The continuing regional recovery in the commercial property market sends Birmingham-focused Real Estate Investors (REI:AIM) 1.5% higher to 64p.

The shops and offices-focused real estate investment trust (Reit) reported strong growth for 2015 and management expect more to come.

Net asset value (NAV) improved 5% to 64.5p during the year, while rental income was 38% higher at £8.4 million compared to the £6.1 million collected in 2014.

This helped push pre-tax profit 104% higher to £12.2 million enabling management to recommend a 33% hike in the total dividend to 2p a share, the equivalent of a 3.1% yield.

Web - Real Estate Investors - 14 March 2016

Inward investment into the region gives management confidence that further valuation gains are coming.

To capitalise on this upbeat outlook the Reit secured a £30 million loan in February 2016 to fund acquisitions.

Analysts at Liberum share management’s optimism of a positive outlook in the West Midlands’s property market. ‘Distressed assets are coming to market and an institutional buying pause aids Real Estate Investors’ prospect to achieve its £200 million targeted portfolio value.'

Real Estate Investors' gross assets totaled £157.5 million at the end of 2015.

Liberum says there is a lack of material office development in the West Midlands. 'The prospects for rental growth remain positive. New supply is beginning to emerge but it will take time to materialise and, in the interim, take-up is high with availability low.'

It says rental growth in Birmingham offices has jumped by 5.7% over the past 12 months, outpacing both London (+5.1%) and the UK as a whole (+3.3%).

Issue Date: 14 Mar 2016