Property Portfolio Sector and Region Splits by Valuation and Income as at 31 December 2025

 

By Valuation

As at 31 December 2025, 90.3% (2024: 90.7%) of the portfolio by market value was offices and 3.7% (2024: 3.6%) was retail. The balance was made up of industrial, 4.3% (2024: 3.7%) and other, 1.7% (2024: 1.7%). By UK region, as at 31 December 2025, Scotland represented 16.6% (2024: 16.6%) of the portfolio and England 76.1% (2024: 77.1%); the balance of 7.2% (2024: 6.3%) was in Wales. In England, the largest regions were the Midlands, the North East and the South East.

 

By Income

As at 31 December 2025, 90.4% (2024: 90.5%) of the portfolio by income was offices and 3.8% (2024: 4.4%) was retail. The balance was made up of industrial, 3.9% (2024: 3.2%), and other, 1.9% (2024: 1.9%). By UK region, as at 31 December 2025, Scotland represented 15.7% (2024: 16.0%) of the portfolio and England 77.1% (2024: 78.0%); the balance of 7.1% was in Wales (2024: 6.0%). In England, the largest regions were the Midlands, the South East and the North East.

 

Lease Expiry Profile

The WAULT on the portfolio is 4.5 years (2024: 4.6 years); WAULT to first break is 2.7 years (2024: 2.9 years). As at 31 December 2025, 12.8% (2024: 13.8%) of income was from leases which will expire within one year, 12.1% (2024: 10.5%) between one and two years, 37.5% (2024: 39.7%) between two and five years and 37.7% (2024: 36.1%) after five years.

 

Tenants by Standard Industrial Classification (SIC)

As at 31 December 2025, 12.3% of income was from tenants in the information and communication activities sector (2024: 10.5%), 11.5% from the administrative and support service activities sector (2024: 11.2%), 9.8% from the wholesale and retail trade sector (2024: 8.7%), 7.5% from the professional, scientific and technical activities sector (2024: 11.8%) and 6.9% from the education sector (2024: 5.9%). The remaining exposure is broadly spread.

 

No tenant represents more than 3.0% of the Group's rent roll as at 31 December 2025, the largest being 2.8% (2024: 2.8%).

 

FINANCIAL REVIEW

 

Net Asset Value

Between 1 January 2025 and 31 December 2025, the EPRA NTA* of the Group decreased to £315.2m (IFRS NAV: £319.3m) from £340.8m (IFRS NAV: £351.6m) as at 31 December 2024, equating to a decrease in the diluted EPRA NTA of 15.8pps to 194.4pps (IFRS: 197.0pps). This is after the dividends declared in the period amounting to 9.7pps. (See Note 13).

 

The investment property portfolio was valued at £555.2m (2024: £622.5m). The decrease of £67.3m since the December 2024 year-end is a reflection of revaluation movement loss of £28.6m, £48.4m of net property disposals and £3.2m loss on the disposal of investment properties, offset by subsequent expenditure of £11.8m and acquisitions of £1.1m. Overall, on a like-for-like basis, the portfolio value decreased by 5.0% during the period, after adjusting for capital expenditure, acquisitions and disposals during the period.

 

The table below sets out the acquisitions, disposals and capital expenditure for the respective periods:

 

		Year ended	Year ended
		31 December 2025 (£m)	31 December 2024 (£m)
Acquisitions
	Net (after costs)	1.2	0.0
	Gross (before costs)	1.1	0.0
Disposals
	Net (after costs)	48.4	28.6
	Gross (before costs)	51.6	30.8
Capital Expenditure
	Net (after dilapidations)	11.8	8.2
	Gross (before dilapidations)	11.8	8.5

 

*The Group has determined that EPRA net tangible assets (NTA) is the most relevant measure.
Further details of the EPRA performance measures are provided in the full Annual Report.

 

The diluted EPRA NTA per Share decreased to 194.4pps (2024: 210.2pps). The EPRA NTA is reconciled in the table below:

 

	£m		Pence per Share
Opening EPRA NTA (31 December 2024)		340.7	210.2
Net rental and property income		40.3	24.8
Administration and other expenses		(9.9)	(6.1)
Loss on the disposal of investment properties		(3.2)	(2.0)
Change in the fair value of investment properties		(26.6)	(16.4)
Change in value of right of use assets		(0.1)	(0.1)
EPRA NTA after operating profit		341.1	210.4
Net finance expense		(11.2)	(6.9)
Share of loss of associate company		0.0	(0.0)
Realised gain on derivative financial instruments		1.2	0.8
EPRA NTA before dividends paid		331.1	204.3
Dividends paid*		(15.7)	(9.7)
EPRA NTA before capital raise		315.4	194.6
Capital raise expenses		(0.3)	(0.2)
Closing EPRA NTA (31 December 2025)		315.2	194.4

 

Table may not sum due to rounding

* As at 31 December 2025, there were 162,088,483 Ordinary Shares in issue.

 

Income Statement

 

Operating profit before gains and losses on property assets and other investments for the year ended 31 December 2025 amounted to £30.3m (2024: £36.1m). Loss after finance and before taxation was £16.4m (2024: £39.5m). 2025 included a full rent roll for the portfolio of properties held as at 31 December 2024, plus the partial rent roll for properties disposed of during the period.

 

Rental and property income amounted to £60.4m, excluding recoverable service charge income and other similar items (2024: £65.2m). The decrease was primarily the result of the decrease in the rent roll being held during the year to 31 December 2025.

 

More than 80% of the rental income is collected within 30 days of the due date and the allowance for doubtful debts in the period amounted to £0.3m (2024: £0.5m).

 

Non-recoverable property costs, excluding recoverable service charge income and other similar costs, amounted to £20.2m (2024: £19.3m), and the rent roll decreased to £50.4m (2024: £60.7m).

 

Realised losses on the disposal of 14 of the investment properties and 4-part sales in the period amounted to £3.2m (2024: 3.2m). The change in the fair value of investment properties amounted to a loss of £28.6m (2024: loss of £54.7m) and an adjustment of £2.0m (2024: £2.0m) from rent smoothing.

 

Net capital expenditure amounted to £11.8m (2024: £8.2m). The change in value of right of use asset amounted to a charge of £0.1m (2024: charge £0.1m).

 

Interest income amounted to £1.0m (2024: £1.4m).

 

Finance expenses amount to £12.2m (2024: £15.2m). The decrease is due to the repayment of the £50m Retail Bond in August 2024 and bank borrowing repayments in 2024 of £54.0m and in 2025 of £50.5m.

 

The EPRA cost ratio, including direct vacancy costs, was 49.8% (2024: 44.7%). The EPRA cost ratio, excluding direct vacancy costs was 18.4% (2024: 17.4%). The ongoing charges for the year ending 31 December 2025 were 9.0% (2024: 9.3%) and excluding direct vacancy costs 3.3% (2024: 3.5%).

 

The EPRA Total Return from Listing to 31 December 2025 was 4.3% (2024: 5.6%), with an annualised rate of 0.4% pa (2024: 0.6% pa).

 

Dividend

In relation to the year from 1 January 2025 to 31 December 2025, the Company declared dividends totalling 10.00pps (2024: 7.8pps)*. A schedule of dividends can be found in the full Annual Report.

 

Going forward, the Company will distribute a minimum 90% of the profit from the property rental business, which is in accordance with regulatory requirements, but will retain earnings where possible to support the business' accretive and essential capital expenditure programme. The Board believes this approach is firmly in shareholders' long-term interests of improving the quality of the portfolio to benefit from rental and capital uplift and remains confident in the Company's strategy and medium-term outlook.

 

* During 2024 the Company offered 15 new Ordinary Shares for every 7 existing Ordinary Shares. This resulted in an increase of 1,105,149,821 Ordinary Shares being issued. Subsequently there was a 10 for 1 consolidation with the resulting Ordinary Shares in issue being 162,088,483.

 

Debt Financing and Gearing

Borrowings comprise third-party bank debt. The bank debt is secured over properties owned by the Group and repayable over the next two to four years. The weighted average maturity of the bank debt is 2.6 years (2024: 2.9 years).

 

The Group's borrowing facilities are with the Scottish Widows Limited & Aviva Investors Real Estate Finance, Royal Bank of Scotland, Bank of Scotland and Santander UK, Scottish Widows Limited, and Santander UK. The total bank borrowing facilities at 31 December 2025 amounted to £266.2m (2024: £316.7m) (before unamortised debt issuance costs), with £nil available to be drawn.

 

At 31 December 2025, the Group's cash and cash equivalent balances amounted to £37.7m (2024: £56.7m), of which £37.7m (2024: £55.9m) was unrestricted cash.

 

The Group's net loan to value ("LTV") ratio stands at 40.4% (2024: 41.8%) before unamortised costs.

 

Debt Profile and LTV Ratios as at 31 December 2025

	Facility	Outstanding debt*	Maturity date	Gross loan to value**	Annual interest rate
Lender	£'000	£'000		%	%
Scottish Widows Ltd. and Aviva Investors Real Estate Finance	118,339	118,339	Dec-27	50.8	3.28 Fixed
Royal Bank of Scotland, Bank of Scotland & Santander UK	72,449	72,449	Dec-28	44.9	2.40 over 3mth £ SONIA
Scottish Widows Ltd	32,325	32,325	Dec-28	45.6	3.37 Fixed
Santander UK	43,113	43,113	Jun-29	48.5	2.20 over 3 months £ SONIA
	266,226	266,226

 

Table may not sum due to rounding.

 

The Investment Adviser continues to monitor the borrowing requirements of the Group. As at 31 December 2025, the Group had headroom against its borrowing covenants.

 

The net gearing ratio (net debt to Ordinary Shareholders' equity (diluted) of the Group was 70.3% as at 31 December 2025 (2024: 73.9%).

 

Interest cover, excluding amortised costs, stands at 3.0 times (2024: 2.7 times) and including amortised costs, stands at 2.5 times (2024: 2.4 times).

 

* Before unamortised debt issue costs

** Based on Colliers International Property Consultants Ltd.

 

Hedging

The Group applies an interest hedging strategy that is aligned to the property management strategy and aims to mitigate interest rate volatility on at least 90% of the debt exposure.

 

		31 December 2025	31 December 2024
		%	%
Borrowings interest rate hedged		101.0	100.0
Thereof:
Fixed		56.6	52.7
Swap		32.3	30.4
Cap		12.1	16.9
WACD1		3.3	3.4

 

Table may not sum due to rounding

¹WACD - Weighted Average Effective Interest Rate including the cost of hedging

 

Tax

The Group entered the UK REIT regime on 7 November 2015 and all the Group's UK property rental business operations became exempt from UK corporation tax from that date. The exemption remains subject to the Group's continuing compliance with the UK REIT rules.

 

On 9 January 2018, the Company registered for VAT purposes in England.

 

During 2025, the Group recognised a tax credit of £14,083 (2024: charge of £64,590), in relation to entities that are not included in the REIT tax regime.

 

PRINCIPAL RISKS AND UNCERTAINTIES

 

Effective risk management is embedded throughout Regional REIT and underpins the execution of the Company's strategy, the positioning of the business for growth and maintaining the regular income over a long-term sustainable horizon.

 

Risk Framework and Approach

The Board acknowledges the importance of embedding a framework to identify, actively monitor, manage and mitigate its risks, which include, but are not limited to: market, major market disruption, funding, tenants, financial and tax changes, operational, cyber security, regulatory, environmental and emerging risks.

 

The Board has overall responsibility for the Company's system of risk management and internal controls. It is supported by the Audit Committee in the management of risk. The Audit Committee is responsible for determining the principal risks facing the business and reviewing, at least annually, the effectiveness of the Company's financial control, risk management and internal control processes.

 

Over the long term, the business will face other challenges and emerging threats for which it remains vigilant.

 

However, the Board also views the risks as opportunities that, when effectively managed, can enhance performance. Thus, having an effective risk management process is key to support the delivery of the Company's strategy.

 

Approach to Managing Risk - Identification, Evaluation And Mitigation

The risk management process emphasis is upon awareness and is structured to identify, evaluate, manage and mitigate, rather than eliminate risks faced. The Company maintains a detailed and formal matrix of current principal risks, which uses risk scoring to evaluate risks consistently. This allows the risks to be monitored and mitigated as part of a risk management process with the Audit Committee undertaking, at a minimum on a six-monthly basis or more frequently if required, a robust evaluation of these risks facing the Company.

 

Risks are identified and assessed according to their potential impact on the Company and to their likelihood occurrence. The Audit Committee utilises the risk matrix to prioritise individual risks, allocating scores to each risk for both the likelihood of its occurrence and the severity its impact. Those with the highest gross rating in terms of impact are highlighted as top risks within the matrix and are defined as principal risks.

 

Although the Board believes that it has a robust framework of internal controls in place, it recognises it can provide only reasonable, and not absolute, assurance against material financial misstatement or loss and is designed to manage, not eliminate, risk.

 

Risk Appetite

Taking risks is an essential and inherent facet of operating any business. As such the risk management approach is not to eliminate all risk but to ensure that appropriate strategies are in place to identify, actively monitor, manage and mitigate the key risks.

 

The Board is responsible for defining the level of risk that the Company assumes and ensuring that it remains in-line with the Company's strategy. Risk appetite is integral to the Board's approach to risk management, business planning and decision making. The level and type of risk that the Company is willing to bear will vary over time.

 

The Board, in collaboration with the Investment Adviser, and with the latest information available, regularly reviews the risk appetite of the Company, allowing a prompt response to identified emerging risks.

 

Emerging Risks

The Board is cognisant of emerging risks defined as potential trends, sudden events or changing risks, which are characterised by a high degree of uncertainty in terms of probability of occurrence and possible effects on the Company. Once emerging risks become sufficiently clear, they may be classed as a principal risk and added to the risk matrix.

 

To help manage emerging risks and discuss other wider matters affecting property, the Board has an annual strategy meeting. The Board considers having a clear strategy is the key to managing and mitigating emerging risk.

 

The Company's principal risks consist of the nine most significant risks which are composed of six strategic and three operational risks. The risks relate to market, major market disruption, funding, tenants, financial and tax changes, operational, cyber security, regulatory, environmental and emerging risks.

 

The below list, in no particular order, sets out the current identifiable principal and emerging risks, including their impact and the actions taken by the Company to mitigate them. It does not purport to be an exhaustive list of all the risks faced by the Company.

 

Principal Risk Summary

Principal Risk		Evolution of the trend during the year
1.	Market	ó
2.	Major market disruption
3.	Funding	ó
4.	Tenants	ó
5.	Financial and tax changes	ó
6.	Operational	ó
7.	Cyber security
8.	Accounting, legal and regulatory	ó
9.	Environmental and energy efficiency standards	ó

 

1.   Market

Potential Impact Mitigation Movement in the period ó The value of the Company's assets is dependent on the strength of leasing and capital markets. ·    A clearly defined investment strategy, which is reviewed annually. ·    A defined and rigorous investment appraisal process. ·    Acquire portfolios, which offer shareholders diversification of investment risk by investing in a range of geographical areas, number of properties. ·    Supply and demand market information is reviewed continuously to assist in acquisitions and disposals. ·    All the above steps are monitored to ensure the strategy is implemented.   ·    The property portfolio remains balanced across a range of geographical areas and a large number of investment properties. ·    Predominately, acquiring office properties in the UK and outside of the M25 motorway. However, the Group may invest in property portfolios in which up to 50% of the properties (by market value) are situated within the M25 motorway.   ·    The Company continues to purchase properties in the UK outside the M25 motorway. ·    No single property, in the ordinary course of business, is expected to exceed 10% of the Company's aggregate Investment Properties valuation. However, the Board may, in exceptional circumstances, consider a property having a value of up to 20% of the Company's investment property value at the time of investment.   ·    300 Bath Street (2024: 300 Bath Street) is the highest valued property, which equates to 3.4% (2024: 2.9%) of the Company's investment properties. ·    No more than 20% of the Company's investment property value shall be exposed to any single tenant or group undertaking of that tenant. ·    The Company's largest single tenant exposure is 2.8% (2024: 2.8%) of gross rental income, being Global Banking School Ltd. (2024: EDF Energy Ltd.).   ·    Speculative development (i.e., properties under construction, but excluding any refurbishment works, which have not been pre-let) is prohibited.   ·    No speculative construction was undertaken during the year under review. ·    The value of the properties is protected as far as possible by an active asset management programme, which is regularly reviewed against the business plan for each property. ·    The Investment Adviser continues to actively manage the investment properties in accordance with market conditions and the individual asset programme.
2.   Major market disruption Potential Impact Mitigation Movement in the period The economic disruption resulting from major geopolitical events or another pandemic could impact rental income; the ability of Valuers to discern valuations; the ability to access funding at competitive rates, adherence to banking covenants, maintain a dividend policy, and adhere to the HMRC REIT regime requirements.   Significant geopolitical events could impact the health of the UK economy, resulting in borrowing constraints, changes in demand by tenants for suitable properties, the quality of the tenants, and ultimately the property portfolio value.   ·    The Investment Adviser continues to adapt and, as required, to support tenants. ·    The property portfolio has been deliberately constituted to ensure a diverse range of tenants by standard industrial classification, which ensured the many tenants, being designated as essential services, continued to operate throughout the recent pandemic. ·    Close relationships with lenders ensuring continued dialogue around covenants and ability to access funding as required at competitive rates. ·    Initial vetting of all third-party providers with annual due diligence reviews, including the review of business continuity capabilities to minimise when remote working has been necessitated. ·    The Company operates with a sole focus on the UK regions, with no foreign currency exchange exposure. It remains well positioned with a deliberately diverse standard industry classification of tenants generating 659 (2024: 780) income streams which are located in areas of expected economic growth ·    The Board receives advice on macro-economic risks from the Investment Adviser and other advisers and acts accordingly.   ·    The Company has continued to scrutinise all current risk mitigation approaches employed and to work closely with all parties. ·    There remains a risk that property valuations and the occupancy market may be impacted by change in the political landscape
3.   Funding Potential Impact Mitigation Movement in the period ó The Company may not be able to secure further debt or on acceptable terms, which may impinge upon investment opportunities, the ability to grow the Company and distribute an attractive dividend.   ·    The Investment Adviser has a Corporate Finance team dedicated to optimising the Company's funding requirements. ·    Funding options are constantly reviewed with an emphasis on reducing the weighted average cost of capital and lengthening the weighted average debt to maturity. ·    Borrowings are currently provided by a range of institutions with targeted staggered maturities. ·    Strong relationships with key long-term lenders. ·    Continual monitoring of LTV.   ·    LTV decreased to 40.4% (2024: 41.8%). ·    Weighted average debt term decreased to 2.6 years (2024: 2.9 years). ·    Weighted average cost of capital, including hedging costs was 3.3% (2024: 3.4%). Bank reference interest rates may be set to become more volatile, accompanying volatile inflation ·    Policy of hedging at least 90% of variable interest rate borrowings. Fixed, swapped and capped borrowing amounted to 100.0% (31 December 2023: 100.0%). ·    Borrowings are currently provided by a range of institutions with targeted staggered maturities.   ·    Continued adherence to the hedging policy. Breach of covenants within the Company's funding structure could lead to a cancellation of debt funding if the Company is unable to service the debt. ·    The Investment Adviser 's corporate finance team reviews the applicable covenants on a regular basis and these are considered in future operational decisions. ·    Compliance certificates and requested reports are prepared as scheduled. ·    The Company continues to have headroom against the applicable borrowing covenants.   4.   Tenants
Potential Impact	Mitigation	Movement in the period ó
Lower occupier demand or poor selection of tenants could result in lower income from reduced lettings or defaults.	·    An active asset management programme with a focus on the Investment Adviser working with individual tenants to assess any occupational issues and to manage any potential bad debts. ·    Diversified portfolio of properties let, where possible, to a large number of low-risk tenants across a wide range of standard industrial classifications throughout the UK. ·    Potential acquisitions are reviewed for tenant overlap and potential disposals are similarly reviewed for tenant standard industrial classification concentration.	·    This risk remains stable in view of the increasing diversification of properties, tenants and geographies in the portfolio. ·    The tenant mix and their underlying activity has continued to increasingly diversify, with the number of tenants amounting to 659 at the year-end (2024:780).
A high concentration of lease term maturity and/or break options could result in a more volatile contracted rent roll.	·    The portfolio lease and maturity concentrations are monitored by the experienced Investment Adviser to minimise concentration. ·    There is a focus on securing early renewals and increased lease periods. ·    The requirement for suitable tenants and the quality of the tenant is managed by the experienced Investment Adviser who maintains close relationships with current tenants and with letting agents.	·    The WAULT to first break as at 31 December 2025 was 2.7 years (2024: 2.9 years). ·    The largest tenant is 2.8% (2024: 2.8%) of the gross rental income, being EDF Energy Limited. ·    The team remains vigilant to the financial well-being of our current tenants and continues to liaise with tenants and agents.
Increased working from home impacts tenant demand for space.	·    Providing high-quality working environment in portfolio properties.	·    There is continued evidence of a return to working from office space.

5.    Financial and Tax Changes

Potential Impact	Mitigation	Movement in the period ó
Changes to the UK REIT and non-REIT regimes tax and financial legislation.	·    The Board receives advice on these changes where appropriate and will act accordingly.	·    Advice is received from several corporate advisers, including tax adviser KPMG LLP and the Company adapts to changes as required.

 

6.     Operational

Potential Impact	Mitigation	Movement in the period ó
Business disruption could impinge on the normal operations of the Company.	·    The contingency plans in place to ensure there are no disruptions to the core infrastructure, which would impinge on the normal operations of the Company.	·    The Investment Adviser annually reviews the Disaster and Business Continuity Plans.
	·    An annual due diligence exercise is carried out on all principal third-party service providers.	·    The annual due diligence visits were undertaken with the Company's principal third-party service providers. No concerns were identified from the visits.
	·    As an externally managed investment company, there is a continued reliance on the Investment Adviser and other third-party service providers.	·    The Investment Adviser is a viable going concern.
	·    All acquisitions undergo a rigorous due diligence process and all multi-let properties undergo an annual comprehensive fire risk.	·    The Investment Adviser continues to monitor changes in Health and Safety regulations.
	·    The impact of physical damage and destruction to investment properties is mitigated by ensuring all are covered by a comprehensive building, loss of rent and service charge plus terrorism insurance with the exception of a small number of "self-insure" arrangements covered under leases.	·    The Investment Adviser reviews the adequacy of insurance cover on an ongoing basis.

 

7.  Cyber security

Potential Impact	Mitigation	Movement in the period
Information security and cyber threat resulting in data loss, or negative regulatory, reputational, operational (including GDPR), or financial impact.	·    The Investment Adviser has a dedicated Information Technology team, which monitors information security, privacy risk and cyber threats ensuring their respective operations are not interrupted. ·    As required the building management systems are reviewed for cyber security risk.	·    The Investment Adviser reviews the respective Information Technology polices and the material third party service suppliers on as required basis to ensure they reflect current and possible future threats.
Cyber fraud could result in financial loss to the Group and inability to operate.	·    The Investment Adviser takes all appropriate precautions to ensure cyber deterrents are deployed.	·    This remains an ever evolving threat.

 

8.  Accounting, Legal, and Regulatory

Potential Impact	Mitigation	Movement in the period ó
Changes to accounting, legal and/or regulatory legislation, including sanctions could result in changes to current operating processes.	·    Robust processes are in place to ensure adherence to accounting, legal and regulatory requirements, including sanctions and Listing Rules. ·    All contracts are reviewed by the Company's legal advisors. ·    The Administrator, Sub-Administrator and the Company Secretary attend relevant Board meetings in order to be aware of all announcements that need to be made. ·    All compliance issues are raised with the Company's Financial Adviser.	·    The Company continues to receive advice from its corporate advisers and has incorporated changes where required. ·    The Administrator and Company Secretary continue to attend all Board meetings and advise on Listing Rule requirements in conjunction with the Corporate Broker and Financial Adviser.
Loss of REIT status	·    The HMRC REIT regime requirements are monitored by the Investment Adviser and external advisors including the Company's tax adviser KPMG LLP and its Sub-Administrator Waystone Administration Solutions (UK) Limited.	·    The Company continues to receive advice from external advisers on any anticipated future changes to the REIT regime.

 

9.   Environmental and Energy Efficiency Standards

Potential Impact	Mitigation	Movement in the period ó
The Company's cost base could be impacted, and management time diverted, due to climate changes and associated legislation.	·    The Board receives regular updates on environmental, social, governance and potential legislation changes from its advisers. ·    The Company has engaged an environmental consultancy, CBRE, to assist with improving the Global Real Industry Sustainability Benchmark (GRESB).	·    Additional attention continues to be devoted to this area to ensure the appropriate approach is applied and embedded in Company activities.
Changes to the environment could impact upon the operations of the Company.	·    Property acquisitions undergo a rigorous due diligence process, including an environmental assessment. ·    The Investment Adviser monitors the portfolio for any detrimental environmental impact, by way of frequent inspections of the properties, and the annual insurance review process.	·    The rigour of the environmental assessments process continues to be reviewed with the aim of enhancing it.
An Energy Performance Rating of E and below may impact the Company's ability to sell or lease an asset.	·    The Company continues to review each property to ensure adherence with Energy Performance Rating requirements. ·    The energy efficiency of investment acquisitions is fully considered as part of the due diligence process for the acquisition of a property.	·    The Investment Adviser is continually reviewing the feasibility of enhancing Energy Performance Ratings to exceed the minimum requirement.

 

Changes to the Principal Risks and Uncertainties

The Board, via the Audit Committee, has reviewed and agreed the movement during the year to each of the identified principal risks and uncertainties following review of these risks, having considered the characteristics of these and the broader economic and geopolitical factors influencing them.

 

The risk framework has been refined for 2025 to improve clarity and alignment with the Company's operating environment: the former Strategic Risk has been retitled Market Risk to better reflect its underlying drivers, the separate Valuation Risk has been removed as valuation movements are now captured within Market and Funding risks, and the previous Healthcare and Economic risks have been consolidated into Major Market Risk to reflect their overlapping macroeconomic characteristics and combined impact on the business.

 

A potential emerging risk is the adoption of artificial intelligence in office-based roles, which could pose both a risk and opportunity for the demand of office space. The Board, alongside the Investment Adviser, continues to monitor developments in this area.

 

The potential impact of these risks on the Company's long-term strategy is considered and evaluated to ensure informed decision-making and proactive management.

 

SUSTAINABILITY REPORT

The Sustainability Report is provided in the full Annual Report.

 

GOING CONCERN AND VIABILITY STATEMENT

 

Going concern

The Directors confirm that they have a reasonable expectation that the Group has adequate resources to continue as a going concern. This expectation is underpinned by having made an assessment of the Group's ability to continue in operational existence, giving due consideration to the Group's cashflow forecast, which encompasses cash resources, rental income, acquisitions and disposals of investment properties, elective and committed capital expenditure, dividend distributions and the borrowing facilities interest payments and the respective maturities.

 

The group ended the year under review with £37.7m of cash and cash equivalents of which £7k was restricted cash. The Group remained compliant with all loan covenants on borrowing facilities, with a net LTV of c. 40.4%, based upon the value of the Group's investment properties as at 31 December 2025. Rental income collections remained strong with 99.3% of rent invoiced in the year collected as at 13 March 2026.

 

Given the amount of unrestricted cash currently held by the Group and, with the next borrowing due to mature being the Scottish Widows Ltd. and Aviva Investors Real Estate Finance £118.3m facility in December 2027, the Directors are satisfied that the Group and Company have adequate resources to continue in operational existence for a period of at least 12 months from the date that these Financial Statements were approved. Based on the above, together with available market information, the Directors are not aware of any material uncertainties that may cast significant doubt upon the Group's ability to continue as a going concern. Accordingly, the Directors consider that it is appropriate to continue to prepare the Financial Statements on a going concern basis.

 

Viability Statement

In accordance with the Association of Investment Companies Corporate Governance Code (the "AIC Code") the Directors have assessed the prospects of the Group and future viability over a three-year period from the year end, being longer than the 12 months required by the going concern provision. The Board conducted a review with regard to the Group's long-term strategy, principal risks and risk appetite, current position asset performance and future plans. Following this review, the Board determined that three years to 31 December 2028 is the maximum timescale over which the performance of the Group can be forecast with any material degree of accuracy and is therefore an appropriate period over which to consider the Group's viability. Achievement of the one-year forecast has a greater level of certainty and is used to set near-term targets across the Group. Achievement of the subsequent forecasted years is less certain than the one-year forecast. However, the Board's forecast provides a longer-term outlook against which strategic decisions can be made.

 

Assessment of Review Period

The Board chose to conduct the review for a three-year period giving consideration to:

 

• The Group's WAULT of 2.7 years to first break

• The Group's detailed forecast covering a rolling three-year period

• The Group's weighted average debt to maturity was 2.6 years as at 31 December 2025

 

Assessment of Prospects and Viability

The financial planning process considers the Group's profitability, capital values, LTV, cashflows, dividend cover, banking covenants, funding obligation and other key financial metrics over the coming three-year period. In addition, property companies are now operating in a more favourable lending climate, with the lowered LTV and strengthened balance sheet the Group is in a good position to refinance the next bank loan maturity in December 2027 of £118.3m.

 

Furthermore, the Board, in conjunction with the Audit Committee, carried out a robust assessment of the principal risks and uncertainties facing the Group, including those that would threaten its business model, strategy, future performance, solvency or liquidity over the three-year period. The risk review process provided the Board with assurance that the mitigations and management systems are operating as intended.

 

The Board believes that the Group is positioned to manage its principal risks and uncertainties successfully, notwithstanding the current economic and political environment. The Board's expectation is further underpinned by the regular briefings provided by the Investment Adviser. These briefings consider market conditions, investment opportunities, the Company's ability to raise third-party funds and deploy these promptly, changes in the regulatory landscape and current political and economic risks and uncertainties. These risks, and other potential risks which may arise, continue to be closely monitored by the Board.

 

Confirmation of Viability

The Board confirms that it has a reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due over the next three years, taking into account the Group's current position and the principal risks and uncertainties.

 

The Directors have carefully reviewed areas of potential financial risk. The Directors have satisfied themselves that the Group has adequate financial resources to continue in operational existence for the foreseeable future.

 

Extract FROM the Directors' REPORT

The full Directors' Report, which includes the Corporate Governance Statement, is provided in the full Annual Report.

 

Share Capital

As at 31 December 2025, the Company's total issued share capital was 162,088,483 Ordinary Shares (2024: 162,088,483).

 

All of the Company's Ordinary Shares are listed on the Main Market segment of the London Stock Exchange and each Ordinary Share carries one vote.

 

There is only one class of Ordinary Shares in issue for the Company, in adherence to the REIT requirements. The only other shares the Company may issue are particular types of non-voting restricted preference shares, of which none (2024: none) are currently in issue.

 

At the AGM held on 15 May 2025, the Directors were granted authority to allot Ordinary Shares on a non- pre-emptive basis for cash up to a maximum number of 16,208,848 Shares (representing approximately 10% of the number of Ordinary Shares in issue on 28 March 2025).

 

The Directors were also granted the authority to disapply pre-emption rights in respect of the allotment of Ordinary Shares up to a maximum number of 16,208,848 Shares (being 10% of the issued Share capital on 28 March 2025) where the allotment of such Shares is for the sole purpose of financing an acquisition or other capital investment as defined by the Pre-Emption Group's Statement of Principles.

 

No Shares were issued under these authorities during the year under review, and the authorities will expire at the Company's 2026 AGM where resolutions for their renewal will be sought, or, if sooner, on 15 August 2026.

 

At the AGM held on 15 May 2025, the Company was authorised to purchase up to a maximum of 16,208,848 of its own Ordinary Shares (being 10% of the Company's issued Share capital on 28 March 2025). No Shares have been purchased under this authority during the year under review, which will expire at the Company's 2026 AGM, where a resolution for the renewal of this authority will be sought, or, if sooner, on 15 August 2026.

 

Restrictions on the Transfer of Shares

Subject to the Articles, as well as applicable foreign securities laws, a shareholder may transfer all or any of their Ordinary Shares in any manner which is permitted by Guernsey law or in any other manner which is from time to time approved by the Board.

 

If any Ordinary Shares are owned directly, indirectly or beneficially by a person believed by the Board to be a "Non-Qualified Holder" (see below), the Board may give notice to such person requiring them either: (i) to provide the Board within 30 days of receipt of such notice with sufficient satisfactory documentary evidence to satisfy the Board that such person is not a Non-Qualified Holder, or (ii) to sell or transfer their Ordinary Shares to a person who is not a Non-Qualified Holder within 30 days and within such 30 days to provide the Board with satisfactory evidence of such sale or transfer and pending such sale or transfer, the Board may suspend the exercise of any voting or consent rights and rights to receive notice of or attend any meeting of the Company and any rights to receive dividends or other distributions with respect to such Ordinary Shares.

 

Where condition (i) or (ii) is not satisfied within 30 days after the serving of the notice, (i) the person will be deemed, upon the expiration of such 30 days, to have forfeited their Ordinary Shares or (ii) if the Board in its absolute discretion so determines, the Company may dispose of the Ordinary Shares at the best price reasonably obtainable and pay the net proceeds of such a disposal to the former holder.

 

A Non-Qualifying Holder is defined as any person whose ownership of Ordinary Shares, or the transfer of Ordinary Shares to such person, may:

 

• cause the Company's assets to be deemed "plan assets" for the purposes of the US Internal Revenue Code of 1986 (as amended), or US Employee Retirement Income Security Act of 1974 (as amended);

• cause the Company to be required to register as an "investment company" under the US Investment Company Act 1940;

• cause the Company or any of its securities to be required under the US Exchange Act, the US Securities Act or any similar legislation;

• cause the Company not being considered a "Foreign Private Issuer", as such term is defined in rule 3b-4(c) under the US Exchange Act;

• cause the Investment Adviser to be required to register as a municipal Adviser under the US Exchange Act;

• result in the Company being disqualified from issuing securities pursuant to Rule 506 of Regulation D under the US Securities Act;

• cause a loss of partnership status for US federal income tax purposes or a termination of the US partnership under US Internal Revenue Code of 1986 (as amended), Section 708;

• result in a person holding Ordinary Shares in violation of the transfer restrictions put forth in any prospectus published by the Company from time to time; or

• cause the Company to be a "controlled foreign corporation" for the purposes of Section 957 of the US Internal Revenue Code of 1986, (as amended), or may cause the Company to suffer any pecuniary or tax disadvantage or any person who is deemed to be a Non-Qualified Holder by virtue of their refusal to provide the Company with information that it requires in order to comply with its obligations under exchange of information agreements.

 

Restrictions on Voting Rights

Other than those discussed above, the Company does not have any restrictions on shareholder voting rights.

 

STATEMENT OF DIRECTORS' RESPONSIBILITIES

 

The Directors are responsible for preparing the Annual Report and the Group Financial Statements in accordance with applicable laws and regulations.

 

Guernsey company law requires the Directors to prepare financial statements for each financial year. The Directors are required under the UK Listing Rules of the Financial Conduct Authority to prepare the group financial statements in accordance with UK-adopted International Accounting Standards. 

 

The financial statements of the Group are required by law to give a true and fair view of the state of the Group's affairs at the end of the financial period and of the profit or loss of the Group for that period and are required by UK-adopted International Accounting Standards to present fairly the financial position and performance of the Group.

 

In preparing each of the Group financial statements, the Directors are required to:

 

·    select suitable accounting policies and then apply them consistently;

·    present a true and fair view of the financial position, financial performance and cash flows of the Company;

·    present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

·    make judgements and accounting estimates that are reasonable and prudent;

·    state whether they have been prepared in accordance with UK-adopted International Accounting Standards; and

·    prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business.

 

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group's transactions; disclose with reasonable accuracy at any time the financial position of the Group; enable them to ensure that the financial statements comply with the requirements of The Companies (Guernsey) Law 2008 and, as regards the Group financial statements, the UK-adopted International Accounting Standards. They are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

 

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website.

 

Legislation in Guernsey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

 

RESPONSIBILITY STATEMENT OF THE DIRECTORS IN RESPECT OF THE CONSOLIDATED ANNUAL REPORT

 

Each of the Directors, whose names and functions are found within the full Annual Report, confirms that to the best of each person's knowledge:

 

·    the financial statements, prepared in accordance with UK-adopted International Accounting Standards, give a true and fair view of the assets, liabilities, financial position and profit of the Group and the undertakings included in the consolidation taken as a whole;

·    the Strategic Report, including the Investment Adviser's Report, includes a fair review of the development and performance of the business and the position of the Group and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties they face; and

·    the Annual Report and financial statements for the year ended 31 December 2025, taken as a whole, are fair, balanced and understandable and provide the information necessary for Shareholders to assess the Group's position, performance, business model and strategy.

 

This responsibility statement was approved by the Board of Directors and signed on its behalf by:

David Hunter

Chairman, 23 March 2026

FINANCIAL STATEMENTS

 

Consolidated Statement of Comprehensive Income for the Year Ended 31 December 2025

	Notes	Year ended 31 December 2025 £'000		Year ended 31 December  2024 £'000
Continuing Operations
Revenue
Rental and property income	5	78,628		90,981
Property costs	6	(38,373)		(45,021)
Net rental and property income		40,255		45,960
Administrative and other expenses	7	(9,944)		(9,851)
Operating profit before gains and losses on property assets and other investments		30,311		36,109
Loss on disposal of investment properties	14	(3,172)		(3,180)
Change in fair value of investment properties	14	(26,612)		(56,732)
Change in fair value of right of use assets	26	(139)		(138)
Operating profit/(loss)		388		(23,941)
Finance income	9	991		1,394
Finance expenses	10	(12,215)		(15,224)
Share of loss of associate company	16	(24)		-
Net movement in fair value of derivative financial instruments	25	(5,506)		(1,703)
Loss before tax		(16,366)		(39,474)
Taxation	11	14		(65)
Total comprehensive losses for the year (attributable to owners of the parent company)		(16,352)		(39,539)

 

Loss per Share - basic and diluted

12

(10.1)p

(33.5)p

 

The notes below are an integral part of these consolidated financial statements.

Total comprehensive losses all arise from continuing operations.

 

Consolidated Statement of Financial Position as at 31 December 2025

	Notes	31 December 2025 £'000		31 December  2024 £'000
Assets
Non-current assets
Investment properties	14	542,191		607,458
Right of use assets	26	10,710		10,849
Investments in associates	16	348		276
Non-current receivables on tenant loan	17	-		144
Derivative financial instruments	25	3,145		11,608
		556,394		630,335
Current assets
Derivative financial instruments	25	1,739		-
Trade and other receivables	18	40,717		35,079
Cash and cash equivalents	19	37,726		56,719
		80,182		91,798
Total assets		636,576		722,133
Liabilities
Current liabilities
Trade and other payables	20	(29,265)		(31,647)
Deferred income	21	(13,540)		(14,364)
Lease liabilities	26	(435)		-
Deferred tax liabilities	22	-		(741)
		(43,240)		(46,752)
Non-current liabilities
Deferred tax liabilities	22	(754)		-
Bank and loan borrowings	23	(262,319)		(312,323)
Lease liabilities	26	(10,977)		(11,444)
		(274,050)		(323,767)
Total liabilities		(317,290)		(370,519)
Net assets		319,286		351,614
Equity
Stated capital	27	618,010		618,266
Accumulated losses		(298,724)		(266,652)
Total equity attributable to owners of the parent company		319,286		351,614

 

Net asset value per Share - basic and diluted

28

197.0p

216.9p

 

The notes below are an integral part of these consolidated financial statements.

 

Consolidated Statement of Changes in Equity for the Year Ended 31 December 2025

 

		Attributable to owners of the parent company
	Notes	Stated capital £'000		Accumulated losses £'000		Total £'000
Balance at 1 January 2025		618,266		(266,652)		351,614
Total comprehensive losses		-		(16,352)		(16,352)
Dividends paid	13	-		(15,720)		(15,720)
Cost of shares issued in 2024	27	(256)		-		(256)
Balance at 31 December 2025		618,010		(298,724)		319,286

 

For the year ended 31 December 2024

		Attributable to owners of the parent company
	Notes	Stated capital £'000		Accumulated losses £'000		Total £'000
Balance at 1 January 2024		513,762		(207,673)		306,089
Total comprehensive loss		-		(39,539)		(39,539)
Dividends paid	13	-		(19,440)		(19,440)
Shares issued	27	110,515		-		110,515
Cost of shares issued	27	(6,011)		-		(6,011)
Balance at 31 December 2024		618,266		(266,652)		351,614

 

The notes below are an integral part of these consolidated financial statements.

 

Consolidated Statement of Cash Flows for the Year Ended 31 December 2025

 

	Year ended 31 December 2025 £'000		Year ended 31 December 2024 £'000
Cash flows from operating activities
Loss before tax	(16,366)		(39,474)
Change in fair value of investment properties	26,612		56,732
Share of loss of associate company	24		-
Change in fair value of financial derivative instruments	5,506		1,703
Loss on disposal of investment properties	3,172		3,180
Change in fair value of right of use assets	139		138
Finance income	(991)		(1,394)
Finance expense	12,215		15,224
Increase in trade and other receivables	(5,509)		(2,027)
(Decrease)/increase in trade and other payables	(1,772)		295
Decrease in deferred income	(824)		(1,233)
Cash generated from operations	22,206		33,144
Interest paid	(10,251)		(13,229)
Taxation received/(paid)	51		(4)
Net cash flow generated from operating activities	12,006		19,911
Investing activities
Investments in associates	(96)		(276)
Investment property acquisitions and subsequent expenditure	(12,942)		(8,249)
Sale of investment properties	48,425		28,574
Interest received	978		1,391
Net cash flow generated from investing activities	36,365		21,440
Financing activities
Proceeds received on derivative financial instruments	1,218		2,698
Dividends paid	(15,152)		(22,301)
Proceeds from share issue	-		110,515
Share issue costs	(1,430)		(4,837)
Bank borrowings repaid	(50,508)		(54,016)
Bank borrowing costs paid	(1,057)		(761)
Repayment of retail eligible bonds	-		(50,000)
Lease repayments	(435)		(435)
Net cash flow used in financing activities	(67,364)		(19,137)
Net increase/(decrease) in cash & cash equivalents	(18,993)		22,214
Cash and cash equivalents at the start of the year	56,719		34,505
Cash and cash equivalents at the end of the year	37,726		56,719

 

The notes below are an integral part of these consolidated financial statements.

 

Notes to the Consolidated Financial Statements for the Year Ended 31 December 2025

 

1.   Corporate information

The Group's consolidated financial statements for the year ended 31 December 2025 comprise the results of the Company and its subsidiaries (together constituting the "Group") and were approved by the Board and authorised for issue on 23 March 2026.

 

The Company is a company limited by Shares incorporated in Guernsey under The Companies (Guernsey) Law, 2008, as amended (the "Law"). The Company's Ordinary Shares are admitted to the Official List of the Financial Conduct Authority ("FCA") and traded on the London Stock Exchange ("LSE").

 

The Company was incorporated on 22 June 2015 and is registered with the Guernsey Financial Services Commission as a Registered Closed-Ended Collective Investment Scheme pursuant to The Protection of Investors (Bailiwick of Guernsey) Law, 2020, as amended, and the Registered Collective Investment Scheme Rules & Guidance 2021.

 

The Company did not begin trading until 6 November 2015 when the Shares were admitted to trading on the LSE.

 

The nature of the Group's operations and its principal activities are set out in the Strategic Report in the Full Annual Report.

 

The address of the registered office is Mont Crevelt House, Bulwer Avenue, St. Sampson, Guernsey GY2 4LH.

 

2.   Basis of preparation

In accordance with Section 244 of The Companies (Guernsey) Law 2008, the Group confirms that the financial information for the year ended 31 December 2025 are derived from the Group's audited financial statements and that these are not statutory accounts and, as such, do not contain all information required to be disclosed in the financial statements prepared in accordance with UK-adopted International Accounting Standards.

 

The statutory accounts for the year ended 31 December 2025 have been audited and approved, but have not yet been filed.

 

The Group's audited financial statements for the year ended 31 December 2025 received an unqualified audit opinion and the auditor's report contained no statement under section 263(2) or 263(3) of The Companies (Guernsey) Law 2008.

 

The financial information contained within this preliminary statement was approved and authorised for issue by the Board on 23 March 2026.

 

2.1 Functional and presentation currency

The financial information is presented in Pounds Sterling, which is also the functional currency of all Group companies, and all values are rounded to the nearest thousand (£'000) pounds, except where otherwise indicated.

 

2.2 Going concern

The Directors confirm that they have a reasonable expectation that the Group has adequate resources

to continue as a going concern. This expectation is underpinned by having made an assessment of the Group's ability to continue in operational existence, giving due consideration to the Group's cashflow forecast, which encompasses cash resources, rental income, acquisition and disposals of investment properties, elective and committed capital expenditure, dividend distributions and the borrowing facilities and the respective maturities.

 

No material uncertainties have been detected which would influence the Group's ability to continue as a going concern for a period of at least 12 months from the approval of these financial statements. The Directors have satisfied themselves that the Group has adequate financial resources to continue in operational existence for this period. Accordingly, the Board of Directors continue to adopt the going concern basis in preparing the financial statements.

 

Further details are provided in the Going Concern and Viability Statement in the Full Annual Report.

 

2.3 New standards, amendments and interpretations

New standards, amendments to standards and interpretations which came into effect for accounting periods starting on or after 1 January 2025 are as follows:

 

Amendments to IAS 21 'The Effects of Changes in Foreign Exchange Rates' (effective for periods beginning on or after 1 January 2025) provides clarification upon treatment for transactions in a foreign currency that is not exchangeable into another currency at the measurement date.

 

During the year ended 31 December 2025, none of the above had a material impact on the financial statements.

 

2.4 New standards, amendments and interpretations effective for future accounting periods

A number of new standards, amendments to standards and interpretations are effective for periods beginning on or after 1 January 2026 and have not been applied in preparing these financial statements. These are:

 

Amendments to IFRS 9 "Financial Instruments" and IFRS 7 "Financial Instruments: Disclosures" (effective for periods beginning on or after 1 January 2026) refine the classification of financial assets and liabilities and introduce enhanced disclosure requirements.

 

Annual Improvements to IFRS Accounting Standards Volume 11 (effective for periods beginning on or after 1 January 2026) contains amendments to five standards, IFRS1, IFRS 7, IFRS 9, IFRS 10 and IAS 7 as a result of the IASB's annual improvements project. The aim of which is to improve consistency across the standards.

 

IFRS 18 'Presentation and Disclosure in Financial Statements (effective for periods beginning on or after 1 January 2027) replaces IAS 1 'Presentation of Financial Statements'.

 

IFRS 19 'Subsidiaries without Public Accountability:

Disclosures (effective for periods beginning on or after 1 January 2027) specifies reduced disclosure requirements that an eligible entity is permitted to apply instead of the disclosure requirements in other IFRS Accounting Standards.

 

The Directors are reviewing these amendments and new standards. IFRS 18 will have some presentational impacts on the financial statements which are currently being assessed.

 

3. Significant accounting judgements, estimates and assumptions

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods.

 

3.1. Critical accounting estimates and assumptions

The principal estimates that may be material to the carrying amount of assets and liabilities are as follows:

 

3.1.1 Valuation of investment property

The value of investment property, is determined by independent property valuation experts to be the estimated amount for which a property should exchange on the date of the valuation in an arm's length transaction less the value of assets arising from rent smoothing. Properties have been valued on an individual basis. The valuation experts use recognised valuation techniques applying the principles of both IAS 40 and IFRS 13.

 

The value of the properties has been assessed in accordance with the relevant parts of the current RICS Red Book. In particular, we have assessed the fair value as referred to in VPS4 item 7 of the RICS Red Book. Under these provisions, the term "Fair Value" means the definition adopted by the International Accounting Standards Board ("IASB") in IFRS 13, namely "The price that would be received to sell an asset, or paid to transfer a liability in an orderly transaction between market participants at the measurement date". Factors reflected include current market conditions, annual rentals, lease lengths and location. The significant methods and assumptions used by the valuers in estimating the fair value of investment property are set out in note 14.

 

The fair value of investment property is equal to the independent property valuer's valuation of £555.2m (2024: £622.5m) less the value of the assets arising from rent smoothing of £13.0m (2024: £15.0m).

 

3.2. Critical judgements in applying the Group's accounting policies

In the process of applying the Group's accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognised in the financial statements:

 

3.2.1 Operating lease contracts - the Group as lessor

The Group has acquired investment properties that are subject to commercial property leases with tenants. The Group has determined, based on an evaluation of the terms and conditions of the arrangements, particularly the duration of the lease terms and minimum lease payments, that it retains all of the significant risks and rewards of ownership of these properties and so accounts for the leases as operating leases.

 

3.2.2 Consolidation of entities in which the Group holds less than 50% but has power to control

Management considered that up until 9 November 2018, the Group had de facto control of View Castle Limited and its 27 subsidiaries (the "View Castle Sub Group") by virtue of the amended and restated Call Option Agreement dated 3 November 2015. Following a restructure of the View Castle Sub Group, the majority of properties held within the View Castle Sub Group now reside in a new special purpose vehicle ("SPV"). A new call option was entered into dated 9 November 2018 with View Castle Limited and five of its subsidiaries (the "View Castle Group"). As per the previous amended and restated Call Option Agreement, under this new option the Group may acquire any of the properties held by the View Castle Group (valued at 31 December 2025 at £14,160,000), for a fixed nominal consideration. Despite having no equity holding, the Group is deemed to have control over the View Castle Group as the Option Agreement means that the Group is exposed to, and has rights to, variable returns from its involvement with the View Castle Group, through its power to control.

 

3.2.3 Recognition of income

Service charges and other similar receipts are included in net rental and property income gross of the related costs as the Directors consider the Group acts as principal in this respect.

 

4. Summary of material accounting policies

The accounting policies adopted in this report are consistent with those applied in the financial statements for the year ended 31 December 2024 and have been consistently applied for the year ended 31 December 2025.

 

4.1 Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the date of the Statement of Financial Position.

 

4.2 Subsidiaries

Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group.

They are deconsolidated from the date that control ceases.

 

Inter-company transactions, balances and unrealised gains and losses on transactions between Group companies are eliminated in full. When necessary, amounts reported by subsidiaries have been adjusted to conform to the Group's accounting policies.

 

4.2.1 Disposal of subsidiaries

When the Group ceases to have control over an entity, any retained interest in the entity is re-measured to its fair value at the date when control is lost, with the change in the carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.

 

4.3 Associates

Associates are entities over which the investor has significant influence, being the power to participate in the financial and operating policy decisions of the investee but is not control or joint control of those policies. and holds 20% or more of the voting power.

 

The Group adopts the equity method of accounting on such assets. On initial recognition, the investment in an associate is recognised at cost, and the carrying amount is increased or decreased to recognise the investor's share of the profit or loss of the associate after the date of acquisition less distributions received.

 

The Group's share of the Associates' profit or loss is recorded in the Consolidated Income Statement.

 

4.4 Segmental information

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker is the person or group that allocates resources to and assesses the performance of the operating segments of an entity. The Group has determined that its chief operating decision-maker is the Board of Directors.

 

After a review of the information provided for management purposes, it was determined that the Group has one operating segment and therefore segmental information is not disclosed in these consolidated financial statements. No single customer comprises in excess of 10% of the Group's revenue in either 2025 or 2024.

 

4.5 Investment property

Investment property comprises freehold or leasehold properties that are held to earn rentals or for capital appreciation, or both, rather than for sale in the ordinary course of business or for use in production or administrative functions.

 

Investment property is recognised, usually, on legal completion, when the risks and rewards of ownership have been transferred, and is measured initially at cost including transaction costs. Transaction costs include transfer taxes, professional fees for legal services and other costs incurred in order to bring the property to the condition necessary for it to be capable of being utilised in the manner intended. Subsequent to initial recognition, investment property is stated at fair value. The Group now recognise the fair value of investment property to be the value calculated by the independent property valuer less the value of assets arising from rent smoothing. Gains or losses arising from changes in the fair value are included in the Group's Consolidated Statement of Comprehensive Income in the period in which they arise under IAS 40, 'Investment Property'.

 

Additions to investment property include costs of a capital nature only. Expenditure is classified as capital when it results in identifiable future economic benefits, which are expected to accrue to the Group. All other property expenditure is charged in the Group's Consolidated Statement of Comprehensive Income as incurred.

 

Investment properties cease to be recognised when they have been disposed of or withdrawn permanently from use and no future economic benefit is expected. The difference between the net disposal proceeds and the carrying amount of the asset (being the fair value at the start of the financial year) would result in either gains or losses at the retirement or disposal of investment property. Any gains or losses are recognised in the Group's Consolidated Statement of Comprehensive Income in the period of retirement or disposal.

 

4.6 Derivative financial instruments

Derivative financial instruments, comprising interest rate caps and swaps for hedging purposes, are initially recognised at fair value and are subsequently measured at fair value, being the estimated amount that the Group would receive or pay to sell or transfer the agreement at the period end date, taking into account current interest rate expectations and the current credit rating of the lender and its counterparties. The gain or loss at each fair value remeasurement date is recognised in the Group's Consolidated Statement of Comprehensive Income.

 

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data is available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs significant to the fair value measurement as a whole.

 

4.7 Financial assets

The Group classifies its financial assets as at fair value through profit or loss or at amortised cost, depending on the purpose for which the asset was acquired. Currently the only assets classified at fair value through profit or loss are derivative financial instruments.

 

Assets held at amortised cost arise principally from the provision of goods and services (e.g. trade and other receivables), but also incorporate other financial assets where the objective is to hold these assets in order to collect contractual cash flows which comprise the payment of principal and interest. They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue and are subsequently carried at amortised cost being the effective interest rate method, less provision for impairment.

 

The Group's financial assets comprise, equity investments, 'trade and other receivables', 'tenant loan' and 'cash and cash equivalents'.

 

The tenant loan relates to a loan made to a tenant which is subject to interest. The amount receivable has been recognised at amortised cost using the effective interest method. Impairment provisions are recognised based on the expected credit loss model detailed within IFRS 9.

 

4.8 Trade and other receivables

Trade and other receivables are recognised initially at fair value and subsequently carried at amortised cost less provision for impairment. Where the time value of money is material, receivables are carried at amortised cost using the effective interest method. Impairment provisions are recognised based on the expected credit loss model detailed within IFRS 9.

 

The Group recognises a loss allowance for expected credit losses on trade receivables. The loss allowance is based on lifetime expected credit losses. Trade receivables are grouped based on shared credit risk characteristics and the days past due. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition. The expected credit losses on these financial assets are estimated based on the Group's historical credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions and an assessment of both the current as well as the forecast direction of conditions at the reporting date. Impaired balances are reported net, however, impairment provisions are recorded within a separate provision account with the loss being recognised within administration costs within the Consolidated Statement of Comprehensive Income. On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision.

 

Lease premiums and other lease incentives provided to tenants are recognised as an asset and amortised over the period from date of lease commencement to termination date. As disclosed in note 4.13, rental income arising from operating leases on investment property is accounted for on a straight-line basis over the lease terms, this practice is known as rent smoothing. As a result, income is often recognised ahead of rent invoices, so an asset arises on rent smoothing which is included in the trade and other receivables note 18. This amount is not considered to be a financial instrument.

 

4.9 Cash and cash equivalents

Cash and cash equivalents include cash in hand and deposits held at banks with original maturities of three months or less. Cash also includes amounts held in restricted accounts that are unavailable for everyday use.

 

4.10 Trade and other payables

Trade and other payables are initially recognised at their fair value being at their invoiced value inclusive of any VAT that may be applicable. Payables are subsequently measured at amortised cost using the effective interest method.

 

4.11 Bank and other borrowings

All bank and other borrowings (comprising bank loans and retail eligible bonds) are initially recognised at cost net of attributable transaction costs. Any attributable transaction costs relating to the issue of the bank borrowings are amortised through the Group's Statement of Comprehensive Income over the life of the debt instrument on a straight-line basis. After initial recognition, all bank and other borrowings are measured at amortised cost, using the effective interest method.

 

Bank and other borrowings are derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in Group's Consolidated Statement of Comprehensive Income.

 

4.12 Dividends payable to Shareholders

Equity dividends are recognised and accrued from the date declared and when they are no longer at the discretion of the Company.

 

4.13 Rental and property income

Rental income arising from operating leases on investment property is accounted for on a straight-line basis over the lease terms and is included in gross rental and property income in the Group's Consolidated Statement of Comprehensive Income.

 

For leases which contain fixed or minimum uplifts, the rental income arising from such uplifts is recognised on a straight-line basis over the lease term.

 

Tenant lease incentives are recognised as a reduction of rental revenue on a straight-line basis over the term of the lease. The lease term is the non-cancellable period of the lease together with any further term for which the tenant has the option to continue the lease where, at the inception of the lease, the Directors are reasonably certain that the tenant will exercise that option.

 

Surrender premiums received from tenants to terminate leases or surrender premises are recognised in the Group's Statement of Comprehensive Income when the right to receive them arises.

 

Dilapidation income is recognised in the Group's Statement of Comprehensive Income when the right to receive it arises.

 

When the Group is acting as an agent, the commission, rather than gross income, is recorded as revenue.

 

Income arising from expenses recharged to tenants is recognised in the year in which the compensation becomes receivable. Service charges and other similar receipts are included in net rental and property income gross of the related costs as the Directors consider the Group acts as principal in this respect.

 

4.14 Property costs

Non-recoverable property costs contain service and management charges related to empty properties.

 

Service and management charges are recognised in the accounting period in which the services are rendered.

 

Recoverable property costs contain service charges and other similar costs which are recognised in the accounting period in which the services are rendered.

 

4.15 Interest income

Interest income is recognised as interest accrued on cash balances held by the Group. Interest charged to a tenant on any overdue rental income is also recognised within interest income.

 

4.16 Finance costs

Interest costs are expensed in the period in which they occur. Arrangement fees that a Group entity incurs in connection with bank and other borrowings are amortised over the term of the loan.

 

4.17 Taxation

As the Company is managed and controlled in the UK, it is considered to be tax resident in the UK.

 

The tax currently payable is based on the taxable profit/(loss) for the period. Taxable profit/(loss) differs from net profit/(loss) as reported in the Consolidated Statement of Comprehensive Income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current and deferred tax is calculated using tax rates that have been enacted or substantively enacted at the date of the Statement of Financial Position.

 

The Group elected to be treated as a UK REIT with effect from 7 November 2015. The UK REIT rules exempt the profits of the Group's UK property rental business from UK Corporation Tax. Gains on UK properties are also exempt from tax, provided that they are not held for trading or sold in the three years after completion of development. The Group is otherwise subject to UK Corporation Tax.

 

There are a small number of entities within the Group which fall outside the REIT rules and are subject to UK taxes on profits and property gains.

 

4.18 Deferred tax

Deferred tax is provided in full using the liability method on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit/(loss). The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates that are expected to apply in the period when the liability is settled or the asset is realised based on tax rates (and tax laws) enacted or substantively enacted at the date of the Statement of Financial Position. A deferred tax asset is recognised only to the extent that it is probable that future profits will be available for offset.

 

The deferred tax liability in relation to investment properties that are measured at fair value is determined assuming that the property will be recovered entirely through sale.

 

Deferred tax has been recognised on the unrealised property valuation gains/(losses) of properties owned by Group entities which fall outside of the REIT tax rules.

 

The current rate of UK Corporation Tax is 25%.

 

4.19 Stated capital

Stated capital represents the consideration received by the Company for the issue of Ordinary Shares. Ordinary Shares are classed as equity.

 

4.20 Leased assets

The Group has a number of leases concerning the long-term lease of land associated with its long leasehold investment properties. These leased assets are capitalised as "right of use assets" by recognising the present value of the lease payments as an asset and a financial liability representing the obligation to make future lease payments.

 

Right of use assets are valued at fair value and the change in fair value is recognised in the Consolidated Statement of Comprehensive Income.

 

The associated financial liability is valued at the present value of future lease payments using an applicable incremental borrowing rate. The value of the financial liability is revalued at each reporting date. Lease payments reduce the financial liability and interest on the financial liability is recognised in finance costs.

 

5. Rental and property income

		Year ended 31 December 2025 £'000		Year ended 31 December 2024 £'000
Rental income - freehold property		50,235		53,406
Rental income - long leasehold property		10,197		11,833
Recoverable service charge income and other similar items		18,196		25,742
Total		78,628		90,981

 

6. Property costs

		Year ended 31 December 2025 £'000		Year ended 31 December 2024 £'000
Direct Vacancy Irrecoverable costs		19,011		17,791
Other property expenses		1,166		1,488
Recoverable service charge expenditure and other similar costs		18,196		25,742
Total		38,373		45,021

 

Direct vacancy costs include service charges, utility costs, rates, insurance, repairs and maintenance.

 

7. Administrative and other expenses

		Year ended 31 December 2025 £'000		Year ended 31 December 2024 £'000
Investment management fees		1,947		1,362
Property management fees		2,257		2,541
Asset management fees		1,949		1,360
Directors' remuneration (see note 8)		309		265
Administration fees		662		679
Legal and professional fees		2,205		2,509
Marketing and promotion		83		71
Other administrative costs		220		186
Allowance for doubtful debts		299		454
Abortive costs		-		412
Bank charges		13		12
		9,851		1
Total		9,944		9,851

 

Services provided by the Company's Auditor and its associates

The Group has obtained the following services from the Company's Auditor and its associates:

 

		Year ended 31 December 2025 £'000		Year ended 31 December 2024 £'000
Fees payable to the Company's Auditor for the audit of the Company's annual accounts		114		110
Fees payable to the Group's Auditor and its associates for the audit of the Company's subsidiaries		147		147
Total fees payable for audit services		261		257
Fees payable to the Group's Auditor and its associates for other services:
Audit-related services		34		33
Corporate finance work for the share issue		-		150
Total fees payable to the Group's Auditor and its associates		295		440

 

8. Directors' remuneration

Key management comprises the Directors of the Company. A summary of the Directors' emoluments is set out in the Directors' Remuneration Report in the Full Annual Report.

		Year ended 31 December 2025 £'000		Year ended 31 December 2024 £'000
Directors' fees		289		243
Employer's National Insurance contributions		20		22
Total		309		265

 

9. Finance income

	Year ended 31 December 2025 £'000		Year ended 31 December 2024 £'000
Interest income	991		1,394
Total	991		1,394

 

10. Finance expense

		Year ended 31 December 2025 £'000		Year ended 31 December 2024 £'000
Interest payable on bank borrowings		10,251		11,881
Amortisation of loan arrangement fees		1,561		1,497
Bond interest		-		1,344
Bond issue costs amortised		-		93
Bond expenses		-		5
Lease interest		403		404
Total		12,215		15,224

 

11. Taxation

	Year ended 31 December 2025 £'000		Year ended  31 December  2024 £'000
Corporation tax (credit)/ charge	(27)		32
Increase in deferred tax liability	13		33
Total	(14)		65

 

The current tax charge is reduced by the UK REIT tax exemptions. The tax charge for the year can be reconciled to the loss in the Consolidated Statement of Comprehensive Income as follows:

 

	Year ended 31 December 2025 £'000		Year ended 31 December 2024 £'000
Loss before taxation	(16,366)		(39,474)
UK Corporation Tax rate	25.00%		25.00%
Theoretical tax at UK Corporation Tax rate	(4,092)		(9,868)
Effects of:
Revaluation of investment property	6,653		14,183
Permanent differences	(87)		(169)
Profits from the tax-exempt business	(2,501)		(4,114)
Deferred tax movement	13		33
Total	(14)		65

 

Permanent differences are the differences between an entity's taxable profits and its results as stated in the financial statements. These arise because certain types of income and expenditure are non-taxable or disallowable, or because certain tax charges or allowances have no corresponding amounts in the financial statements.

 

The Group elected to be treated as a UK REIT with effect from 7 November 2015. The UK REIT rules exempt the profits of the Group's UK property rental business from corporation tax. Gains on UK properties are also exempt from tax, provided they are not held for trading purposes or sold in the three years after completion of development. The Group is otherwise subject to UK corporation tax.

 

As a REIT, Regional REIT Ltd is required to pay PID's equal to at least 90% of the Group's exempted net income. To retain UK REIT status, there are a number of conditions to be met in respect of the principal company of the Group, the Group's qualifying activity and its balance of business. The Group continues to meet these conditions.

 

UK Corporation Tax arises on entities which form part of the Group consolidated accounts but do not form part of the REIT group.

 

Due to the Group's REIT status and its intention to continue meeting the conditions required to maintain this status for the foreseeable future, no provision has been made for deferred tax on any capital gains or losses arising on the revaluation or disposal of investments held by entities within the REIT group.

 

No deferred tax asset has been recognised in respect of losses carried forward.

 

12. Earnings per Share

Earnings per Share amounts are calculated by dividing (losses)/profits for the year attributable to ordinary equity holders of the Company by the weighted average number of Ordinary Shares in issue during the year.

 

In accordance with IAS 33 "Earnings per Share", the weighted average number of shares have been recalculated as though the bonus issue and share consolidation were in place from 1 January 2024.

 

The calculation of basic and diluted earnings per Share is based on the following:

 

		Year ended 31 December 2025 £'000		Year ended 31 December 2024 £'000
Calculation of earnings per Share
Net loss attributable to Ordinary Shareholders		(16,352)		(39,539)
Adjustments to remove:
Changes in value of investment properties		26,612		56,732
Changes in value of right of use assets		139		138
Loss on disposal of investment properties		3,172		3,180
Changes in fair value of interest rate derivatives and financial assets		5,506		1,703
Abortive costs		-		412
Deferred tax charge		13		33
EPRA earnings		19,090		22,659
Weighted average number of Ordinary Shares		162,088,483		118,199,045
Loss per Share - basic and diluted		(10.1)p		(33.5)p
EPRA earnings per Share - basic and diluted		11.8p		19.2p

 

13. Dividends

 

All dividend rates stated in this note represent the dividend rates announced to the London Stock Exchange. Following a share issue and 1 for 10 share consolidation on 29 July 2024, the number of Ordinary Shares in issue decreased from 515,736,583 Ordinary Shares to 162,088,483 Ordinary Shares.

 

		Year ended 31 December 2025 £'000		Year ended  31 December  2024  £'000
Dividend of 2.20 (2024: 1.20) pence per Ordinary Share for the period 1 October - 31 December		3,565		6,188
Dividend of 2.50 (2024: 1.20) pence per Ordinary Share for the period 1 January - 31 March		4,052		6,189
Dividend of 2.50 (2024: 2.20) pence per Ordinary Share for the period 1 April - 30 June		4,052		3,566
Dividend of 2.50 (2024: 2.20) pence per Ordinary Share for the period 1 July - 30 September		4,052		3,567
Unpaid dividends held by Registrar		(1)		(70)
Total		15,720		19,440

 

On 20 February 2025, the Company announced a dividend of 2.20 pence per Share in respect of the period 1 October 2024 to 31 December 2024. The dividend payment was made on 4 April 2025 to shareholders on the register as at 28 February 2025.

 

On 15 May 2025, the Company announced a dividend of 2.50 pence per Share in respect of the period 1 January 2025 to 31 March 2025. The dividend payment was made on 11 July 2025 to shareholders on the register as at 23 May 2025.

 

On 9 September 2025, the Company announced a dividend of 2.50 pence per Share in respect of the period 1 April 2025 to 30 June 2025. The dividend payment was made on 17 October 2025 to shareholders on the register as at 19 September 2025.

 

On 12 November 2025, the Company announced a dividend of 2.50 pence per Share in respect of the period 1 July 2025 to 30 September 2025. The dividend payment was made on 9 January 2026 to shareholders on the register as at 21 November 2025.

 

On 19 February 2026, the Company announced a dividend of 2.50 pence per Share in respect of the period 1 October 2025 to 31 December 2025. The dividend will be paid on 10 April 2026 to shareholders on the register as at 27 February 2026. The financial statements do not reflect this dividend.

 

The Board intends to pursue a dividend policy with quarterly dividend distributions. The level of future payment of dividends will be determined by the Board having regard to, amongst other things, the financial position and performance of the Group at the relevant time, UK REIT requirements, and the interest of shareholders.

 

14. Investment properties

In accordance with International Accounting Standard, IAS 40, 'Investment Property', investment property has been independently valued at fair value by Colliers International Property Consultants Limited, an accredited independent valuer with recognised and relevant professional qualifications and with recent experience in the locations and categories of the investment properties being valued.

 

The valuations have been prepared in accordance with the RICS Red Book and incorporate the recommendations of the International Valuation Standards Committee which are consistent with the principles set out in IFRS 13.

 

The valuations are the ultimate responsibility of the Directors. Accordingly, the critical assumptions used in establishing the independent valuation are reviewed by the Board.

 

 

Group Movement in investment properties for the year ended 31 December 2025			Freehold Property £'000		Long Leasehold Property £'000		Total £'000
Valuation at 1 January 2025			492,896		129,584		622,480
Property additions - acquisitions			1,160		-		1,160
Property additions - subsequent expenditure			8,143		3,639		11,782
Disposal proceeds, net of costs			(48,193)		(232)		(48,425)
Loss on disposal of investment properties			(3,094)		(78)		(3,172)
Change in fair value during the period			(20,976)		(7,619)		(28,595)
Valuation advised by the property valuers at 31 December 2025		429,936			125,294			555,230
Less adjustments for rent smoothing assets (note 18)		(9,780)			(3,259)			(13,039)
Fair Value at 31 December 2025		420,156			122,035			542,191
Group Movement in investment properties for the year ended 31 December 2024
Valuation at 1 January 2024			562,395		138,325		700,720
Property additions - acquisitions			-		-		-
Property additions - subsequent expenditure			7,286		963		8,249
Disposal proceeds, net of costs			(28,574)		-		(28,574)
Loss on disposal of investment properties			(3,180)		-		(3,180)
Change in valuation during the period			(45,031)		(9,704)		(54,735)
Valuation advised by the property valuers at 31 December 2024			492,896		129,584		622,480
Less adjustment for rent smoothing assets (note 18)*			(10,795)		(4,227)		(15,022)
Fair Value at 31 December 2024			482,101		125,357		607,458

 

* The analysis of the comparative rent smoothing adjustment between leasehold and freehold property has been updated.

 

The net book value of properties disposed of during the year amounted to £51,597,000 (2024: £31,754,000).

 

The historic cost of the properties is £773,287,000 (2024: £850,152,000).

 

Bank borrowings are secured by charges over investment properties held by certain asset-holding subsidiaries.

 

The banks also hold charges over the shares of certain subsidiaries and any intermediary holding companies of those subsidiaries. The independent valuer's assessment of the value of investment properties secured at 31 December 2025 was £555,230,000 (2024: £622,480,000).

 

The table below shows the total change in fair value during the year.

 

	31 December 2025 £'000	31 December 2024 £'000
Change in valuation during the period	(28,595)	(54,735)
Change in rent smoothing assets adjustment	1,983	(1,997)
Total	(26,612)	(56,732)

 

The following table provides the fair value measurement hierarchy for investment property:

 

Date of valuation:	Total £'000	Quoted active prices (level 1) £'000	Significant observable inputs (level 2) £'000	Significant unobservable inputs  (level 3) £'000
31 December 2025	542,191	-	-	542,191
31 December 2024	607,458	-	-	607,458

 

The hierarchy levels are defined in note 30.

 

It has been determined that the entire investment properties portfolio should be classified under the level 3 category. The table below shows the movement in the year on the level 3 category:

 

		Year ended 31 December 2025 £'000		Year ended 31 December 2024 £'000
Balance at the start of the year		607,458		687,695
Additions		12,942		8,249
Disposals		(48,425)		(28,574)
Loss on the disposal of investment properties		(3,172)		(3,180)
Change in fair value during the year		(26,612)		(56,732)
Balance at the end of the year		542,191		607,458

 

The determination of the fair value of the investment properties held by each consolidated subsidiary requires the use of estimates such as future cash flows from investment properties, which take into consideration lettings, tenants' profiles, future revenue streams, any environmental matters and the overall repair and condition of the property, and discount rates applicable to those assets. Future revenue streams comprise contracted rent (passing rent) and Estimated Rental Value (ERV) after the contract period. In calculating ERV, the potential impact of future lease incentives to be granted to secure new contracts is taken into consideration. All these estimates are based on local market conditions existing at the reporting date.

 

 As at 31 December 2025, the estimated fair value of each property has been primarily derived using comparable recent market transactions on arm's length terms and assessed in accordance with the relevant parts of the RICS Red Book.

 

The impact of climate change on the portfolio and the principal risk around environmental and energy efficiency standards are disclosed in the Strategic Report section of the Full Annual Report.

 

Techniques used for valuing investment properties

 

The following descriptions and definitions relate to valuation techniques and key significant inputs made in determining the fair values:

 

Valuation technique: market comparable method

Under the market comparable method (or market approach), a property's fair value is estimated based on comparable transactions in the market.

 

Significant input: market rental

The rent at which space could be let in the market conditions prevailing at the date of valuation range: £16,200 - £3,512,000 per annum (2024: £14,200 - £3,237,000 per annum)

 

Significant input: rental growth

Rental Growth: decrease in contracted income of -13.79% (2024: 8.64% decrease) from December 2024 (£53,840,436) to December 2025 (£46,413,666). There is a gross contracted rent reduction, as per normal operations it is a combination of property disposals, space under refurbishments and lease expiries.

 

Significant input: equivalent yield

The time-weighted average return that a property will produce including purchase costs. The equivalent yield generally sits between the net initial yield and reversionary yield. See below table.

 

Unobservable inputs

The significant unobservable inputs (level 3) are sensitive to changes in the estimated future cash flows from investment properties such as increases and decreases in contracted rents, operating expenses and capital expenses, plus transactional activity in the real estate market.

 

Geographical and sector specific market evidence reviewed in the course of preparing the December 2025 valuation had an initial yield range of 6.0% to 20.9% (2024: 6.00% to 25.19%).

 

As set out within the significant accounting estimates and judgements, the Group's property portfolio valuation is open to judgement and is inherently subjective by nature, and actual values can only be determined in a sales transaction.

 

ERV and equivalent yield range by sector:

Significant Unobservable Inputs
Sector	Valuation £'000	ERV Range (£ per sq ft p.a.)	ERV Weighted average (£ per sq ft)	Equivalent Yield Range %	Equivalent Yield Weighted Average %
As at December 2025
Industrial	£23,825.00	£4.00 - £9.49	7.07	6.40% - 21.38%	8.51
Retail	£20,290.00	£2.07 - £40.00	15.94	8.20% - 13.41%	8.82
Alternatives	£9,550.00	£5.00 - £13.50	9.28	9.67%	9.67
Office by Region
Office South East	£88,075.00	£5.00 - £29.01	18.65	8.24% - 32.55%	10.28
Office South West	£53,950.00	£12.28 - £22.90	18.54	9.93%- 14.34%	11.33
Office Midlands	£112,590.00	£3.01 - £35.04	15.37	9.52% - 12.10%	10.97
Office North West	£62,725.00	£6.61 - £21.99	16.95	8.53% - 16.59%	10.89
Office North East	£89,950.00	£8.29 - £37.13	18.13	8.36% - 12.00%	10.21
Office Wales	£17,650.00	£10.01 - £13.50	12.01	8.89% - 11.01%	10.48
Office Scotland	£76,625.00	£4.50 - £90.21	17.77	9.39% - 14.16%	10.41
Total	£555,230.0

 

The impact of changes to the significant unobservable inputs:

	2025 Impact on statement of comprehensive income £'000	2025 Impact on statement of financial position £'000	2024 Impact on statement of comprehensive income £'000	2024 Impact on statement of financial position £'000
Improvement in ERV by 5%	25,062	25,062	27,490	27,490
Worsening in ERV by 5%	(24,787)	(24,787)	(27,009)	(27,009)
Improvement in yield by 0.125%	8,061	8,061	9,064	9,064
Worsening in yield by 0.125%	(7,837)	(7,837)	(8,792)	(8,792)

 

The 0.125% yield movement applied is considered reasonable, as it reflects a shift commonly observed in normal market conditions and is consistent with independent valuer guidance for diversified UK commercial real estate portfolios. This margin therefore represents a reasonably possible change in key unobservable inputs at the reporting date.

 

15. Investment in subsidiaries

List of subsidiaries which are 100% owned and controlled by the Group:

	Country of incorporation	Ownership %
1 Beaufort Office Park Management Company Limited	United Kingdom	100%
1 Glasgow Airport Business Park Management Company Limited	United Kingdom	100%
1 Origin Apartments Management Company Limited	United Kingdom	100%
2 Regional Commercial MIDCO Ltd	Jersey	100%
2 RR Bennett House Ltd	Jersey	100%
2 RR Brand Street Ltd	Jersey	100%
2 RR Bristol Ltd	Jersey	100%
2 RR Chancellor Court Ltd	Jersey	100%
2 RR Falcon Ltd	Jersey	100%
2 RR Glasgow Ltd	Jersey	100%
6 RR Glasgow II Ltd	United Kingdom	100%
2 RR Harvest Ltd	Jersey	100%
2 RR Hounds Gate Ltd	Jersey	100%
2 RR Milburn House Ltd	Jersey	100%
2 RR Minton Place Ltd	Jersey	100%
2 RR Newstead Court Ltd	Jersey	100%
2 RR Portland Street Ltd	Jersey	100%
2 RR Rainbow (Aylesbury) Ltd	Jersey	100%
2 RR Rainbow (North) Ltd	Jersey	100%
2 RR Rainbow (South) Ltd	Jersey	100%
2 RR Range Ltd	Jersey	100%
5 RR Reflex Limited	United Kingdom	100%
3 RR Sea Dundee Ltd	United Kingdom	100%
3 RR Sea Hanover Street Ltd	United Kingdom	100%
2 RR Sea Lamont I Ltd	Jersey	100%
2 RR Sea Lamont II Ltd	Jersey	100%
3 RR Sea St. Helens Ltd	United Kingdom	100%
3 RR Sea Stafford Ltd	United Kingdom	100%
3 RR Sea Strand Ltd	United Kingdom	100%
4 RR Sea TAPP Ltd	Guernsey	100%
4 RR Sea TOPP Bletchley Ltd	Guernsey	100%
4 RR Sea TOPP I Ltd	Guernsey	100%
2 RR Sheldon Court Ltd	Jersey	100%
2 RR Star Ltd	Jersey	100%
2 RR St James Court Ltd	Jersey	100%
2 RR Strathclyde BP Ltd	Jersey	100%
2 RR UK (Central) Ltd	Jersey	100%
2 RR UK (Cheshunt) Ltd	Jersey	100%
2 RR UK (Port Solent) Ltd	Jersey	100%
2 RR UK (South) Ltd	Jersey	100%
2 RR Wallington Ltd	Jersey	100%
2 RR Westminster House Ltd	Jersey	100%
2 RR Wing Portfolio Ltd	Jersey	100%
2 Tay Properties Ltd	Jersey	100%
2 TCP Arbos Ltd	Jersey	100%
2 TCP Channel Ltd	Jersey	100%

 

Registered Office Address

¹ Leeds House, Central Park, Leeds LS11 5DZ

² Second Floor, No.4 The Forum, Grenville Street, St Helier, Jersey JE2 4UF

³ 19th Floor, 51 Lime Street, London EC3M 7DQ

⁴ 2nd Floor, Lefebvre Place, Lefebvre Street, St Peter Port, Guernsey GY1 2JP

⁵ 300 Bath Street, First Floor West, Glasgow G2 4JR

⁶ Ferguson House, 15 Marylebone, London, NW1 5JD

 

All of the above entities have been included in the Group's consolidated financial statements.

 

By virtue of an Amended and Restated Call Option Agreement dated 3 November 2018, the Directors consider that the Group has control of View Castle Limited and its subsidiaries (the "View Castle Group").

 

Under this option, the Group has the ability to acquire any of the properties held by the View Castle Group by issuing an option notice for a nominal consideration of £1. The recipient of the option notice will be obliged to convey its title within one month after receipt of the option notice.

 

Despite having no equity holding, the Group controls the View Castle Group as the option agreement has the effect that the Group is exposed to, and has rights to, variable returns from its involvement with the View Castle Group through its power to control.

 

The companies which make up the View Castle Group are as follows:

 

List of subsidiaries that are controlled by the Group:	Country of incorporation	Control %
1 Credential (Wardpark North) Ltd	United Kingdom	100%
1 Credential Estates Ltd	United Kingdom	100%
2 Rocket Unit Trust	Jersey	100%
1 Squeeze Newco 2 Ltd	United Kingdom	100%
1 View Castle Ltd	United Kingdom	100%
1 View Castle (Milton Keynes) Ltd	United Kingdom	100%
1 View Castle (Properties) Ltd	United Kingdom	100%

 

Registered Office Address

¹ 300 Bath Street, First Floor West, Glasgow G2 4JR

² Gaspé House, 66-72 Esplanade, St Helier, Jersey JE2 3QT

 

All of the above entities have been included in the Group's consolidated financial statements up to 31 December 2025.

 

16. Investment in associates

The Company has an investment in an associate, Sugarbird Solar (UK) Limited ("SolarCo"), which represents 40% of the issued share capital. Sunbird Solar International (Cyprus) Limited contributed 60% of the issued share capital.

 

The investment represents a minority interest with significant influence but not control over SolarCo. SolarCo is operated and managed by Sunbird Solar International (Cyrpus) Limited.

 

In addition, the Company has holdings in two property management companies acquired for nil value.

 

The table below shows the movement in the investment during the year:

	31 December 2025 £'000	31 December  2024 £'000
At start of year	276	-
Amounts paid for investment	96	276
Share of losses	(24)	-
At end of year	348	276

                                                                                                             

 

List of companies not wholly owned by the Group:	Country of incorporation	Holding %
HCP (Estate Management) Limited	United Kingdom	49%
Sugarbird Solarco (UK) Limited	United Kingdom	40%

 

17. Non-current receivables on tenant loans

 

	31 December 2025 £'000	31 December 2024 £'000
At start of year	337	578
Amounts repaid in the year	(193)	(241)
At end of year	144	337
Asset due within 1 year (note 18)	144	193
Asset due after 1 year	-	144
	114	337

 

During 2016, the Group entered into a loan agreement with a tenant for £1,926,000. The loan is subject to interest of 4% above the base rate of the Bank of Scotland on late payments and is repayable in instalments over ten years. No impairment has been recognised against the non-current receivable as at 31 December 2025 or 31 December 2024.

 

18. Trade and other receivables

	31 December 2025 £'000	31 December 2024 £'000
Gross amount receivable from tenants	11,291	9,696
Less provision for impairment	(252)	(1,451)
Net amount receivable from tenants	11,039	8,245
Current receivables - tenant loans (note 17)	144	193
Income tax	-	24
Other receivables	2,169	1,495
Assets arising from rent smoothing (note 14)	13,039	15,022
Prepayments and accrued income	14,326	10,100
	40,717	35,079

 

The maximum exposure to credit risk at the reporting date is the carrying value of the amounts disclosed above in note 30.1. The Group does not hold any collateral as security.

 

 

The aged analysis of trade receivables that are past due but not impaired was as follows:

	31 December 2025 £'000	31 December 2024 £'000
< 30 days	7,211	3,928
30-60 days	475	722
> 60 days	3,605	5,046
Net amount receivable from tenants	11,291	9,696
Less provision for impairment	(252)	(1,451)
Net Amount receivable from tenants	11,039	8,245

 

The Directors consider the fair value of receivables equals their carrying amount.  

 

The table above shows the aged analysis of trade receivables included in the table which are past due but not impaired. These relate to tenants for whom there is no recent history of default.

 

Provision for impairment of trade receivables movement as follows:

 

	31 December 2025 £'000	31 December 2024 £'000
At start of year	1,451	915
Provision for impairment in the year	901	1,739
Receivables written off as uncollectable	(1,346)	(195)
Unused provision reversed	(754)	(1,008)
At end of year	252	1,451

 

Other categories within trade and other receivables do not include impaired assets. Receivables are written off as uncollectable where there is no reasonable expectation of recovery.

 

19. Cash and cash equivalents

	31 December 2025 £'000		31 December 2024 £'000
Group
Cash held at bank	37,719		55,869
Restricted cash held at bank	7		850
At end of year	37,726		56,719

Comparatives have been re-analysed between restricted and non-restricted balances.

 

Restricted cash balances of the Group comprise:

 

• £7,000 (2024: £850,000) of funds held in blocked bank accounts which are controlled by the Group's lenders and are released once certain loan conditions are met. The restricted funds arose on net proceeds from investment property disposals.

 

The following amounts are not analysed as restricted balances:

• £8,604,000 (2024: £9,847,000) of cash funds represent service charge income received from tenants for settlement of future service charge expenditure.

 

• £2,710,000 (2024: £2,698,000) of cash funds represent tenants' rental deposits.

 

The restricted cash balances are all accessible within 90 days so meet the definition of cash and cash equivalents.

 

20. Trade and other payables

	31 December 2025 £'000		31 December 2024 £'000
Withholding tax due on dividends paid	512		429
Dividends announced but not paid	4,052		3,567
Trade payables	3,147		2,377
Other payables	15,521		19,182
Value added tax	2,066		1,974
Accruals	3,967		4,118
At end of year	29,265		31,647

 

Other payables principally include rent deposits held and service charge costs.

 

The Directors consider the fair value of trade and other payables to equal their carrying amounts.

 

21. Deferred income

Deferred rental income of £13,540,000 (31 December 2024: £14,364,000) represents rent received in advance from tenants.

 

22. Deferred tax liabilities

	31 December 2025 £'000		31 December 2024 £'000
Deferred tax	754		741
At end of year	754		741
The movement on deferred tax liability is shown below:
At start of year	741		708
Deferred tax on the valuation of investment properties	13		33
At end of year	754		741

 

The deferred tax liability relates to the potential tax liability that may crystalise when investment properties are sold. It is calculated on the revaluation gains of investment properties held by the Group which fall outside of the REIT regime.

 

23. Bank and loan borrowings

Bank borrowings are secured by charges over investment properties held by certain asset-holding subsidiaries. The banks also hold charges over the Shares of certain subsidiaries and any intermediary holding companies of those subsidiaries. Any associated fees in arranging the bank borrowings unamortised as at the year-end are offset against amounts drawn on the facilities as shown in the table below:

 

	31 December 2025 £'000		31 December 2024 £'000
Bank borrowings drawn at start of year	316,734		370,750
Bank borrowings repaid	(50,508)		(54,016)
Bank borrowings drawn at end of year	266,226		316,734
Less: unamortised costs at start of year	(4,411)		(5,147)
Less: loan issue costs incurred in the year	(1,057)		(761)
Add: loan issue costs amortised in the year	1,561		1,497
At end of year	262,319		312,323
Maturity of bank borrowings
Repayable within 1 year	-		-
Repayable between 1 to 2 years	118,339		99,789
Repayable between 2 to 5 years	147,887		216,945
Repayable after more than 5 years	-		-
Unamortised loan issue costs	(3,907)		(4,411)
	262,319		312,323

 

 

The table below lists the Group's borrowings.

 

Lender	Facility £'000	Outstanding debt* £'000	Maturity date	Gross loan to value**	Annual interest rate	Amortisation
Scottish Widows Ltd & Aviva Investors Real Estate Finance	118,339	118,339	Dec-27	50.8%	3.28% Fixed	None
Scottish Widows Ltd	32,325	32,325	Dec-28	45.6%	3.37% Fixed	None
Royal Bank of Scotland, Bank of Scotland and Santander	72,449	72,449	Dec-28	44.9%	2.40% over 3mth £ SONIA	Mandatory prepayment
Santander UK	43,113	43,113	Jun-29	48.5%	2.20% over 3 months £ SONIA	Mandatory prepayment
Total bank borrowings	266,226	266,226

 

SONIA = Sterling Over Night Indexed Average

* Before unamortised debt issue costs

** Based upon Colliers International Property Consultants limited property valuations

 

The percentage of borrowings at variable rates of interest was 43.4% (2024: 47.2%).

 

The weighted average term to maturity of the Group's debt at the year-end was 2.6 years (2024: 2.9 years).

 

The weighted average interest rate payable by the Group on its total bank borrowings, excluding hedging costs, as at the year-end was 4.6% (2024: 5.2%).

 

The Group weighted average interest rate, including and hedging activity at the year end, amounted to 3.3% per annum (2024: 3.4% per annum).

 

The Group has been in compliance with all of the financial covenants relating to the above facilities as applicable throughout the year covered by these consolidated financial statements. Each facility has distinct covenants which generally include: historic interest cover, projected interest cover, LTV cover and debt service cover. A breach of agreed covenant levels would typically result in an event of default of the respective facility, giving the lender the right, but not the obligation, to declare the loan immediately due and payable. Where a loan is repaid in these circumstances, early repayment fees will apply, which are generally based on a percentage of the loan repaid or calculated with reference to the interest income foregone by the lenders as a result of the repayment.

 

As shown in note 25, the Group uses a combination of interest rate swaps and fixed rate bearing loans to hedge against cash flow interest rate risks. The Group's exposure to interest rate volatility is minimal.

 

24. Retail Eligible Bonds

The table below shows the movement on the Company's £50,000,000 4.5% Retail Eligible Bonds that matured on 6 August 2024. These unsecured bonds were listed on the London Stock Exchange ORB platform until their maturity in the year.

 

	31 December 2025 £'000		31 December   2024 £'000
Bond principal at start of year	-		50,000
Unamortised issue costs at start of year	-		(93)
Amortisation of issue costs	-		93
Maturity	-		(50,000)
At end of year	-		-

 

25. Derivative financial instruments

Interest rate caps and swaps are in place to mitigate the interest rate risk that arises as a result of entering into variable rate borrowings.

 

	31 December 2025 £'000		31 December   2024 £'000
Fair value at start of period	11,608		16,009
Early break costs received	(1,218)		(2,698)
Revaluation in period	(5,506)		(1,703)
Fair Value at end of year	4,884		11,608

 

The calculation of fair value of interest rate caps and swaps is based on the following calculation: the notional amount multiplied by the difference between the swap rate and the current market rate and then multiplied by the number of years remaining on the contract and discounted. Further details can be found in note 30.1.

 

During the year the notional amount on derivative instruments was reduced with a cash amount realised of £1,218,000 (2024: £2,698,000).

 

The value of derivatives maturing in less than 1 year £1,739,000 (2024: £nil)

 

The table below lists the hedging and swap notional amounts and rates against the details of the Group's loan facilities.

 

Lender	Facility £'000	Outstanding debt* £'000	Loan maturity date	Annual interest rate	Notional amount £'000	Swap/cap rate
Scottish Widows Ltd & Aviva Investors Real Estate Finance	118,339	118,339	Dec-27	3.28% Fixed	n/a	n/a
Scottish Widows Ltd	32,325	32,325	Dec-28	3.37% Fixed	n/a	n/a
Royal Bank of Scotland, Bank of Scotland and Santander UK	72,449	72,449	Dec-28**	2.40% over 3mth £ SONIA	51,4201 23,7802	0.99%3 0.97%3
Santander UK	43,113	43,113	Jun-29	2.20% over 3mth £ SONIA	34,5851 8,5292	1.39% 1.39%
Total bank borrowings	266,226	266,226

 

¹ Interest rate swap

² Interest rate cap

³ Average rate of the three derivative providers

* Before unamortised debt issue costs

** Derivative maturity date is 27 August 2026. As detailed in note 35, Subsequent Events,

the Group has executed new derivatives maturing in December 2028.

SONIA = Sterling Over Night Indexed Average

 

As at 31 December 2025, the swap notional arrangements were £86.0 million (2024: £96.1 million) and the cap notional arrangements amounted to £32.3 million (2024: £53.5 million).

 

The Group weighted average effective interest rate was 3.3% (2024: 3.4%) inclusive of hedging costs and the Retail Eligible Bond, which matured in August 2024.

 

The maximum exposure to credit risk at the reporting date is the fair value of the derivative liabilities.

 

It is the Group's target to hedge at least 90% of the total debt portfolio using interest rate derivatives and fixed- rate facilities. As at the year end, the total proportion of hedged debt equated to 101.0% (2024: 100.0%), as shown below.

 

	31 December 2025 £'000		31 December  2024 £'000
Total bank borrowings	266,226		316,734
Notional value of interest rate caps and swaps	118,314		149,637
Fixed rate borrowings	150,664		167,097
	268,978		316,734
Proportion of hedged debt	101.0%		100.0%

 

Table may not sum due to rounding

 

26. Leases

Right of use asset	31 December 2025 £'000		31 December  2024 £'000
At start of year	10,849		10,987
Fair value movement	(139)		(138)
At end of year	10,710		10,849

 

 

Lease liability	31 December 2025 £'000		31 December  2024 £'000
At start of year	11,444		11,475
Lease payments	(435)		(435)
Interest charges	403		404
At end of year	11,412		11,444

 

The Group's lease commitments which are now represented by the right of use asset and lease liability are spread across 10 (2024: 10) separate leases with the two largest leases at Northern Cross Basingstoke and Quantum Court Edinburgh making up 48% (2024: 48%) of the balance. Total commitments on leases in respect of land and buildings are as follows:

 

Group	31 December 2025 £'000		31 December  2024 £'000
Payable within 1 year	435		435
Payable between 1 and 2 years	435		435
Payable between 2 and 5 years	1,305		1,305
Payable after 5 years	33,308		33,563
At end of year	35,483		35,738

 

27. Stated capital

Stated capital represents the consideration received by the Company for the issue of Ordinary Shares.

 

During the previous year, the Company offered 15 new Ordinary Shares for every 7 existing shares. This resulted in an increase of 1,105,149,821 Ordinary Shares being issued. Subsequently, there was a 10 for 1 consolidation with the resulting Ordinary Shares in issue being 162,088,483.

 

		31 December 2025 £'000		31 December   2024 £'000
Group
Issued and fully paid Shares of no par value
At start of the year		618,266		513,762
Shares issued in year		-		110,515
Cost of shares issued in 2024		(256)		(6,011)
At end of the year		618,010		618,266
Number of Shares in issue
At start of the year		162,088,483		515,736,583
Shares issued in year		-		1,105,149,821
Reduction in shares (see note above)		-		(1,458,797,921)
At end of the year		162,088,483		162,088,483

 

28. Net asset value (NAV) per Share

Basic NAV per Share is calculated by dividing the net assets in the Statement of Financial Position attributable to ordinary equity holders of the parent by the number of Ordinary Shares outstanding at the end of the year. See Note 27 for further explanation.

 

Further detail of the EPRA performance measures can be found in the Full Annual Report.

 

		31 December 2025 £'000		31 December  2024 £'000
Group
Net asset value per Consolidated Statement of Financial Position		319,286		351,614
Adjustment for calculating EPRA net tangible assets:
Derivative financial instruments		(4,884)		(11,608)
Deferred tax liability		754		741
EPRA Net Tangible Assets		315,156		340,747
Number of Ordinary Shares in issue		162,088,483		162,088,483
Net asset value per Share - basic and diluted		197.0p		216.9p
EPRA Net Tangible Assets per Share - basic and diluted		194.4p		210.2p

 

29. Notes to the Statement of Cash Flows

 

29.1 Reconciliation of changes in liabilities to cash flows arising from financing activities

 

	Bank loans and borrowings £'000	Retail Eligible Bonds £'000	Lease liabilities £'000	Total £'000
Balance at 1 January 2025	312,323	-	11,444	323,767
Changes from financing cash flows:
Bank borrowings repaid	(50,508)	-	-	(50,508)
Bank and bond borrowing costs paid	(1,057)	-	-	(1,057)
Lease payments	-	-	(435)	(435)
Total changes from financing cash flows	(51,565)	-	(435)	(52,000)
Amortisation of issue costs	1,561	-	-	1,561
Unwinding of discount	-	-	403	403
Total other changes	1,561	-	403	1,964
Balance at 31 December 2025	262,319	-	11,412	273,731

 

 

	Bank loans and borrowings £'000	Retail Eligible Bonds £'000	Lease liabilities £'000	Total £'000
Balance at 1 January 2024	365,603	49,907	11,475	426,985
Changes from financing cash flows:
Bank borrowings repaid	(54,016)	-	-	(54,016)
Bank and bond borrowing costs paid	(761)	-	-	(761)
Repayment of bond	-	50,000)	-	(50,000)
Lease payments	-	-	(435)	(435)
Total changes from financing cash flows	(54,777)	(50,000)	(435)	(105,212)
Amortisation of issue costs	1,497	93	-	1,590
Unwinding of discount	-	-	404	404
Total other changes	1,497	93	404	1,994
Balance at 31 December 2024	312,323	-	11,444	323,767

 

30. Financial risk management

 

30.1 Financial instruments

The Group's principal financial assets and liabilities are those that arise directly from its operations: trade and other receivables, trade and other payables and cash and cash equivalents. The Group's other principal financial assets and liabilities are bank and other loan borrowings, amounts due to interest rate derivatives and lease liabilities, the main purpose of which is to finance the acquisition and development of the Group's investment property portfolio.

 

Set out below is a comparison by class of the carrying amounts of the Group's financial instruments that are carried in the financial statements and their fair value:

 

	31 December 2025		31 December 2024
Group	Carrying value £'000	Fair value £'000	Carrying value £'000	Fair value £'000
Financial assets - measured at amortised cost
Trade and other receivables	13,352	13,352	10,077	10,077
Cash and short-term deposits	37,726	37,726	56,719	56,719
Financial assets - measured at fair value through profit or loss
Interest rate derivatives	4,884	4,884	11,608	11,608
Financial liabilities - measured at amortised cost
Trade and other payables	(26,687)	(26,687)	(29,244)	(29,244)
Bank and loan borrowings	(262,319)	(259,060)	(312,323)	(301,293)
Lease liability	(11,412)	(11,412)	(11,444)	(11,444)

 

The following financial assets and liabilities are recorded in the Consolidated Statement of Financial Position at amortised cost but their fair value is different as disclosed above. Their fair values are determined as follows:

 

·    The fair value of bank and loan borrowings is determined by reference to mark-to-market valuations provided by the lenders.

·    The fair value of the lease liability has been determined as the present value of future cash flows discounted using the Group's incremental borrowing rate.

 

The following financial assets and liabilities are recorded in the Consolidated Statement of Financial Position at fair value which is determined as follows:

 

·    The fair value of interest rate derivatives is recorded in the Consolidated Statement of Financial Position and is determined by forming an expectation that interest rates will exceed strike rates and discounting these future cash flows at the prevailing market rates as at the year end.

 

Fair value hierarchy

The following table provides the fair value measurement hierarchy for financial assets and liabilities measured at fair value through profit or loss.

 

	Total £'000	Quoted active prices (level 1) £'000	Significant observable inputs (level 2) £'000	Significant unobservable inputs  (level 3) £'000
Balance at 31 December 2025
Interest rate derivatives	4,884	-	4,884	-
31 December 2024
Interest rate derivatives	11,608	-	11,608	-

 

The different levels are defined as follows.

 

Level 1: Quoted (unadjusted) market prices in active markets for identical assets or liabilities.

 

Level 2: Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.

 

Level 3: Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

 

For assets and liabilities that are recognised in the consolidated financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by reassessing categorisation at the end of each reporting period.

 

There have been no transfers between levels during the year.

 

30.2 Risk management

The Group is exposed to market risk (including interest rate risk), credit risk and liquidity risk. The Board of Directors oversees the management of these risks. The Board of Directors reviews and agrees policies for managing each of these risks that are summarised below.

 

30.3 Market risk

Market risk is the risk that the fair values of financial instruments will fluctuate because of changes in market prices. The financial instruments held by the Group that are affected by market risk are principally the Group's bank balances along with a number of interest rate swaps entered into to mitigate interest rate risk.

 

The Group's interest rate risk arises from long-term borrowings issued at variable rates, which expose the Group to cash flow interest rate risk. Borrowings issued at variable rates expose the Group to fair value interest rate risk. The Group manages its cash flow interest rate risk by using floating to fixed interest rate swaps, interest rate caps and interest rate swaps. Interest rate swaps have the economic effect of converting borrowings from floating rates to fixed rates. Interest rate caps limit the exposure to a known level. No quantitative analysis relating to market risk is disclosed as this is not deemed to be material.

 

30.4 Credit risk

Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Group is exposed to credit risk from both its leasing activities and financing activities, including deposits with banks and financial institutions. Credit risk is mitigated by tenants being required to pay rentals in advance under their lease obligations. The credit quality of the tenant is assessed based on an extensive credit rating scorecard at the time of entering into a lease agreement.

 

Outstanding trade receivables are regularly monitored. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial asset.

 

30.5 Credit risk related to trade receivables

Trade receivables, primarily tenant rentals, are presented in the Group's Statement of Financial Position net of provisions for impairment. Credit risk is primarily managed by requiring tenants to pay rentals in advance and performing tests around strength of covenant prior to acquisition.

 

30.6 Credit risk related to financial instruments and cash deposits

One of the principal credit risks of the Group arises with the banks and financial institutions. The Board of Directors believes that the credit risk on short-term deposits and current account cash balances is limited because the counterparties are banks, who are committed lenders to the Group, with high credit ratings assigned by international credit-rating agencies.

 

The list of bankers for the Group, with their latest Fitch credit ratings, was as follows:

 

Bankers	Fitch Ratings
Aviva	A- Stable
Bank of Scotland plc	AA- Stable
Royal Bank of Scotland	AA- stable
Santander UK	A- Stable
Scottish Widows Limited	A+ Stable

 

30.7 Liquidity risk

Liquidity risk arises from the Group's management of working capital and, going forward, the finance charges and principal repayments on its borrowings. It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due, as the majority of the Group's assets are investment properties and are therefore not readily realisable. The Group's objective is to ensure that it has sufficient available funds for its operations and to fund its capital expenditure. This is achieved by continuous monitoring of forecast and actual cash flows by management.

 

The table below summarises the maturity profile of the Group's financial liabilities based on contractual undiscounted payments:

 

While the bank borrowings aged liability interest rate derivative aged liability within the below table are presented separately, the payment obligation of the bank borrowings is the net of the two balances.

 

Group at 31 December 2025	Within 1 year £'000	Between 1 and 2 years £'000		Between 2 and 5 years £'000	After 5 years £'000	Total £'000
Trade and other payables	(26,687)	-		-	-	(26,687)
Bank borrowings and interest payments	(13,028)	(131,368)		(160,416)	-	(304,812)
Interest rate derivatives	4,167	4,167		5,988	-	14,322
Lease liability	(435)	(435)		(1,305)	33,308)	(35,483)
	(35,983)	(127,636)		(155,733)	(33,308)	(352,660)
Group at 31 December 2024	Within 1 year £'000	Between 1 and 2 years £'000	Between 2 and 5 years £'000		After  5 years £'000	Total £'000
Trade and other payables	(29,244)	-	-		-	(29,244)
Bank borrowings and interest payments	(16,875)	(114,129)	(233,016)		-	(364,020)
Interest rate derivatives	6,554	5,025	4,919		-	16,498
Lease liability	(435)	(435)	(1,305)		(33,563)	(35,738)
	(40,000)	(109,539)	(229,402)		(33,563)	(412,504)

 

31. Capital management

The primary objective of the Group's capital management is to ensure that it remains a going concern and continues to qualify for UK REIT status.

 

The Group's capital is represented by reserves and bank borrowings. The Board, with the assistance of the Investment Adviser, monitors and reviews the Group's capital so as to promote the long-term success of the business, facilitate expansion, deliver a quarterly dividend distribution and to maintain sustainable returns for shareholders.

 

The Group's policy on borrowings is as follows: the level of borrowing will be on a prudent basis for the asset class and will seek to achieve a low cost of funds, while maintaining flexibility in the underlying security requirements and the structure of both the portfolio and of Regional REIT.

 

Based on current market conditions, the Board will target Group net borrowings of 40% of Investment Property Values at any time. However, the Board may modify the Group's borrowing policy (including the level of gearing) from time to time in light of then-current economic conditions, relative costs of debt and equity capital, fair value of the Company's assets, growth and acquisition opportunities or other factors the Board deems appropriate.

 

The optimal debt financing structure for the Group will have consideration for key metrics including: fixed or floating interest rate charged, debt type, maturity profile, substitution rights, covenant and security requirements, lender type, diversity and the lender's knowledge and relationship with the property sector.

 

32. Operating leases

The future minimum lease payments receivable under non-cancellable operating leases in respect of the Group's property portfolio are as follows:

 

Group	31 December 2025 £'000		31 December  2024 £'000
Receivable within 1 year	38,284		47,096
Receivable between 1-2 years	35,360		42,215
Receivable between 2-5 years	68,465		85,709
Receivable after 5 years	50,095		66,075
	192,204		241,095

 

The Group has in excess of 650 operating leases.

 

The number of years remaining on these operating leases varies between 1 and 991 years. The amounts disclosed above represent total rental income receivable up to the next lease break point on each lease. If a tenant wishes to end a lease prior to the break point, a surrender premium will be charged to cover the shortfall in rental income received.

 

33. Segmental information

After a review of the information provided for management purposes, it was determined that the Group has one operating segment and therefore segmental information is not disclosed in these consolidated financial statements.

 

34. Transactions with related parties

 

Transactions with the Directors

The following persons and entities are related parties because they have significant influence over the reporting entity or are key management personnel or the reporting entity.

 

Directors' remuneration is disclosed within the Directors' Remuneration Report in the full Annual Report and note 8 to the financial statements. Directors' beneficial interests in the Ordinary Shares of the Company are disclosed within the Directors' Report.

 

Bridgemere Investments Limited ("BIL") is deemed a related party of the Company by virtue of its significant shareholding, holding 22.10% of the issued share capital as disclosed in the TR-1 announcement dated 10 July 2025. In addition, Ms. Nicole Burstow serves as a Non-Executive Director of the Company and is employed by BIL, with her directorship fees being payable to BIL; further detail regarding these fees is provided in the Full Annual Report and note 8 to the financial statements. BIL is therefore considered a related party, and all transactions and arrangements with BIL during the year were conducted on an arm's-length basis and in accordance with the Company's governance procedures.

 

The Investment Adviser does not meet the definition of a related party transaction. Full details of the management arrangements are available in the Full Annual Report.

 

The Group identifies Sugarbird Solar (UK) Ltd. as a related party under IAS 24 on the basis of its 40% investment and resulting significant influence. During the year, the Group made equity contributions of £96,000 and advanced shareholder loan funding of £64,000, all on normal commercial terms. The Group's share of results has been recognised in accordance with IAS 28. Sugarbird Solar (UK) Ltd. has transacted with the Group during 2025. The transactions during the year and the balances at the year-end being de minimis.

 

35. Subsequent Events

On 19 February 2026, the Company declared the Q4 2025 dividend of 2.50pps, which will be paid to shareholders on 10 April 2026.

 

On 11 December 2025, the Company declared the Company's investment management and asset management agreements will be merged into a single Amended and Restated Master Investment Management and Services Agreement ("IMA"), streamlining the management structure and enhancing operational efficiency. This new agreement, comes into effect 1 January 2026, has been entered into with ESR Europe Investment Management Ltd ("AIF Manager") who continues in its role and ESR Europe LSPIM Ltd ("Investment Adviser"), who continues in its role as asset manager and has also taken over the role of investment adviser from ESR Europe (Private Markets) Ltd. Further information regarding these changes can be found in the Full Annual Report.

 

Following the 24 December 2025 announcement of the Group's £72.4m refinancing, the Group entered into new interest rate hedging arrangements after the reporting date. On 27 February 2026, the Group executed new derivatives comprising GBP 40.6 million of swaps and GBP 17.4 million of caps, effective from August 2026 and maturing on December 2028, matching the maturity profile of the new refinancing.

 

Company Information

 

Directors

 

David Hunter (Chairman and Independent Non-Executive Director)

Massy Larizadeh (Senior Independent Non-Executive Director, Chair of the Nomination

Committee and Management Engagement and Remuneration Committee)

Nicole Burstow (Non-Executive Director)

Frances Daley (Independent Non-Executive Director, Chair of the Audit Committee)

Stephen Inglis (Non-Executive Director)

Sarah Whitney (Independent Non-Executive Director)

 

Registered office

Regional REIT Limited

Mont Crevelt House

Bulwer Avenue

St. Sampson

Guernsey

GY2 4LH

 

Regional REIT Limited

ISIN: GG00BSY2LD72

SEDOL: BSY2LD72

Legal Entity Identifier: 549300D8G4NKLRIKBX73

 

Company website
www.regionalreit.com

 

FURTHER INFORMATION

 

The Company's annual report and accounts for the year ended 31 December 2025 will be available to view shortly on www.regionalreit.com.

 

The annual report will also be submitted shortly in full unedited text to the Financial Conduct Authority's National Storage Mechanism and will be available for inspection at  data.fca.org.uk/#/nsm/nationalstoragemechanism  in accordance with DTR 6.3.5(1A) of the Financial Conduct Authority's Disclosure Guidance and Transparency Rules.