Birmingham’s increasingly strong regional commercial property market is a cause of great celebration for investors in the area, with local property group Real Estate Investors one of the major beneficiaries of this trend.
This week, the real estate investment trust revealed a record breaking half year result along with the news that it has finally broken through the one million square foot mark for assets owned in its extensive portfolio.
During the six months to the 30th of June 2015, the group enjoyed a pre-tax profits boost of an incredible 211 per cent, rising to £8.1 million from the £2.6 million recorded during the same period last year.
In part, this was due to a surplus on the revaluation of interest rate swaps of £690,000 and a separate revaluation surplus of £5.9 million, the latter of which increased year on year from £2.4 million in 2014.
Revenue also climbed impressively from £2.9 million to £3.8 million, equating to a rise of an impressive 31 per cent year on year. A 21 per cent rise in contracted rental income since the end of 2014 played a major role in this, with the £9.3 million income sum marking a new record for the firm.
Real Estate Investors chief executive Paul Brassi believes that the fortuitous West Midlands property market and asset management initiatives undertaken by the group have combined to create the ideal climate for growth.
He says; “Our acquisition strategy is beginning to show positive capital growth and strong cash flows.
“The £45 million placing in April has provided additional capital to allow us to capitalise on market opportunities in a rapidly improving regional market.
“Birmingham and the wider Midlands is re-emerging as a major UK economic powerhouse and, while manufacturing and in particular the automotive sector remains strong, the regeneration of the local economy is underpinned by the growing industries of tourism, education, retail, digital media and technology.”
During the first half of the year, Real Estate Investors engaged in major acquisitive activities as a means of increasing the value of its portfolio, allowing the group to break through the one million square foot owned asset ceiling.
This activity helped the overall ownership portfolio to climb by 26 per cent since the end of 2014, when it totalled just 799,112 square feet.
Like many property investors in Birmingham at present, the group placed a great deal of emphasis upon the office and retail sectors, snapping up properties with strong yields in well located areas. These included the acquisitions of Bearwood Shopping Centre in Birmingham for £8.65 million, a package of offices in the Jewellery Quarter’s St Paul’s Square for £3.75 million and retail space in Acocks Green for £8 million.
Mr Bassi continued; “All of these assets provide asset management potential which will provide income and capital growth.
“I anticipate continued growth in our rental income, profitability, dividend payment and our current available resources establishing a £200 million portfolio within the next six months, subject to sales.”
Do you think Real Estate Investment’s acquisitive strategy will continue to pay off as the Birmingham market grows further in the future?
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