2 February
2024
REGIONAL
REIT Limited
("Regional REIT", the "Group" or the "Company")
Q4 Trading Update and
Year-End Portfolio Valuation
98.6% Rent Collection for
2023
Regional REIT (LSE: RGL) today
announces its portfolio valuation as at 31 December 2023 and a
positive update for both EPC ratings and rent
collections.
Full Year 2023 Valuation and Portfolio
Update
·
Portfolio valuation
£700.7m (2022: £789.5m)
· The like-for-like value of the portfolio decreased by 5.9%
from 30 June 2023 to 31 December 2023 after adjusting for capital
expenditure, acquisitions and disposals during the period (5.5%
excluding capital expenditure adjustment)
· Total rent collection for 2023 is currently 98.6% compared
with 97.9% for the equivalent period in 2022
·
Gross annualised rent roll £67.8m (2022: £71.8m);
ERV £87.0m (2022: £92.0m)
·
Equivalent Yield 9.9% (2022: 9.0%)
·
Excellent progress on EPC ratings with c.73% of
the portfolio EPC C or better
·
144 properties (2022: 154); 978 occupiers (2022:
1,076)
·
Total disposals in 2023 of £26.1m (before
costs)
·
Portfolio: offices (by value) at 92.1% (2022:
91.8%), industrials 3.2% (2022: 3.1%), retail 3.1% (2022: 3.6%),
and Other 1.7% (2022: 1.4%)
·
England represented 78.4% (2022: 78.3%) (by
value), Scotland 16.2% (2022: 16.7%) and Wales 5.4% (2022:
5.0%)
·
EPRA Occupancy (by ERV) at 80.0% (2022:
83.4%)
·
Average lot size c. £4.9m (2022:
c. £5.1m)
·
Net loan-to-value ratio 55.1% (2022:
49.5%)
·
Group cost of debt (incl. hedging) 3.5% pa (2022:
3.5% pa) - 100% fixed and hedged
·
Weighted average debt duration 3.5years (2022: 4.5
years)
Stephen
Inglis, CEO of London and Scottish Property Investment Management,
the Asset Manager, commented:
"2023 was one
of the most challenging years for REITs in recent memory and
Regional REIT was not immune from the macro-economic difficulties
faced by the sector. Whilst valuations have been impacted, the
Asset Manager's active asset management initiatives continued to
mitigate some of the impact on the portfolio. The leasing market
was slower than anticipated largely due to the uncertainty around
working patterns and the geopolitical situation impacting inflation
and interest rates, but with some stability we are witnessing
increasing numbers of enquiries for our assets.
"Notably, the
Company continued to achieve a strong level of rent collection
thanks to its high-quality tenant base. The ongoing asset disposal
programme continues to achieve the latest
valuations.
"It is
pleasing to note that substantial progress has been achieved in
improving the EPC rating of the portfolio. Over the course of 2023
the number of properties rated EPC C and above has improved to in
excess of 73% of the portfolio.
"The LTV
continues to be a key focus of the Board and the management have a
plan to reduce LTV to the long term target of 40% through selective
sales and repayment of debt. The senior debt is 100% fixed, swapped
or capped and will not exceed 3.5%. The Company is actively
exploring a range of refinancing options for the retail bond given
its near-term maturity date."
Rent Collection 2023 Update
The Company is pleased to report
that as at 30 January 2024, Q1 2023 collections amounted to 99.7%,
Q2 2023 to 98.5% and Q3 2023 to 98.2%. Currently, Q4 2023 rent
collection, adjusting for monthly rent stands at 98.1%, which is
above the equivalent period in 2022, when 95.6% had been collected.
The total rent collection for 2023 is currently at 98.6% (see
below) compared with 97.9% this time last year.
|
%
|
Q1 2023
|
Q2 2023
|
Q3 2023
|
Q4 2023
|
YTD
|
|
Rent paid
|
99.7
|
98.4
|
98.1
|
97.3
|
98.4
|
|
Adjusted for monthly rents
|
0.0
|
0.0
|
0.1
|
0.7
|
0.2
|
|
|
99.7
|
98.5
|
98.2
|
98.1
|
98.6
|
Table may not sum due to
rounding.
The Company remains supportive of its
tenants and is in ongoing discussions with occupiers regarding the
balance of the outstanding rent. It expects to collect the vast
majority of the outstanding rent in due course.
Quarterly rental collection refers
to all invoices issued during the calendar quarters:
Q1: 1 January 2023 to 31 March
2023
Q2: 1 April 2023 to 30 June
2023
Q3: 1 July 2023 to 30 September
2023
Q4: 1 October 2023 to 31 December
2023
EPC
update
During the quarter we have continued
to improve the portfolio EPC ratings and the Company remains on
target to achieve EPC B rating by 2030 in accordance with current
guidelines.
|
Rating
|
31-Dec-22
|
31-Dec-23
|
Movement
|
|
B plus and Exempt
|
23.6%
|
42.1%
|
+18.50pps
|
|
C
|
33.3%
|
31.6%
|
(1.70)pps
|
|
D
|
27.2%
|
15.7%
|
(11.50)pps
|
|
E and below
|
16.0%
|
10.6%
|
(5.40)pps
|
Excluding Scotland:
|
Rating
|
31-Dec-22
|
31-Dec-23
|
Movement
|
|
B plus and Exempt
|
25.1%
|
42.9%
|
+17.80pps
|
|
C
|
33.5%
|
32.4%
|
(1.10)pps
|
|
D
|
28.0%
|
15.8%
|
(12.20)pps
|
|
E and below
|
13.4%
|
9.0%
|
(4.40)pps
|
pps: percentage points
Sales
Total disposals in the year to 31 December 2023
amounted to £26.1m (before costs), broadly in line with the
respective valuation points and reflecting a net initial yield of
4.5% (7.9% excluding vacant units).
Further
Background Information
Lettings Update - Summary of Activity since 30 September
2023:
Since 30 September 2023, notable new
lettings in aggregate amounted to c.£0.9m of new rent and aggregate
lease renewals amounted to c. £1.5m, reflecting in aggregate an
increase of a 6.7% above 30 June 2023 ERV.
·
Columbus
House, Coventry - Shell Energy Retail Ltd. has taken assignment of
lease and renewed for a further two years from January 2024, at a
rental income of £908,500 pa (£17.06/ sq. ft.) on 53,253
sq. ft. of space.
·
Norfolk
House, Birmingham - Existing tenant Global Banking School Ltd. has
let an additional 29,383 sq. ft. of space at a rental income
of £558,277 (19.00/ sq. ft.). The lease is to December
2037, with a break option in 2032 to be coterminous with the
existing lease of ground, first and third floors.
·
Kingscourt
Leisure Complex, Dundee - 29,626 sq.
ft. of previously vacant space has been let to The Original Bowling
Company Ltd. The annual rent amounts to £166,000 pa (£5.60/ sq.
ft.), with a 15-year lease.
·
Hampshire
Corporate Park, Eastleigh - Silverstream Technologies (UK) Ltd. has leased 4,400 sq. ft.
of space for 10 years with a break option in 2028 at a rent of
£127,339 pa (£28.94/ sq. ft.).
·
Aspect House,
Bennerley Road, Nottingham -
Nottingham Citycare Partnership CIC has leased 3,750 sq. ft. of
space until May 2024 at a rent of £132,768 pa (£35.40/ sq.
ft.).
·
Lightyear -
Glasgow Airport, Glasgow - Loganair
Ltd. renewed its lease for a further 10 years, to November 2033, at
a rental income of £259,445 pa (£18.11/ sq. ft.) on 14,330 sq. ft.
of space.
·
St James Court,
Bristol - Thomas Silvey Ltd. renewed
its lease for a further five years, to December 2028, at a rental
income of £82,624 pa (£16.00/ sq. ft.) on 5,164 sq. ft. of
space.
·
Salamander Quay,
Bankside, Harefield - Alcatel IP
Networks Ltd. renewed its lease for a further 10 years, to October
2033 with a break option in 2028 at a rental income of £136,000 pa
(£20.12/ sq. ft.) on 6,759 sq. ft. of space.
·
The Royals,
Altrincham Road, Manchester - Match
Me Finance Ltd. has leased 5,814 sq. ft. of space for 10 years with
a break option in 2028 at a rent of £92,553 pa (£15.92/ sq.
ft.).
Forthcoming
Events
22 February
2024 Q4 2023 Dividend
Declaration Announcement
26 March
2024
Full year 2023 Preliminary Results Announcement
22 May
2024
May 2024 Trading Update and Outlook Announcement
Q1 2024 Dividend Declaration Announcement
23 May
2024
Annual General Meeting
Note: All dates are
provisional and subject to change.
- ENDS -
Enquiries:
|
Regional REIT Limited
|
|
|
Press enquiries through
Buchanan
|
|
|
|
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ARA
Europe Private Markets Limited
|
Tel: +44 (0) 20 7845 6100
|
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Investment Adviser to the
Group
|
|
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Adam Dickinson, Investor
Relations
|
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London & Scottish Property Investment
Management
|
Tel: +44 (0) 141 248 4155
|
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Asset Manager to the
Group
|
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Stephen Inglis
|
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Buchanan Communications
|
Tel: +44 (0) 20 7466 5000
|
|
Financial PR
|
|
|
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 ARA Europe Private Markets Limited,
the Investment Adviser,
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 144
properties, 978 occupiers as at 31 December 2023, with a valuation
of c.£700.7m.
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.
ESMA Legal Entity Identifier
("LEI"): 549300D8G4NKLRIKBX73