TIDMRGL
RNS Number : 0121S
Regional REIT Limited
11 November 2021
11 November 2021
REGIONAL REIT Limited
("Regional REIT", the "Group" or the "Company")
Q3 2021 Trading Update, Dividend Declaration & ESG
Update
Regional REIT Limited (LSE: RGL), the regional office
specialist, is pleased to announce a trading update for the period
from 1 July 2021 to 30 September 2021 and dividend declaration for
the third quarter of 2021.
Q3 2021 Trading Update
The Group has exchanged on 35 leases to new tenants since 1
January 2021, totalling 134,523 sq. ft., of which 11 leases have
been exchanged since 30 June 2021, totalling 19,050 sq. ft.. When
fully occupied these 35 new leases will provide GBP1.7m per annum
("pa") of rental income. The 11 leases exchanged since 30 June 2021
will provide GBP0.3m pa of rental income.
A number of leases came up for renewal from 1 January 2021.
Retention of occupancy by area remains high at 82.1% * .
* includes tenants that are currently holding over, lease
renewals, and the acquisition of new replacement tenants.
Portfolio as at 30 September 2021:
-- 169 properties, 1,498 units and 1,074 tenants, totalling
c.GBP915.6m(**) of gross property assets value
-- Offices (by value) were 90.0% of the portfolio (31 December
2020: 83.5%), Industrial sites 5.3% (31 December 2020: 11.1%),
Retail 3.3% (31 December 2020: 4.1%), and Other 1.4% (31 December
2020: 1.3%)
-- Rent roll GBP75.5m (30 June 2021: GBP61.1m); ERV GBP94.8m (30 June 2021: GBP75.1m)
-- England & Wales represented 82.3% (31 December 2020:
82.7%) of the portfolio with the remainder in Scotland
-- EPRA Occupancy (by ERV) 83.0% versus 85.7% as at 30 June
2021; 30 September 2021 like-for-like (versus 30 September 2020)
EPRA occupancy was 82.5% (88.9%). As expected, EPRA Occupancy was
impacted by the GBP236.0m portfolio acquisition made in Q3 '21,
with an EPRA Occupancy (by ERV) of 78.4%. Asset management plans
are in place to improve occupancy.
-- Average lot size c. GBP5.4m (31 December 2020: c. GBP4.8m)
-- Net loan-to-value ratio c. 42.5%(**) (31 December 2020:
40.8%). Gross borrowings GBP437.5m (31 December 2020; GBP366.2m);
cash and cash equivalent balances GBP48.1m (31 December 2020:
GBP67.4m). Cost of debt (including hedging) of 3.3% pa (31 December
2020: 3.3% pa)
** Gross property assets value based upon C&W valuations as
at 30 June 2021, adjusted for subsequent acquisitions, disposals
and capital expenditure in the period.
Q3 2021 Dividend Declaration
As previously indicated, the Company is pleased to declare that
it will pay a dividend of 1.60 pence per share ("pps") for the
period 1 July 2021 to 30 September 2021, (1 July 2020 to 30
September 2020: 1.50pps). 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"), and more
details can be found on the Company's website
https://www.regionalreit.com/investors .
The key dates relating to this dividend are given below:
Ex-dividend date 18 November 2021
Record date 19 November 2021
-----------------
Last day for DRIP election 17 December 2021
-----------------
Payment date 12 January 2022
-----------------
Further to the announcement made on the 16 September 2021, the
Board will target a dividend of 6.5pps for the full year 2021
(2020: 6.4pps), which equates to an annualised dividend yield of
7.3% at the closing price per share on 10 November 2021.
ESG Update
The Group is pleased to announce that it has achieved Green Star
status from the Global Real Estate Sustainability Benchmark
("GRESB"). Following the assessment by GRESB, the Company is
evaluating the results and intends to take additional actions going
forward to further improve the rating for 2022.
A full update on the Company's ESG progress will be provided in
the annual report and accounts, which are due to be published in
2022.
Rental Collection Update
As at 5 November 2021, the Company had collected 94.3% of the
rent due for Q3 2021. This comprised rent received of 91.1%,
monthly rents of 1.4% and agreed collection plans of 1.8%.
Rent received from 1 January 2021 to 5 November 2021 amounted to
97.1%, comprising of rent received of 94.9%, monthly rents of 0.6%
and agreed collection plans of 1.6%. The rent received of 94.9%
compares favourably with the equivalent period in 2020 of
93.2%.
Outlook
The Company's business model continues to perform strongly in
the year to date, despite the testing and uncertain economic
outlook. The Company's asset management platform continues to
engage actively with our occupiers ensuring strong rent collections
whilst maintaining the momentum of ongoing asset management
initiatives to increase capital values.
These attributes continue to underpin the Company's
uninterrupted quarterly dividend distributions and will ensure the
continued growth of capital returns to our shareholders over the
long term.
Stephen Inglis, CEO of London & Scottish Property Investment
Management, Asset Manager commented:
I am delighted to report another strong quarter of trading,
which saw robust momentum maintained in rent collections, the sale
of the majority of our remaining industrial assets, and a large
portfolio acquisition from which we see long-term shareholder value
accretion. Given the covid-19 pandemic, transactions in the
occupational market remain subdued, however, we are now seeing an
increase in the level of enquiries, which we anticipate will flow
through to lettings in due course.
Our strong ongoing relationships with tenants and our active
asset management approach has supported our tenant retention and
occupancy remains high, against a competitive market backdrop.
Additionally, I am pleased to confirm the Q3 dividend of 1.60
pence per share. As previously announced, the Company is targeting
a full year 2021 dividend of 6.5p, which offers a highly attractive
dividend yield at the current share price.
Summary of Activity in the Quarter to 30 September 2021:
The Group undertook several asset management projects,
generating new lettings and maintaining and improving income
through lease renewals and re-gears:
-- Cyan Building, Rotherham - National Westminster Bank Plc
renewed its lease for 67,458 sq. ft. for a further two years at a
rental income of GBP425,000 pa (GBP6.30/ sq. ft.).
-- Ashby Business Park, Ashby De La Zouch - Hill Rom UK Ltd.
(29,358 sq. ft.) has renewed its lease for a further nine months at
a rent of GBP366,975 pa (GBP12.50/ sq. ft.) representing an uplift
of 27.9% from the previous rent.
-- Logic House, Waterfront Business Park, Fleet - Barclays
Execution Services Ltd. (19,361 sq. ft.) has renewed its lease for
a further ten years with the option to break in 2024. The lease
will provide a rental income of GBP348,500 pa (GBP18.00/ sq.
ft.).
-- Advantage House, Reading - Barrett & Co. Solicitors LLP
leased 3,255 sq. ft. for a period of ten years with the option to
break in 2027 at a rent of GBP87,288 pa (GBP26.81/ sq. ft.).
-- The Coach Works, The Calls, Leeds - 3,304 sq. ft. of space
has been let to Pentest People Ltd. following refurbishment at a
rent of GBP84,600 pa (GBP25.61/ sq. ft.) for a period of five years
with the option to break in 2024.
-- Genesis Business Park, Woking - Metamark (UK) Ltd. has leased
2,622 sq. ft. for five years with the option to break in 2024 at a
rent of GBP61,617 pa (GBP23.50/ sq. ft.).
-- Milburn House, Newcastle - Burnetts Solicitors have renewed
their lease for a further five years with a break option in 2024 at
a rental income of GBP56,131 pa (GBP11.75/ sq.ft.) on 4,777 sq.
ft..
-- Mandale Business Park, Durham - A new tenancy agreement has
been signed with Partner Construction Ltd. for 5,000 sq. ft.. The
lease is for five years with a break option in 2024 at a rental
income of GBP57,500 pa (GBP11.50/ sq. ft.).
Acquisitions
The Group acquired a major portfolio of 31 high quality,
predominately multi-let office assets during the quarter for
GBP236.0m.
Portfolio Highlights
-- 27 office assets providing over 1.6m sq. ft. for 192 tenants;
two industrial units (120,020 sq. ft.) with three tenants; a
residential asset with 12 tenants (10,672 sq. ft.); and a Tim
Horton's Drive-Thru restaurant (2,010 sq. ft.)
-- Regional offices (by value) constitute 93.3% of the
portfolio; industrial 4.9%; residential 1.1%; retail 0.7%
-- Located entirely outside of the M25, 78.2% in England; 17.1%
in Scotland; and the remaining 4.7% in Wales
-- Net initial yield of 7.8%, and a reversionary yield of 11.0%
-- Contracted rent roll amounts to GBP21.9m pa
Further to the announcement made on 31 August 2021, the landlord
at Quantum Court, Edinburgh has now provided consent to transfer
the lease. This acquisition, comprising of seven modern multi-let
office pavilions (38,328 sq. ft.), with car parking, including
electric car charging points, completes the GBP236.0m portfolio
acquisition.
Sales
Total disposals in the three months to 30 September 2021
amounted to GBP57.2m, reflecting a net initial yield of 6.9% and an
uplift of 4.0% against the December 2020 valuation. Key disposals
included:
-- Industrial Portfolio - Significant GBP45.0m industrial
portfolio sale to ARA Dunedin. This reflects a net initial yield of
6.75% and is 7.5% above the valuation as at 31 December 2020. After
capital expenditure, the sale represents an uplift of 18.0% from
the acquisition price. During the Company's ownership of the seven
industrial properties (801,787 sq. ft.) located in Bromborough,
Erith, Nottingham, Scunthorpe, Telford, Winsford and Wisbech,
several asset management initiatives have been actioned to increase
value. These initiatives included a series of renovations and the
subdivision of some of the larger units, which assisted in
improving occupancy rates, rental income and in turn, capital
values.
-- Arena Point, Leeds - Disposal of office property for
GBP10.6m. The purchaser intends to demolish the 19-storey office
block (76,176 sq. ft.) to make way for a 43-storey tower, providing
accommodation for 705 students. The disposal represents the final
part of the long term business plan for this asset, which the
Company acquired with the adjacent two-storey casino and pub, known
as the Podium Buildings, in March 2016 for GBP10.5m. In July 2018,
the Podium Buildings were sold to Unite Students for GBP12.2m for
development into what is now the 16 and 27-storey tower, named
White Rose View. The final disposal of Arena Point has now secured
profits after all costs for the site of some GBP9.3m.
Subsequent Events post 30 September 2021:
Since the quarter end, the Group has successfully completed the
following lettings and sales:
Lettings
-- Commercial Road, Bromborough - A new lease has been signed
with Albea Creative Ltd. for 126,689 sq. ft. of space for ten years
with the option to break in 2026 at a rent of GBP543,270 pa
(GBP4.29/ sq. ft.) with this asset forming part of the industrial
sale to ARA Dunedin.
-- 300 Bath Street, Glasgow - A lease agreement for ten years,
with a five year break option, has been signed with London &
Scottish Property Investment Management, the Company's asset
manager, for the first floor suite at 300 Bath Street, Glasgow, for
GBP182,621 pa (GBP18.50 / sq. ft.) on 9,439 sq. ft., plus four car
parking spaces for GBP2,000 pa. The Company was advised by
independent commercial property advisor: Ryden.
Sales
-- James House, Leicester - Largely vacant property was sold on
8 October 2021 for GBP3.6m, in line with the most recent
valuation.
Forthcoming Events
24 February 2022 Q4 2021 Dividend Declaration and Portfolio
Valuation
29 March 2022 Full year 2021 Preliminary Results Announcement
25 May 2022 May 2022 Trading Update and Outlook Announcement
Q1 2022 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, 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 169
properties, 1,074 occupiers as at 30 September 2021, with a
valuation of c.GBP915.6m.
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
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END
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