Executive salaries at Paul Bassi’s Real Estate Investors have been slashed by a third as it works to cut debt and sell assets.
Bonuses and other awards have been cut in half.
CEO Bassi’s salary has dropped from £550,000 to £367,000, while CFO Marcus Daly has had his wage reduced from £344,000 to£229,000.
The annual discretionary executive bonus has also been reduced from a maximum of 100% of basic salary to a maximum of 50% of the new reduced basic salary.
Uninvested awards granted under the existing long-term investment plan will also be reduced, by a third for 2020, two-thirds for 2021 and cancelled for 2022. This is expected to result in a saving of £1.2m.
However, a short term investment plan is expected to hand executives a minimum of £410,000.
In addition, non-executive directors’ fees have been reduced by one-third.
REI has been attempting to reduce its debt by selling assets, and has so far been largely successful. Debt has been cut almost in half over the past three years, from £101m to £54.3m, thanks to the sale of £56.4m of assets.
Bassi said the plan was still to accelerate the sales programme. “Given the ongoing substantial discount between the share price and NAV, combined with a lack of liquidity in its shares, the board has concluded that it will conduct an orderly strategic sale of the company’s portfolio over the next three years with the objective of maximising the return of capital to shareholders.”
However, disposals have slowed due to market conditions, with the company saying it will not sell any asset below book value.
Bassi said: “Having finalised our strategic plan, our priority is to continue disposing of assets at or above book value, maximising returns to shareholders. During 2023, despite an inactive property market, we made sales of £17.97m (predominantly to private investors) and receipts from these disposals were utilised to reduce debt by £17.1m. We currently have a further healthy pipeline of sales in legals, which we anticipate to complete in H1 2024.”
He added: “Despite a strong year of sales to private investors and special purchasers, market sentiment remains weak and we anticipate valuation decline across the industry.”
To send feedback, e-mail piers.wehner@eg.co.uk or tweet @PiersWehner or @EGPropertyNews
