RGL

REGIONAL REIT Limited

Q4 Trading Update and Year-End Portfolio Valuation

98.6% Rent Collection for 2023

Regional REIT (LSE: RGL) today announces its portfolio valuation as at 31 December 2023 and a positive update for both EPC ratings and rent collections.

Full Year 2023 Valuation and Portfolio Update

·    Portfolio valuation £700.7m (2022: £789.5m)

·   The like-for-like value of the portfolio decreased by 5.9% from 30 June 2023 to 31 December 2023 after adjusting for capital expenditure, acquisitions and disposals during the period (5.5% excluding capital expenditure adjustment)

·   Total rent collection for 2023 is currently 98.6% compared with 97.9% for the equivalent period in 2022

·    Gross annualised rent roll £67.8m (2022: £71.8m); ERV £87.0m (2022: £92.0m)

·    Equivalent Yield 9.9% (2022: 9.0%)

·    Excellent progress on EPC ratings with c.73% of the portfolio EPC C or better

·    144 properties (2022: 154); 978 occupiers (2022: 1,076)

·    Total disposals in 2023 of £26.1m (before costs)

·    Portfolio: offices (by value) at 92.1% (2022: 91.8%), industrials 3.2% (2022: 3.1%), retail 3.1% (2022: 3.6%), and Other 1.7% (2022: 1.4%)

·    England represented 78.4% (2022: 78.3%) (by value), Scotland 16.2% (2022: 16.7%) and Wales 5.4% (2022: 5.0%)

·    EPRA Occupancy (by ERV) at 80.0% (2022: 83.4%)

·    Average lot size c. £4.9m (2022: c. £5.1m)

·    Net loan-to-value ratio 55.1% (2022: 49.5%)

·    Group cost of debt (incl. hedging) 3.5% pa (2022: 3.5% pa) – 100% fixed and hedged

·    Weighted average debt duration 3.5years (2022: 4.5 years)

Stephen Inglis, CEO of London and Scottish Property Investment Management, the Asset Manager, commented:

“2023 was one of the most challenging years for REITs in recent memory and Regional REIT was not immune from the macro-economic difficulties faced by the sector. Whilst valuations have been impacted, the Asset Manager’s active asset management initiatives continued to mitigate some of the impact on the portfolio. The leasing market was slower than anticipated largely due to the uncertainty around working patterns and the geopolitical situation impacting inflation and interest rates, but with some stability we are witnessing increasing numbers of enquiries for our assets.

“Notably, the Company continued to achieve a strong level of rent collection thanks to its high-quality tenant base. The ongoing asset disposal programme continues to achieve the latest valuations.

“It is pleasing to note that substantial progress has been achieved in improving the EPC rating of the portfolio. Over the course of 2023 the number of properties rated EPC C and above has improved to in excess of 73% of the portfolio.

“The LTV continues to be a key focus of the Board and the management have a plan to reduce LTV to the long term target of 40% through selective sales and repayment of debt. The senior debt is 100% fixed, swapped or capped and will not exceed 3.5%. The Company is actively exploring a range of refinancing options for the retail bond given its near-term maturity date.”

Rent Collection 2023 Update

The Company is pleased to report that as at 30 January 2024, Q1 2023 collections amounted to 99.7%, Q2 2023 to 98.5% and Q3 2023 to 98.2%. Currently, Q4 2023 rent collection, adjusting for monthly rent stands at 98.1%, which is above the equivalent period in 2022, when 95.6% had been collected. The total rent collection for 2023 is currently at 98.6% (see below) compared with 97.9% this time last year.

%	Q1 2023	Q2 2023	Q3 2023	Q4 2023	YTD
Rent paid	99.7	98.4	98.1	97.3	98.4
Adjusted for monthly rents	0.0	0.0	0.1	0.7	0.2
	99.7	98.5	98.2	98.1	98.6

Table may not sum due to rounding.

The Company remains supportive of its tenants and is in ongoing discussions with occupiers regarding the balance of the outstanding rent. It expects to collect the vast majority of the outstanding rent in due course.