Property and redevelopment company Real Estate Investors has slipped into the red in the past six months after being hit by interest rates.
The Birmingham-based firm, headed up by Birmingham Chamber of Commerce president Paul Bassi, saw a £1.3 million profit in the first half of last year turn into a £1.6 million in the six months to June 30 this year.
The company, which has recently concluded a £4.5 million deal for 75-77 Colmore Row, saw rental income drop by five per cent over the period, to £1.66 million.
It lost £1.5 million on interest rate swops – where a stream of future interest payments are exchanged for another based on a specified amount – which hit its balance sheet after making a £1.2 million gain in the same period last year.
Mr Bassi said: “We continue to establish a business of substance that will benefit significantly when market valuations recover, and we will also benefit from new lettings achieved and trading properties that we have already acquired.”
Mr Bassi said the results were in line with expectations and believes the trading position will improve in the second half of the year.
The Group has won about £400,000 worth of new annual rental income during the period, from new tenants including Tesco and Greenberg Traurig Maher.
Mr Bassi added: “Prior to and after the general election, occupiers were reluctant to commit, however, we are seeing encouraging activity in new lettings, which gives us confidence in our year end rental income expectations.
“These new streams of rental income will more than compensate for the slight fall in rental income seen during the first half which was predominantly due to the timing differentials of the replacement leases.”