Strong demand for Midlands-based assets has left Real Estate Investors upbeat after the first six months of 2021 trading.
The Midlands-based firm, run by Paul Bassi, said that it was seeing strong demand from private investors in the region and as a result had sold eight assets for £10.7m, a circa 10% premium to their December 2020 book values. Contracts on a further £5.5m of assets have been exchanged and the group said it was evaluating the potential break-up of some more of its assets to satisfy investor appetite.
Cash generated from disposals will be reinvested in resilient and emerging sub-sectors, said Bassi, adding that the group would “look to secure opportunistic acquisitions which offer the real prospect of capital growth and rental income”.
Alongside investor confidence, REI said that rent collection was normalising, with more than 90% of rents for the current quarter paid. Occupancy remains down on 2020, at 83.4% (down from 91.6%), but the group said that the reduction was due mostly to known lease events and that it was seeing demand for its neighbourhood and convenience assets increase.
“Following a very uncertain 2020, we are beginning to see some early signs of market normalisation coupled with a strong investor marketplace,” said Bassi. “While we are not immune to the ongoing impact of Covid-19 on the wider UK property market, we are very well positioned in an active regional Midlands market, with a healthy exposure to resilient and sought-after community assets.”
He added: “Occupier demand is beginning to strengthen across the marketplace, with decision-makers less cautious and naturally eager to move forward after a uniquely challenging 18 months. We have a healthy pipeline of new lettings on our void space, which is expected to improve our occupancy levels and support our valuation recovery.”
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