Nov

Commercial real estate investor optimistic on rent collections

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In a recent Rent Collection & Trading Update, Real Estate Investors Plc, a Midlands-focused Real Estate Investment Trust (REIT) says it is pleased to report that rent collections for previous and current quarters continue to improve.

With a diversified portfolio of 1.59 million sq ft of investment property across all sectors in the Midlands, the company’s updated rent collection data for the March quarter (March to June) has reached 93.44% (adjusted for monthly and deferred agreements) up from 90.7% reported on 21 September, 90.16% reported on 15 July and 81% reported on 15 June.

The June quarter (June to September 2020) its rent collection total has now risen to 90.23% (adjusted for monthly and deferred agreements), up from 86.9% reported on 21 September and 81.94% reported on 15 July.

The September quarter (September to December) rent collection is currently at 89.92% (adjusted for monthly and deferred agreements).

REI’s Rent Collection Data:

Rent Collections	March Quarter	June Quarter	September Quarter
Collected	83.08%	85.59%	85.31%
Deferred arrangement	10.36%	4.64%	4.61%
Total	93.44%	90.23%	89.92%
Debtors	6.56%	9.77%	10.08%

Source REI Trading Update

The report says that the company is “in supportive dialogue with a number of tenants and anticipate that unpaid rents will be received from these tenants as they become able to commence normalised trading again.”

There are a number of tenants who continue to delay paying rent and are taking full advantage of government restrictions on landlords. These tenants, says REI, have the ability to pay but are refusing to do so whilst these rules are in force, though it seems some of them have now engaged in a dialogue and have agreed settlement arrangements.

“We remain confident of recovering these outstanding rents or being able to reach an agreed solution,” says the report.

Occupancy & WAULT (weighted average unexpired lease term)

Our current occupancy level across the portfolio is 93% and year to date we have secured 23 positive lease events. The WAULT across the portfolio has been materially extended following the recent negotiations with tenants and is currently 4.86 years to break (31 December 2019: 3.82 years to break) and similarly expiry dates have moved to 6.53 years (31 December 2019: 5.79 years to expiry).

Retail

As reported in September, a somewhat normal pattern of trading has been enjoyed by a large proportion of our occupiers for the last few months, with our neighbourhood and convenience retail portfolio in particular showing resilience and strong performance.

Offices

Our office portfolio, which is almost entirely out of town, continues to see improved demand as occupiers seek to provide a safe and convenient environment for their employees without the need for unnecessary use of public transport or City centre commutes. We anticipate strong ongoing demand and the potential for rental growth and capital appreciation.

Dividend

We have continued to make our quarterly, fully covered dividend payments of 0.50p. The Board will reflect on the strength of the trading performance for the year and make a final dividend payment accordingly, complying with our REIT payment obligations.

ShareBuyback Programme

The Company announced the terms of a share buyback programme on 20 October 2020 with an aggregate market value of up to £2.0 million which is expected to end no later than 31 December 2020.

Paul Bassi, Chief Executive, commented:

“Management’s experience and proactive approach to asset management and the ongoing strategy to operate a diversified portfolio has supported our robust levels of occupancy and rent collection.”

“We also remain confident that occupier demand for our assets will continue and we are mindful that the current environment may create opportunistic sales and acquisitions for the Group.”

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