Real Estate Investors, the quoted vehicle of Midlands property specialist Paul Bassi, has jumped into profit after reporting a 13 per cent rise in the value of its assets.
The Birmingham-based company posted a pre-tax profit of £4.3 million, compared to a loss of £15.7 million in 2008.
The group reported gross property assets were valued at £54.8 million, compared to £48.5 million at the end of the last financial year.
It also saw a rise in rental income of eight per cent, to £3.2 million.
He has announced that he will shortly be stepping down as chairman but staying on the board as a non-executive director.
REI is expected to reveal a West Midlands heavyweight to take up the role of chairman in the Spring.
Peter Lewin, chairman of REI, said: “I stated last year that these unprecedented market conditions would reveal winners and losers and I firmly believe that the company, with the recent fundraising, coupled with its existing cash, banking arrangements, experienced and focussed management team, has a very positive outlook for 2010, revealing REI to have a winning business and strategy.”
Mr Lewin has announced that he will shortly be stepping down as chairman but staying on the board as a non-executive director.
Mr Bassi, REI’s chief executive, said: “The property market has recently shown some healthy signs of improving values, and although there is limited evidence in the public domain at the year end, we believe that market data will reveal a strengthening in yields across most sectors. If these conditions remain, we anticipate that our portfolio valuations will benefit.
“It is our view that these improving values are driven by limited property stock and a thirst for income, coupled with significant cash reserves from international, institutional and corporate investors.
“The group’s strategy is focussed on creating value through lettings, change of use and refurbishment. In 2009, we completed nearly all our refurbishments and we have seen a slowdown from the occupier market during most of 2009. However, we are pleased to report that during the last quarter of 2009, occupier interest and tenant confidence did improve and we anticipate securing significant rental income from our existing portfolio during 2010.
“This will result in improved profitability and, if values remain at present levels, increased capital growth.
“The types of opportunity we seek to secure have not been forthcoming during 2009 and we have not seen adequate value or potential value as the market place has been starved of stock. We have therefore been reluctant and relatively inactive in making new purchases. “However, we have great confidence in investing our resources during 2010. We will be active in all sectors other than industrial, with a focus on retail and residential as an investor, trader and will take on refurbishment projects where we see good value. Our focus will remain in the Midlands and, at all times, we will be opportunity, value and profit driven.
“We anticipate that the banking sector will begin to release assets that they have placed in ‘recovery’ and the lack of banking finance available for our target acquisitions will place the company in an advantageous position as an experienced cash buyer.
“We have no reliance on any one sector or tenants who could have a negative impact on the company, and we believe market conditions are ideal for our asset management and regional focus. We believe that there will be a plethora of opportunities before us and we remain focussed on capitalising on them and produce another set of positive results for 2010.”
Birminghampost.net reported in January that REI planned to use the £10.1 million placing “to provide additional resources to take advantage of depressed values in the West Midlands property market”.
Its cash war chest is now in excess of £20 million plus agreed banking facilities. The company said it was targeting “attractive valuations” and was in discussions on a £100 million pipeline of opportunities.
The group saw a slight fall in the amount of cash in the bank, to £10.8 million from £11.4 million, after total acquisitions of property in the year amounted to £2.8 million.