REI plunges into the red with £1.6m loss
Real Estate Investors (REI), the Birmingham-based property investment company, has said that it expects market valuations to “remain volatile over the next few years”, following a loss-making first half of 2010. The AIM listed company posted a pre-tax loss of £1.6m this morning, compared with a profit of £1.3m in the comparable 2009 period.
The company said that the loss "includes loss on valuation of interest rate swaps of £1.5m". In 2009, the company made a gain of £1.2m. REI said the loss was “an accounting provision and not a cash loss”.
REI acquired £400,000 of new contracts during the period, from clients including Tesco and Greenberg Trahig Maher, but said that its non-Midlands portfolio suffered some lease expiries. REI said it lost about £200,000 of rental income from non-Midlands stock, including a former JJB Sports unit in Wakefield and a property leased by Kelly Services in Crawley.
The investment company said that it recorded a profit before tax, revaluations and loss or gain on valuation of interest rate swaps of £50,000, compared with £100,000 in 2009.
Since the first half of the year, the company also acquired 75-77 Colmore Row, Birmingham for £4.5m. The office site has now been let to PricewaterhouseCoopers at a rent of approximately £400,000 per year.
In terms of future investments, the company said that “a number of investment acquisition discussions are advanced, with vendors likely to make disposal decisions in the last quarter of 2010, and we further anticipate a very active 2011, now that the election and banking concerns are receding”
Paul Bassi, chief executive of REI, said: "We continue to establish a business of substance that will benefit significantly when market valuations recover, and we will also benefit from new lettings achieved and trading properties that we have already acquired."
Through the company’s interim statement this morning, Bassi said that a number of new leases are currebtly in legals, which “the directors believe will result in the expected increase in new rental income by the year end”.
