used towards repaying further debt and
reducing portfolio gearing, with a view to delivering on strategic
objectives and narrowing the discount between share price and
NAV.
The Board intends to maintain 'maximum flexibility' with our
strategy in the months ahead and will consider a further share
buyback or capital return if appropriate, the structure and timing
of which is yet to be decided. The quantum of any return of capital
will be set to ensure that we maintain a prudent LTV ratio, whilst
also being mindful of the overall liquidity in the Company's
shares.
Renewed occupier appetite, combined with a proactive asset
management approach to the existing portfolio over the months ahead
should unlock income from void spaces and lead to improved
occupancy levels. A rise in occupancy, along with evidence from
successful sales should go some way to offsetting any negative
impact of economic instability on future valuations, although
further and higher rate rises could adversely impact these.
Management intends to continue paying an uninterrupted,
fully-covered quarterly dividend payment to shareholders, subject
to portfolio disposals and any acceleration in the sales
programme.
As always, we are aware of market consolidation within the real
estate and REIT market and we remain alert to options that align
with the interests of REI's shareholders.
Our Stakeholders
Our thanks to our shareholders, advisers, tenants and staff for
their continued support.
William Wyatt Paul Bassi CBE D. Univ
Chairman Chief Executive
27 March 2023 27 March 2023
PROPERTY REPORT
UK Property Market Overview
Sentiment around the investment market is shrouded in
uncertainty following a tumultuous 2022. The year started off with
investor optimism on the economic outlook, although economists'
forecasts vary considerably. The impact of central banks raising
interest rates to combat inflation has led to some of the highest
borrowing costs since the 2008 global financial crisis.
Consequently, UK fund activity has so far been subdued during Q1
2023, with noticeable reduction in demand for larger lot sizes,
except for some well let prime industrial investments, where
interest is slowly recovering after a poor year of performance.
However, as witnessed throughout the UK national auction
markets, activity from smaller private investors remains resilient,
albeit on-going sales are piecemeal and slow due to a lack of
market confidence and availability of finance. UK institutions have
started the year very subdued with minimal volume activity for
larger lot sizes. Until the inflationary storm passes, monetary
policy pivots to neutral and the economy proves resilient, we
anticipate that the funds will likely remain inactive or at best
highly selective.
As would have been expected given base rate moves, capital value
declines in 2022 were overwhelmingly driven by expanding yields
(yield impact of -17.3% year-on-year), with rental values seeing
marginal growth (+4.2%) as a result of a strong performance in the
first half of the year. However, overall total returns are down.
According to MCSI's IPD UK Property Index, UK investment property
values declined by 14.2% for the year, making 2022 the worst year
for UK property since the financial crisis.
Higher borrowing costs fed through to the investment market with
prospects of higher rate expectations which has dampened buyer
sentiment towards commercial real estate. Consequently, open-ended
real estate funds have been battling to meet a surge in demand for
redemptions against a backdrop of high inflation and economic
uncertainty. Some of the largest UK property asset managers, have
imposed restrictions on property fund redemptions since September
2022, with many other funds and institutions also cutting their
exposure to commercial property.
Early 2023 valuations look slightly healthier, with sentiment
improving, suggesting that some of the downside risk has been
mitigated. However, property prices are typically negatively
correlated to interest rates, so returns will likely be determined
by how high interest rates need to go to tame inflation. The length
and breadth of a recession is also very important for commercial
property pricing, as this will impact the occupational market.
Reductions in valuations in the investment market is mainly
focussed on industrial and offices sectors. Fortunately, the REI
portfolio is heavily diversified and our valuations have proven to
be more resilient.
With the region firmly on the map, thanks to a very successful
2022 Commonwealth Games and the highly anticipated HS2 project,
Birmingham City centre and the wider Midlands region is witnessing
a continued migration of large businesses from London to the
region, with Goldman Sachs just one of many corporates taking space
in 2022, signing up for 110,000 sq ft of Grade A space.
According to JLL Research, occupiers continue to seek quality,
with Grade A accounting for 49% of office take up across the
Birmingham City Centre office market in 2022. Take up levels in the
City centre totalled 692,700 sq ft for the year, a marginal
increase on the 5-year average, with transaction levels 14% higher.
Recovery in rental values continued with an increase of 7% in
Birmingham's headline rent on 2021 to GBP40.00 per sq ft, 16% above
pre-Covid levels. A lack of quality space is driving the growth,
with only c. 80,000 sq ft of new build development in the pipeline
for Birmingham City Centre, currently under construction and
available. We acknowledge that the market for secondary City centre
offices is experiencing a decline, however our vacancy within this
sector represents c. 1% of our entire portfolio and as such is not
cause for concern.
The REI Portfolio
The REI portfolio, comprising of 42 assets with 201 tenants has
a net initial yield of 6.84% and a reversionary yield of 8.23%.
Valuations have seen a rise of 1.9% on a like-for-like basis to
GBP173.0 million (FY 2021: GBP169.8 million). Further valuation
gains could be achieved during the course of 2023 as REI intends to
continue to sell off assets at a premium to a strong investor
market and generate income from void space within the
portfolio.However, further interest rate rises could add downward
valuation pressure.
The current portfolio sector weightings are:
Sector GBP Income % Income by
by sector sector
Office 5,310,138 42.06
----------- ------------
Traditional Retail 2,189,615 17.34
----------- ------------
Other - Hotels (Travelodge), Leisure
(The Gym Group, Luxury Leisure), Car
parking, AST 1,502,058 11.90
----------- ------------
Discount Retail - Poundland/B&M etc 1,472,350 11.66
----------- ------------
Medical and Pharmaceutical - Boots/Holland
& Barrett etc 759,049 6.01
----------- ------------
Restaurant/Bar/Coffee - Wetherspoons,
Dominos etc 595,750 4.72
----------- ------------
Food Stores - Co-op, Iceland etc 409,545 3.25
----------- ------------
Financial/Licences/Agency - Clydesdale
Bank Plc, Santander UK Plc, Bank of Scotland
etc 386,125 3.06
----------- ------------
Total 12,624,630 100.00
----------- ------------
Disposals
Whilst the more institutional markets were in a state of flux,
during the year we recognised that there was a growing amount of
activity from private investors seeking smaller lot sizes of up to
GBP1 million. We identified several assets that could be broken up
into smaller sales to achieve premium values and disposed several
assets via private treaty to private purchasers at levels above
book value.
During the year, we disposed of 25 assets/units with an average
lot size of GBP836,000, for a combined consideration of GBP20.9
million at an aggregate 8.5% uplift to valuation, comprising the
following:
-- Acocks Green Shopping Centre, comprising twelve separate
units, with a combined sale value of GBP7.03m - sold at an
aggregate uplift of 17% above book value
-- 120-138 High Street, Kings Heath for GBP4.7m - sold at 8% above book value
-- Bearwood Shopping Centre, comprising eight separate units,
with a combined sale of GBP3.7m - sold at an aggregate uplift of 4%
above book value
-- 37a Waterloo Street, Birmingham at GBP3.17m, to a China based
private investor - sold at 9.41% below book value
-- McDonalds Unit Leamington for GBP1.55m - sold at 43% above book value
-- Eastleigh / Hanover retail units, non-core assets to a
private property company for GBP735,000 - no uplift on combined
sales
It is worth noting that, whilst some of our assets were sold on
an opportunistic basis, others, where asset management initiatives
had been completed, were identified as ready for disposal as our
knowledge of the local market meant it was the correct time to be
disposing of them.
Post Period End Disposals
Since the year end we are now under offer on a significant
pipeline of disposals which are in solicitors hands, subject to
contract. REI intends to make further opportunistic sales, should
investor demand prevail.
Acquisitions
No suitable acquisitions were identified during the year and
focus was directed at sales. M anagement will consider portfolio
acquisitions should they offer portfolio value and income
enhancement.
Asset Management
Notwithstanding the backdrop of economic uncertainty amid a
cost-of-living crisis, there was still renewed occupier confidence
experienced in 2022, with the asset management team completing 127
lease events. New lettings during the year totalled just under GBP1
million p.a. with notable lettings at Birchfield House (Oldbury),
Titan House (Telford) and Venture Court (Wolverhampton).
The occupier market remains active with a good number of
pipeline lettings in our void space. Portfolio occupancy is at
84.54% (FY 2021: 85.75%) with potential to rise further with the
completion of key pipeline lettings which are in advanced
discussions. Of the 15.46% vacancy (as at 31 December 2022) within
the portfolio, over half of this (8.01%) can be attributed to
spaces at 4 properties (Barracks Road, Newcastle-under-Lyme; Crewe
Shopping Centre; Kingston House and Birch House).
As a result of the asset management activity in 2022 our WAULT
was 4.98 years to break and 6.29 years to expiry (FY 2021: 5.03
years to break and 6.76 years to expiry).
Key asset management initiatives undertaken during the year
include:
Titan House
Following the refurbishment of the office space to a Grade A
specification, there was strong interest during 2022. BohooMoon
Limited signed for the third floor on a 5-year lease and we are in
legals with an occupier to take the first-floor office space. This
is on a ten-year lease with a tenant break in year 5. The remaining
floor has seen strong interest since the year end to date and we
are confident that the building will be fully occupied by the end
of 2023.
Oldbury
DHU Health Care CIC took occupation of all 16,584 sq ft at
Birchfield House towards the end of 2022 at a market rent of
GBP273,636 p.a. This is on a short-term lease to facilitate a
potential move into all of the 35,749 sq ft at Birch House during
2023.
Tunstall
Argos' 15-year lease expired in 2020 and following a period of
time where they 'held over', this lease was renewed for a further 5
years in mid-2022. Poundland, having taken a temporary lease in
2020 to assess trade post Covid, entered into a new 5-year lease at
a market rent. The proposed Drive Thru 'pod' has seen an increased
demand from a number of operators. All the above support the
sentiment of the strength of this location.
Crewe
The former Argos unit became vacant after the store consolidated
to the local Sainsburys and we are now under offer to a national
occupier for the ground floor of this unit. Additionally, we are in
solicitors' hands for a new lease agreement to Bodycare to take the
former Clinton Cards unit with anticipated opening during the
summer. We currently have two vacancies in the indoor mall which
occurred after Christmas, but we are working hard to find
occupiers, with ongoing interest. We have agreed to sell the
consented new drive thru land in the rear car park to a well-known
fast-food operator and once completed we feel that this will have a
very positive effect on the scheme. Parking revenue has been
resilient and we have recently renewed our parking contract with an
operator which includes brand new parking machines and improved car
park signage.
Brandon Court
Following the successful surrender and reconfiguration of the
Yazaki space, the letting to Bennetts and Comex 2000 completed late
2021/early 2022. The final suite at the scheme was let in June 2022
to City Fibre on a 5-year lease. Once again, the scheme is fully
let.
Redditch
The final vacant unit was let in March 2022 to a Euro
Supermarket. The operator took a 15-year lease and has traded
exceptionally well since opening. Car parking income at the scheme
has seen a strong resurgence since the impact of the Pandemic. A
new operator was appointed and has invested in new equipment and
pay facilities.
Topaz Business Park
Several operators expressed interest in surplus land at Topaz
and, after negotiations, it was decided to proceed with Costa.
Costa is considered one of the best covenants of the Drive Thru
market. An Agreement for Lease was entered into in July 2022 and
tenders are being prepared to obtain a fixed price build contract.
Heads have been agreed on a forward sale with REI committing to
develop the scheme. Once PC is achieved, the lease is entered into
and this will trigger the completion of the sale.
Lease terms:
-- Letting to Costa Limited
-- 15-year lease
-- GBP85,000 per annum
-- 9-months rent free
-- Five yearly rent reviews - open market reviews with cap and
collar limits of 3% and 1% respectively
New tenants to the portfolio in 2022
Microsoft, Shoe Zone (AG), King & Moffat UK Ltd, Delta
Simons Ltd, City Fibre Holdings, Team Support Healthcare &
DHU.
Post Period End Activity and Sentiment
Whilst there have only been a handful of lettings post the year
end, we are noticing a significant increase in enquiries for vacant
space. The vacant office space within key city/town centres is
generating levels of enquiries not seen since the pandemic. Ongoing
lease events are progressing slowly, e.g. Birch House, Oldbury due
to government funding approval and ever-increasing levels of
scrutiny.
Portfolio Summary
Value (GBP) Area Contracted ERV NIY EQY RY Occupancy
(sq ft) Rent (GBP) (GBP) (%) (%) (%) (%)
Portfolio 173,030,000 1,373,631 12,624,630 15,193,820 6.84 8.14 8.23 84.54
------------ ---------- ------------ ----------- ----- ----- ----- ----------
Land 2,389,365 - - - - - - -
------------ ---------- ------------ ----------- ----- ----- ----- ----------
Total 175,419,365 1,373,631 12,624,630 15,193,820 6.84 8.14 8.23 84.54
------------ ---------- ------------ ----------- ----- ----- ----- ----------
*Our land holdings are excluded from the yield calculations
Environmental, Social and Governance ("ESG")
REI has continued to work alongside Measurabl, the leading ESG
technology and services platform for real estate, to collect, track
and report carbon emissions data across REI's landlord-controlled
areas. The reduction of the portfolio's carbon footprint is a
priority for the business.
We have detailed below our emissions for Jan-Dec 2019 and 2020
(carbon emissions data for 2021 and 2022 will be supplied in due
course as we complete the historical data collection):
Carbon Emissions 2020 2019
Scope 1 Emissions* 10,930 MTCO 17,574 MTCO
e e
----------- -----------
Scope 2 Emissions * 904.28 MTCO 1,236 MTCO
e e
----------- -----------
Total Scope 1 and Scope 2 11,834 MTCO 18,810 MTCO
Emissions* e e
----------- -----------
*The above calculations apply to landlord-controlled gas and
electricity consumption only
Portfolio Energy Performance Certification
In accordance with government guidelines, REI has undertaken a
programme to ensure our assets meet the UK statutory regulations
and timeframes for EPCs. We will continue to upgrade assets when
required. An overview of the asset EPC ratings across the portfolio
is noted below, showing the progress since 31 December 2021:
% of portfolio (by sq ft)
EPC
Rating A B C D E F G Total
----- ------ ------ ------ ----- ----- ----- --------
31 Dec
2021 0.00 9.48 37.18 43.15 9.35 0.54 0.30 100.00
----- ------ ------ ------ ----- ----- ----- --------
31 Dec
2022 1.36 22.99 31.18 37.49 6.98 0 0 100.00
----- ------ ------ ------ ----- ----- ----- --------
FINANCIAL REVIEW
Overview
Our results for 2022 are in line with management's expectations
following a successful year of disposals. Profit before tax of
GBP10.9 million (FY 2021: GBP13.9 million), to include a
revaluation gain of GBP3.2 million on investment properties (FY
2021: gain of GBP4.9 million), a gain of GBP948,000 on the sale of
investment property (FY 2021: gain of GBP1.2 million) and a gain in
the market value of our interest rate hedging instruments of GBP2.2
million (FY 2021: gain of GBP1.4 million).
Property disposals during the year amounted to GBP20.9 million,
of which GBP18 million was used to repay debt. Significant debt
repayment, combined with a gain in portfolio valuations has led to
a reduction in our LTV (net of cash) to 36.8% (FY 2021: 42.2%). As
a result, our EPRA NTA per share has risen by 5.8% to 62.2p (FY
2021: 58.8p).
As at 31 December 2022, total drawn down debt was GBP71.4
million (FY 2021: GBP89.4 million) with 100% of the Company's debt
fixed at an average cost of debt of 3.7%. REI continues to meet all
banking covenants (which continue to be measured against LTV of the
loans to property values and the interest cover against rental
income) and have headroom available. REI remains multi-banked
across 4 lenders.
During the year, contracted rental income reduced to GBP12.6
million (FY 2021: GBP14.3 million) due to significant portfolio
disposals, combined with a temporary drop in occupancy levels
across the portfolio as the markets react to economic pressures.
The loss of income resulted in a drop in revenue to GBP13.3 million
(FY 2021: GBP14.7 million). Our like-for-like rental income has
remained constant, due to intensive asset management during the
year. Underlying profit for the year was GBP4.6 million (FY 2021:
GBP6.4 million).
Our pre-tax profits of GBP10.9 million supported uninterrupted
dividend payments throughout 2022, with Q1 and Q2 paid at a level
of 0.8125p per share, fully covered. The Q3 2022 dividend was
reduced to 0.4375p per share due to the acceleration of disposals.
The final dividend in respect of 2022 is confirmed as 0.4375p per
share, reflecting a total fully-covered dividend payment for 2022
of 2.5p (FY 2021: 3.0625p) and a yield of 8.8% based on a
mid-market opening price of 28.25p on 27 March 2023.
31 December 31 December
2022 2021
Gross Property Assets GBP175.4 million GBP190.8 million
---------------------------- -----------------
Underlying profit before GBP4.6 million GBP6.4 million
tax
---------------------------- -----------------
Pre-tax profit GBP10.9 million GBP13.9 million
---------------------------- -----------------
Revenue GBP13.3 million GBP14.7 million
---------------------------- -----------------
EPRA EPS 2.7p 3.7p
---------------------------- -----------------
EPRA NTA per share 62.2p 58.8p
---------------------------- -----------------
Net Assets GBP109 million GBP105 million
---------------------------- -----------------
Loan to value 42.2% 47.4%
---------------------------- -----------------
Loan to value net of cash 36.8% 42.2%
---------------------------- -----------------
Average cost of debt 3.7% 3.5%
---------------------------- -----------------
Dividend per share 2.5p 3.0625p
---------------------------- -----------------
Like-for-like rental income GBP12.6 million GBP12.6 million
---------------------------- -----------------
Like-for-like capital GBP125.97 psf GBP123.67 psf
value psf
---------------------------- -----------------
Like-for-like valuation GBP173.0 million GBP169.8 million
---------------------------- -----------------
Capital Return Strategy & Buyback Programme
The Board is committed to delivering value to its shareholders
and believes that the share price discount to the net tangible
assets ("NTA") continues to be unwarranted. Following successful
sales and subsequent debt repayment in 2022, the Company undertook
a share buyback, acquiring a total of 7,142,857 shares at an
average cost of 28p per share during November and December 2022.
All 7,142,857 buyback shares purchased under the programme
previously held in treasury were cancelled. Therefore, the total
number of Ordinary Shares in issue and carrying voting rights is
172,651,577 with no Ordinary Shares held in treasury.
During 2023, the Board intends to maintain 'maximum flexibility'
in our approach towards our capital return strategy and will
consider a special dividend, further share buyback or other form of
capital return to shareholders, the structure and timing of which
is yet to be decided and subject to the ongoing sales
programme.
Results for the year
The profit before tax of GBP10.9 million (FY 2021: GBP13.9
million), includes a revaluation gain of GBP3.2 million on
investment properties (FY 2021: gain of GBP4.9 million), a gain of
GBP948,000 on the sale of investment property (FY 2021: gain of
GBP1.2 million) and a gain in the market value of our interest rate
hedging instruments of GBP2.2 million (FY 2021: gain of GBP1.4
million). Excluding these items, the underlying profits reduced to
GBP4.6 million (FY 2021: GBP6.4 million).
Due to a loss of income during the year of GBP1.7 million p.a.
(in the main due to loss of income associated with sales of
GBP1.654 million, combined with other expected lease events)
revenues for the year were down to GBP13.3 million (FY 2021:
GBP14.7 million) despite new lettings of just under GBP1 million
p.a. and intensive asset management initiatives offsetting much of
the rental loss. In addition, holding costs of void space and
direct costs increased to GBP2.5 million (FY 2021: GBP1.9
million).
As at 31 December 2022, cash at bank was GBP7.8 million. During
the year, REI did not make any investment property acquisitions due
to a lack of supply. Attention was focussed on achieving value by
disposing of assets at above book value to a strong private
investor market.
As previously stated, the Company is looking to target up to
GBP300,000 of savings in FY 2023 by identifying services that are
no longer required as the portfolio reduces in size. During the
year, administrative costs and overhead expenses increased by
GBP200,000 to GBP3.3 million (FY 2021: GBP3.1 million), mainly due
to a salary rise and increased bonus for staff (excluding
directors) of GBP100,000, maintaining bad debts provision of
GBP50,000 (FY 2021: GBP50,000), and a provision for costs of the
Long-Term Incentive Plan of GBP150,000 (FY 2021: GBP150,000). The
Remuneration Committee agreed that bonuses for the Executive
Directors of GBP180,000, being 25% of salary for 2022 should be
made (FY 2021: GBP180,000).
Interest costs for the year reduced by GBP250,000 to GBP3
million (FY 2021: GBP3.2 million) due to GBP18 million debt
repayment during the year. The weighted average cost of debt rose
marginally to 3.7% (FY 2021: 3.5%) as a result of the Group paying
down cheaper debt.
Earnings per share were:
Basic: 6.3p (FY 2021: 7.8p)
Diluted: 6.3p (FY 2021: 7.6p)
EPRA: 2.7p (FY 2021: 3.7p)
Shareholders' funds increased to GBP109 million at 31 December
2022 (31 December 2021: GBP105 million) as a result of the gain on
property portfolio revaluation.
Basic NAV: 63.1p (FY 2021: 58.5p)
EPRA NTA: 62.2p (FY 2021: 58.8p)
Finance and Banking
Due to a successful disposals programme in 2022 and subsequent
debt repayment of GBP18 million, total drawn debt at 31 December
2022 was GBP71.4 million (FY 2021: GBP89.4 million) with the AIB
facility repaid in full. The Group has GBP7.8 million cash at bank
and remains multi-banked across 4 lenders and continues to meet
banking covenants with its lenders, with headroom available. As at
31 December 2022, 100% of the debt across the portfolio is fixed,
preserving low average costs of debt at 3.7%, with a weighted
average debt maturity of 2 years (FY 2021: 1.8 years). The business
is well-insulated from interest rate rises in the coming
months.
The LTV as at 31 December 2022 was 42.2% (FY 2021: 47.4%) and
the LTV (net of cash) was 36.8% (FY 2021: 42.2%). It is
management's intention to maintain a portfolio LTV of sub 40%. The
Group's hedge facility improved by GBP2.2 million for the year to
31 December 2022 and as at 31 December 2022, the swap position was
an asset of GBP68,000.
Lender Debt Facility Debt Maturity Hedging (%)
(GBPm)
National Westminster
Bank 33.1 March 2024 100
-------------- -------------- ------------
Lloyds Banking Group 20 December 2023 100
-------------- -------------- ------------
Barclays 7.6 December 2024 100
-------------- -------------- ------------
Aviva 11.2 2027 & 2030 100
-------------- -------------- ------------
I n March 2023, the Group extended the GBP20 million facility
with Lloyds Banking Group Plc for 6 months to 31 May 2024 and the
GBP31 million facility with National Westminster Bank Plc for 3
months to June 2024. It was agreed to renew discussions later in
the year in order to formalise new, longer-term facilities when
long-term rates have stabilised. However, management continues to
take a proactive approach to the maturity of these loans, and have
a close dialogue with the banks, with rates monitored on a
continuous basis to renew the facilities earlier if
appropriate.
Going concern
The consolidated financial statements for the Group have been
prepared on a going concern basis.
Long Term Incentive Plan ("LTIP")
The Company's LTIP is designed to incentivise and reward
employees in reaching specific goals that lead to increased
shareholder value and maximised returns. Based on the results for
the year, 50% of the options awarded for 2020 are likely to vest
and so a charge to the provision of GBP150,000 (FY 2021:
GBP150,000) has been made in the accounts in respect of the
LTIP.
Taxation
The Group converted to a Real Estate Investment Trust (REIT) on
1 January 2015. Under REIT status the Group does not pay tax on its
rental income profits or on gains from the sale of investment
properties. The Group continues to meet all REIT requirements for
REIT status.
Dividend
Under the REIT status the Group is required to distribute at
least 90% of rental income taxable profits arising each financial
year by way of a Property Income Distribution. Quarterly dividends
commenced in 2016.
Despite uncertainty in the property markets throughout 2022 and
significant disposals by REI, the Company's dividend payments
continued uninterrupted with the first two quarterly dividend
payments in respect of 2022 paid at a level of 0.8125p per share,
fully covered. The Q3 2022 dividend was reduced to 0.4375p per
share due to the acceleration of disposals.
The final dividend in respect of 2022 is confirmed as 0.4375p
per share, reflecting a total fully-covered uninterrupted dividend
payment for 2022 of 2.5p (FY 2021: 3.0625p) (which would be the
basis for the dividend for FY2023, subject to the pace of further
disposals) and a yield of 8.8% based on a mid-market opening price
of 28.25p on 27 March 2023. This takes the total declared/paid to
shareholders since the commencement of our dividend policy in 2012
to GBP46.3 million.
The dividend will be paid on 28 April 2023 as a Property Income
Distribution (PID), to all shareholders on the register as at 11
April 2023 with an ex-dividend date of 6 April 2023. The Board
remains committed to paying a covered dividend, subject to business
performance and the pace of further disposals.
Marcus Daly, Finance Director
27 March 2023
Real Estate Investors plc
Consolidated statement of comprehensive income
For the year ended 31 December 2022
Note 2022 2021
GBP000 GBP000
Revenue 13,293 15,971
Cost of sales (2,489) (3,329)
---------- ---------
Gross profit 10,804 12,642
Administrative expenses (3,252) (3,045)
Gain on sale of investment property 948 1,177
Gain in fair value of investment properties 3,152 4,951
---------- ---------
Profit from operations 11,652 15,725
Finance income 49 46
Finance costs (2,981) (3,235)
Gain on financial liabilities at fair value through profit and loss 2,214 1,388
---------- ---------
Profit on ordinary activities before taxation 10,934 13,924
Income tax charge - -
Net profit after taxation and total comprehensive income 10,934 13,924
---------- ---------
Total and continuing earnings per ordinary share
Basic 3 6.33p 7.76p
Diluted 3 6.25p 7.64p
EPRA 3 2.68p 3.67p
---------- ---------
The results of the Group for the year related entirely to
continuing operations.
Real Estate Investors plc
Consolidated statement of changes in equity
For the year ended 31 December 2022
Share Capital Share-based
Share premium redemption payment Retained
capital account reserve reserve earnings Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 January 2021 17,938 51,721 749 609 26,657 97,674
Share based payment - - - 150 - 150
Dividends - - - - (6,726) (6,726)
--------- --------- ------------ ------------- ---------- --------
Transactions with
owners - - - 150 (6,726) (6,576)
--------- --------- ------------ ------------- ---------- --------
Profit for the year
and total comprehensive
income - - - - 13,924 13,924
At 31 December 2021 17,938 51,721 749 759 33,855 105,022
--------- --------- ------------ ------------- ---------- --------
Share based payment - - - 150 - 150
Share buy back (714) - - - (1,296) (2,010)
Transfer re capital - - 714 - (714) -
Share issue 42 108 (150) - -
Dividends - - - - (5,131) (5,131)
Transactions with
owners (672) 108 714 - (7,141) (6,991)
--------- --------- ------------ ------------- ---------- --------
Profit for the year
and total comprehensive
income - - - - 10,934 10,934
At 31 December 2022 17,266 51,829 1,463 759 37,648 108,965
========= ========= ============ ============= ========== ========
Real Estate Investors plc
Consolidated statement of financial position
At 31 December 2022
Note 2022 2021
GBP000 GBP000
Assets
Non-current
Intangible assets - -
Investment properties 4 173,030 188,485
Property, plant and equipment 3 4
173,033 188,489
--------- ---------
Current
Inventories 2,389 2,384
Trade and other receivables 3,110 3,588
Derivative financial asset 68 -
Cash and cash equivalents 7,818 9,836
--------- ---------
13,385 15,808
--------- ---------
Total assets 186,418 204,297
========= =========
Liabilities
Current
Bank loans (20,325) (2,479)
Trade and other payables (5,982) (7,685)
--------- ---------
(26,307) (10,164)
--------- ---------
Non-current
Bank loans (51,146) (86,965)
Derivative financial liabilities - (2,146)
--------- ---------
(51,146) (89,111)
--------- ---------
Total liabilities (77,453) (99,275)
========= =========
Net assets 108,965 105,022
========= =========
Equity
Share capital 17,266 17,938
Share premium account 51,829 51,721
Capital redemption reserve 1,463 749
Share-based payment reserve 759 759
Retained earnings 37,648 33,855
-------- --------
Total Equity 108,965 105,022
======== ========
Net assets per share 63.1p 58.5p
======== ========
Real Estate Investors plc
Consolidated statement of cash flows
For the year ended 31 December 2022
2022 2021
GBP000 GBP000
Cash flows from operating activities
Profit after taxation 10,934 13,924
Adjustments for:
Depreciation 2 2
Net gain on valuation of investment property (3,152) (4,951)
Gain on sale of investment property (948) (1,177)
Share based payment 150 150
Finance income (49) (46)
Finance costs 2,981 3,235
Gain on financial liabilities at fair value through profit and loss (2,214) (1,388)
(Increase)/decrease in inventories (5) 1,412
Decrease in trade and other receivables 478 752
Decrease in trade and other payables (1,051) (100)
--------- ---------
Net cash from operating activities 7,126 11,813
--------- ---------
Cash flows from investing activities
Expenditure on investment properties (609) (955)
Purchase of property, plant and equipment (1) (2)
Proceeds from sale of investment properties 20,164 16,119
Interest received 49 46
--------- ---------
19,603 15,208
--------- ---------
Cash flows from financing activities
Interest paid (2,981) (3,235)
Share based payment - -
Share buy back (2,010) -
Equity dividends paid (5,783) (6,278)
Payment of bank loans (17,973) (11,910)
--------- ---------
(28,747) (21,423)
--------- ---------
Net (decrease)/increase in cash and cash equivalents (2,018) 5,598
Cash, cash equivalents and bank overdrafts at beginning of period 9,836 4,238
--------- ---------
Cash, cash equivalents and bank overdrafts at end of period 7,818 9,836
========= =========
NOTES:
Cash and cash equivalents consist of cash in hand and balances
with banks only.
Real Estate Investors plc
Notes to the preliminary announcement
For the year ended 31 December 2022
1. Basis of preparation
The financial statements have been prepared under the historical
cost convention, except for the revaluation of properties and
financial instruments held at fair value through profit and loss,
and in accordance with international accounting standards in
conformity with the requirements of the Companies Act 2006.
It should be noted that accounting estimates and assumptions are
used in preparation of the financial statements. Although these
estimates are based on management's best knowledge and judgement of
current events and actions, actual results may differ from those
estimates. The areas involving a higher degree of judgement or
complexity, or areas where assumptions and estimates are
significant to the financial statements, are set out in the Group's
annual report and financial statements.
The consolidated financial statements incorporate the financial
statements of the Company and its subsidiaries made up to 31
December each year. Material intra-group balances and transactions,
and any unrealised gains arising from intra-group transactions, are
eliminated on consolidation. Unrealised losses are also eliminated
unless the transaction provides evidence of an impairment of the
asset transferred.
The principal accounting policies are detailed in the Group's
annual report and financial statements.
Going concern
The Group has prepared and reviewed forecasts and made
appropriate enquiries which indicate that the Group has adequate
resources to continue in operational existence for the foreseeable
future, being a period of 12 months from the date of approval of
these financial statements to 31 March 2024. These enquiries
considered the following:
-- the significant cash balances the Group holds and the low
levels of historic and projected operating cash outflows
-- any property purchases will only be completed if cash
resources or loans are available to complete those purchases
-- the Group's bankers have indicated their continuing support
for the Group. In March 2023 the Group extended the GBP20 million
facility with Lloyds Banking Group Plc for 6 months to 31 May 2024
, whilst continuing negotiations to extend the facility by a
further 3 years.
-- In March 2023 the Group extended the facility of GBP31
million with National Westminster Bank PLC by a further 3 months to
June 2024.
-- The directors have at the time of approving these financial
statements, a reasonable expectation that the Group has adequate
resources to continue in operational existence for the foreseeable
future being a period of not less than 12 months from the date of
approval of these financial statements.
For these reasons, the Directors continue to adopt the going
concern basis in preparing the financial statements.
2. Gross profit
2022 2021
GBP000 GBP000
Revenue Rental income 12,725 13,934
Sale of inventory property - 1,225
Surrender premiums 568 812
-------- --------
13,293 15,971
-------- --------
Cost of sales Direct costs (2,489) (1,932)
Cost of inventory stock - (1,397)
-------- --------
10,804 12,642
-------- --------
3. Earnings per share
The calculation of earnings per share is based on the result for
the year after tax and on the weighted average number of shares in
issue during the year.
Reconciliations of the earnings and the weighted average numbers
of shares used in the calculations are set out below.
2022 2021
Average Average
number of Earnings per number of Earnings
Earnings shares Share Earnings shares per share
GBP000 GBP000
Basic earnings per share 10,934 172,651,577 6.33p 13,924 179,377,898 7.76p
Dilutive effect of share options - 2,312,675 - - 2,883,365 -
--------- ------------ ------------- ----------- ------------ -----------
Diluted earnings per share 10,934 174,964,252 6.25p 13,924 182,261,263 7.64p
========= ============ ============= =========== ============ ===========
The European Public Real Estate Association indices below have
been included in the financial statements to allow more effective
comparisons to be drawn between the Group and other business in the
real estate sector.
EPRA EPS per share
2022 2021
Earnings Earnings
Earnings Shares per share Earnings Shares per share
GBP000 No p GBP000 No P
Basic earnings per share 10,934 172,651,577 6.33 13,924 179,377,898 7.76
Net gain on valuation of investment
properties (3,152) (4,951)
Gain on disposal of investment
properties (948) (1,177)
Loss on sale of inventory properties - 172
Gain in fair value of derivatives (2,214) (1,388)
--------- -----------
EPRA earnings per share 4,620 172,651,577 2.68 6,580 179,377,898 3.67
========= ===========
NET ASSET VALUE PER SHARE
The Group has adopted the new EPRA NAV measures which came into
effect for accounting periods starting 1 January 2020. EPRA issued
new best practice recommendations (BPR) for financial guidelines on
its definitions of NAV measures. The new NAV measures as outlined
in the BPR are EPRA net tangible assets (NTA), EPRA net
reinvestment value (NRV) and EPRA net disposal value (NDV).
The Group considered EPRA Net Tangible Assets (NTA) to be the
most relevant NAV measure for the Group and we are now reporting
this as our primary NAV measure, replacing our previously reported
EPRA NAV and EPRA NNNAV per share metrics. EPRA NTA excludes the
intangible assets and the cumulative fair value adjustments for
debt-related derivatives which are unlikely to be realised.
31 December 2022
EPRA NTA EPRA NRV EPRA NDV
GBP'000 GBP'000 GBP'000
Net assets 108,965 108,965 108,965
Fair value of derivatives (68) (68) -
Real estate transfer tax - 11,245 -
EPRA NAV 108,897 120,142 108,965
------------ ------------ ------------
Number of ordinary shares issued for diluted and EPRA net assets per share 174,964,252 174,964,252 174,964,252
EPRA NAV per share 62.2p 68.7p 62.3p
============ ============ ============
The adjustments made to get to the EPRA NAV measures above are
as follows:
-- Real estate transfer tax: Gross value of property portfolio
as provided in the Valuation Certificate (i.e. the value prior to
any deduction of purchasers' costs).
-- Fair value of derivatives: Exclude fair value financial
instruments that are used for hedging purposes where the company
has the intention of keeping the hedge position until the end of
the contractual duration.
31 December 2021
EPRA NTA EPRA NRV EPRA NDV
GBP'000 GBP'000 GBP'000
Net assets 105,022 105,022 105,022
Fair value of derivatives 2,146 2,146 -
Real estate transfer tax - 13,127 -
----------------------------------------------------------------------------
EPRA NAV 107,168 120,295 105,022
---------------------------------------------------------------------------- ------------ ------------ ------------
Number of ordinary shares issued for diluted and EPRA net assets per share 182,261,263 182,261,263 182,261,263
EPRA NAV per share 58.8p 66.0p 57.6p
============================================================================ ============ ============ ============
31 December 2022 31 December 2021
No of Shares No of Shares
Number of ordinary shares issued at end of period 172,651,577 179,377,898
Dilutive impact of options 2,312,675 2,883,365
Number of ordinary shares issued for diluted and EPRA net assets per share 174,964,252 182,261,263
----------------- -----------------
Net assets per ordinary share
Basic 62.2p 58.8p
Diluted 68.7p 66.0p
----------------- -----------------
EPRA NTA 62.3p 57.6p
================= =================
4. Investment properties
Investment properties are those held to earn rentals and for
capital appreciation.
The carrying amount of investment properties for the periods
presented in the consolidated financial statements is reconciled as
follows:
GBP000
Carrying amount at 1 January 2021 197,520
Additions - subsequent expenditure 955
Disposals (14,941)
Change in fair value 4,951
---------
Carrying amount at 31 December 2021 188,485
Additions - subsequent expenditure 609
Disposals (19,216)
Change in fair value 3,152
Carrying amount at 31 December 2022 173,030
=========
5. Publication
The financial information set out in this preliminary
announcement does not constitute statutory accounts as defined in
section 434 of the Companies Act 2006. The consolidated statement
of financial position at 31 December 20 22 and the consolidated
statement of comprehensive income, the consolidated statement of
changes in equity, the consolidated statement of cash flows and the
associated notes for the year then ended have been extracted from
the Group's financial statements upon which the auditor's opinion
is unqualified and does not include any statement under section 498
of the Companies Act 2006. The statutory accounts for the year
ended 31 December 20 22 will be delivered to the Registrar of
Companies following the Company's Annual General Meeting.
6. Copies of the announcement
Copies of this announcement are available for collection from
the Company's offices at 2(nd) Floor, 75-77 Colmore Row,
Birmingham, B3 2AP and from the Company's website at www.reiplc.com
. The report and accounts for the year ended 31 December 2022 are
available from the Company's website and will be posted to
shareholders in May 2023.
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END
FR SEDFMWEDSEDD
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