(“Regional REIT” or the “Company”, together with its subsidiaries the “Group”)

Launch of Underwritten Capital Raising of £110.5m, Share Consolidation and Notice of Extraordinary General Meeting

Regional REIT Limited (LSE: RGL), the regional property specialist, is pleased to announce a Capital Raising of approximately £110.5 million, in aggregate, by way of a fully underwritten Placing, Overseas Placing and Open Offer of 1,105,149,821 New Ordinary Shares at an issue price of 10 pence per New Ordinary Share. The Company also announces a 1 for 10 Share Consolidation. The Capital Raising is being fully underwritten by Bridgemere Investments Limited (“Bridgemere”), which is part of the Bridgemere group of Companies established by Steve Morgan CBE.

The Capital Raising will enable the Company’s £50 million Retail Bond to be fully repaid, eliminating this short term liability and further reducing the constraints caused by the requirement to pay coupon distributions on the Retail Bond. In addition, £26.3 million of the Net Capital Raising Proceeds will be used to reduce bank facilities, which will result in the Company having greater headroom under the covenants in such facilities, and the remaining £28.4 million of the Net Capital Raising Proceeds will provide additional flexibility to fund selective capital expenditure on assets, which will enhance earnings in the near term and value in the mid to long-term, further underpinning quarterly dividends going forward. This will reduce LTV from 56.8 per cent. (based on the valuations as at 21 June 2024 as set out in the Valuation Report) to 40.6 per cent. upon completion of the Capital Raising.

Kevin McGrath, Chairman of Regional REIT, commented:

“Following a comprehensive review of a wide range of options to accelerate a reduction in indebtedness and the repayment of the £50 million retail bond which matures in August 2024, the Board believes this Capital Raising is the best available solution for shareholders. The Capital Raising, supported by Bridgemere, will enable the Company to strengthen significantly Regional REIT’s financial position, reducing indebtedness and provide the Company with greater financial flexibility and liquidity headroom.“

Stephen Inglis, Chief Executive Officer of London & Scottish Property Investment Management Limited, the Asset Manager, commented:

“Since the Covid-19 pandemic the Company has been operating in a challenging environment resulting in the LTV increasing to 56.8% against a target of less than 40%. The fully underwritten and fully pre-emptive Capital Raising provides the best long-term solution to the upcoming retail bond refinancing, will put the Company on a sound footing reducing the LTV to approximately 40% and provide the flexibility to fund capital expenditure on assets to maximise value and income for shareholders over the long term.“

Key Highlights

·    Placing, Overseas Placing and Open Offer (the “Capital Raising”) of 1,105,149,821 New Ordinary Shares at an issue price of 10 pence per New Ordinary Share to raise approximately £110.5 million, approximately £104.7 million net of expenses (the “Net Capital Raising Proceeds”).

·    The Capital Raising is being fully underwritten by Bridgemere, which is part of the Bridgemere group of Companies established by Steve Morgan CBE, providing the requisite certainty to recapitalise the Company.

·    Bridgemere will subscribe for the Placing Shares at the Issue Price and the Placing Shares will be subject to clawback to satisfy valid applications under the Open Offer and Overseas Placing.

·    The Open Offer to Qualifying Shareholders is on the basis of:

15 New Ordinary Shares for every 7 Existing Ordinary Shares

·    The Issue Price represents a discount of 50.4 per cent. to the Closing Price of 20.2 pence and a discount of 82.3 per cent. to the latest published NTA per Share prior to the Latest Practicable Date of 56.4 pence.

·    The Net Capital Raising Proceeds of approximately £104.7 million will be used to:

o satisfy the redemption of the £50 million 4.5 per cent. Retail Bond, which matures on the 6 August 2024;

o reduce bank facilities by £26.3 million, which will result in the Company having greater headroom under the covenants in such facilities; and

o the remaining £28.4 million of the Net Capital Raising Proceeds will provide flexibility to fund selective capital expenditure on assets, which will enhance earnings in the near term and value in the mid to long-term, further underpinning quarterly dividends going forward.

·    The Company’s investment properties were independently valued on 21 June 2024 at £647.8 million (31 December 2023: £700.7 million), representing a decrease of 4.6% in the like-for-like value of the portfolio.

·    Following completion of the Capital Raising, and subject to shareholder approval, it is proposed that the Ordinary Shares will be consolidated at the Consolidation Ratio of one Consolidated Share for every 10 Ordinary Shares.

·    Assuming that Admission and Admission of the Consolidated Shares occur, the Board’s current intention is to pay approximately 2.2 pence per Ordinary Share (assuming the Share Consolidation becomes effective) in relation to the 2024 Q2 Dividend, which is expected to be declared in September 2024.