The upturn in the regional property markets is continuing with one Midlands company reporting a staggering 238 per cent surge in profits and a Yorkshire investment firm seeing a rise in the value of its portfolio.
In a six-month return which saw it raise £20m in equity, Birmingham-based Real Estate Investors (REI) reported a profit of £2.6m to the end of June compared to just £769,000 for the same period last year.
Gross property assets increased by 15 per cent to £86.2m, nine-million pounds up on 2013, and investment property assets also increased by a similar figure, up 14 per cent to £79.4m. REI — which spent £9.1 on acquisitions between January and June — reported a rental income rise from £2.6m last year to £2.7m.
Commenting on his company’s “excellent” first half-year accounts, REI chief executive Paul Bassi, said: “We are beginning to see the benefits of our strategy to focus on our region and asset management opportunities, which has resulted in improving valuations and allowed us to continue with our progressive dividend policy.”
With ten of its key assets in Birmingham city centre, totalling 157,980 sq ft in office floorspace, he claimed that while property values were improving they still did not truly reflect potential sales value, and cited the sale of Cathedral Place which was sold for 19 per cent above an independent valuers’ estimate.
“There is now institutional, private equity, overseas and public company capital chasing regional assets with significantly more vigour than in the last five years and particularly evidenced in the last six months in our core market,” Bassi said.
“All the evidence is now suggesting that secondary real estate in town centres around the Midlands is well positioned to see an improvement in valuations.”
In a more modest upturn, Town Centre Securities (TCS) saw its full-year, pre-tax profit to the end of June increase from £3.6m in 2013 to almost £27.5m this year.
The property investor, developer and car park owner, which has its head office in Leeds, claimed the value of its investment portfolio had jumped by just under 10 per cent to £27m.
TCS’s strongest performing property was its Leeds’ Merrion Centre — celebrating its 50th anniversary this year and which the company has owned since its 1964 construction — and which saw its capital value climb by 16.3 per cent. With Morrisons expanding its supermarket in the mall by nearly a quarter, rents from the Merrion Centre were now producing £500,000 a year.
“We have produced another strong trading performance and our properties are now starting to show some of the growth which we have seen in London recently,” said chairman and chief executive Edward Ziff, who has worked at the business for 33 years and is in his 11th year as chairman.
“These returns have been achieved through a combination of intensive management of our assets along with a conservative management style. We have extensively churned the portfolio in recent years to ensure that our funds are invested where there is likely to be growth,” Ziff said, while adding: “Our property management team completed 184 transactions in the year to maximise the returns from our portfolio.”
