REO portfolio value declines

Treasury-Holdings backed property group Real Estate Opportunities (REO) said the value of its portfolio has decreased by 4.3 per cent since the end of February.

The group said its portfolio was valued at £1,050 million at the end of August.

The reported decrease in value was attributed to a re-evaluation adjustment, after capitalised costs of $45 million, of 3.5 per cent on average across the portfolio.

The group's UK portfolio, which is primarily comprised of Battersea Power Station, increased by 1.6 per cent during the six months under review. However, Irish portfolio values declined on average by 8.2 per cent, primarily due to currency fluctuations.

REO said the group's performance continues to be affected by the weak underlying economic environment, together with constrained liquidity in the banking sector.

It added that it is continuing to adopt a prudent approach towards the timing of its development pipeline, as discussions progress with Nama, with construction in progress on only one development project.

However, it said that as part of its longer term development strategy, it continues to seek "appropriate planning permissions which will enable it to maximise longer term growth."

The company said property income during the six months under review totalled £17 million, compared to £18 million for the same period a year earlier.

Loss after tax reduced to £45 million from £196 million while loss per share fell to 13.6 pence from 58 pence for the same period a year ago.

REO said its cash balances remain consistent at £39 million.

"As we continue to manage the business through these challenging market conditions, I am pleased to announce the significant progress made towards the financial restructuring of the group," said chairman Ray Hornsey.

"I am grateful to our lenders for their ongoing support and pleased that the group can begin to move forward on a solid footing. Plans are also advancing for the development of the Battersea Power Station, with a decision regarding the planning application anticipated in the near future," he added.