Q4 Dividend, Year End Valuation and Trading Update

20 February 2025

REGIONAL REIT Limited

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

Q4 Dividend, Year End Valuation and Trading Update

2024 Lettings 13.5% Above ERV

Regional REIT (LSE: RGL) today announces its portfolio valuation as at 31 December 2024, Q4 dividend and a positive update for both EPC ratings and rent collections.

Trading Update

The Group traded robustly during 2024 completing 61 new lettings totalling £3.2m rent roll, with these lettings being 13.5% above 2023 ERV.

Full Year 2024 Valuation and Portfolio Update

·    The like-for-like value of the portfolio decreased by 8.2% from 1 January 2024 to 31 December 2024, after adjusting for capital expenditure, acquisitions and disposals during the period (7.1% excluding capital expenditure adjustment); a decrease of 3.1% in the period 1 July 2024 to 31 December 2024

·    Portfolio valuation £622.5m (2023: £700.7m), with disposals amounting to £30.8m (before costs) during 2024 in line with their respective sale valuation dates (2023: £26.1m)

·    Net loan-to-value ratio 41.8% (2023: 55.1%)

·    Gross annualised rent roll £60.7m (2023: £67.8m); ERV £83.2m (2023: £87.0m)

·    Total rent collection to date for 2024 has remained high at 98.1% compared with 98.4% for 2023

·    Excellent progress on EPC ratings with c.82.7% (2023: 73.7%) of the portfolio EPC C or better

·    126 properties (2023: 144); 780 tenants (2023: 978)

·    England represented 77.1% (2023: 78.4%) (by value), Scotland 16.6% (2023: 16.2%) and Wales 6.3% (2023: 5.4%)

·    EPRA Occupancy (by ERV) at 77.5% (2023: 80.0%)

·    Average lot size c. £4.9m (2023: c. £4.9m)

·    Gross borrowings £316.7m (2023: £420.8m); cash and cash equivalents £56.7m (2023: £34.5m)

·    Group cost of debt (incl. hedging) decreased to 3.4% pa (2023: 3.5% pa) -100% fixed and hedged ensuring the maximum cost of debt in 2025 will not exceed 3.4%

·    Weighted average debt duration 2.9 years (2023: 3.5 years)

Stephen Inglis, Head of ESR Europe LSPIM Ltd., the Asset Manager, commented:

"2024 has been another challenging year for the property market, the REIT sector and the regional office market. Undoubtedly, we are beginning to see improvement in sentiment in the UK office market and companies' attitudes to staff attendance in the office. This will result in enhanced rents for the quality accommodation that Regional REIT provides and improving occupancy levels following our Capex programme, leading to an improved net income position.

With the restated strategy of Regional REIT continuing to be a high dividend paying REIT, coupled with an additional focus on pursuing added capital value through initiatives such as obtaining higher value planning consents, this does mean we are holding some vacant and part vacant assets for longer, which does have a short term impact on occupancy and net income. It is expected that the value improvement upside will be substantial on those assets. 

The Company's LTV remains a core focus for the Board, and the management continues to pursue options to reduce this, with all the Company's debt remaining 100% fixed and hedged to ensure that the maximum cost does not exceed 3.4%.

We look forward to updating shareholders on additional progress made by the Company's management team at the Company's full year results in March."

Capital expenditure programme

Further to the 13 November 2024 announcement, an additional two capital projects have been approved for £1.5m resulting in ten current projects involving a total investment of £16.5m.

Highlight:

·    Capitol Park, Leeds - £1.2m deal led refurbishment of Truman House (10,297 sq. ft). delivering an annual rent of £0.3m (£23.09 /sq.ft.), an expected valuation uplift of c.£1.8m and raising the rental tone benefiting other assets in the Company's portfolio at this location.

Q4 2024 Dividend Declaration

As previously indicated, the Company is pleased to declare that it will pay a dividend of 2.2 pence per share ("pps") for the period 1 October 2024 to 31 December 2024. The entire dividend will be paid as a REIT property income distribution ("PID").

Shareholders have the option 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/investors-dividend/dividend-reinvestment-plan.

The key dates relating to this dividend are:

Prior to the capital raise and share consolidation* the Company declared a Q1 2024 dividend of 1.2pps. Post the capital raise and subsequent share consolidation the Company declared a Q2 2024 dividend of 2.2pps on 10 September 2024, Q3 2024 dividend of 2.2pps on 13 November 2024 and is now declaring a Q4 2024 dividend of 2.2pps.

*On 29 July 2024, the shares in issue were consolidated by ratio of 1 new share for every 10 shares.

The level of future payment of dividends will be determined by the Board having regard to the UK REIT requirements, the financial position and performance of the Group at the relevant time, the interest of shareholders and the long-term future of the Company.

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.

Tables may not sum due to rounding.

pps: percentage points

Further Background Information

Lettings Update - Summary of Activity since 30 September 2024:

Since 30 September 2024, notable new lettings:

·    1-4 Llansamlet Retail Park, Cardiff - Dreams Ltd. has let 10,139 sq. ft. of space to December 2034 at a rental income of £192,641 (£19.00/ sq. ft.)

·    Global Reach, Cardiff - Relx UK Ltd. has renewed existing lease for 7,954 sq. ft. of space to October 2029 at a rental income of £107,379 (£13.50/ sq. ft.)

·    14-16 Rossmore Business Village, Ellesmere Port - The Alexander Beard Group of Companies Ltd. has renewed existing lease for 4,369 sq. ft. of space to October 2034 with a break option in 2030, at a rental income of £61,200 pa (£14.00/ sq. ft.).

·    The Royals, Altrincham Road, Manchester - The Golfers Club U.K. Ltd. has renewed existing lease for 5,470 sq. ft. of space to December 2025 with a break option in March 2025, at a rental income of £82,050 pa (£15.00/ sq. ft.).

·    Bear Brook Office Park, Aylesbury- Ulrich Attachments Ltd. has let 3,347 sq. ft. of office space to November 2034 with the option to break in 2029, at a rental income of £51,500 pa (£15.39 / sq. ft.).

·    Mandale Business Park, Durham - NHS Property Services Ltd. has renewed existing lease for 5,100 sq. ft. of space to November 2034 with a break option in 2029, at a rental income of £58,750 pa (£11.52/ sq. ft.).

·    Woodlands Court, Bristol - Routeco Ltd. has let 2,881 sq. ft. of office space to November 2034 with the option to break in 2029, at a rental income of £54,739 pa (£19.00 / sq. ft.).

Sales

Total disposals in the year to 31 December 2024 amounted to £30.8m (before costs), in line with their respective sale valuation dates and reflecting a net initial yield of 8.3% (10.6% excluding vacant units).

Subsequent Events summary post 31 December 2024

Since the quarter end, the Group has successfully completed the following sales:

·    Three sales completed totalling £1.6m (before costs), 11.1% above pre-sale valuations.

Sales

The controlled asset disposal programme will continue to assist in the reduction of the LTV. It currently comprises of 43 sales totalling c £104.3m:

·    2 disposals contracted for c. £2.6m

·    4 disposals totalling c. £12.3m under offer and in legal due diligence

·    2 further disposals totalling c. £3.2m are in negotiation

·    12 further disposals totalling c. £21.3m are on the market

·    23 potential disposals totalling c. £64.9m are being prepared for the market

Forthcoming Events

25 March 2025            Full year 2024 Preliminary Results Announcement

15 May 2025               Q1 2025 Trading Update and Outlook Announcement

                                    Q1 2025 Dividend Declaration Announcement

15 May 2025               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 ESR Europe LSPIM Limited, the Asset Manager, and ESR Europe Private Markets Limited, the Investment Adviser.

Regional REIT's commercial property portfolio is comprised wholly of income producing UK assets, predominantly offices located in the regional centres outside of the M25 motorway. The portfolio is geographically diversified, with 126 properties, 1,271 units and 780 tenants as at 31 December 2024, with a valuation of c.£622.5m.

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.

LEI: 549300D8G4NKLRIKBX73