REI launches £100m Midlands vulture fund

A Midlands property company are refusing to let the recent news about ‘credit crunches’, ‘recessions’ and slowing property markets and committing £100m to buying commercial property

Real Estate Investors plc is bucking the trend and committing £100m to purchasing commercial property in the region.
REI has refinanced part of its debt-free property portfolio, raising a further £20m through the Birmingham office of Bank of Scotland to provide a total war chest of £100m to target commercial property in the Midlands.

Through his private company Bond Wolfe Assets, Midlands investor Paul Bassi owns 20.47 percent of REI having continued to purchase shares in the group throughout 2007.

Mr Bassi said: “Despite the credit crunch and the reluctance of some banks to fund commercial property, REI has refinanced part of its debt-free property portfolio and released a further £20m which, together with existing cash and bank facilities, will provide it with £100m of firepower to capitalise on commercial property opportunities in the present market, effectively creating a specialist regional vulture fund.”

Mr Bassi pointed out that Scottish Widows, Norwich Union, New Star, Aegon and many other funds have been selling commercial property investments at a rate significantly below valuation in order to release funds to their policy holders.
The lack of liquidity in the market, and with banks reducing their appetite to lend to the property sector, is providing opportunities for those companies with cash and bank facilities to capitalise on this downturn.

Mr Bassi said: "REI remains committed to growing its investment base in the Midlands. The property fundamentals of high occupancy demand and low interest rates provide an ideal opportunity to acquire quality commercial property.
“Additionally, we have a very volatile stock market and I believe that investors will return to the stability and safety of quality bricks and mortar.

"We received several offers of funding from other banks to support our strategy and decided to partner with Bank of Scotland with whom I have worked for a number of years."

Steve George, Bank of Scotland's Area Director for Real Estate, said: "We have been in close dialogue with Real Estate Investors since Paul Bassi become Chief Executive Officer, and we have worked with Mr Bassi on a number of transactions in the past for Bond Wolfe.

"Mr Bassi has an excellent track record in adding value to properties of this nature - the right properties in the right locations.

"We fully believe in his strategy for REI. Occupier demand is there and there is potential to improve income streams where properties acquired have been unloved by previous owners.

"Against the current background of market uncertainty, at Bank of Scotland we remain firmly open for business for the right borrowers and good propositions will always be supported.

Mr George led a team at Bank of Scotland which included director Mike Murphy and associate director Nigel Johns.
Property consultants DTZ advised on valuations, law firm George Green LLP advised Bank of Scotland and Challinors Solicitors provided legal advice to REI plc.