TIDMRGL
RNS Number : 3278O
Regional REIT Limited
17 May 2018
17 May 2018
Regional REIT Limited
Trading Update, Dividend Announcement and Outlook Statement
Continued steady progress of the business
Q1 2018 dividend 1.85pps
Regional REIT Limited (LSE: RGL) ("Regional REIT", "the Group"
or "the Company"), the UK regional office and industrial property
focused REIT, in advance of its Annual General Meeting today,
announces its trading update for the year to date, its dividend
declaration for the first quarter of 2018, and provides a statement
on the Group's Outlook for the full year 2018.
Stephen Inglis, Chief Executive Officer of London & Scottish
Investments Limited, the Asset Manager commented: "The Group has
maintained a good pace of lettings in the first quarter of 2018,
coupled with steady interest in both its office and industrial
sites. This, together with our granular approach to asset
management, further enforces our confidence in our ability to grow
income and increase occupancy.
"As always, whilst we remain focused on organic development
within our portfolio, the Company remains opportunistic and will
continue to explore opportunities to further exploit the strong
presence we have in the regions."
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 2018 to date, the Group has exchanged on 16 new
leases, totalling 46,171 sq. ft.; when fully occupied these will
provide approximately GBP0.6m pa of rental income. Over the period
38 leases came up for renewal, totalling 156,309 sq. ft.. Lease
renewals, and the acquisition of new replacement tenants, c.69% (by
value).
Capital expenditure year-to-date was GBP2.9m net.
Portfolio as at 31 March 2018:
-- 160 properties, 1,339 units and 996 tenants, amounting to c.
GBP727m of gross property assets; a contracted rent roll run-rate
of c. GBP61.7m pa.
-- Offices (by value) were 66.9% of the portfolio (31 December
2017: 67.3%) and industrial sites 23.4% (31 December 2017: 23.3%);
England & Wales represented 77.2% (31 December 2017: 77.6%) of
the portfolio.
-- Occupancy (by value) increased to 85.7%, versus 85.0% at 31
December 2017; 31 March 2018 like-for-like (versus 31 December
2017) occupancy was in-line at 85.7% (85.7%).
-- Average lot size remained at c. GBP4.5m (31 December 2017: GBP4.5m).
-- Net loan-to-value ratio c. 44% (31 December 2017: 45.0%).
Gross borrowings GBP378.8m; cash and cash equivalent balances
GBP59.8m. Cost of debt (including hedging) of 3.8% pa (31 December
2017: 3.8% pa).
Active asset management activity highlights:
-- Building 2, Aylesbury - following the completion of
refurbishment works, the first floor was let to Agria Pet Insurance
Ltd. (13,832 sq. ft.) for 10 years with no break option. The annual
rent is GBP235,000. The letting was completed in advance of the
completion of the Group's GBP3.36m refurbishment scheme completing
in April 2018.
-- Ashby Park, Ashby De La Zouch - the property was purchased as
part of the Conygar portfolio in 2017 and is now fully let
following the completion of two lettings at the beginning of March
2018 at Ceva House: a 5-year lease for 3,117 sq. ft. let to Jigsaw
Solutions Ltd. at GBP95,315pa, and a 3-year lease for 7,232 sq. ft.
let to Dunwoody Airline Services Ltd. at GBP46,743pa.
-- The Point, Glasgow - regear of existing lease to The
University Court of the University of Glasgow completed for 16,016
sq. ft. for a further 10-year term, subject to a break option at
the fifth anniversary, achieving a 31.5% uplift in headline rent to
GBP112,122pa.
-- Tolvaddon Business Park, Camborne - regear of two existing
leases for units 1 and 2 North Crofty to Lumiradx Care Solutions UK
Ltd. totalling 5,110 sq. ft for a 5-year term. The leases provide a
combined rental income of GBP48,545pa, indicating a 7.9% uplift in
headline rent. In addition to the aforementioned regears, Lumiradx
Care Solutions UK Ltd. signed a lease for an additional 4,587 sq.
ft. of space on a 5-year lease at an annual rent of GBP43,577. The
letting of this previously vacant unit has resulted in an increase
in occupancy (by value) from c.75% (31 December 2017) to c.92% (31
March 2018). This property was acquired in December 2017.
Acquisitions
On 29 March 2018, Regional REIT completed the acquisition of an
office building at Port Solent as part of the Northwood Investors
transaction. The acquired space within the One Port Way development
totals 62,379 sq. ft. across three floors. It is let to Ageas
Insurance Ltd. until 2026 at a rent of GBP0.4m, which represents a
yield on purchase price (assuming standard costs) of 8.05%. The
site underwent comprehensive refurbishment prior to its
acquisition.
Since 31 March 2018, Regional REIT has also announced the
acquisition of a GBP35.2m portfolio from Kildare Partners, which is
expected to provide a net income of c.GBP3.1m pa and equates to a
net initial yield of 8.4%, further utilising the proceeds of the
fundraise the Group undertook in December 2017. The portfolio
consists of five regional offices and one office/distribution
property located in Telford, Rotherham, Macclesfield, Dundee,
Chelmsford and Bedford. The assets total circa 320,000 sq. ft. let
to 12 tenants including NHS Property Services Ltd., Swiss Precision
Diagnostics, Capgemini, Elior UK Services Ltd., Royal Bank of
Scotland plc. and The Scottish Ministers. Completion will take
place towards the end of June 2018.
Sales
There were a number of disposals by the Group in the first
quarter of 2018 with disposal amount (net of costs) totalling
GBP18.2m. All sales were agreed in H2 2017 averaging 19.3% above 30
June 2017 valuation.
-- CGU House, Leeds - sold in February 2018 at a sale price of GBP9.58m.
-- Lonsdale House, Birmingham - sold in January 2018 at a sale
price of GBP2.85m, reflecting a net initial yield of 4.8%.
-- St Georges House, Cheltenham - having successfully completed
its business plan, Regional REIT completed the sale of the property
in February 2018 at a sale price of GBP2.3m, reflecting a net
initial yield of 8.2%
-- Unit 6 Centrepoint, Manchester - sold in January 2018 at a
sale price of GBP1.98m, reflecting a net initial yield of 5.9%.
This property was purchased as part of the Rainbow portfolio in
March 2016.
-- St Nicholas Chambers, Newcastle Upon Tyne - having
successfully increased occupancy to 100% following the completion
of the letting of the last remaining unit to The Liquor Co. Ltd.,
the Group completed the sale of the property in January 2018 at a
sale price of GBP1.5m, reflecting net initial yield of 8.7%.
-- Antler Complex, Morley - The Group completed a part sale
during the quarter at a sale price of GBP0.2m.
In addition, there has been a number of smaller lettings and
there remain many potential deals to be completed.
Outlook
The Group continues to benefit from a good performance in the
industrial and office occupancy markets of the UK's regions.
Management expects trading to be in-line with its expectations for
2018 and remains confident as to the Group's ability to grow
income, decrease void rate, and increase occupancy in 2018. This is
underpinned by Group's active asset management which is delivering
results with both recent acquisitions and the established
portfolio.
First Quarter 2018 Dividend Declaration
The Company will pay a dividend of 1.85 pence per share ("pps")
for the period 1 January 2018 to 31 March 2018
(1 January 2017 to 31 March 2017: 1.80 pps). The dividend
payment will be made on 13 July 2018 to shareholders on the
register as at 25 May 2018. The ex-dividend date will be 24 May
2018. The dividend will be paid as 1.85 pps as a REIT property
income distribution ("PID").
It is the Company's intention to pay three quarterly dividends
at approximately this level in relation to the financial year 2018,
of which this is the first, and then a fourth quarter dividend to
at least manage compliance with the REIT distribution
requirement.
The level of future payment of dividends will be determined by
the Board having regard to, among other things, the financial
position and performance of the Group at the relevant time, UK REIT
requirements and the interests of Shareholders.
Enquiries:
Regional REIT Limited
Press enquiries through Headland
Toscafund Asset Management Tel: +44 (0) 20 7845 6100
Investment Manager to the Group
Adam Dickinson, Investor Relations, Regional REIT Limited
London & Scottish Investments Tel: +44 (0) 141 248 4155
Asset Manager to the Group
Stephen Inglis
Headland Tel: +44 (0) 20 3805 4822
Financial PR
Francesca Tuckett / Bryony Sym / Jack Gault
About Regional REIT
About Regional REIT Regional REIT Limited (LSE: RGL) is a London
Stock Exchange Main Market traded 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 2017, was
spread across 164 regional properties, 1,368 units and 1,026
tenants. As at 31 December 2017, the investment portfolio had a
value of GBP737.3m and a net initial yield of 6.5%. The weighted
average unexpired lease term to first break was 3.5 years.
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.
LEI: 549300D8G4NKLRIKBX73
www.regionalreit.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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