A property company run by one of the leading entreprenuers in the West Midlands has recorded losses of more than £5 million.
Paul Bassi’s Real Estate Investors posted a loss before tax of £5.6 million against a 2009 profit of £4.3 million.
However the results for 2010 showed a 20 per cent rise in contracted rental income from £3.34 million in 2009 to £4.01 million and net assets up 18.3 per cent from £27.3 million to £32.3 million.
The company said that more than more than £4 million of the swing in to the red was accounted for by a 7.5 per cent downwards valuation of REI’s investment properties, while the rest was accounted for by a paper loss on the valuation of interest rate swaps of £1.2 million, leaving a loss before tax excluding net property valuation and financial instrument provisions of £292,000, against a 2009 profit of £21,000.
Mr Bassi said: “We anticipate that the commercial property industry’s current view on valuations will provide us with excellent opportunities to buy in 2011/12.
“Revaluations are a two edged sword.
“On the one hand, they make up the majority of the reason for the loss we are reporting, but on the other hand they give us reasons for hoping we can buy quality stock at what the market currently considers to be lower values.”
REI chairman John Crabtree added: “While London investment property values are buoyant, driven largely by institutional and overseas capital, the UKproperty sector as a whole is not exempt from the economic backdrop.
“Valuations in UKregions remain depressed, largely due to the lack of bank finance, leading to very limited transactions and comparable evidence being predominantly gathered from distressed sales.
“Our purchases plus other opportunities that we anticipate securing, together with rising rental values, will provide the potential for significant capital gains and surplus cash flow in the short to medium term, establishing REI as a highly respected regional property investment company, that will benefit substantially once market conditions normalise.”