Q1 2022 Trading Update and Dividend Declaration

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 £69.2m (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 £48.2m 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. £874.0m¹ of gross property assets; with a gross rent roll of c. £68.5m 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. £5.5m (31 December 2021: £5.4m)

·    Capital expenditure £0.7m (31 December 2021 £6.8m)

·    Net loan-to-value ratio c. 40.3%¹ (31 December 2021: 42.4%). Gross borrowings £434.1m (31 December 2021: £439.9m); cash and cash equivalent balances £82.3m (31 December 2021: £56.1m). 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:

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 £1.0m 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 £209,652 pa (£20.43/ 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 £193,223 pa (£23.00/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 £184,161 pa (£16.74/ 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 £165,484 pa (£11.12/ 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 £94,350 pa (£17.00/ 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 £93,312 pa (£16.39/ 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 £70,000 (£15.56/ 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 £66,474 pa (£13.24/ 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 £66,384 pa (£12.00/ 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 £57,470 pa (£14.00/ 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 £50,000 pa (£20.14/ sq. ft.).

Sales

Total disposals in the three months to 31 March 2022 amounted to £33.5m, 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 £65,344 pa (£13.41/ 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 £54,450 pa (£16.50/ 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 £34,824 (£8.00/ sq. ft.).

Sales

Since 31 March 2022, five properties have been sold for £35.7m, 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 £69.2m (before costs).

Acquisitions

As announced on the 18 May 2022, the Company has acquired three offices investments for £48.2m, reflecting a NIY of 8.7%.

Forthcoming Events

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.

ESMA Legal Entity Identifier ("LEI"): 549300D8G4NKLRIKBX73