TIDMRGL
RNS Number : 5473N
Regional REIT Limited
21 May 2020
21 May 2020
REGIONAL REIT Limited
("Regional REIT", the "Group" or the "Company")
Q1 Trading Update, Dividend and Outlook Statement
Regional REIT (LSE: RGL), the regional real estate investment
specialist focused on building a diverse portfolio of income
producing regional UK core and core plus office and industrial
property assets, today announces its trading update for the year to
date, its dividend declaration for the first quarter of 2020, and
provides a statement on the Group's outlook for the full year
2020.
Stephen Inglis, Chief Executive Officer of London & Scottish
Property Investment Management Limited, the Asset Manager
commented: "We are pleased to be able to deliver a reassuring
trading update for the first quarter of 2020, particularly in light
of increasingly difficult market conditions as the effects of
Covid-19 began to impact businesses across the UK in March. We are
confident in the outlook for Regional REIT due to the unique
features of our asset management platform that ensures a close
working relationship with our diverse register of quality
occupiers, of which some 50% are providing Government defined
'essential services'.
The quality and diversity of our portfolio properties and tenant
register, supported by active asset management relationships has
directly led to a first quarter 2020 rent collection of 93.9%
received by the Company. This revenue strength should ensure that a
sector leading level of income will continue to be paid to our
shareholders for the foreseeable future."
Trading Update
The Group has continued to pursue its strategy of providing
investors with an attractive return on a sustained and consistent
basis from investing in and managing, predominantly, offices and
light industrial property in the main regional centres of the UK
outside of the M25 motorway.
Since 1 January 2020 to date, the Group has exchanged on 18 new
leases, totalling 117,012 sq. ft., which, when fully occupied, will
provide approximately GBP0.8m pa of rental income.
Capital expenditure year-to-date was GBP4.8m net.
Q1 Rent Collection as at 18 May 2020:
93.9% of rent due had been collected (18 May 2019: 92.7%). This
comprises of 90.1% of Q1 2020 rent due and agreed collections from
occupiers who are now settling monthly amounting to 3.8%.
We continue to maintain close working relationships with all our
tenants through this difficult period.
First Quarter 2020 Dividend Declaration
The Company will pay a dividend of 1.90 pence per share ("pps")
for the period 1 January 2020 to 31 March 2020. The dividend
payment will be made on 17 July 2020 to shareholders on the
register as at 5 June 2020. The ex-dividend date will be 4 June
2020. The dividend will be paid as 1.90 pps as a REIT property
income distribution ("PID"). This follows the payment on 9 April
2020 of the dividend for Q4 2019 of 2.55pps.
In light of recent events, and until we have greater clarity on
the economic outlook, future quarterly dividend distributions
remain under review by the Board, having regard to, among other
things the financial position and performance of the Group,
including the levels of rental income received at the relevant
time, UK REIT requirements and the interests of shareholders.
Balance sheet and liquidity as at 31 March 2020:
-- Net loan-to-value ratio c.38.3% (31 December 2019: 38.9%);
gross borrowings GBP369.1m (31 December 2019: GBP344.0m);
-- Cash and cash equivalent balances GBP69.0m* (31 December 2019: GBP37.2m);
-- Cost of debt (including hedging) of 3.5% pa (31 December 2019: 3.5% pa);
-- No debt maturities before June 2024; weighted average debt
duration 7.1 years (31 December 2019: 7.3 years).
* Prior to payment of GBP11.0m in relation to the Q4 2019
dividend on 9 April 2020.
Portfolio as at 31 March 2020:
-- 154 properties, 1,261 units and 882 tenants, (31 December
2019: 160 properties, 1,251 units, 904 tenants) amounting to
GBP783.6m* of gross property assets (31 December 2019: GBP787.9m);
a rent roll of c. GBP63.4m pa (31 December 2019: GBP64.3m);
-- Offices (by value) were 80.3% of the portfolio (31 December
2019: 79.9%) and industrial sites 13.3% (31 December 2019: 13.7%);
England & Wales represented 81.6% (31 December 2019: 82.0%) of
the portfolio;
-- EPRA Occupancy 88.5%, versus 89.4% at 31 December 2019; 31
March 2020 like-for-like (versus 31 December 2019) occupancy was
88.5% (89.4%);
-- Average lot size increased to c. GBP5.1m (31 December 2019: GBP4.9m).
* Gross property assets based upon 31 December 2019 C&W
valuations, adjusted for subsequent disposals and capital
expenditure in the period.
Active asset management highlights - Ongoing value
optimisation:
Summary of activity in the quarter to 31 March 2020:
-- Elmbridge Court, Gloucester: Frazer-Nash Consultancy Ltd. has
renewed its leases of Unit C1 and C2 of the property (4,925 sq.
ft.) for a further five years from September this year at a rent of
GBP85,000 pa (GBP17.26/sq. ft.), an uplift of 38% against the
previous rent.
-- Oakland House, Talbot Road, Stretford, Greater Manchester:
The existing tenant, Greater Manchester Combined Authority, has
renewed its lease of the 8(th) Floor (East Wing) of the office
property (5,481 sq. ft.). The annual rent is GBP63,032 pa
(GBP11.50/sq. ft.), which is a 27% uplift to the previous rental
agreement.
-- Part Ground Floor, Betchworth House, Redhill: Current tenant
Man Energy Solutions UK Ltd. has renewed the existing lease of the
1,778 sq. ft. office unit for a further five years at a rent of
GBP42,000 pa (GBP23.62/sq. ft.), a 12% uplift against the previous
rent.
-- North Malting & North Kiln, Felaw Street, Ipswich,
Suffolk: KCOM Group Ltd. has re-geared its existing lease for the
second floor of the office property (11,897 sq. ft.), at a rent of
GBP92,000 pa (GBP7.73/sq. ft.), with the tenant's break date having
now moved out two years to 28 September 2022.
-- Gyleview House, 3 Redheughs Rigg, Edinburgh: Existing tenant
Citibase, has renewed the current lease for occupancy of the entire
serviced office property (24,503 sq. ft.) for a further five
years.
-- Braidhurst House, Lark Way, Strathclyde Business Park, and
Bellshill: New letting to ADT Fire and Security PLC on the ground
floor office premises (8,416 sq. ft.) at a rent of GBP109,408 pa
(GBP13.00/sq. ft.) for five years.
-- Commercial Street and Wellington Arcade, Brighouse: Costa
Coffee Ltd. has signed a new lease for 10 years for 3,170 sq. ft.
of previously vacant retail space at a rent of GBP40,000 pa
(GBP12.62/sq. ft.).
-- Ashby Park, Ashby De La Zouch: Brush Electrical Machines Ltd.
has let Power House (21,289 sq. ft.) for 10 years from January this
year at a rent of GBP300,000 pa (GBP14.09/sq.ft.).
-- Heathall Industrial Estate, Dumfries: Plastic Recycling
Technology Ltd. has signed a new lease for 10 years for 59,737 sq.
ft. of previously vacant space at a rent of GBP125,000 pa.
-- Trident Retail Park, Birmingham: City Electrical Factors Ltd.
has signed a new lease for 20 years for 4,931 sq. ft. of previously
vacant space at a rent of GBP43,100 pa (GBP8.74/sq. ft.).
-- Albert Edward House, Preston: Existing tenant in the
building, SpaMedica Ltd., has let additional space (3,793 sq. ft.).
The annual rent for this space is GBP37,930 pa (GBP10.00/sq.
ft.).
-- Miller Court, Tewkesbury: Rehability UK Community Ltd. has
let 2,250 sq. ft. of space for five years from February this year
at a rent of GBP35,100 pa (GBP15.60/sq. ft.).
-- The Brunel Centre, Bletchley: Peacocks Stores Ltd. has signed
a five-year lease for 3,302 sq. ft. at a rent of GBP27,500 pa
(GBP8.33/sq. ft.).
-- The Genesis Centre, Warrington: New letting to General
Insurance Distribution Ltd. for 1,946 sq. ft. at a rent of
GBP24,325 pa (GBP12.50/sq. ft.).
-- City West Business Park, Durham: New letting to Paramount
Technical Solutions Ltd. 2,874 sq. ft. at a rent of GBP23,800 pa
(GBP8.28/sq. ft.).
-- Heathall Industrial Estate, Dumfries: Current tenant Laurmar
Ltd. has extended existing lease for a further three years at a
rent of GBP65,000 pa, an 8% uplift against the previous rent.
-- Salamander Quay, Harefield: EDP Health, Safety and
Environment Consultants has signed a new lease for 10 years for
1,256 sq. ft. of space at a rent of GBP22,015 pa (GBP17.53/sq.
ft).
Sales since 1 January 2020:
January 2020 - Two attractive disposals above book value
-- Total Petrol Filling Station, Dysart Way, Leicester - GBP1.8m
-- Michigan Drive, Milton Keynes - GBP3.7m
February 2020 - Continuing to reduce retail sector exposure
-- 37 Stockwell Gate, Mansfield, Nottingham (retail) - at
auction for GBP110,000 - legal completion on 25 March 2020
-- West Stewart Street, Greenock, Greenock (retail) - at auction
for GBP275,000 - legal completion on 26 March 2020
-- 52/66 Newmarket Street, Ayr (retail) - sold prior to auction for GBP155,000
-- Whittle Court, Stoke-On-Trent (part sale) (office) - sold for GBP200,000
-- Sheldon Court, Birmingham (office) - sold for GBP2.4m
Outlook
Our confidence for the longer term continues to be underpinned
by the Group's focus on tenant relationships, asset management
initiatives coupled with our robust balance sheet. However, we
remain mindful of the backdrop of economic uncertainty and tenant
requirements in a structurally evolving property market, which
continues to be impacted by Covid-19.
Forthcoming Events
Late July/August Annual General Meeting
17 Sep 2020 Interim 2020 results announcement
12 Nov 2020 Q3 2020 Trading Update
Note : All dates are provisional and subject to change
-S -
Enquiries:
Regional REIT Limited
Toscafund Asset Management Tel: +44 (0) 20 7845
6100
Investment Manager 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 regional@buchanan.uk.com
Charles Ryland / Victoria Hayns / Henry
Wilson
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 Toscafund Asset Management LLP, the
Investment Manager.
Regional REIT's commercial property portfolio is comprised
wholly of income producing UK assets and comprises, predominantly,
offices and industrial units located in the regional centres
outside of the M25 motorway. The portfolio is highly diversified,
with 160 properties, 904 tenants as at 31 December 2019, with a
valuation of GBP787.9m.
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
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