Mailbox REIT PLC held its interim dividend steady as it reported rent collection back at pre-Covid levels and further valuation increases in the second quarter, saying it is exploring avenues to mitigate the rising cost of debt.
After BBC Birmingham yesterday announced that it plans to leave the Mailbox building at the end of its current lease in June 2026, chairman Stephen Barter said this provided an opportunity for the Mailbox to refurbish the space and “drive the rental value and capture the reversionary potential of the space”.
“We now have until the end of June 2026 to make alternative arrangements and are fully confident that we will be able to re-let the space ahead of that time,” he said in a half-year trading statement.
“With the BBC no longer in occupation, it will make our pathway to net zero more achievable."
He said one of the main themes for Mailbox in the past quarter has been implementing ESG initiatives in line with occupier demand.
Another milestone in the period was the opening in May of the new flexible workspace operated under IWG's Spaces brand, using 50,000 sq ft of surplus retail space within the building.
With more than 30% occupancy already, Barter said this was ahead of expectations.
Taking into account the opening of the Spaces facility, Mailbox as a whole saw a property's valuation uplift for the fifth consecutive quarter since the IPO, climbing 2% over the three months to end-June to £192.3mln, according to an independent fair valuation.
As of 19 July 2022, the group said it had collected 94.0% of the contractual rents for the quarter commencing 24 June, with 99.7% now received for the quarter commencing 25 March.
Barter said the company was "well aware of the emerging economic headwinds and inflationary environment, which has led to an increase in the cost of debt. The board is currently exploring appropriate avenues to mitigate these challenges.
"Nevertheless, we have been able to hold the quarterly dividend at the target level.
"The current limited supply of grade A space within the city, and the constrained new development pipeline because of inflation and supply chain challenges, provides a very supportive leasing environment. These factors further underline our confidence."