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Dear Reader,

I am pleased to say that as of 30th June 2019 Somerset Estates REIT Plc has completed its first full financial year as a Real Estate Investment Trust. I am also pleased to announce its first set of interim results as a listed Real Estate Investment Trust for six months to 31st December 2018 which can be found here: www.somersetestatesreit.co.uk/investors and here: https://www.tisegroup.com/market/companies/6328

FINANCIAL HIGHLIGHTS

  • Rental income for the first six months of the year has increased from £163,723 to £185,440.
  • Gross Profit for the first six months of the year has increased from £105,535 to £146,770

Somerset Estates REIT focusses on acquiring, renting out and managing properties within the UK Private Rented Sector (PRS). The aim of the Company is to acquire high yielding buy-to-let properties from landlords wishing to exit the sector as a result of tax and regulatory changes, and developers.  Somerset provides a platform from which an extensive portfolio of private rented properties can be operated with additional housing stock introduced at low marginal cost.

Investing in Somerset Estates REIT provides investors with exposure to the PRS sector. Investment returns are magnified through the REIT structure where no corporation tax is payable, provided 90% of rental income is distributed by way of dividend.  This enables a property portfolio to be grown in a vehicle which is inherently transparent whilst reducing transaction costs and ongoing management fees.

MARKET OVERVIEW

The impact of the ongoing Brexit saga appears to have already been filtered through the housing market where prices have been depressed but are now stabilising. However, the UK residential property market continues to be as tricky to predict as the English summer weather. There are glimmers of sunshine poking through the cloudy skies. UK employment remains buoyant with mortgage approvals in April 2019 experiencing a year on year growth of 3.8% (Bank of England). House prices appear to be remaining stable with a year on year growth of 1.4% in March 2019 (UK House Price Index), albeit there was a 0.2% fall from the previous month. The current average UK house price is £226,798. Transaction levels remain stable with 99,420 residential property transactions taking place in April 2019 (HMRC) - in line with the long-term average.

The prospects for the buy to let market remain mixed. Whilst house prices and rents remain stable, tax changes to mortgage interest relief announced in 2015 will start to impact in 2019 / 20. In addition, the tenant fees ban was introduced on the 1st June 2019, this will for landlords be a further nail in the buy to let coffin.

    CORPORATE ACTIVITY

    The Company continues to have discussions with Parties regarding the acquisition of portfolios of PRS housing. Further announcements will be made in due course.

    OUTLOOK

    The Board is looking at a number of ways to grow the company including equity fundraising and Joint Venture opportunities. As mentioned we look forward to updating Shareholders.