Midlands-focused Real Estate Investors has offered an upbeat outlook on out-of-town offices, predicting stronger occupier demand as the second lockdown looms.
The REIT highlighted that its office portfolio, which is almost entirely out-of-town, posted “improved demand as occupiers seek to provide a safe and convenient environment for their employees without the need for unnecessary use of public transport or city centre commutes”.
It therefore expected “strong ongoing demand and the potential for rental growth and capital appreciation”.
The occupancy level across its portfolio stood at 93%, while its WAULT is nearly 4.9 years to break after recent tenant negotiations, up from 3.8 years at the end of last year.
The investor also highlighted “a number of tenants that continue to delay paying and are taking full advantage of government restrictions on landlords”.
The firm said: “These tenants have the ability to pay but are refusing to do so while these rules are in force, though some of them have now engaged in a dialogue and have agreed settlement arrangements.”
The REIT has so far collected 89.9% of rent owed for the September quarter, including 4.6% in deferrals.
Its rent collection for March is now 93.4%, including 10.4% deferrals. This has risen from 90.7% reported in September.
Total collection rates for June are also up, to 90.2%. This includes 4.6% deferrals.
Chief executive Paul Bassi said: “We remain confident that occupier demand for our assets will continue and we are mindful that the current environment may create opportunistic sales and acquisitions for the group.”
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