REI continues sale plan for debt reduction strategy

Midlands-based Real Estate Investors has completed or conditionally exchanged on a further £11.9m of sales in the year to date. In a trading update ahead of the announcement of its interim results on 23 September, REI said it had been using the receipts from completed disposals to continue its policy of paying down debt. Chief executive Paul Bassi said: “We are pleased with the performance of the business in the year-to-date and remain on track with our strategy to make targeted sales to private investors and special purchasers during 2024, repaying debt with the proceeds. “Despite the known uncertain market conditions, particularly in the investment market, where transaction levels are 40% below the five-year average, in 2024 so far, we have completed or exchanged contracts on £11.9m of assets, repaying £7.3m of debt with the proceeds from completions.” Bassi added that there was a strong sales pipeline in legals that was expected to complete in the second half of 2024. The Birmingham-based business has now reduced its total drawn down debt to £47.1m, down from £54.4m at 31 December 2023 year end, and seen a hedge facility improvement of £190,000 in the year to date at 31 July 2024. The company now has contracted rental income of £10m, down marginally from £10.9m in December 2023, with the loss of income predominantly due to disposals and taking vacant possession on specific assets to fulfil sales obligations. “We believe the recent 0.25% interest rate reduction, announced by the Bank of England last week, will further enhance confidence and support a return to more normalised investment market conditions that will allow us to start to sell our larger assets, utilising funds more rapidly to eliminate our debt with a view to then returning surplus capital to our shareholders,” said Bassi. “We continue to focus on maximising income across the remainder of the portfolio, with a view to potentially improving valuations and occupancy levels further and supporting our ongoing dividend which has been uninterrupted and fully covered despite the sales programme.”