REI Regulatory News (RLE)

14 March 2016

Real Estate Investors Plc

("REI" or the "Company" or the "Group")

Final Results - for the year ended 31 December 2015

Record Contracted Rental Income, Profits, Dividend and Occupancy

Financial Highlights

· Gross Property Assets £157.5 million, up 50.9%

· EPRA NAV per share 64.5p (2014: 61.3p) up 5%

· Rental income £8.4 million (2014: £6.1 million) up 38%

· Contracted Rental Income £11.9 million, up 54.5%

· Profit before Tax £12.2 million (2014: £6.0 million) up 104%

· EPRA** EPS 0.81p (2014: loss 0.36p)

· Net loan to value 22.4% (2014: 35.2%) up 36%

· Gross debt £44 million (2014: £43 million)

· Total dividend per share for 2015 up 33% to 2p, final dividend 1p per share

· Post period end, secured a new 5 year £30 million facility with RBS at 1.75% above Libor

Operational Highlights

· Conversion to a Real Estate Investment Trust (REIT*) on 1 January 2015

· £45 million capital raise in April 2015, successfully deployed, acquisitions totalling £57.7 million (2014: £29.4 million)

· Overall occupancy 89% and WAULT*** 5.28 years (to break) (2014: 84.6% and 4.4 years)

· Acquisitions totalling £57.7 million (2014: £29.4 million) up 96.3%

· Property disposals proceeds totalling £15.3 million (2014: £7.0 million) including non-core assets as REI continues to recycle capital to improve growth profile of portfolio

· Total ownership 1.1 million sq ft (2014: 799,112 sq ft) up 37.6%

· 211 Tenants (2014: 175) up 20.6%

Definitions

* REIT = Real Estate Investment Trusts are listed property investment companies or groups not liable to corporation tax on their rental profits or capital gains from their qualifying activities

** EPRA = European Public Real Estate Association

***WAULT = Weighted Average Unexpired Lease Term

Commenting, Paul Bassi, CEO of Real Estate Investors, said:

"We have enjoyed progressively positive results over concurrent years, together with a growing dividend payment. We anticipate continued growth in our portfolio in 2016, and further rental and capital growth over the coming years, all of which will underpin our commitment to paying a progressive dividend.

Our region is in the early stages of its re-emergence as an economic and commercial powerhouse, underpinned by a number of supporting factors, not least, the highest level of future inward investment the region has ever seen, building on the now established new business and industrial prosperity, which is clearly evidenced by the renewed buoyancy in new job creation across the region."

Enquiries:

Chairman and Chief Executive Statement

Overview - a year of progress on all fronts

This has been an excellent year of progress for shareholders that has resulted in record rent roll, profits, portfolio size and dividend payment. We have continued to invest in our region, in criteria compliant assets that have the potential for capital growth and provide strong rental yields, through active asset management.

We stated last year, that for 2015, we anticipated nothing other than a mild 'pause' around the general election, providing a window of opportunity, when we acted to secure additional property and that the regional economy would remain robust. We are pleased to see that this is precisely what happened, the economy has continued to grow and property investor demand has remained strong and a positive improvement in occupier demand has surfaced.

More growth to come

Despite the economic and political 'headwinds', a highly volatile stock market, coupled with the Brexit debate and Euro vote, which might deliver another buying opportunity, we anticipate that economic activity in our region will remain positive and that investor and occupier demand will remain stable, especially as it is likely that the low interest rate environment will remain for 2016. Property investment continues to provide investors with secure returns in uncertain and volatile periods and we therefore anticipate a positive property market going forward.

Buoyant Commercial Sector

Investment in the West Midlands commercial property sector topped £2.6bn last year (up 6% on 2014). The office sector made up almost a third of West Midlands' investments at £822 million, whilst retail accounted for 28% at £744 million. Investor appetite from institutional investors and fund managers remains positive and new entrants to the marketplace vary from specialist funds to new public companies that are regionally focused. This growing investor appetite has continued to push prices upwards and created yield compression within the marketplace amidst increased competition for assets.

Birmingham's city centre and out-of-town markets continue to thrive, with record-breaking office deals of 970,000 sq ft completed across the year for the city centre market, a significant uplift on the previous high of 886,000 sq ft which was recorded in 2008.

Successful Strategy building Income and Capital Growth

These factors, combined with our active approach to asset management, have contributed towards valuation growth within our portfolio and, whilst we are strategically looking to hold assets which produce income and capital growth, we have capitalised on opportunistic sales that have been completed above book value. We continue to focus on criteria compliant assets that require active asset management and local knowledge with the potential for capital value and increasing income. This 'niche' allows REI Plc to secure quality assets with prospects for rental improvement for which we know there is a ready investment market.

More interestingly, traditional buyers in a normalised market include private property companies, pension funds and high net worth individuals; these remain largely absent. Private property companies have limited support from the banks, with conservative loan to value debt availability, and limited equity. Pension funds are still re-capitalising by building up profits and high net worth individuals appear to have a lack of confidence in direct property investment. However, we envisage that all of these potential investors will gradually re-enter the market place, adding further price pressure on assets. Occupier and rental growth potential is vastly improved, having remained absent over the last few years and we are beginning to experience regular competition for space with the additional benefit of reduced requirement for incentives.

Investor appetite, rental growth, occupancy improvement and the availability of debt, will positively improve capital values and rental levels over the next few years, and we believe that the Company will be a beneficiary of market normalisation.

We remain confident that we will continue to grow the portfolio further over the course of the next few years, with the focus on income producing property. Our near term milestone is to establish a portfolio of assets totalling approximately £200 million, which will underpin our commitment to a progressive quarterly dividend policy going forward.

Results

We are now seeing the benefits of our strategy and our focus on criteria compliant assets that offer strong rental income with capital growth potential.

Our profits are in line with management expectations at £12.2 million and up 104% on 2014.The Company is a well-established and recognised Birmingham based, Midlands investor, with a property portfolio of £157.5 million, up 50.9% over the year, with contracted rental income at £11.9 million, up 54.5%.

The £45 million fundraising in April 2015 has been key to the growth of the Company and will underpin further growth from rental income and capital uplift potential. Our February 2016, £30 million facility at 1.75% above Libor, with RBS, will further support future acquisitions.

Our significant cash and bank facilities will allow us to grow the portfolio over the next few years, which will underpin our ability to deliver a progressive dividend policy. A new purchase in Wythall totalling £2.45 million has already been completed in Q1 2016 and we have a number of additional purchases in our pipeline.

Dividend

The Board has committed to a progressive dividend policy and an important factor in our decision to convert to a Real Estate Investment Trust (REIT) was to support our dividend policy. Our interim dividend of 1p in respect of H1 2015, was declared in September 2015 and our final dividend of 1p, provides a total dividend in respect of 2015 at 2.0p, an increase of 33%. In line with our progressive dividend policy, we will also be paying future dividends on a quarterly basis, commencing in 2016. The proposed dividend timetable is as follows:

Dividend Timetable

Finance and Banking

The banking marketplace is beginning to normalise and we now have key banking relationships with Lloyds, Aviva, Santander and Royal Bank of Scotland. These provide us with support and facilities that our present circumstances require, and all our banks have confirmed their appetite to support REI Plc further.

Outlook - Building on a successful growth strategy

We have enjoyed progressively positive results over concurrent years, together with a growing dividend payment. We anticipate continued growth in our portfolio and dividend in 2016, and further rental and capital growth over the coming few years.

The property market place is beginning to see the financial crisis distressed assets finally being made available by the large US equity houses that acquired volume assets and loan books from the main UK lenders. These opportunities are tailor made for REI, as many of these assets cannot support traditional bank debt, require asset management and therefore are the perfect 'cash buyer's' opportunity.

We have a strong cash position and excellent secured bank facilities, including the new £30 million, 5 year facility with Royal Bank of Scotland, which together with our existing facilities, provide the platform to grow the business meaningfully and help secure additional assets that will support our progressive dividend policy as a REIT, and the growth of our portfolio to over £200 million during 2016.

Our region is in the early stages of its next phase of economic growth, underpinned by a number of supporting factors, not least, the highest level of future inward investment the region has ever seen, building on the established new business and industrial prosperity that we now enjoy and is clearly evidenced by the renewed buoyancy in new job creation across the region.

We certainly believe that our investment strategy will benefit further from the economic prosperity of the region.

REI's Regional Review

During 2015, Birmingham has enjoyed excellent regional and national attention, mainly focused on the new Grand Central station and the office relocation of HSBC, but there is much more positive activity to report.

Listed below are some key facts demonstrating the activity in 2015 across the region:

Travel & Tourism/Entertainment & Shopping

· Grand Central Station, boasting 66 new stores and restaurants, officially opens for business following its five-year, £150 million transformation

· Birmingham Airport celebrates its most successful 12 months to date, handling 10.2 million passengers, almost 5% up on 2014

Manufacturing

· A new transatlantic trade and investment deal negotiated between the EU and the USA stands to bring huge benefits to the automotive industry in the West Midlands.

· Manufacturing companies across the West Midlands are outperforming their counterparts across England, according to a new barometer from the Business Growth Service.

· Midland's car manufacturer Jaguar Land Rover has announced plans to double the size of its Wolverhampton factory in a £450 million expansion.

· Jaguar Land Rover has announced record full year global sales for 2015, with a 5% increase on the previous year having sold 487,065 vehicles around the world, double that of 2009.

Sciences, Technology, Healthcare & Education

· Software giant, Advanced Computer Software Limited invests in Birmingham and London, creating 1000 jobs over the next 18 months

· West Midlands named as a beneficiary of new funding for digital healthcare

Employment

· Employment in the West Midlands enjoyed its strongest growth in six months in November 2015, according to Lloyds Bank PMI report

· The region's 200 biggest firms provided a huge boost to the regional economy last year with almost 20,000 new jobs being created in 2015.

· The West Midlands is one of the top UK regions for jobs directly supported by the energy sector, according to a new report by EY.

Business

· The volume of deals in the Midlands rose by 17.6 per cent during 2015 as the UK enjoyed the strongest year for mergers and acquisitions (M&A) in eight years.

· Birmingham played host to more start-up companies than any city outside London in 2015, retaining its title as the most entrepreneurial regional city, with 14,152 companies registered during the year.

Property

· Birmingham ranked as the highest UK city for investment prospects in a new report by the Urban Land Institute (ULI) and PwC. 

· Birmingham named the most investable city in the UK for a second year running, ranking above Milan, London and Paris in an annual survey of European investors' intentions.

· Birmingham remains one of the hottest cities in the UK for inward investment, according to a new Bilfinger GVA report. The survey which highlights investment activity in the UK's Big Six regional cities - Birmingham, Bristol, Edinburgh, Glasgow, Leeds and Manchester - shows Birmingham is dominating the retail sector in particular.

· Take-up of office space in central Birmingham rose sharply, by 97% during the first nine months of 2015.

· The out-of-town office market in the M42 corridor saw an outstanding level of transactional activity last year. Total activity in Solihull Town Centre and throughout the area's business parks reached 489,687 sq ft across 2015, placing it well ahead of 2014's total of 419,951 sq ft, compiled by property adviser Bilfinger GVA.

· Birmingham's HSBC home is sold for £40.5 million, a prominent city centre building next to the new Grand Central shopping centre, representing a net initial yield of 4.5%.

· Office construction has hit a 13-year peak in Birmingham, with almost a million square feet being built, according to a new report by Deloitte.

Economy & Trade

· H2 2015 saw business leaders from Greater Birmingham outline over £1 billion of investment opportunities to some of China's most senior financiers, developers and institutional funders in London.

· George Osborne signs a deal along with West Midlands' leaders, creating £1 billion of government investment and putting Britain's second city and the wider West Midlands in line to be governed by a metro-mayor, and the first region outside of the north of England to sign up to a devolution deal with an elected mayor.

The REI Portfolio

Our portfolio has grown by 50.9% to £157.5 million (2014: £104.4 million) and remains spread across our geographical focus of the midlands, with a strong concentration on Birmingham City Centre and the West Midlands. As a result of institutional and UK Funds refocusing from London to UK regions, we have seen an improvement in investment values and competition for assets, and have benefited from rising values. We remain focused on assets that require active management, letting risk and refurbishment, and these assets are not targeted by institutions and funds, and we have therefore continued to build our portfolio with only limited competition, with the benefit of our cash resources and bank facilities.  

We only seek acquisitions that meet our criteria in improving locations with refurbishment and redevelopment potential, income enhancement and often within close proximity to other REI Plc owned property. We have a strong pipeline of potential new purchases and during the period, we totalled new purchases of £57.7 million and sales of £15.3 million.  

Property Acquisitions  

Throughout the year we have witnessed a discount for good high street retail across the region and we have taken advantage of this position by acquiring four high street retail investments with a combined average yield of 8.67%. In addition, we have seen good value in well located regional offices. We have acquired average net initial yields of 9.46% and capital value prices of £133 per square foot.   

40 St Pauls Square, Birmingham

We acquired this office property in March 2015. The building is located in Birmingham's Jewellery Quarter, where property values have historically traded at a discount to central business district values. The acquisition represented an initial yield of 10.19% and incorporated a vacant office suite of 1,872 square feet at the time of acquisition. Following completion of the purchase, we immediately let the vacant office suite. The property is now fully let and offers good prospects for future rental and capital growth, as the area is rapidly improving. 

36 Great Charles Street, Birmingham

In March 2015 we acquired 36 Great Charles Street, a 24,552 sq ft office building in an established but fringe city location at a cost of £1.85m, with the intention to complete a refurbishment programme. Shortly after the acquisition, we were approached by a London based property company with an offer of £2.5m for our recently acquired interest. Having considered all relevant options, we agreed to sell the asset (completing in June 2015) in order to take an immediate profit and recycle capital into alternative opportunities. 

Castlegate House, Castlegate Way, Dudley

We bought this well let modern office investment in June 2015. It is located on the entrance to a busy mixed use out of town park, with occupiers including Rentokil, Iconics, Premier Inn, Tesco Extra, Nandos and Showcase Cinema. The 21,375 square foot building is arranged over two floors to grade A specification. It is fully let to Towergate Underwriting Group Ltd, trading as Footman James, the classic car insurance specialists, on a 10 year lease from 17th November 2014, with an option to determine at year five on 17th November 2019, at a passing rent of £235,125 per annum. The property was acquired for £2.44m, which represents a net initial yield of 9.11% and a capital value of £114 per square foot, and therefore providing good medium income return with prospects for longer term capital growth.  

150 Birmingham Road, West Bromwich

Acquired from a receivership sale in May 2015, it comprises a 15,840 square foot high quality office building, with a substantial warehouse. There are a number of ancillary buildings including a small modular office building and a detached two bedroom residential property. Following acquisition, we have sold the rear element at a profit and are in the process of negotiating terms with a number of possible occupiers to take a new lease on the remaining office element.  

Virginia House, Worcester

REI Plc acquired this office in June 2015. The office building is well occupied and located in the centre of Worcester in close proximity to the expanding Heart of Worcester College. It comprises a multi-let property and let to a variety of tenants. The building comprises 15,332 square feet with a low average passing rent of £8.59 per square foot. We bought the property at a significant discount to the level which the property was marketed, equating to £78 per square foot, with strong prospects for capital performance, and a net initial yield of 10.47%.  

Brandon Court, Coventry

We bought this well-established 33,566 sq ft office park in December 2015 at a price of £5,125,000 representing an initial yield of 8.32%. The investment benefits from a strong tenant line up with 71% of the income let to blue chip tenants and WAULT of 11.5 years to expiry and 7.2 years to break options. The purchase includes a potential development plot of 0.28 acre, which offers scope for future added value.  

Bearwood Shopping Centre, Smethwick

In May 2015, the company acquired Bearwood Shopping Centre, in Smethwick for a total consideration of £8.65 million, reflecting a net initial yield of 7.49%. The 58,268 sq ft retail parade comprises a major food store and nine retail units with the additional benefit of a 120 space surface car park. Occupiers include Aldi, Argos, Poundland, Greggs, Card Factory and Lloyds Pharmacy, with a WAULT of 10.5 years. 

Acocks Green Shopping Centre, Acocks Green, Birmingham

In August 2015 we acquired Acocks Green Shopping Centre for £8.0 million from NAMA. The property comprises a 60,457 square foot retail scheme in Acocks Green on the outskirts of Solihull and Birmingham, providing an income of £808,084 and a yield of 10.48% at purchase. The scheme is anchored by Wilkinson, Boots, Argos and Lloyds Bank, with a WAULT at purchase of 3.7 years.  

Jasper Retail Park, Tunstall, Stoke on Trent

Our retail warehouse acquisition during the reporting period includes Jasper Retail Park, Tunstall which was acquired in September 2015 for £11 million which represents an initial yield of 7.68%. The 72,149 sq ft retail warehouse scheme comprises six retail warehouse units and is let to Matalan, Argos, Next, Shoezone and Pizza Hut. The property was marketed at a higher level and the purchase price represents a discount, with good prospects for capital improvement through market demand for this type of investment.  

Property Sales

As our portfolio grows, we are beginning to recycle more capital and this year £15.3 million of cash proceeds were realised through five disposals, where it was deemed that our asset management strategy had been completed or that the risk profile had changed. Sales included historic non-core assets and all properties were sold at levels above our book value. 

With rising demand from institutional investors, the Birmingham office investment market has witnessed significant capital value improvement in the recent past. REI Plc has taken advantage of improving investor demand with the sale of 85-89 Colmore Row, Birmingham, for £7.4 million, having acquired the building in December 2012 for £4m.

During 2015 we sold five properties:

· One of which was a core asset (85-89 Colmore Row)

· Two were outside the region (non-core portfolio)

· Two were fully occupied and had therefore reached their full strategic potential 

Our strategic view going forward is to retain existing assets for income and future capital growth and to grow our overall portfolio and generate significant income to support our growing dividend policy.

Our Stakeholders

As always, our continued progress has only been possible due to the support of our staff, advisers, tenants and shareholders, for which we thank them and look forward to the continued growth and prosperity of REI Plc.

John Crabtree Paul Bassi

Chairman Chief Executive

11 March 2016 11 March 2016

Finance Director's Report

Overview

Our main objectives for the year were to allocate the proceeds of the placing of £45 million raised in April of this year, continue our progressive dividend policy, and increase our profit before tax, earnings per share and net assets per share. All of these objectives have been achieved.

Results for the year

Profit before tax (IFRS) totalled £12.2 million (2014: £6.0 million), buoyed by a surplus on sale of investment properties of £1.7 million (2014: £277,000) and a surplus on revaluation of investment properties of £8.6 million (2014: £6.8 million), together with a profit on the market value of our interest rate hedging instruments of £669,000 (2014: loss £1.4 million).

In April 2015 we raised £45 million (£43.7 million net of expenses) to capitalise on the market opportunities that were evident to us, which we then used to acquire investment properties totalling £57.7 million during the year on criteria compliant properties. Rental income for the year was up 38% to £8.4 million (2014: £6.1 million) but the full benefit of these purchases will be realised in 2016. The investment properties are revalued externally at 31 December and generated a surplus on revaluation of £8.6 million.

The decision to dispose of certain properties during the year resulted from properties reaching maturity, receiving an offer that could not be refused and continuing to dispose of the "legacy" portfolio which we inherited and is out of area.

We continue to review our overhead base and administrative expenses of £3.1 million (2014: £2.5 million) rose mainly as a result of increase in employee numbers, a bonus provision plus employers' National Insurance of £732,000 (2014: £627,000) and a provision for costs of the Long Term Investment Plan of £300,000 (2014: £Nil).

Interest costs for the year reduced to £2.6 million (2014: £2.7 million) and the weighted average cost of debt also reduced to 5.9% (2014: 6.0%) as a result of paying off loans at expensive rates on the disposal of certain properties and the new facility taken out with Santander during the year at 2.25% over LIBOR. In February 2016 the Group agreed a new £30 million facility with Royal Bank of Scotland at 1.75% above LIBOR, which will again assist in reducing the average cost of financing costs.

Earnings per share rose to:

Basic - 7.46p (2014: 4.05P)

Diluted - 7.40p (2014: 4.05p)

EPRA - 0.8p (2014: loss 0.4p)

Shareholders' funds increased to £117.6 million at 31 December 2015 (2014: £64.6 million) and the NAV per share increased:

Basic NAV - 63.1p (2014: 57.9)

EPRA NAV - 64.4p (2014: 61.3p)

EPRA NNNAV - 62.6 (2014: 57.9)

Finance and banking

Total drawn debt at 31 December was £44 million (2014: £43 million) with undrawn facilities of £2 million (2014: £Nil). As previously mentioned, during the year the Group agreed a new £9 million facility with Santander at 2.25% above LIBOR and in February 2016 a new £30 million facility with Royal Bank of Scotland at 1.75% above LIBOR. The weighted average cost of debt was 5.9% (2014: 6.0%) and the weighted average debt maturity was 5.8 years (2014: 6.3 years). The loan to value (LTV) at 31 December was 28.0% (2014: 41.2%) and the LTV net of cash was 22.4% (2014: 35.2%).

Long Term Incentive Plan (LTIP)

On 8 June 2015 the terms of the LTIP were revised and previous options cancelled. The LTIP is designed to promote retention and to incentivise the executive directors to grow the value of the Group and to maximise returns. A provision has been made in the accounts of £300,000 (2014: £Nil) in respect of the LTIP.

Taxation

The Group converted to a Real Estate Investment Trust (REIT) on 1 January 2015. Under REIT status the Group does not pay tax on its rental income profits or on gains from the sale of investment properties. The tax charge for the year is in respect of bank interest received and the movement on the deferred tax asset in respect of the financial instruments. The Group continues to meet all of the REIT requirements to maintain REIT status.

Dividend

Under the REIT status the Group is required to distribute at least 90% of rental income taxable profits arising each financial year by way of a Property Income Distribution (PID). An interim dividend of 1p per share was paid in October and the Board proposes a final dividend of 1p per share payable in April 2016 making a total of 2p for the year (2014: 1.5p) an increase of 33%. Both of these dividends were paid as ordinary dividends and the allocation of future dividends between PID and non PID will continue to vary.

As a result of the increase in the Group's shareholding following the placing in April 2015 the dividend was not totally covered for 2015 but following the acquisition of investment properties of £57.7 million during the year, future dividends will be fully covered.

Post Balance Sheet Event

In February 2016 the Group arranged a new £30 million facility with Royal Bank of Scotland at 1.75% above LIBOR, which will be used to continue the acquisition of criteria compliant investment properties in the current year.

Marcus Daly

Finance Director

11 March 2016

Real Estate Investors plc

Consolidated statement of comprehensive income

For the year ended 31 December 2015

The results of the Group for the period related entirely to continuing operations.

Real Estate Investors plc

Consolidated statement of changes in equity

For the year ended 31 December 2015

Real Estate Investors plc

Consolidated statement of financial position

At 31 December 2015

Real Estate Investors plc

Consolidated statement of cash flows

For the year ended 31 December 2015

NOTES:

Cash and cash equivalents consist of cash in hand and balances with banks only.

Real Estate Investors plc

Notes to the preliminary announcement

For the year ended 31 December 2015

1. Basis of preparation

The consolidated financial statements have been prepared under the historical cost convention, except for the revaluation of properties and financial instruments held at fair value through the profit and loss account, and in accordance with International Financial Reporting Standards (IFRS) adopted by the European Union.It should be noted that accounting estimates and assumptions are used in preparation of the financial statements. Although these estimates are based on management's best knowledge and judgement of current events and actions, actual results may differ from those estimates. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are set out in the Group's annual report and financial statements.

The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries made up to 31 December each year. Material intra-group balances and transactions, and any unrealised gains arising from intra-group transactions, are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

The principal accounting policies are detailed in the Group's annual report and financial statements.

Going concern

The Group has prepared and reviewed forecasts and made appropriate enquiries which indicate that the Group has adequate resources to continue in operational existence for the foreseeable future. These enquiries considered the following:

· the significant cash balances the Group holds and the low levels of historic and projected operating cashflows

· any property purchases will only be completed if cash resources or loans are available to complete those purchases

· the Group's bankers have indicated their continuing support for the Group. The Group's £20 million facility with Lloyds Banking Group is due for renewal in October 2016. Whilst the process of agreeing terms for the renewal of these facilities, which would be subject to credit approval, documentation and due diligence, has not commenced at the present time the bank have confirmed the intention to roll the facilities at a similar level for a period of three to five years from the expiry of the facilities.

· In February 2016, the Group agreed a new £30 million facility with Royal Bank of Scotland

For these reasons, the directors continue to adopt the going concern basis in preparing the financial statements.

2. Gross profit

3. Earnings per share

The calculation of earnings per share is based on the result for the year after tax and on the weighted average number of shares in issue during the year.

Reconciliations of the earnings and the weighted average numbers of shares used in the calculations are set out below.

The European Public Real Estate Association indices below have been included in the financial statements to allow more effective comparisons to be drawn between the Group and other business in the real estate sector.

EPRA EPS per share

EPRA NAV per share

4. Investment properties

Investment properties are those held to earn rentals and for capital appreciation.

The carrying amount of investment properties for the periods presented in the consolidated financial statements is reconciled as follows:

5. Publication

The financial information set out in this preliminary announcement does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. The consolidated statement of financial position at 31 December 2015 and the consolidated statement of comprehensive income, the consolidated statement of changes in equity, the consolidated statement of cash flows and the associated notes for the year then ended have been extracted from the Group's financial statements upon which the auditor's opinion is unqualified and does not include any statement under section 498 of the Companies Act 2006. The statutory accounts for the year ended 31 December 2015 will be delivered to the Registrar of Companies following the Group's Annual General Meeting.

6. Copies of the announcement

Copies of this announcement are available for collection from the Company's offices at 2nd Floor, 75-77 Colmore Row, Birmingham, B3 2AP.