A Birmingham-based property investment firm has revealed a huge swing into the red after being hit by a fall in values.
Real Estate Investors (RLE) has revealed a pre-tax loss of £5.6 million for the 2010 calendar year, 12 months on from posting a £4.3 million profit in 2009.
The company, which is owned by former Birmingham Chamber of Commerce president Paul Bassi, revealed it took a £4.1 million hit from a revaluation of investment properties – which accounts for 7.5 per cent. Last year it benefited from a £2.7 million gain.
However, contracted rental income rose to £4 million, up by a fifth on the £3.3 million reported last year, and rental income rose by 1.8 per cent to £3.3 million.
Mr Bassi said: “The next 12 to 24 months will remain challenging, yet we remain well positioned to capitalise on improving occupancy, capital values, lease renewals and trading opportunities.
“Additionally, the probability of rising interest rates in the future will provide us with a significant improvement on the market value of our hedge which has already recovered substantially since the year end by £450,000 at the end of February 2011.
“We are very aware of short term fluctuations in property values, and their impact on our results. REI views the downturn as an opportunity and we have already demonstrated our ability to secure assets favourably.
“We remain committed to building a significant property investment business of substance and depth, with positive revenues and capital growth.”
The firm’s gross property assets were valued at £56.5 million, up by three per cent on the £54.8 million reported in 2009.
Its cash at the bank stood at £11.8 million at the end of the year, an incraese of £1 million year on year.