REI Regulatory News (RLE)

15 June 2020

Real Estate Investors Plc

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

Update on Trading and Dividend

Real Estate Investors Plc (AIM: RLE), the UK's only Midlands-focused Real Estate Investment Trust (REIT) with a diversified portfolio of 1.59 million sq ft of investment property across all sectors, provides the following update on trading and dividend for 2020.

Rent Collection & Lease Events

Our diverse and stable property portfolio has performed well, despite the extremely challenging market conditions and unhelpful government restrictions placed on commercial landlords. Rent collection for the March quarter so far is 81% and we remain in a dialogue with occupiers whose payments remain overdue many of whom are waiting for their businesses to re-open or are taking advantage of the 90-day government payment rule. However, we anticipate that we will agree the repayment of any outstanding arrears alongside their ongoing rental payments.

The last three months have been an active period with Covid-19 related negotiations on rent being agreed alongside lease extensions, which has resulted in 18 new lease events, leading to an improvement in our WAULT (Weighted Average Unexpired Lease Term) to 4.96 years to break and 6.63 years to expiry (31 December 2019: 3.82 years to break and 5.79 years to expiry). These agreements should act as a catalyst for some valuation gain or at least assist in combatting downward valuations.

As at the date of this announcement, our portfolio consists of 58 assets and 277 occupiers, with £17.3 million contracted rental income and occupancy at 95.14% (31 December 2019: occupancy 96.3%). Our diversified portfolio ensures that we have no material reliance on any single sector, asset or tenant, with our largest sector (by rental income) being offices at 38.12% and our largest occupier being the government at 7.98%.

Dividend Policy & Payment

As a Real Estate Investment Trust (REIT), we are required to pay 90% of the Company's rental taxable profit in dividends to shareholders. REI currently pays in excess of the required level of dividend.

As stated in our recent trading update on 8 April 2020, the Board is very mindful of the ongoing uncertainties surrounding the Covid-19 pandemic and the potential for the markets in which we operate to deteriorate. The Board has therefore decided to reduce quarterly dividend payments and leave the option to make a larger final quarter dividend payment to be decided once the financial year has been completed.

As such, REI will now pay a 0.5p per share Q1 dividend, with the expectation that this will also be the level of dividend for Q2 and Q3. As stated above, the Board retains the option to make a larger final quarter dividend payment following the year end. The Board has not taken this decision lightly, and looks forward to the resumption of sustainable dividend growth, as soon as it is prudent to do so.

The Board confirms that the Q1 dividend for 2020 of 0.5p per share, will be paid on 24 July 2020, to all shareholders on the register as at 26 June 2020, with an ex-dividend date of 25 June 2020. This will be paid as a Property Income Distribution. 

Paul Bassi, CEO of Real Estate Investors Plc, commented:

"The diversity of our portfolio combined with our close working relationships with our tenants and their advisers, together with managements' in-depth knowledge of the regional marketplace, continues to be the strength of our business model. That said, given the current market environment, it is appropriate that we act prudently and a logical precaution is to reduce dividend payments during the course of the year leaving the option to make a larger final payment, if the Company is able to continue to maintain its current resilience."

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About Real Estate Investors Plc

Real Estate Investors Plc is a publicly quoted, internally managed property investment company and REIT with a portfolio of 1.59 million sq ft of mixed-use commercial property, managed by a highly-experienced property team with over 100 years of combined experience of operating in the Midlands property market across all sectors. The Company's strategy is to invest in well located, real estate assets in the established and proven markets across the Midlands, with income and capital growth potential, realisable through active portfolio management, refurbishment, change of use and lettings. The portfolio has no material reliance on a single asset or occupier. On 1 January 2015, the Company converted to a REIT. Real Estate Investment Trusts are listed property investment companies or groups not liable to corporation tax on their rental income or capital gains from their qualifying activities. The Company aims to deliver capital growth and income enhancement from its assets, supporting its dividend policy, which has enjoyed 7 years of consecutive growth. Further information on the Company can be found at www.reiplc.com

Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.