FY21 Valuation, Q4 divi & rent collection update

24 February 2022

REGIONAL REIT Limited

("Regional REIT", the "Group" or the "Company")

2021 Year-End Portfolio Valuation, Q4 Dividend and Letting Update

98.6% Rent Collection for 2021

Regional REIT (LSE: RGL), the regional office specialist, is today pleased to announce its portfolio valuation as at 31 December 2021, Q4 2021 dividend declaration, trading update and a positive rent collection update.

Full Year 2021 Portfolio Valuation

·    Significant increase in the portfolio valuation to £906.1m (2020: £732.4m) following the £236.0m portfolio acquisition made in Q3 2021

·    The like-for-like value of the portfolio increased by 1.1% in 2021 after adjusting for capital expenditure, acquisitions and disposals during the period

·    Gross rent roll increased substantially overall to £72.1m (2020: £64.2m); ERV £94.6m (2020: £76.6m)

·    168 properties (2020: 153); 1,077 occupiers (2020: 898)

·    Further good progress in portfolio rotation with offices (by value) at 89.8% of the portfolio (2020: 83.5%), industrials 5.1% (2020: 11.1%), retail 3.7% (2020: 4.1%), and Other 1.4% (2020: 1.3%)

·    England & Wales (by value) represented 81.0% (2020: 82.7%) of the portfolio with the remainder in Scotland

·    EPRA Occupancy (by ERV) at 81.8% (2020: 89.4%). As expected, EPRA Occupancy was impacted by the £236.0m portfolio acquisition made in Q3 2021. Asset management plans are in place to improve occupancy.

·    Average lot size c. £5.4m (2020: c. £4.8m)

·    Net loan-to-value ratio was 42.4% (2020: 40.8%)

Rent Collection 2021 Update

As at 16 February 2022, Q1 2021 collections amounted to 99.3%, Q2 2021 to 99.5% and Q3 2021 to 99.1%. Currently, Q4 2021 rent collection, adjusting for monthly rent and agreed collection plans, stands at 96.6%, which is in line with the equivalent period in 2020 when 96.0% had been collected. The total rent collection for 2021 is currently at 98.6% compared with 97.7% at this time last year.

Table may not sum due to roundings.

Quarterly rental collection refers to all invoices issued during the calendar quarters:

Q1: 1 January 2021 to 31 March 2021

Q2: 1 April 2021 to 30 June 2021

Q3: 1 July 2021 to 30 September 2021

Q4: 1 October 2021 to 31 December 2021

The Company remains in supportive and ongoing discussions with occupiers regarding the balance of the outstanding rent and expects to collect the vast majority in due course.

Q4 2021 Dividend

As previously indicated, the Company will pay a dividend of 1.70 pence per share ("pps") for the period 1 October 2021 to 31 December 2021 (1 October 2020 to 31 December 2020: 1.50pps), which amounts to a total dividend of 6.5pps for 2021 (2020: 6.4pps) and equates to an annualised dividend yield of c7.4% at the closing price per share on 23 February 2022. 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:

Stephen Inglis, CEO of London and Scottish Property Investment Management, the Asset Manager, commented:

"We are pleased to report a very robust performance from the property portfolio in what is an unsettled environment for the office sector. For shareholders, the Company has delivered on its targeted distribution for the year of 6.5 pence per share, equating to a yield of 7.4 per cent on the current share price. In the meantime, we today provide a further positive rent collection update with collections of 98.6% for 2021.

We believe the office is an essential aspect of the working infrastructure and that the sector is poised for a recovery. We have therefore rotated the portfolio to have a higher percentage of assets invested in regional offices. We expect future office trends to include a de-densification of office space and increasing demand for quality regional space, all of which should benefit the Company's portfolio."

Further Background Information

Lettings Update - Summary of Activity since 30 September 2021:

·    1-4 Llansamlet Retail Park, Nantyffin Rd, Swansea - 15,000 sq. ft. of space has been let to NCF Furnishings Ltd. at a rent of £180,000 per annum ("pa") (£12.00/ sq. ft.) for a period of ten years with the option to break in 2027.

·    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 £182,621 pa (£18.50 / sq. ft.) on 9,439 sq. ft., including four car parking spaces for £2,000 pa. Until 2026, the lease allows for a minimum of 8,244 sq. ft. to be occupied at a rent of £160,514 pa (£18.50 / sq. ft.), with the option to occupy the remaining space at the increased rent, after which time the full lease becomes payable. The Company was advised by independent commercial property advisor: Ryden.

·    Templeton On The Green, Glasgow - The Wise Group has leased 6,677 sq. ft. for ten years with the option to break in 2026 at a rent of £83,463 pa (£12.50/ sq. ft.).

·    Templeton On The Green, Glasgow - Odro Ltd. has leased 4,183 sq. ft. for three years and eight months at a rent of £54,379 pa (£13.00/ sq. ft.).

·    Quadtech, Hemel Hempstead - 4,479 sq. ft. of space has been let to Medray (UK) Ltd. at a rent of £65,000 pa (£14.51/ sq. ft.) for a period of six years with the option to break in 2024.

·    Loreny Industrial Estate, Kilmarnock - Matalan Retail Ltd. renewed its lease for a further five years, to April 2031, at a rental income of £407,484 pa (£11.97/ sq.ft.) on 34,040 sq. ft..

·    Waterfront Business Park, Fleet - Barclays Execution Services Ltd. (19,361 sq. ft.) has renewed its lease for a further ten years, to September 2031, with the option to break in 2024. The lease will provide a rental income of £348,500 pa (£18.00/ sq. ft.).

·    Eagle Court, Coventry Road, Birmingham - Rexel UK Ltd. (20,182 sq. ft.) renewed three leases for a further five years and six months with the option to break in 2023, at a combined rent of £356,660 pa (£17.67/ sq. ft.).

·    Salamander Quay, Bankside, Harefield - Federal Republic of Germany Office (8,320 sq. ft.) has renewed its lease until August 2032 at a rental income of £125,505 pa (£15.08/ sq. ft.).

·    Global Reach, Cardiff - Relx (UK) Ltd. (15,923 sq. ft.) renewed three leases for a further three years at a combined rent of £206,992 pa (£13.00/ sq. ft.), with the option to break in August 2022. Additionally, Relx (UK) Ltd. removed the break option on an additional unit (7,806 sq. ft.) which provides a rental income of £105,381 pa (£13.50/ sq. ft.) until October 2024.

Forthcoming Events

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:

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.£906.1m.

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.

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