TIDMRGL
RNS Number : 8584S
Regional REIT Limited
09 November 2023
9 November 2023
REGIONAL REIT Limited
("Regional REIT", the "Group" or the "Company")
Q3 2023 Trading Update, Dividend Declaration & ESG
Update
6.2% uplift in rent renewal income
Regional REIT Limited (LSE: RGL), the regional property
specialist, is pleased to announce a trading update for the period
from 1 July 2023 to 30 September 2023 and a dividend declaration
for the third quarter of 2023. Additionally, the Group provides an
update on its positive ESG progress, with a notable strengthening
of its EPC and GRESB rating.
Q3 2023 Trading Update
The Group continued to trade well during the period under review
and has made good progress, completing a number of lease renewals
during the quarter. Retention remained high with 73.2%(*) of units
up for renewal let to the same tenants. Renewals achieved a 6.2%
uplift in rental income.
Since 1 January 2023, the Group has exchanged on 56 leases to
new tenants totalling 96,355 sq. ft. and GBP1.6m per annum ("pa")
of rental income when fully occupied, achieving a rental uplift of
11.3% against December 2022 ERVs. Of this total, 13 leases have
been exchanged since 30 June 2023, totalling 25,859 sq. ft. and
will provide GBP0.4m pa of additional rental income.
Including the letting announced on 31 October 2023 at Norfolk
House to Global Banking School Ltd the year-to-date total let space
amounted to 125,738 sq. ft., providing GBP2.1m pa of additional
rental income.
* Includes tenants that are currently holding over, lease
renewals, and the acquisition of new replacement tenants.
Portfolio Highlights as at 30 September 2023:
-- 150 properties, 1,533 units and 1,021 tenants, totalling
c.GBP752.9m(**) of gross property assets value
-- Offices (by value) were 92.9% of the portfolio (31 December
2022: 91.8%), Retail 3.5% (31 December 2022: 3.6%), Industrial 2.1%
(31 December 2022: 3.1%) and Other 1.5% (31 December 2022:
1.4%)
-- Group cost of debt (incl. hedging) 3.5% pa (31 December 2022:
3.5% pa) - 100% fixed and hedged ensuring the maximum cost of debt
will not exceed 3.5%
-- Rent roll of GBP68.0m (30 June 2023: GBP69.8); ERV GBP88.7m (30 June 2023: GBP88.9m)
-- England & Wales represented 83.5% (31 December 2022:
83.3%) of the portfolio with the remainder in Scotland
-- EPRA Occupancy (by ERV) 80.7% versus 82.5% as at 30 June
2023; 30 September 2023 like-for-like (versus 30 September 2022)
EPRA occupancy was 80.7% (85.5%)
-- Average lot size c. GBP5.0m (31 December 2022: c. GBP5.1m)
-- Net loan-to-value ratio c. 52.6%(**) (30 June 2023: 51.9%)
-- Weighted average debt duration 3.8 years, with the earliest
borrowing maturity date being August 2024
-- Cash and cash equivalent balances GBP32.6m (31 December 2022: GBP50.1m)
-- Gross borrowings GBP428.5m (31 December 2022; GBP440.8m)
** Gross property assets value based upon Colliers valuations as
at 30 June 2023, adjusted for subsequent acquisitions, disposals
and capital expenditure in the period.
Q3 2023 Dividend Declaration
As previously indicated, the Company is pleased to declare that
it will pay a dividend of 1.20 pence per share ("pps") for the
period 1 July 2023 to 30 September 2023, (1 July 2022 to 30
September 2022: 1.65pps). 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
.
The key dates relating to this dividend are:
Ex-dividend date 16 November 2023
Record date 17 November 2023
-----------------
Last day for DRIP election 19 December 2023
-----------------
Payment date 12 January 2024
-----------------
Further to the announcement made on the 12 September 2023, the
Board will target a dividend of 5.25pps for the full year 2023
(2022: 6.6pps), which equates to an annualised dividend yield of
19.2% at the closing price per share on 8 November 2023.
ESG Update
During the quarter the portfolio EPC ratings continued to
improve, and the Company remains on target to achieve EPC B rating
by 2030 in accordance with current guidelines.
Rating 30 June 2023 30 September Movement %
% 2023 %
B plus and Exempt 26.4 34.2 +780bps
------------- ------------- -----------
C 33.2 31.0 (220)bps
------------- ------------- -----------
D 26.1 22.5 (360)bps
------------- ------------- -----------
E and below 14.3 12.3 (200)bps
------------- ------------- -----------
Excluding Scotland:
Rating 30 June 2023 30 September Movement %
% 2023 %
B plus and Exempt 28.4 34.1 +570bps
------------- ------------- -----------
C 33.7 32.4 (130)bps
------------- ------------- -----------
D 26.7 23.0 (370)bps
------------- ------------- -----------
E and below 11.2 10.5 (70)bps
------------- ------------- -----------
Following the assessment by Global Real Estate Sustainability
Benchmark ("GRESB"), the Group has increased its score noticeably
to 66 in 2023 from 60 in 2022, achieving two Green Star status. The
Company continues to improve and embed ESG processes throughout its
operations and looks forward to announcing continued improvements
to the rating for 2024.
A full update on the Company's ESG progress will be provided in
the annual report and accounts, which is due to be published in
2024, including the development of the Company's pathway to net
zero carbon.
Rental Collection Update
As at 3 November 2023, the Company had collected 95.9 % of the
rent due for Q3 2023. This comprised rent received of 95.4%,
monthly rents of 0.5% and agreed collection plans of 0.0%.
Rent received from 1 January 2023 to 3 November 2023 amounted to
98.1%, comprising of rent received of 97.9%, monthly rents of 0.2%
and agreed collection plans of 0.0%. The rent received of 98.1%
compares favourably with the equivalent period in 2022 of
97.2%.
Outlook
During the period under review, the challenging economic
backdrop and inflationary environment remained evident with a
subdued investment market; and though positive leasing momentum
continued across the portfolio, the time to completion remains
elongated.
In the near term, the Board remains focused upon a controlled
disposal programme, to reduce the LTV back to the Company's
long-term target of 40%, whilst maintaining the quarterly
dividend.
Stephen Inglis, CEO of London & Scottish Property Investment
Management, Asset Manager commented:
"The Company has performed robustly in the period, against a
backdrop of a volatile market conditions, and continued headwind
for the commercial office market.
"We again achieved strong rent collection and lease retention
for the quarter, highlighting the strength and diversity of our
tenant base; and although, completions were elongated we achieved
an average uplift of 6.2% in rental income, providing an additional
GBP0.4m of rental income per annum.
We continue to remain committed to a programme of asset sales to
reduce net borrowings back to the Company's long term c.40% LTV
target."
Summary of Activity in the Quarter to 30 September 2023:
The Group undertook several asset management projects,
generating new lettings and maintaining and improving income
through lease renewals and re-gears:
-- Eagle Court, Birmingham - Virgin Media Ltd. renewed its lease
to April 2033, with the option to break in 2028, at a rental income
of GBP791,784 pa (GBP18.00/ sq. ft.) on 43,988 sq. ft. of
space.
-- Victory House, Chatham, Kent - Lloyds Bank Plc renewed its
lease to June 2028, with the option to break in 2026, at a rental
income of GBP548,298 pa (GBP11.34/ sq. ft.) on 48,372 sq. ft. of
space.
-- Lightyear, Glasgow Airport, Glasgow - Rolls-Royce has let
15,116 sq. ft. of office space to August 2033, with an option to
break in 2028, at a rental income of GBP264,530 pa (GBP17.50/ sq.
ft.).
-- Southgate Park, Peterborough - Virgin Media Ltd. renewed its
lease to April 2033, with the option to break in 2028, at a rental
income of GBP143,745 pa (GBP15.00/ sq. ft.) on 9,583 sq. ft. of
space.
-- Salamander Quay, Bankside, Harefield - Alcatel IP Networks
Limited renewed its lease to October 2033, with the option to break
in 2028, at a rental income of GBP136,000 pa (GBP20.12/ sq. ft.) on
6,759 sq. ft. of space.
-- 15 Davy Court, Rugby - Morris Homes (Midlands) Ltd. renewed
its lease to July 2028, with no option to break prior to the lease
expiry, at a rental income of GBP123,050 pa (GBP12.19/ sq. ft.) on
10,092 sq. ft. of space.
-- Oakland House, Manchester - Please Hold (UK) Ltd. renewed its
lease to the end of August 2024, at a rental income of GBP110,050
pa (GBP10.00/ sq. ft.) on 11,005 sq. ft. of space.
-- Manchester Green, Manchester - Assetz SME Capital Ltd.
continued its commitment to existing lease (14,937 sq. ft.),
guaranteeing a rental income of GBP272,600 pa (GBP18.25/ sq. ft.)
to September 2027.
-- Vantage Point, Edinburgh - Adobe Systems Europe Ltd.
continued its commitment to existing lease (13,328 sq. ft.),
guaranteeing a rental income of GBP199,920 pa (GBP15.00/ sq. ft.)
to July 2028.
-- Miller Court, Tewkesbury - Amiosec Ltd. continued its
commitment to existing lease (10,070 sq. ft.), guaranteeing a
rental income of GBP151,050 pa (GBP15.00/ sq. ft.) to August
2025.
-- Southgate Park, Peterborough - Linden Ltd. continued its
commitment to existing lease (9,816 sq. ft.), guaranteeing a rental
income of GBP130,108 pa (GBP13.25/ sq. ft.) to June 2028.
-- Mere Grange, St Helens - Portico Day Nurseries Ltd. continued
its commitment to existing lease (6,181 sq. ft.), guaranteeing a
rental income of GBP96,240 pa (GBP15.57/ sq. ft.) to July 2027.
Sales
Total disposals in the three months to 30 September 2023
amounted to GBP2.1m (before costs), reflecting a net initial yield
of 7.2% and in line with the 30 June 2023 valuation.
Subsequent Events summary post 30 September 2023:
Since the quarter end, the Group has successfully completed the
following lettings and sales:
Lettings
-- Columbus House, Coventry - Shell Energy Retail Ltd. has taken
assignment of lease and renewed for a further two years from
January 2024, at a rental income of GBP908,500 pa (GBP17.06/ sq.
ft.) on 53,253 sq. ft. of space.
-- Norfolk House, Birmingham - Existing tenant Global Banking
School Ltd. has let an additional 29,383 sq. ft. of space at a
rental income of GBP558,277 (19.00/ sq. ft.). The lease is to
December 2037, with a break option in 2032 to be coterminous with
the existing lease of ground, first and third floors.
-- 133 Finnieston Street, Glasgow - Anderson, Anderson &
Brown LLP has let 19,829 sq. ft. of office space to September 2033,
with an option to break in 2028, at a rental income of GBP356,922
pa (GBP18.00/ sq. ft.).
Sales
Additionally, announced separately today Venlaw and Elmbank
Gardens, Glasgow has been sold for GBP6.25m, 26.3% above the June
valuation. The 51,775 sq. ft. of office space comprises of 23
individual units let on 13 separate leases. The purchaser intends
to redevelop the office space for student and residential use.
This sale brings our total disposals to GBP26.0m in the
financial year to date (before costs) equating to 2% above their
last valuation.
Forthcoming Events
22 February 2024 Q4 2023 Dividend Declaration and Portfolio
Valuation
26 March 2024 Full year 2023 Preliminary Results Announcement
22 May 2024 May 2024 Trading Update and Outlook Announcement
Q1 2024 Dividend Declaration Announcement
23 May 2024 Annual General Meeting
Note: All dates are provisional and subject to change
- ENDS -
Enquiries:
Regional REIT Limited
Press enquiries through Buchanan
ARA Europe Private Markets Limited Tel: +44 (0) 20 7845 6100
Investment Adviser to the Group
Adam Dickinson, Investor Relations, Regional REIT Limited
London & Scottish Property Investment Management Tel: +44 (0) 141 248 4155
Asset Manager to the Group
Stephen Inglis
Buchanan Communications Tel: +44 (0) 20 7466 5000
Financial PR
Charles Ryland, Henry Wilson, George Beale
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 London & Scottish Property Investment Management
Limited, the Asset Manager, and ARA Europe Private Markets Limited,
the Investment Adviser.
Regional REIT's commercial property portfolio is comprised
wholly of income producing UK assets and comprises, predominantly
of offices located in the regional centres outside of the M25
motorway. The portfolio is geographically diversified, with 150
properties, 1,021 tenants as at 30 September 2023, with a valuation
of c.GBP752.9m.
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 .
Cautionary Statement
This document has been prepared solely to provide additional
information to Shareholders to assess the Group's performance in
relation to its operations and growth potential. The document
should not be relied upon by any other party or for any other
reason. Any forward looking statements made in this document are
done so by the Directors in good faith based on the information
available to them up to the time of their approval of this
document. However, such statements should be treated with caution
due to the inherent uncertainties, including both economic and
business risk factors, underlying any such forward-looking
information.
ESMA Legal Entity Identifier ("LEI"): 549300D8G4NKLRIKBX73
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END
DIVNKFBPFBDDPDK
(END) Dow Jones Newswires
November 09, 2023 02:00 ET (07:00 GMT)
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