REG - Regional REIT Ltd - Q4 Dividend, Year End Valuation and Trading Update

Regional REITAnnouncement

20/02/2025 07:15

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RNS Number : 7756X  Regional REIT Limited  20 February 2025

20 February 2025

REGIONAL REIT Limited

("Regional REIT" the "Group" or the "Company")

Q4 Dividend, Year End Valuation and Trading Update

2024 Lettings 13.5% Above ERV

Regional REIT (LSE: RGL) today announces its portfolio valuation as at 31
December 2024, Q4 dividend and a positive update for both EPC ratings and rent
collections.

Trading Update

The Group traded robustly during 2024 completing 61 new lettings totalling
£3.2m rent roll, with these lettings being 13.5% above 2023 ERV.

Full Year 2024 Valuation and Portfolio Update

·    The like-for-like value of the portfolio decreased by 8.2% from 1
January 2024 to 31 December 2024, after adjusting for capital expenditure,
acquisitions and disposals during the period (7.1% excluding capital
expenditure adjustment); a decrease of 3.1% in the period 1 July 2024 to 31
December 2024

·    Portfolio valuation £622.5m (2023: £700.7m), with disposals
amounting to £30.8m (before costs) during 2024 in line with their respective
sale valuation dates (2023: £26.1m)

·    Net loan-to-value ratio 41.8% (2023: 55.1%)

·    Gross annualised rent roll £60.7m (2023: £67.8m); ERV £83.2m
(2023: £87.0m)

·    Total rent collection to date for 2024 has remained high at 98.1%
compared with 98.4% for 2023

·    Excellent progress on EPC ratings with c.82.7% (2023: 73.7%) of the
portfolio EPC C or better

·    126 properties (2023: 144); 780 tenants (2023: 978)

·    England represented 77.1% (2023: 78.4%) (by value), Scotland 16.6%
(2023: 16.2%) and Wales 6.3% (2023: 5.4%)

·    EPRA Occupancy (by ERV) at 77.5% (2023: 80.0%)

·    Average lot size c. £4.9m (2023: c. £4.9m)

·    Gross borrowings £316.7m (2023: £420.8m); cash and cash equivalents
£56.7m (2023: £34.5m)

·    Group cost of debt (incl. hedging) decreased to 3.4% pa (2023: 3.5%
pa) -100% fixed and hedged ensuring the maximum cost of debt in 2025 will not
exceed 3.4%

·    Weighted average debt duration 2.9 years (2023: 3.5 years)

 

Stephen Inglis, Head of ESR Europe LSPIM Ltd., the Asset Manager, commented:

"2024 has been another challenging year for the property market, the REIT
sector and the regional office market. Undoubtedly, we are beginning to see
improvement in sentiment in the UK office market and companies' attitudes to
staff attendance in the office. This will result in enhanced rents for the
quality accommodation that Regional REIT provides and improving occupancy
levels following our Capex programme, leading to an improved net income
position.

With the restated strategy of Regional REIT continuing to be a high dividend
paying REIT, coupled with an additional focus on pursuing added capital value
through initiatives such as obtaining higher value planning consents, this
does mean we are holding some vacant and part vacant assets for longer, which
does have a short term impact on occupancy and net income. It is expected that
the value improvement upside will be substantial on those assets.

The Company's LTV remains a core focus for the Board, and the management
continues to pursue options to reduce this, with all the Company's debt
remaining 100% fixed and hedged to ensure that the maximum cost does not
exceed 3.4%.

We look forward to updating shareholders on additional progress made by the
Company's management team at the Company's full year results in March."

Capital expenditure programme

Further to the 13 November 2024 announcement, an additional two capital
projects have been approved for £1.5m resulting in ten current projects
involving a total investment of £16.5m.

Highlight:

 

·    Capitol Park, Leeds - £1.2m deal led refurbishment of Truman House
(10,297 sq. ft). delivering an annual rent of £0.3m (£23.09 /sq.ft.), an
expected valuation uplift of c.£1.8m and raising the rental tone benefiting
other assets in the Company's portfolio at this location.

 

Q4 2024 Dividend Declaration

As previously indicated, the Company is pleased to declare that it will pay a
dividend of 2.2 pence per share ("pps") for the period 1 October 2024 to 31
December 2024. The entire dividend will be paid as a REIT property income
distribution ("PID").

 

Shareholders have the option to invest their dividend in a Dividend
Reinvestment Plan ("DRIP"), and more details can be found on the Company's
website:
https://www.regionalreit.com/investors/investors-dividend/dividend-reinvestment-plan
(https://www.regionalreit.com/investors/investors-dividend/dividend-reinvestment-plan)
.

 

The key dates relating to this dividend are:

 

 Ex-dividend date            27 February 2025
 Record date                 28 February 2025
 Last day for DRIP election  14 March 2025
 Payment date                04 April 2025

 

Prior to the capital raise and share consolidation* the Company declared a Q1
2024 dividend of 1.2pps. Post the capital raise and subsequent share
consolidation the Company declared a Q2 2024 dividend of 2.2pps on 10
September 2024, Q3 2024 dividend of 2.2pps on 13 November 2024 and is now
declaring a Q4 2024 dividend of 2.2pps.

 

*On 29 July 2024, the shares in issue were consolidated by ratio of 1 new
share for every 10 shares.

 

The level of future payment of dividends will be determined by the Board
having regard to the UK REIT requirements, the financial position and
performance of the Group at the relevant time, the interest of shareholders
and the long-term future of the Company.

 

EPC update

During the quarter we have continued to improve the portfolio EPC ratings and
the Company remains on target to achieve EPC B rating by 2030 in accordance
with current guidelines.

 

 Rating             31-Dec-23  31-Dec-24  Movement
 B plus and Exempt  42.1%      57.7%      +15.6pps
 C                  31.6%      25.0%      (6.6)pps
 D                  15.7%      11.0%      (4.7)pps
 E and below        10.6%      6.3%       (4.3)pps

 

Tables may not sum due to rounding.

pps: percentage points

 

Further Background Information

Lettings Update - Summary of Activity since 30 September 2024:

Since 30 September 2024, notable new lettings:

·    1-4 Llansamlet Retail Park, Cardiff - Dreams Ltd. has let 10,139 sq.
ft. of space to December 2034 at a rental income of £192,641 (£19.00/ sq.
ft.)

·    Global Reach, Cardiff - Relx UK Ltd. has renewed existing lease for
7,954 sq. ft. of space to October 2029 at a rental income of £107,379
(£13.50/ sq. ft.)

·    14-16 Rossmore Business Village, Ellesmere Port - The Alexander Beard
Group of Companies Ltd. has renewed existing lease for 4,369 sq. ft. of space
to October 2034 with a break option in 2030, at a rental income of £61,200 pa
(£14.00/ sq. ft.).

·    The Royals, Altrincham Road, Manchester - The Golfers Club U.K. Ltd.
has renewed existing lease for 5,470 sq. ft. of space to December 2025 with a
break option in March 2025, at a rental income of £82,050 pa (£15.00/ sq.
ft.).

·    Bear Brook Office Park, Aylesbury- Ulrich Attachments Ltd. has let
3,347 sq. ft. of office space to November 2034 with the option to break in
2029, at a rental income of £51,500 pa (£15.39 / sq. ft.).

·    Mandale Business Park, Durham - NHS Property Services Ltd. has
renewed existing lease for 5,100 sq. ft. of space to November 2034 with a
break option in 2029, at a rental income of £58,750 pa (£11.52/ sq. ft.).

·    Woodlands Court, Bristol - Routeco Ltd. has let 2,881 sq. ft. of
office space to November 2034 with the option to break in 2029, at a rental
income of £54,739 pa (£19.00 / sq. ft.).

 

Sales

Total disposals in the year to 31 December 2024 amounted to £30.8m (before
costs), in line with their respective sale valuation dates and reflecting a
net initial yield of 8.3% (10.6% excluding vacant units).

Subsequent Events summary post 31 December 2024

Since the quarter end, the Group has successfully completed the following
sales:

 

·    Three sales completed totalling £1.6m (before costs), 11.1% above
pre-sale valuations.

Sales

The controlled asset disposal programme will continue to assist in the
reduction of the LTV. It currently comprises of 43 sales totalling c £104.3m:

·    2 disposals contracted for c. £2.6m

·    4 disposals totalling c. £12.3m under offer and in legal due
diligence

·    2 further disposals totalling c. £3.2m are in negotiation

·    12 further disposals totalling c. £21.3m are on the market

·    23 potential disposals totalling c. £64.9m are being prepared for
the market

 

Forthcoming Events

25 March 2025            Full year 2024 Preliminary Results
Announcement

15 May 2025               Q1 2025 Trading Update and Outlook
Announcement

                                    Q1 2025
Dividend Declaration Announcement

15 May 2025               Annual General Meeting

 

Note: All dates are provisional and subject to change.

 

 

- ENDS -

 

Enquiries:

 

 Regional REIT Limited
 Press enquiries through Burson Buchanan

 ESR Europe Private Markets Limited                         Tel: +44 (0) 203 831 9776
 Investment Adviser to the Group
 Adam Dickinson, Investor Relations, Regional REIT Limited

 ESR Europe LSPIM Limited                                   Tel: +44 (0) 141 248 4155
 Asset Manager to the Group
 Stephen Inglis

 Burson Buchanan Communications                             Tel: +44 (0) 20 7466 5000
 Financial Communications
 Charles Ryland, Henry Wilson, Samuel Adams

 

About Regional REIT

Regional REIT Limited ("Regional REIT" or the "Company") and its
subsidiaries (the "Group") is a United Kingdom ("UK") based real estate
investment trust that launched in November 2015. It is managed by ESR Europe
LSPIM Limited, the Asset Manager, and ESR Europe Private Markets Limited, the
Investment Adviser.

 

Regional REIT's commercial property portfolio is comprised wholly of income
producing UK assets, predominantly offices located in the regional centres
outside of the M25 motorway. The portfolio is geographically diversified, with
126 properties, 1,271 units and 780 tenants as at 31 December 2024, with a
valuation of c.£622.5m.

 

Regional REIT pursues its investment objective by investing in, actively
managing and disposing of regional Core and Core Plus Property assets. It aims
to deliver an attractive total return to its Shareholders, targeting greater
than 10% per annum, with a strong focus on income supported by additional
capital growth prospects.

 

The Company's shares were admitted to the Official List of
the UK's Financial Conduct Authority and to trading on the London Stock
Exchange on 6 November 2015. For more information, please visit the Group's
website at www.regionalreit.com (http://www.regionalreit.com/) .

 

LEI: 549300D8G4NKLRIKBX73

 

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