TIDMRGL
RNS Number : 4731Z
Regional REIT Limited
27 May 2016
27 May 2016
Regional REIT Limited
May 2016 Trading Update, Dividend Declaration and AGM Outlook
Statement
Regional REIT Limited (LSE: RGL) ("Regional REIT", "the Group"
or "the Company") today announces its Trading Update as at 27 May
2016 and its dividend declaration for the first quarter of 2016. In
addition, the Company will hold its Annual General Meeting at which
the Chairman will provide a statement on the outlook for 2016.
May 2016 Trading Update
The Group has pursued its strategy of providing investors with
an attractive return on a sustained and consistent basis from
investing in, predominantly, offices and light industrial property
in the main regional centres of the UK outside of the M25
motorway.
-- As at 31 March 2016:
o c. 130 properties, around 970 units and approximately 700
tenants, amounting to some GBP507m of gross property assets; a
contracted rent roll run-rate c. GBP43.5m pa.
o Offices (by value) were 59.1% of the portfolio (IPO 58.4%) and
industrial sites 29.0% (IPO 25.3%); England & Wales represented
c. 67% (IPO 64.6%) of the portfolio.
o Occupancy (by area) 80.9%; 31 March 2016 like-for-like (versus
31 December 2015) occupancy was 82.0%, broadly in line with the
year end (82.8%).
o Average lot size increased to c. GBP3.8m (IPO GBP3.0m).
o Gross borrowings GBP225.9m; net loan-to-value ratio c. 40%;
cost of debt reduced to c. 3.7% pa. Cash and cash equivalent
balances GBP24.7m.
-- Summary of the First Quarter to 31 March 2016 :
In the period the Group completed a number of acquisitions,
o Rosalind House, Basingstoke, for GBP3m in January.
o Wing portfolio for GBP37.5m in March, comprising four
multi--let office buildings - in Basingstoke, Leeds, Leicester and
Manchester - and a multi-let industrial estate - in Beverley. The
portfolio totals c. 703,000 sq. ft., provides a net income of
GBP3.38 million pa and a net initial yield of 8.5%.
o Rainbow portfolio for GBP80.0m, also in March. The portfolio
comprised 12 assets - five offices and seven industrial sites -
totalling 1.15m sq. ft., geographically spread throughout the UK's
major regional urban areas, including Bristol, Manchester, Cardiff,
Sheffield and the West Midlands. A net yield of 8.2% at a capital
rate of GBP70 per sq. ft.
There were a number of disposals by the Group,
o Churchill Plaza, Basingstoke, for GBP12m, a 9% increase on the
December 2015 valuation.
o Five retail assets for a total consideration of GBP4.8m,
marginally ahead of the December 2015 valuation.
o 21 Blythswood Square, Glasgow, an office building, for
GBP1.5m, in line with valuation.
The Group completed several asset management projects,
generating additional income through new lettings and maintaining
and improving income through lease renewals and re-gears,
o Tay House, Glasgow - Barclays Bank plc re-geared as the major
tenant of the Grade A office building, occupying 78,044 sq. ft.
This will provide a contractually guaranteed income until October
2021. Separately, refurbishment commenced on the first and second
floors amounting to 48,533 sq. ft.
o Chancellor Court, The Calls, Leeds - a five-year lease
extension, from September 2016, was negotiated with the current
tenant St James Place Wealth Management Limited. The lease consists
of 17,896 sq. ft. of office space over two floors, providing a rent
of GBP268,440 pa.
o Other asset management initiatives were completed at St James
Court, Bristol, at St James Court, Bath, and at Sherwood Park,
Nottingham.
o The Group undertook additional bank borrowing to support the
two major portfolio acquisitions and extended and refinanced
several of its existing facilities.
-- Since 31 March 2016:
o On 6 April the Group announced the sale of its student
accommodation, Blythswood House, Glasgow, for GBP17.4m, in line
with the valuation at 31 December 2015. Also, Unit A, Spectrum
Business Park, Wrexham, was sold for GBP4.1m, 22% higher than the
valuation at 30 June 2015. A new 10-year management agreement was
secured with Regus for 30,000 sq. ft. at Tay House, Glasgow.
o In late May the Group completed the purchases of a multi-let
office building in Nottingham city centre for GBP4.3m and an office
building In Sheffield city centre for GBP6.3m.
o Acquisitions of GBP131.1m since Listing, including two
regional office and industrial portfolios.
o Non-core property disposals since Listing total GBP45.6m,
generating profits of GBP5.1m.
o In the period the office and industrial share of the portfolio
has increased further to approximately 91.5% of the gross property
asset value, whilst the share of England & Wales has risen to
around 73%.
First Quarter 2016 Dividend Announcement
The Company will pay a dividend of 1.75 pence per share ("pps")
for the period 1 January 2016 to 31 March 2016. The dividend
payment will be made on 8 July 2016 to shareholders on the register
as at 10 June 2016. The ex-dividend date will be 9 June 2016.
It is the Company's current intention to pay three quarterly
dividends at approximately this level in relation to the financial
year 2016 and then a fourth quarter dividend to manage compliance
with the 90% minimum REIT distribution requirement.
The payment of dividends will remain subject to market
conditions, the Company's performance, its financial position and
the business outlook.
Annual General Meeting Outlook Statement
At the Annual General Meeting of the Company that will take
place today, the Chairman, Kevin McGrath, will make the following
statement on the Group's outlook for 2016.
"Into 2016 we have delivered on our strategy and the commitments
we made at the time of the Listing, of significant acquisitions,
asset management initiatives including disposals and reducing the
cost of our debt financing."
"We remain positive on the prospects for the Group in 2016, with
a sustained growth in rental income and tight control of costs,
accompanied by some further growth in assets and an active
management of the portfolio mix. We see a strong underpinning for
longer term NAV growth and returns to our Shareholders."
Top-15 Investments as at 31 March 2016 (market values as at 31
December 2015)
Property Sector Market % of Lettable Let Annualised WAULT
value (GBPm) portfolio area by area gross to
(sq. (%) rent (GBPm) expiry
ft.) (years)
Tay House,
Glasgow Office 30.5 6.1% 156,933 69.1% 2.2 9.0
Buildings 2/3,
Walton St,
Aylesbury Office 21.1 4.2% 146,936 100.0% 2.3 5.6
Juniper Park,
Southfield
Industrial
Estate, Fenton
Way, Basildon Industrial 20.1 4.0% 296,100 70.0% 1.5 2.2
Wardpark
Industrial
Estate,
Cumbernauld Industrial 19.1 3.8% 709,816 88.9% 2.3 3.9
Blythswood House, Student
Glasgow* Accomm. 17.4 3.5% 32,000 100.0% 0.9 24.5
Hampshire
Corporate Park,
Chandler's
Ford, Eastleigh Office 14.8 3.0% 85,422 100.0% 1.4 2.9
One and Two
Newstead Court,
Nottingham Office 14.7 2.9% 146,063 100.0% 1.5 6.0
Columbus House,
Coventry Office 14.7 2.9% 53,253 100.0% 1.1 7.8
Winsford
Industrial
Estate,
Winsford Industrial 13.1 2.6% 246,209 100.0% 0.9 18.5
1-4 Llansamlet
Retail Park,
Swansea Retail 12.5 2.5% 71,615 85.7% 1.0 9.6
Tower North,
Leeds Office/Retail 10.8 2.2% 98,856 82.0% 0.8 4.9
The Point, Mixed
Glasgow use 10.5 2.1% 193,861 89.0% 0.8 11.1
Oaklands House,
Manchester Office 10.2 2.0% 152,404 78.7% 1.1 14.6
Templeton on the
Green, Glasgow Office 10.2 2.0% 138,123 86.9% 1.0 10.2
CGU House, Leeds Office 9.9 2.0% 50,763 100.0% 1.0 1.5
229.6 45.8% 2,578,354 19.8
*Blythswood House, Glasgow, sold in April 2016.
Debt Profile as at 31 March 2016
Lender Original Outstanding Maturity Gross Annual Amortisation Hedging
Facility Debt Date LTV Interest and Swaps:
GBP'000 GBP'000* Rate Notional
Amounts/
Rates**
------------- ----------- ------------ --------- ------ -------------- ------------- ----------------
Mandatory
Santander 2.0% over Prepayment
UK GBP48,673 GBP45,669 Dec-18 42.2% 3mth LIBOR basis GBP25.15m/1.35%
Mandatory
Santander 2.0% over Prepayment
UK GBP25,343 GBP25,343 Dec-18 46.7% 3mth LIBOR basis GBP12.9m/1.43%
Royal Bank 2.15% over
of Scotland GBP25,000 GBP24,450 Jun-19 39.5% 3mth LIBOR None GBP14.0m/1.79%
ICG Longbow 5.0% pa for
Ltd GBP65,000 GBP65,000 Aug-19 43.0% term None n/a
Santander 2.0 % over GBP50,000
UK GBP7,000 GBP6,800 Feb-18 45.8% 3mth LIBOR per qtr GBP5.44m/1.444%
Mandatory
Royal Bank 2.40 % over Prepayment
of Scotland GBP40,000 GBP39,848 Mar-21 50.0% 3mth LIBOR basis In progress***
Mandatory
Santander 2.0 % over Prepayment
UK GBP18,750 GBP18,750 Jan-19 50.0% 3mth LIBOR basis GBP9.375m/1.09%
----------- ------------ ---------
GBP229,766 GBP225,859
------------- ----------- ------------ --------- ------ -------------- ------------- ----------------
* Including unamortised debt issue costs
** Hedging arrangements: As at 31 March 2016, the swap notional
amount was GBP66.9m. Under the swap agreements, the notional amount
reduces on a quarterly basis.
*** Since 31 March 2016 swap hedging arrangements with a
notional amount of GBP19.9m have been executed at 1.395% in respect
of this facility.
Table may not cast due to rounding.
- ENDS -
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.
Enquiries:
Regional REIT Limited
Press enquiries through Headland
London & Scottish Investments Tel: +44 (0) 141 248 4155
Asset Manager to the Group
Stephen Inglis
Derek McDonald
Toscafund Asset Management Tel: +44 (0) 20 7845 6100
Investment Manager to the Group
James S Johnson
Nigel Gliksten
Headland Tel: +44 (0)20 7367 5222
Financial PR
Francesca Tuckett
About Regional REIT
Regional REIT Limited (LSE: RGL) is a London Stock Exchange Main
Market listed specialist real estate investment trust focused on
office and industrial property interests in the principal regional
locations of the United Kingdom outside of the M25 motorway.
Regional REIT is managed by London & Scottish Investments,
the Asset Manager, and Toscafund Asset Management, the Investment
Manager, and was formed by the combination of two existing funds
previously created by the Managers as a differentiated play on the
expected recovery in UK regional property, to deliver an attractive
total return to shareholders and with a strong focus on income.
The Group's investment portfolio, as at 31 December 2015, was
spread across more than 120 regional properties, in excess of 710
units and over 530 tenants. As at 31 December 2015, the investment
portfolio had a value of GBP403.7m and a net initial yield of 7.6%.
The weighted average unexpired lease term was approximately six
years.
The Company's shares joined the Official List of the UK's
Financial Conduct Authority and were admitted to trading on the
London Stock Exchange on 6 November 2015. For more information,
please visit the Group's website at www.regionalreit.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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