Real Estate Investors (REI) has reported improved profits in its half-year results, with a focus on the private market and the delay of larger asset sales to navigate market challenges, while prioritising debt reduction and long-term growth.
For the six months ended 30 June 2025, REI, the Midlands-focused real estate investment trust (REIT) saw a 13.6 per cent drop in revenue to £4.8 million (HY1 2024: £5.5 million), driven by asset disposals.
However, the trust, which holds a diverse commercial property portfolio, posted a pre-tax profit of £329,000, compared to a £3.1 million loss in HY1 2024.
Operating profit also improved from a £1.7 million loss in the same period last year, to £1.5 million, and cash reserves rose to £6.1 million from £5.4 million.
While the office market remains under pressure, REI noted renewed interest in retail and other sectors, supported by positive occupier demand and rental growth.
With larger institutional investors and funds “absent”, the trust “refrained” from placing larger assets on the open market in HY1 2025, instead focusing on the private investor and owner-occupier markets, where demand for smaller assets remained steady, though at a slower pace.
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The trust completed £7.7 million in property sales in the year-to-date, reducing debt by £4.3 million to £34.9 million.
An additional £3.9 million in disposals are in the pipeline, and the trust has £13.6 million of private investor stock on the open market.
Larger assets valued at £54 million are set for sale in 2026, as the trust anticipates a return of UK funds, property companies, private equity, and international buyers to the market.
Looking ahead, REI aims for full debt clearance, with plans for capital returns once debt is repaid.
Chief executive, Paul Bassi acknowledged the challenging market conditions but remained optimistic, citing the regional economy and positive outlook for smaller investor demand as interest rates decrease and lending conditions improve.
“As anticipated, HY1 2025 presented challenging conditions, which has dictated the pace of our disposals,” he said.
“Recent UK government borrowing cost increases and the uncertainty around the forthcoming budget in November are dampening sentiment and we expect some paralysis in the property market until the year end.
“However, the interest rate reductions year to date and the relaxation in bank lending criteria provides a more favourable environment for small, private investor demand.”
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