TIDMRGL
RNS Number : 6698M
Regional REIT Limited
25 May 2022
25 May 2022
REGIONAL REIT Limited
("Regional REIT", the "Group" or the "Company")
Trading Update
&
Dividend Declaration
Regional REIT Limited (LSE: RGL), the regional office
specialist, is pleased to announce a trading update for the year to
date, its dividend declaration for the first quarter of 2022, and a
statement on the Group's outlook for the full year 2022.
Stephen Inglis, CEO of London & Scottish Property Investment
Management, the Asset Manager of Regional REIT commented:
"Right across our highly diversified core portfolio of regional
offices, from the newly acquired Lightyear building at Glasgow
airport to Global Reach in Cardiff and over to the Southgate Park
in Peterborough, we are witnessing tenants returning to our high
quality office spaces, resulting in week on week increases in
active occupancy across all regions.
Rent collections have remained strong across the portfolio,
97.1% for Q1 '22 to date, underpinning our confidence in increasing
our quarterly dividend by a further c.3% to 1.65p. In addition, we
have completed GBP69.2m (before costs) of disposals this year,
comprising both non-core properties and those which have achieved
their individual asset management plans, reflecting an average net
initial yield of 5.9%. In turn, the capital proceeds have been
promptly recycled into acquiring GBP48.2m of regional offices at
considerably higher average net initial yield of 8.7%, which
exhibit exciting value accretive potential for our shareholders
over the long term, whilst delivering a strong rental yield."
Portfolio as at 31 March 2022:
-- 160 properties, 1,438 units and 1,035 tenants, totalling c.
GBP874.0m(1) of gross property assets; with a gross rent roll of c.
GBP68.5m pa
-- Offices (by value) were 91.4% of the portfolio (31 December
2021: 89.8%), industrial sites 3.8% (31 December 2021: 5.1%),
retail 3.4% (31 December 2021: 3.7%), and Other 1.4% (31 December
2021: 1.4%)
-- England & Wales represented 82.7% (31 December 2021:
81.0%) of the portfolio with the remainder in Scotland
-- EPRA Occupancy (by ERV) 81.6% (31 December 2021: 81.8%); 31
March 2022 like-for-like (versus 31 March 2021) 82.1% (88.4%);
including subsequent transactional activity EPRA Occupancy stands
at 82.7%
-- Average lot size c. GBP5.5m (31 December 2021: GBP5.4m)
-- Capital expenditure GBP0.7m (31 December 2021 GBP6.8m)
-- Net loan-to-value ratio c. 40.3%(1) (31 December 2021:
42.4%). Gross borrowings GBP434.1m (31 December 2021: GBP439.9m);
cash and cash equivalent balances GBP82.3m (31 December 2021:
GBP56.1m). Cost of debt (including hedging) of 3.4% pa (31 December
2021: 3.3% pa)
1 Gross property assets value based upon C&W valuations as
at 31 December 2021, adjusted for subsequent acquisitions,
disposals and capital expenditure in the period.
Rent Collection Update
As at 19 May 2022, the rent collection for Q1 2022 invoicing
amounted to 97.1%, which comprised of 95.2% rent received, monthly
rents of 1.3% and agreed collection plans of 0.6%. This compares
favourably with the collection of 93.3% for the equivalent period
in 2021.
We anticipate collecting the vast majority of the balances
outstanding in due course as usual.
Q1 2022 Dividend Declaration - c.3% Increase for the Quarter
The Company is pleased to declare that it will pay a dividend of
1.65 pence per share ("pps") for the period 1 January 2022 to 31
March 2022, an increase of c. 3% from 1 January 2021 to 31 March
2021 dividend of 1.60pps. The entire dividend will be paid as a
REIT property income distribution ("PID").
The Company has introduced the option for shareholders to invest
their dividend in a Dividend Reinvestment Plan ("DRIP"). 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 given below:
Ex-dividend date 1 June 2022
Record date 6 June 2022
-------------
Last day for DRIP election 24 June 2022
-------------
Payment date 15 July 2022
-------------
Outlook - Positioned for Growth
The 2022 calendar year began with the removal of all but a
handful of Covid - 19 restrictions in England, Wales and Scotland,
and with this free movement, the trend towards a more normal course
of daily life has gathered pace across the UK.
The Company's Asset Management platform continues to navigate
conditions of uncertainty, aided by its highly diversified
portfolio that provides in excess of 1,000 income streams to
support the high quarterly dividend distributions.
Overall, Regional REIT is strongly positioned as it continues to
deliver on its investment strategy of providing a de-risked office
portfolio, which in-turn will drive shareholder income and value
over the long-term.
Summary of Activity in the Quarter to 31 March 2022:
The Group completed a number of lease renewals during the
quarter, achieving rental uplifts of 13.6% versus previous rent and
an uplift of 11.7% against ERV. Of the 44 leases that came up for
renewal in Q1 2022, 31 units remain let (70.5%).
Since 1 January 2022, the Group has exchanged on 20 new leases,
totalling 136,206 sq. ft.. When fully occupied these new leases
will provide GBP1.0m per annum ("pa") of rental income.
The Group undertook several asset management projects,
generating new lettings and maintaining and improving income
through lease renewals and re-gears:
-- 300 Bath Street, Glasgow - The Firm of Fairhurst Consulting
Structural and Civil Engineers has leased 10,262 sq. ft. for ten
years with the option to break in 2027 at a rent of GBP209,652 pa
(GBP20.43/ sq. ft.).
-- 2800 The Crescent, Solihull, Birmingham - The remaining
available space was let to Align Technology UK Ltd. (8,401 sq. ft.)
at a rent of GBP193,223 pa (GBP23.00/sq. ft.) from March 2022 until
February 2029, with the option to break in 2024.
-- Hudson House, Derby - Mobile Gaming Studios Ltd. has let the
remaining available space of 11,000 sq. ft. at a rent of GBP184,161
pa (GBP16.74/ sq. ft.). The lease is for ten years with the option
to break in 2029.
-- 31 Foleshill Road, Coventry - Halfords Ltd. renewed its lease
for a further five years, to June 2027, at a rental income of
GBP165,484 pa (GBP11.12/ sq. ft.) on 14,888 sq. ft. of space.
-- Building 2, Bear Brook Office Park, Aylesbury - 5,550 sq. ft.
of space has been let to International Fire Consultants Ltd. at a
rent of GBP94,350 pa (GBP17.00/ sq. ft.) until April 2029 with the
option to break in in 2026.
-- Woodlands Court, Bristol - Mobileum UK Ltd. has renewed its
lease for a further three years to April 2025, with the option to
break in 2023, at a rental income of GBP93,312 pa (GBP16.39/ sq.
ft.) on 5,693 sq. ft.
-- Miller Court, Tewkesbury - Kingsbridge Risk Solutions Ltd.
has renewed its lease for 4,500 sq. ft. for a further five years to
March 2027 at a rental income of GBP70,000 (GBP15.56/ sq. ft.).
-- Mere Grange, St Helens - 5,022 sq. ft. has been let to
Balance Power Projects Ltd. for five years at a rental income of
GBP66,474 pa (GBP13.24/ sq. ft.).
-- Oakland House, Manchester - Please Hold (UK) Ltd. has let
5,532 sq. ft. for ten years with the option to break in in 2027 at
a rent of GBP66,384 pa (GBP12.00/ sq. ft.).
-- Mere Grange, St Helens - 4,105 sq. ft. has been let to James
Fisher Marine Services Ltd. for three years at a rental income of
GBP57,470 pa (GBP14.00/ sq. ft.).
-- Elmbridge Court, Gloucester - X Cyber Group Ltd. has renewed
its lease for 2,483 sq. ft. for a further five years with the
option to break in 2025 at a rent of GBP50,000 pa (GBP20.14/ sq.
ft.).
Sales
Total disposals in the three months to 31 March 2022 amounted to
GBP33.5m, reflecting an uplift of 1.3% premium to the 31 December
2021 valuation.
Subsequent Events post 31 March 2022:
Since the quarter end, the Group has successfully completed the
following lettings and sales:
Lettings
-- The Royals, Altrincham Road, Manchester - 4,872 sq. ft. of
space has been let to Advanced Travel Partners UK Ltd.. The lease
is for ten years with a break option in 2027 at a rent of GBP65,344
pa (GBP13.41/ sq. ft.)
-- Finnieston Business Park, Glasgow - Previously vacant 3,300
sq. ft. of space has been let to Tag Digital Ltd.. The lease is for
five years with a break option in 2025 at a rent of GBP54,450 pa
(GBP16.50/ sq .ft.).
-- Witham Park House, Lincoln - Distract Ltd. has renewed its
lease for 4,353 sq. ft. of space for a further ten years with a
break option in 2027 at a rental income of GBP34,824 (GBP8.00/ sq.
ft.).
Sales
Since 31 March 2022, five properties have been sold for
GBP35.7m, reflecting a net initial yield of 6.7% and broadly in
line with 31 December 2021 book value, taking the overall disposals
this year to GBP69.2m (before costs).
Acquisitions
As announced on the 18 May 2022, the Company has acquired three
offices investments for GBP48.2m, reflecting a NIY of 8.7%.
Forthcoming Events
15 September 2022 2022 Interim Results Announcements
10 November 2022 Q3 2022 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, 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 Toscafund Asset Management LLP, the
Investment Manager.
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 168
properties, 1,077 occupiers as at 31 December 2021, with a
valuation of c.GBP906.1m.
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 .
ESMA Legal Entity Identifier ("LEI"): 549300D8G4NKLRIKBX73
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END
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