The Midlands Investor
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Annual Report and Accounts 2018 Real Estate Investors Plc Annual Report and Accounts 2018 Birmingham Wolverhampton Warwick Leicester WestBirmingham Bromwich WolverhamptonLeamington Dudley Warwick Walsall LeicesterBirmingham Coventry West Wolverhampton Bromwich Leamington Warwick Dudley Leicester Walsall West Bromwich Coventry Leamington Dudley Walsall Coventry Oldbury Derby Worcester Redditch Kings Heath RugeleyOldbury Bromsgrove Derby Worcester Bearwood Redditch Acocks Kings GreenOldbury Heath Tunstall DerbyRugeley Worcester Bromsgrove Redditch Bearwood Kings AcocksHeath RugeleyGreen Tunstall Bromsgrove Bearwood Acocks Green Tunstall Kingswinford Wythall Telford Nottingham Crewe NuneatonKingswinford Birmingham Wythall Telford Wolverhampton NottinghamKingswinford Warwick Crewe NuneatonWythall Telford Birmingham Nottingham Wolverhampton Crewe Nuneaton Warwick Birmingham Wolverhampton Warwick Leicester West Bromwich Leamington Dudley WalsallLeicester Coventry West Oldbury Bromwich Derby 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Bromwich West Bromwich Leamington Dudley Walsall THE MIDLANDS INVESTOR Real Estate Investors Plc (‘REI’) is the UK’s only Midlands-focused, Birmingham-based REIT. Internally The Company operates a robust managed by a team with over 100 years business model. With prudent of combined experience, the Company’s leverage, excellent banking proven track record, together with its relationships and access to debt, network and knowledge of the region REI has the ability to execute it operates in, have positioned it on deals quickly as a cash buyer as the premier property investor and secure criteria compliant in the Midlands. acquisitions, delivering capital enhancement across the portfolio. With recycled capital from disposals 6 YEARS OF and a growing income stream, REI aims to continue to deliver on its CONSECUTIVE progressive dividend policy, with 6 DIVIDEND years of YOY growth now recorded. GROWTH £224.8 MILLION PORTFOLIO VALUE 96.1% OCCUPANCY With a portfolio valued at over £220 million and no material reliance on any sector, asset or occupier, REI generates value via active asset management initiatives such as rent reviews, lease renewals, lettings, change of use and refurbishment. REI is uniquely positioned in a vibrant regional economy that is rapidly expanding and, with its market reputation as a preferred buyer, is able to capitalise on opportunities as they reveal themselves. HIGHLIGHTS ANOTHER YEAR OF PROGRESS STRATEGIC REPORT Financial highlights Contents Our objective: As a Real Estate Investment Trust since 2015, we generate rental income and capital growth with the aim of delivering a progressive dividend payment and capital growth for our shareholders. Underlying profit before tax* EPRA EPS** GOVERNANCE £7. 2 m 3.9p +16.1% +16.3% FINANCIAL STATEMENTS FINANCIAL Gross property assets Contracted rental income £224.8m £17.0 m +5.5% +4.9% EPRA NAV per share** Dividend per share 69.3 p 3.562p Strategic Report +0.6% +14.0% Highlights 1 At a Glance 2 Our Dividend 3 Chairman’s and Chief Executive’s Report 4 Occupancy Revenue Our Region 6 Our Business Model 10 Simplified Debt Structure 11 96.1% £15.6 m How We Create Value 12 +3.3% +5.1% Chief Executive’s Q&A 14 Our Portfolio 16 Property Report 22 Finance Director’s Report 26 Principal Risks and Uncertainties 28 Operational highlights Governance • Acquisitions of criteria compliant • Total ownership 1.55 million sq ft Board of Directors and Management 30 properties totalling £15.4 million (net of (2017: 1.5 million sq ft) – up 3.3% Corporate Governance Report 32 acquisition costs), at a net initial yield of • Renewed £20 million bank facility with Directors’ Remuneration Report 35 8.88% and reversionary yield of 9.20% Lloyds in December 2018 for 5 years Directors’ Report 37 • Property disposal proceeds totalling • £10 million new facility secured with RBS £5.7 million, as REI recycles capital into at 1.95% above LIBOR Financial Statements criteria compliant assets • Like for like portfolio valuation £209.2 Independent Auditor’s Report to the • Active asset management with 25 new million (2017: £207.4 million) – up 0.9% Members of Real Estate Investors Plc 38 lettings and 6 lease renewals Consolidated Statement of • Overall occupancy increased to 96.1% * Underlying PBT excludes profit/loss on revaluation, Comprehensive Income 42 (2017: 92.8%) – up 3.3% sale of properties and interest rate swaps Consolidated Statement of Changes in Equity 43 ** EPRA = European Public Real Estate Association • WAULT*** 4.24 years to break and 6.24 Company Statement of Changes in Equity 43 *** WAULT = Weighted Average Unexpired years