TIDMRGL
RNS Number : 3407T
Regional REIT Limited
14 November 2019
14 November 2019
REGIONAL REIT Limited
("Regional REIT", the "Group" or the "Company")
Q3 2019 Trading Update, Dividend and Outlook Statement
Regional REIT Limited (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 period from 1 July to 30 September 2019, and its dividend
declaration for the third quarter of 2019.
Q3 2019 Trading Update
The Group continues to pursue its strategy of providing
investors with an attractive and sustainable income focused return
from investing and asset managing, in predominantly, offices and
light industrial properties in the main regional centres of the UK
outside of the M25 motorway.
The Group has exchanged on 50 leases to new tenants since 1
January 2019, totalling 239,374 sq. ft., of which 15 leases have
been exchanged since 30 June 2019, totalling 151,995 sq. ft.. When
fully occupied, these 50 new leases will provide an additional
GBP2.2m pa of rental income. The 15 leases acquired since 30 June
2019 will provide GBP1.1m of rental income pa. The Group also
completed a number of lease renewals during the quarter. Retention
of income remains high at 88.3% (by value) as 85.2% of the units
with lease renewals remain occupied.
In the quarter to 30 September 2019, the Group acquired seven
properties for an aggregate value of GBP28.4m (before costs),
disposed of one unit for GBP1.0m (net of costs), and capital
expenditure amounted to GBP0.8m.
Portfolio as at 30 September 2019:
-- 156 properties, 1,224 units and 864 tenants, totalling c.
GBP749.7m* of gross property assets; with a gross rent roll of c.
GBP60.2m pa
-- Offices (by value) were 78.5% of the portfolio (31 December
2018: 76.1%), industrial sites 14.1% (31 December 2018: 15.5%),
retail 6.0% (31 December 2018: 7.1%), and Other 1.4% (31 December
2018: 1.4%)
-- England & Wales represented 82.6% (31 December 2018:
82.0%) of the portfolio with the remainder in Scotland
-- EPRA Occupancy (by ERV) increased to 88.5% versus 87.5% at 30
June 2019; 30 September 2019 like-for-like (versus 30 September
2018) EPRA occupancy increased to 87.7% (87.5%)
-- Average lot size c. GBP4.8m (31 December 2018: c. GBP4.8m)
-- Net loan-to-value ratio c. 34.2%* (31 December 2018: 38.3%).
Gross borrowings GBP344.3m; cash and cash equivalent balances
GBP86.2m. Cost of debt (including hedging) of 3.5% pa (31 December
2018: 3.8% pa)
*Gross property assets based upon 30 June 2019 C&W
valuations, adjusted for subsequent acquisitions, disposals and
capital expenditure in the period.
Q3 2019 Dividend Declaration
The Company will pay a dividend of 1.90 pence per share ("pps")
for the period 1 July 2019 to 30 September 2019, an increase of c.
3% (1 July 2018 to 30 September 2018: 1.85pps). The dividend
payment will be made on 19 December 2019 to shareholders on the
register as at 22 November 2019. The ex-dividend date will be 21
November 2019. The entire dividend will be paid as a REIT property
income distribution ("PID").
The payment of dividends will remain subject to market
conditions, the Company's performance, its financial position, UK
REIT requirements and the business outlook.
Outlook
The outlook for the Group is positive. We continue to invest the
proceeds from the oversubscribed July 2019 equity capital raise and
expect the proceeds to be fully deployed on schedule.
Despite the wider political uncertainty, our confidence is
underpinned by our diversified regional, tenant and sector
portfolio, supported by the Group's strong financial position.
These strengths will enable us to continue to deliver strong
returns for shareholders reinforced by the strength of our
recurring income.
Stephen Inglis, CEO of London & Scottish Property Investment
Management, the Asset Manager of Regional REIT commented:
"The Company has continued to achieve considerable success
resulting in another period of positive momentum throughout 2019.
During the first three quarters, we executed significant positive
re-letting activities and completed a number of attractive
acquisitions to increase further the scale and diversified income
of our portfolio."
"We are confident that we will invest the remaining proceeds
from our over-subscribed capital raise, as well as capital recycled
from strategic disposals in attractive, income producing assets
with robust tenancies in major regional centres. We see continued
strong demand for our existing assets with a high level of letting
renewals to existing tenancies at strong rental levels. In
particular, the outlook for regional offices is strong as returns
continue to strengthen."
"Once again, the Company has demonstrated the success of the
active asset management strategy to ensure robust and diverse
income streams to provide regular high dividend returns to our
shareholders."
Summary of activity in the quarter to 30 September 2019:
The Group undertook several asset management projects,
generating new lettings and maintaining and improving income
through lease renewals and re-gears:
-- 800 Aztec West, Bristol - The remaining available space was
let to Edvance SAS (9,736 sq. ft.) who now occupy 41,285 sq. ft.
within the building paying a rent of GBP902,232 (c. GBP22/sq. ft.)
on a nine-year lease with the option to break in 2022
-- Mile End Road, Colwick Nottingham - Hillary's Blinds Limited
have leased the entire 82,380 sq. ft. of industrial space at
Colwick 80, Mile End Road Colwick, Nottingham for a period of 10
years and six months at a rent of GBP320,000 pa
-- Silver Court, Watchmead, Welwyn Garden City - Unit 6 (4,048
sq. ft.) has been let to Coreix Limited for five-years at a rent of
GBP70,840 pa, 9.3% ahead of ERV. Additionally, Sidel (UK) Limited
renewed its lease for 3,794 sq. ft. on the ground floor (unit 3)
for a further five-years at a rent of GBP60,000 pa, 33.3% ahead of
the previous headline rent and 2.0% ahead of ERV
-- Braidhurt House, Strathclyde Business Park, Bellshill -
Wireless Infrastructure Group Limited have leased the first floor
of 4,697 sq. ft. for 10 years, subject to a tenant break option
after five-years at a rent of GBP58,713 pa, 4.1% ahead of ERV
-- Oakland House, Manchester - A letting has been secured with
Please Hold (UK) Limited, which is upsizing in Oakland House,
Manchester. The letting over the 10-year term increases the
tenant's space by 5,450 sq. ft. at a rent of GBP68,125 pa
-- Witham Park House, Lincoln - Two new lettings have been
secured at Witham Park House in Lincoln. The lettings to Anglian
Water and Distract Limited represent a combined total of 12,287 sq.
ft. at an annual rent of GBP137,263 pa
-- Acorn Business Park, Leeds - Unit 1 has been let to Aegis
Leeds East LLP on a new five-year lease at a rent of GBP20,805 pa.
Regional REIT purchased the site at the beginning of 2018 with over
10,000 sq. ft. (58%) of vacant space available and the business
park is now fully let
-- Juniper Park, Basildon - The lease of Unit 2 of the 16-unit
site has successfully been renewed to Vanguard Logistics Services
Limited for a five-year period with Vanguard having the option to
extend beyond this. A stepped rent has been agreed on the 61,079
sq. ft. unit, increasing to GBP370,000 pa representing an uplift of
15.4% to the previous rent, and 5.4% ahead of ERV
-- Charles House, Northampton - Reed Specialist Recruitment have
renewed their three leases for a further two years to September
2021 at a combined rental of GBP112,700 pa on 11,277 sq. ft., 2.7%
ahead of ERV
-- Enterprise House, Century Park, Altrincham - Enterprise
Software Systems Limited have renewed their lease over the entire
building of 6,500 sq. ft. for a further 10 years until September
2029, subject to break option after five-years at a rent of
GBP89,400 pa, 14.6% ahead of ERV
Acquisitions
During the period, the Group completed the following
acquisitions:
-- On 21 August 2019, the acquisition of a portfolio of six
assets completed for a total consideration of GBP25.9m. The
portfolio comprises six offices located in Birmingham, Bristol,
Cardiff, Chester, Glasgow and Manchester. The assets total 172,442
sq. ft. and are expected to provide a net income of approximately
GBP2.36m pa from 27 tenants; equating to a net initial yield of
8.87% and anticipated reversionary yield of 9.54%. The portfolio's
weighted average unexpired lease term is 4.9 years. The acquired
tenant profile is deliberately diversified across both industry
type and geography, with no crossover to existing tenants; and
-- On 29 August 2019, a unit on Loreny Industrial Estate,
Kilmarnock was acquired for approximately GBP2.52m, reflecting a
net initial yield of 15.2%. The property is 100% let to Matalan
(34,040 sq. ft.) at an annual rent of c.GBP407,000 with an
unexpired lease term of 6.6 years
Sales
-- Carnbroe House, Bellshill - This vacant unrefurbished unit
was sold in September 2019 for GBP1.0m to an owner occupier. The
sale forms part of the Group's strategy to reduce exposure to the
Scottish market closer to the Group's overall target of 15% (by
value). This property was no longer core to the Group
Subsequent events post 30 September 2019:
Since the quarter end, the Group has successfully completed the
following lettings and acquisitions:
Lettings
-- Juniper Park, Basildon - Unit 1 of the 16-unit site has
successfully been let to DG International Group Limited for a
five-year period. The 30,100 sq. ft. industrial unit has been let
for a rental of GBP240,800 pa representing a notable uplift of 30%
from the previous tenancy. The unit was re-let within 11 weeks of
the previous lease coming to an end
-- Witham Park House, Lincoln - Anglian Water Limited has
increased its footprint within the 102,000 sq. ft. multi occupied
office complex signing a lease of Units 4 & 7 until January
2032. The combined suites extend to c. 17,000 sq. ft. with an
annual headline rent of GBP220,000 pa
-- 2800 The Crescent, Birmingham - The first floor has been
successfully leased for 10 years at a rent of GBP150,876 pa
(GBP22/sq. ft.) subject to a break option on the fifth anniversary.
Only 8,369 sq. ft. remains available of the comprehensively
refurbished 28,583 sq. ft. building
-- Silver Court, Watchmead, Welwyn Garden City - Continuing the
recent letting success at this 30,000 sq. ft. business park, a
national charity organisation has renewed its lease of Unit 6
(1,933 sq. ft.) for a further three years at a headline rent of
GBP32,861 pa
Acquisitions
-- On 31 October 2019, Regional REIT completed the acquisition
of a portfolio of four office assets for a total consideration of
GBP27.7m from a UK institutional vendor. The portfolio comprises
four multi-let offices located in Redhill, Harefield, Bristol and
High Wycombe. The assets total circa 131,036 sq. ft. and are
expected to provide a net income of approximately GBP2.59m pa from
24 tenants; equating to a net initial yield of 8.7% and anticipated
reversionary yield of 9.7%. The portfolio's weighted average
unexpired lease term is 3.1 years and 5.4 years to expiry. The
portfolio offers short-term asset management opportunities to
enhance value through improvement to income.
Forthcoming Events
27 February 2020 Q4 2019 Dividend Declaration and Portfolio
Valuation
26 March 2020 Full year 2019 Preliminary Results Announcement
21 May 2020 May 2020 Trading Update and Outlook Announcement
Q1 2020 Dividend Declaration Announcement
Annual General Meeting
Note: All dates are provisional and subject to change
- ENDS -
Enquiries:
Regional REIT Limited
Press enquiries through Buchanan
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
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 ("LSPIM"), the Asset Manager, and Toscafund Asset
Management LLP ("Toscafund"), 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 149 properties, 1,178 units and 828 tenants as at 30 June
2019, with a valuation of GBP721.7m.
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.
LEI: 549300D8G4NKLRIKBX73
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END
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