Regional REIT (RGL) owns a highly diversified commercial property portfolio located in the regional centres of the UK.

Equity Proposition

Regional REIT’s commercial property portfolio is located wholly in the UK and comprises predominantly offices located in the regional centres outside of the M25 motorway. The portfolio is highly diversified, with more than 100 properties, containing over 1,000 units and let to well over 600 tenants. The portfolio value at the end of 2025 was £555m.

Responding to significant and challenging structural shifts in the office market, Regional REIT is well-advanced with a major repositioning of its portfolio, while reducing gearing. Meanwhile, there are a number of factors that suggest the performance of the office sector relative to the wider commercial property market may be at a turning point.

There are four main reasons why now may be the right time to look at Regional REIT.

1. Good quality assets are generating premium rental growth.

There is now much greater visibility on the post-pandemic use of office space; most employers have adopted some form of hybrid working, and office attendance has returned to normal levels. However, occupier demand is not spread equally across the sector. There is a flight to quality with many occupiers willing to pay higher rents for good quality, energy-efficient space, while lower quality, hard-to-let assets have continued to leave the sector, often for alternative use. It is estimated that less than a quarter of regional offices meet the energy efficiency standards that are expected to become a legal requirement and which are already being demanded by occupiers. With little new development on the horizon, the outlook for rental growth looks promising.

2. The majority of Regional REIT’s office portfolio already meets these occupier requirements or will soon do so.

At the end of 2025, 85% of Regional REIT’s current portfolio was EPC rated C or better and compliant with the expected 2027 regulatory standards. Core, good quality, long-term income generating properties were 63% of the portfolio, and another 19% were expected to become so through refurbishment and improvement. The balance of the portfolio will be sold, usually outright, but in selected cases after first obtaining part or full planning consent to create additional value. In 2025, Regional REIT completed more than £50m of disposals at a small premium to book value before sales costs, using the proceeds to fund capex and reduce debt.

3. Significant potential to grow net rental income.

The overall leasing market has remained challenging amid economic and political uncertainty, but the potential for Regional REIT to grow its net rental income is significant. There is a wide gap between existing rents and the level of market rents estimated by the external valuers. This is available to be captured by letting vacant space, and, encouragingly, recent lettings have been at rents above the estimated market level. Leasing vacant space does not just increase rental income but also reduces the property costs that must otherwise be paid by the company. The sale of underperforming, low occupancy properties reduces costs more than the income.

4. A significant discount to net assets with a high covered yield.

Regional REIT’s shares trade at around a 50% discount to the NAV and offer one of the highest, fully covered dividend yields in the sector. Within the commercial property market, the office sector has underperformed significantly, particularly since the pandemic, and investor expectations are low. Given these low expectations, improving demand-supply fundamentals and continuing market rental growth, combined with a successful execution of the company’s strategy, could be powerful drivers of dividend-led investment returns.

Published 15 April 2026