10 September 2024
Regional REIT Limited
("Regional REIT", the "Group" or the "Company")
2024 Half Year Results, Q2 Dividend Declaration
& £110.5m Fundraise Successfully Completed Post Period End
Regional REIT (LSE: RGL), the regional commercial property specialist today announces its half year results for the six months ended 30 June 2024.
Post-Period end highlights, Transformational Successful Fundraise:
· 18 July 2024 successfully completed £110.5m equity fund raise, supported by Shareholders
· Proceeds used for the repayment of the £50m retail bond and £26.3m will be used to reduce bank facilities. The remaining net proceeds of £28.4m will be used in accretive capital expenditure projects on assets, enhancing earnings in the near term and value in the mid to long-term, further underpinning dividend payments going forward
· 29 July 2024 1 for every 10 ordinary share consolidation completed
· 6 August 2024 repaid in full the 4.50%, £50m retail bond
· LTV reduced to 42.2% from 30 June 2024 58.3%
Financial Highlights:
· Portfolio valuation of £647.9m (31 December 2023: £700.7m). On a like-for-like basis, the portfolio value reduced by 5.1% during the period, after adjusting for disposals and capital expenditure, comparing favourably against the MSCI Rest of UK offices Index return of -6.4%
· Rent collection remained strong over the period at 98.0% (equivalent period for 30 June 2023: 98.8%).
· Rent roll at £63.5m, 3% lower on a like-for-like basis (31 December 2023: £67.8m)
· Net initial yield on the portfolio 6.1% (31 December 2023: 6.2%)
· Covered dividend declared per share of Q1 2024 1.20 pence per share ("pps"); following the successful equity capital raise and 1 for 10 share consolidation the dividend for Q2 2024: 2.20pps (30 June 2023: 2.85pps)
· The fully covered dividend target for 2024 for H2 2024 is 4.4pps
· The Group's weighted average cost of debt continued to remain low at 3.5% (31 December 2023: 3.5%)
· Operating profit before gains and losses on property assets and other investments for the six months ending 30 June 2024 amounted to £19.1m (30 June 2023: £20.6m)
· The weighted average maturity of the bank debt was 3.0 years (31 December 2023: 3.5 years)
· EPRA NTA 48.8pps (31 December 2023: 56.4pps); IFRS NAV of 51.7pps (31 December 2023: 59.3pps)
· Prior to the 1 for 10 share consolidation on 29 July 2024: EPRA EPS of 2.1pps for the period (30 June 2023: 2.5pps); and post share consolidation 21.3p (30 June 2023: 24.6p)
Operational highlights:
· As at 30 June 2024, 81.8% of portfolio properties had attained an EPC rating of C+ or higher, an improvement from 73.7% as recorded on 31 December 2023. Properties rated B+ and Exempt have surged to 56.3%, up from 42.1% at the end of the previous year. These milestones place us firmly on the path to better the Minimum Energy Efficiency Standard (MEES) target of an EPC rating of B well before the 2030 deadline
· The Group made disposals amounting to £21.9m (before costs) during the period
· At period end, 91.5% (31 December 2023 92.1%) of the portfolio by valuation was offices, 3.4% industrial (31 December 2023: 3.2%), 3.1% retail (31 December 2023 3.1%) and 1.9% other (31 December 2023: 1.7%)
· At the period end, the portfolio valuation split by region was as follows: England 77.5% (31 December 2023: 78.4%), 16.7% Scotland (31 December 2023: 16.2%) and 5.8% Wales (31 December 2023: 5.4%).
· By income, office assets accounted for 90.9% of gross rental income (30 June 2023: 91.4%) and 4.3% was retail (30 June 2023: 4.6%). The remaining balance was made up of industrial, 3.0% (30 June 2023: 2.7%) and other, 1.8% (30 June 2023: 1.4%)
· The portfolio continues to remain diversified with 132 properties (31 December 2023: 144), 1,305 units (31 December 2023: 1,483) and 832 tenants (31 December 2023: 978)
· EPRA Occupancy rate stood at 78.0% (31 December 2023: 80.0%)
Q2 2024 Dividend Declaration
The Company declares that it will pay a dividend of 2.20 pps for the period 1 April 2024 to 30 June 2024. The entire dividend will be paid as a REIT property income distribution ("PID").
Shareholders have the option to invest their dividend in a Dividend Reinvestment Plan ("DRIP"), and more details can be found on the Company's website https://www.regionalreit.com/investors/investors-dividend/dividend-reinvestment-plan.
The key dates relating to this dividend are:
| Ex-dividend date | 19 September 2024 |
| Record date | 20 September 2024 |
| Last day for DRIP election | 27 September 2024 |
| Payment date | 18 October 2024 |
The level of future payments of dividends will be determined by the Board having regard to, among other factors, the financial position and performance of the Group at the relevant time, UK REIT requirements, the interest of shareholders and the long term future of the Company.
Stephen Inglis, CEO of London and Scottish Property Investment Management, the Asset Manager:
"The period under review was another challenging period for the commercial real estate sector, with valuations reduced by persistently high interest rates and poor investor sentiment towards UK commercial real estate. However, the regional office market appears to be reaching an inflection point, with the recent cut to the base rate providing a helpful development.
"Post-period end, we repaid in full our 4.50% £50m retail bond, which we were able to achieve following a £110.5m capital raise in July. This also provides us with the opportunity to reduce the Company's borrowings with the LTV reducing to 42% and we continue to make efforts to reduce the LTV further to the long term target of 40%. The raise also provides greater flexibility for capital expenditure to improve the core assets in our portfolio and increase shareholder value going forward.
"We would again like to thank shareholders for their continued support during this challenging period and we look forward to updating them on our progress in enhancing shareholder value through active portfolio management."
Subsequent Events summary post 30 June 2024
Since the quarter end, the Group has successfully completed an additional notable letting:
Lettings
· The Courtyard, Macclesfield - Elior UK Services Ltd. has renewed existing lease for 23,100 sq. ft. of space to August 2028, at a rental income of £542,700 pa (£23.49/ sq. ft.)
· 1175 Century Way, Thorpe Park, Leeds - Greenbelt Group Ltd. has let 2,670 sq. ft. of office space to July 2029, at a rental income of £64,080 pa (£24.00 / sq. ft.).
· Mandale Business Park, Durham - Avove Ltd. has let 5,000 sq. ft. of office space to July 2034 with the option to break in 2029, at a rental income of £58,750 pa (£11.75 / sq. ft.).
· St James Business Park, Paisley - Maximus UK Services Ltd. has let 5,456 sq. ft. of office space to September 2029 with the option to break in 2025, at a rental income of £76,384 pa (£14.00 / sq. ft.).
· Buchanan Gate, Stepps, Glasgow - RPS Environmental Management Ltd. has let 7,710 sq. ft. of office space to September 2029 with the option to break in 2027, at a rental income of £88,665 pa (£11.50 / sq. ft.).
Future asset disposal programme comprises of 54 sales totalling c £106m:
· 2 disposals contracted for c. £1.5m
· 10 disposals totalling c. £12.4m under offer and in legal due diligence
· 7 further disposals totalling c. £10.4m are in negotiation
· 7 further disposals totalling c. £9.1m are on the market
· 28 potential disposals totalling c. £73m are being prepared for the market
Forthcoming Events
| 13 November 2024 | Q3 2024 Trading Update |
Enquiries:
| Regional REIT Limited |
|
| Press enquiries through Burson Buchanan | |
| | |
| ESR Europe Private Markets Limited | Tel: +44 (0) 203 831 9776 |
| Investment Manager to the Group | |
| Adam Dickinson, Investor Relations, Regional REIT Limited | |
| | |
| London & Scottish Property Investment Management | Tel: +44 (0) 141 248 4155 |
| Asset Manager to the Group | |
| Stephen Inglis | |
| | |
| Burson Buchanan Communications | Tel: +44 (0) 20 7466 5000 |
| Financial Communications | |
| Charles Ryland, Henry Wilson, George Beale | |
About Regional REIT
Regional REIT Limited ("Regional REIT" or the "Company") and its subsidiaries (the "Group") is a United Kingdom ("UK") based real estate investment trust that launched in November 2015. It is managed by London & Scottish Property Investment Management Limited, the Asset Manager, and ESR Europe Private Markets Limited, the Investment Adviser.
Regional REIT's commercial property portfolio is comprised wholly of income producing UK assets and comprises, predominantly of offices located in the regional centres outside of the M25 motorway. The portfolio is geographically diversified, with 132 properties, 1,305 units and 832 tenants as at 30 June 2024, with a valuation of c.£647.9m.
Regional REIT pursues its investment objective by investing in, actively managing and disposing of regional Core and Core Plus Property assets. It aims to deliver an attractive total return to its Shareholders, targeting greater than 10% per annum, with a strong focus on income supported by additional capital growth prospects.
The Company's shares were admitted to the Official List of the UK's Financial Conduct Authority and to trading on the London Stock Exchange on 6 November 2015. For more information, please visit the Group's website at www.regionalreit.com.
ESMA Legal Entity Identifier ("LEI"): 549300D8G4NKLRIKBX73
KEY FINANCIALS
Period ended 30 June 2024
| | 30 June 2024 | 31 December 2023
|
| Portfolio Valuation | £647.9m | £700.7m |
| IFRS NAV per Share | 51.7p | 59.3p |
| EPRA* NTA per Share | 48.8p | 56.4p |
| Net Loan to Value Ratio* | 58.3% | 55.1% |
| Weighted Average Cost of Debt* | 3.5% | 3.5% |
| Weighted Average Debt Duration* | 3.0 yrs | 3.5 yrs |
The European Public Real Estate Association ("EPRA")*
The EPRA's mission is to promote, develop and represent the European public real estate sector. As an EPRA member, we fully support the EPRA Best Practices Recommendations. Specific EPRA metrics can be found in the Company's financial and operational highlights, with further disclosures and supporting calculations in the full Half Year Report.
* Alternative Performance Measures. Details are provided in the Glossary of Terms in the full Half-Year Report.
"The Board's focus remained on the continued disposal of non-core assets and reducing the LTV, which has been achieved following the successful equity fundraise completed in July, whilst maintaining dividend payments to our shareholders."
Kevin McGrath
Chairman
CHAIRMAN'S STATEMENT
Overview
My below summary of the Group's performance for the six months to 30 June 2024, has been overshadowed by subsequent events with the completion on 18 July 2024 of the successful £110.5m equity capital raise.
The transformational raise enabled the Company's £50m Retail Bond to be fully repaid, eliminating this short-term liability and further reduced the constraints caused by the requirement to pay coupon distributions on the Retail Bond. In addition, some £26m are to be used to reduce bank facilities, which will result in the Company having greater headroom under the covenants in such facilities. The remaining proceeds of the net capital raise 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 dividends going forward.
Notwithstanding the constrained commercial real estate transactional market conditions, our Asset Manager, in line with our strategy, continued to focus upon the disposal of non-core assets, which in the period under review amounted to £20.7m (net of costs) at a net initial yield of 9.3% (10.4% excluding vacant units). The proceeds from the disposals were promptly allocated to our stated near-term objectives of reducing borrowing levels, with £17.4m being repaid. Planned capital expenditure amounting to £5.2m was utilised to drive property values and increase occupancy.
After adjusting for disposals and capital expenditure during the period, the Company's portfolio experienced a £52.8m decrease in value to £647.9m (31 December 2023: £700.7m); this reflects a like-for-like decrease of 5.1%, with a Loan-to-Value (LTV) of 58.3%. The Group's post period end equity raise described below has substantially reduced this figure to 42.2%.
Rent collection remained strong throughout the period to 30 June 2024. As at 30 August 2024, rent collection for the period to 30 June 2024, amounted to 98.0% (equivalent period for the six months to 30 June 2023 98.8%.) Enquiry levels for space requirements continued to increase through the period under review, however, the continued wider macroeconomic conditions saw potential occupiers adopting a cautious approach with the EPRA occupancy standing at 78.0% at the period end (30 June 2023: 82.5%). If fully occupied the rental income is estimated at ERV £83.7m, reflects an equivalent yield of 10.2% (June 2023: 9.5%). EPRA earnings were 21.3p (six months to June 2023: 24.6p). *
The Board's focus remained on the continued disposal of non-core assets and reducing the LTV, which has been achieved following the successful fundraise completed in July, whilst maintaining dividend payments to our shareholders.
Financial Resources
The EPRA NTA saw a reduction to £251.6m (IFRS NAV: £266.6m) as of 30 June 2024, a decrease from the 31 December 2023 £290.8m (IFRS NAV; £306.1m). This contraction is primarily attributed to the lower revaluation of the investment property portfolio, which mirrors the broader challenges faced by the market.
Despite these headwinds, the Company maintained a robust cash balance of £25.7m as of 30 June 2024
(31 December 2023: £34.5m), with £21.8m of this being unrestricted funds (31 December 2023: £30.7m).
Our debt strategy, characterised by 100% fixed and hedged interest rate debt, shielded the Company from
rate fluctuations, maintaining a stable weighted average cost of debt at 3.5%. The maturity of the £50m 4.5% Retail Eligible Bond in August 2024 remained a focal point for the Board and more details can be found in the Subsequent Events section.
* Prior to the Company share consolidation of 1 new share for every 10 ordinary shares after the period end EPRA earnings per share would have been 2.1p (six months to June 2023: 2.5p).
Sustainability
As of 30 June 2024, I am pleased to report that 81.8% of our properties have attained an EPC rating of C+ or higher, a significant improvement from 73.7% as recorded on 31 December 2023. Properties rated B+ and Exempt have surged to 56.3%, up from 42.1% at 31 December 2023. These milestones place us firmly on the path to surpassing the Minimum Energy Efficiency Standard (MESS) target of an EPC rating of B well before the 2030 deadline.
Board Composition
As noted in the Prospectus published by the Company on 27 June 2024, both Dan Taylor and I, having each served on the Board for nine years, intend to step down from the Board, subject to replacement directors being appointed in our place. The Company and its new significant shareholder, Bridgemere, have agreed, through the Subscription Agreement of the Capital Raising, that Dan will be replaced by a director to be identified by Bridgemere. In addition to his non-executive Director duties, Dan currently also serves as our Senior Independent Director, therefore, as part of the Board's succession plan, one of the Board members will be appointed as the new Senior Independent Director to replace Dan. The Nomination Committee has commenced the process to identify a new non-executive Chair to replace me. We will report to shareholders on the progress, and expect to be able to make the appropriate announcements through a Regulatory Information Service in due course.
Dividends
For the period under review, the Company declared a covered dividend of 1.2pps for the first quarter 2024 and dividend of 2.2 pps* for the second quarter 2024, (declared on 9 September 2024) being post the capital raise and the subsequent share consolidation (six months to June 2023: 2.85pps). Please see Subsequent Events for more information.
*On 29 July 2024, the shares in issue were consolidated by a ratio of 1 new share for every 10 shares.
Performance
The period under review was impacted by the announced equity capital raise on the 27 June 2024. The Company's total shareholder return was -50.8%, versus the return of -2.4% for the FTSE EPRA NAREIT UK Total return Index over the same period. The EPRA total return from listing on 6 November 2015 was 7.5% and the annualised EPRA Total Return was 0.8%. Total Shareholder Return since listing was -65.9%, compared with the FTSE EPRA NAREIT UK Total Return Index of -10.3%.
Subsequent Events
Following shareholder support and approval at the extraordinary general meeting held on 18 July 2024, the Company successfully raised £110.5m of gross proceeds in aggregate, by way of a fully underwritten Placing, Overseas Placing and Open Offer of 1,105,149,821 New Ordinary Shares. The Capital Raise was fully underwritten by Bridgemere Investments Limited, whom we now welcome as a significant new Shareholder with a holding of 18.7%.
As announced on 29 July 2024, the Company completed a share consolidation, representing a consolidation ratio of 1 consolidated share for every 10 ordinary shares.
The Company repaid in full the 4.50% £50m retail bond (ISIN XS1849479602), which matured on 6 August 2024.
ESR Europe Investment Management Ltd ("ESR Europe") obtained its FCA licence on the 1st August 2024 and the process of changing the AIFM for Regional REIT Ltd from Toscafund Asset Management LLP to ESR Europe IM completed on 30 August 2024.
On 9 September 2024, the Company declared a dividend of 2.20 pps in respect of the period 1 April 2024 to 30 June 2024. The dividend is payable to the 162,088,483 shares in issue on the record date of 20 September 2024.
Outlook
Continuing through 2024, the economic landscape in the UK's regions for regional offices is showing signs
of improvement, with interest rates expected to reduce further following the sharp fall in headline inflation over recent months. However, the Board is conscious of the persistent macroeconomic headwinds that may challenge us in the near term.
The successful £110.5m capital raise in July 2024, has placed the Company on a much stronger footing with the £50m retail bond repaid in full, the continued reduction of debt, whilst providing the Company with greater financial flexibility to fund capital expenditure on assets to maximise value and income for shareholders over the long term. In addition, the Company continues its programme of disposal of non-core assets.
Operationally, our performance remains robust, as evidenced by our solid rent collections. The Board
remains dedicated to providing vibrant, growth- conducive spaces for our tenants, which is fundamental to increasing occupancy and reducing the costs associated with vacant spaces.
With an eye on the future, we are committed to growing our rent roll and sustaining our dividend payments coupled with the execution of our asset management plans, which are expected to drive property values and ensure the long-term growth of the Company.
Kevin McGrath
Chairman
9 September 2024
ASSET AND INVESTMENT MANAGERS' REPORT
"The six months to 30 June 2024 was another challenging period for UK commercial real estate,
with persistently high interest rates and poor investor sentiment both consistent headwinds. Despite this, the Company's operational performance remained robust, and we are pleased to note that the regional office market has begun to show early signs of reaching an inflection point
During the six months to 30 June 2024, though the Company's portfolio valuation declined on a like-for-like basis by 5.1%, after adjusting for disposals and capital expenditure, it outperformed the MSCI UK regional office benchmark, which saw a decline of 6.4% over the same period. In the main this was due to our high-quality, blue-chip tenant base, the continued asset management programme, and the diversification and quality of our portfolio in terms of sector and geography. Given the recent cut to the base rate, we hope to see wider market conditions improve in the coming months, confirming that valuations have passed their nadir.
In June 2024, we announced a capital raise of £110.5m, by way of a fully underwritten placing. We are pleased to note that this was strongly supported by Shareholders and it successfully completed post period end. This has enabled us to repay, in full, the 4.5% £50 million retail bond, provides us with greater headroom within the Group's covenants, greater flexibility for capital expenditure an
opportunities to increase shareholder value.
Looking ahead to the remainder of 2024, we will continue to adopt an active approach to portfolio management, taking steps to improve the quality of core assets, reduce the Group's LTV, improve occupancy and EPC ratings, and grow the Company's rent roll.
We would again like to thank shareholders for their continued support during this period and we look forward to updating you on our progress over the coming months."
Stephen Inglis
CEO of London & Scottish Property Investment Management, Asset Manager
Investment Activity in the UK Commercial Property Market
Although 2023 proved to be a challenging year with investment in the UK commercial property market totalling £37.4billion, improving investment volumes in the final quarter suggested the market bottomed out in2023, signalling the early stages of an upward trend and a reason to be optimistic moving into 2024, according to research from Lambert Smith Hampton ("LSH")1. The most recent data from LSH shows that investment in UK commercial property improved in the first half of 2024 reaching £21.0 billion, 19.3% above the same period in 2023. Investment volumes in Q2 2024 reached £11.1 billion, 11.6% above Q1 volume of £9.9 billion, as a result of a rise in the number of deals that took place, with transaction activity approximately 5.0% above the five-year average. Recent investment levels show signs of recovery which is expected to continue in the second half of 2024. Although uncertainty remains in financial markets, the most recent ONS figures show that UK inflation (CPI) remains at the 2.0% target set by the Bank of England, a considerable improvement from the 7.9% recorded in June 20232 . Additionally, forecasts from HM Treasury indicate that interest rates are set to fall from 5.0% to 4.75% by the end of 2024 and to 3.75% at the end 20253.
Single Asset Investment Activity
Research by LSH highlights the importance of the regional markets, with the regions outperforming when compared to London for a third consecutive quarter. At £3.8 billion, investment in single assets across the UK regional markets in Q2 2024 was 21.9% higher than the level of investment in Greater London - well above the five-year quarterly average margin of 9.6%. Four regions experienced robust levels of investment in Q2 2024 when compared to their corresponding averages, namely Yorkshire and the Humber, Scotland, East Midlands and the North East. Data from LSH shows the South East of England accounted for the largest share of regional investment in Q2 2024 for the third successive quarter.
Single Office Investment Activity
Overall, investment in regional offices reach £1.0 billion in H1 2024, 5.0% below the same period in 2023. As can be seen from the table on page 17 of the Full Half Year Report, LSH's data on the split between London and the regions is hard to interpret because of a growing proportion of portfolio transactions, some of which will include both London and Regional properties. Although investment in the regional office market was below trend in H1 2024, optimism is supported by positive office attendance figures. Data from the ONS shows that despite the rise in hybrid working as a result of Covid-19, the vast majority of people do not work from home, with 68.0% of employees reporting that they exclusively travel to work or worked on a hybrid basis, with only 11.0% of workers reporting that they worked exclusively from home - down from 26% in mid-January 2022.4 Moreover, the most recent CEO Outlook published by KPMG shows that c. 87% of CEOs are more inclined to reward those employees that work from the office on a regular basis in the form of better projects, salary increases and promotions. The majority of respondents (64%) anticipate a full return to the office over the next three years5.
1 Lambert Smith Hampton, UKIT, Q2 2024
2 ONS, Labour Market Overview, UK, July 2024
3 Colliers, UK Property Snapshot, July 2024
4 ONS, Characteristics of homeworkers, June 2024
5 KPMG, CEO Outlook, 2023
Quarterly Investment Volumes
Overseas investment in the UK commercial property market accounted for 53.9% of total investment in Q2 2024 and drove overall investment at the larger end of the market. Figures indicate that overseas investment reached £6.0 billion in Q2 2024, 54.8% higher than the previous quarter, and in line with the five-year quarterly average. International investment in the second quarter of the year brought the H1 2024 total to £9.8 billion, 8.3% above the same period in 2023. Overseas investment was largely supported by North American buyers with investment of £3.4 billion, which accounted for approximately 56.2% of all overseas investment. LSH research suggests that North American investors were the most acquisitive net buyers at £2.4 billion. Moreover, investors from Europe, the Far East and Middle East were also net buyers in Q2 2024 at £0.5 billion, £0.5 billion and £2.0 million, respectively.
Occupational Demand in the UK Regional Office Market
Avison Young estimate that take-up of office space across the nine regional markets6 reached 1.6 million sq. ft. in Q2 2024, bringing the half year total to 3.5 million sq. ft., 7.4% above the five-year average take-up for the first 6 month of the year. City Centre activity accounted for the largest proportion of take-up (61.6%) in H1 2024 at 2.2 million sq. ft., 9.2% above the five-year average. When comparing this to the same period in 2023, city centre take-up as a proportion of total take-up has increased from 58.5% in H1 2023. In the first half of 2024 approximately 1.3 million sq. ft. was transacted in the out-of-town market, 4.6% above the five-year average, and accounting for 38.4% of total H1 2024 take-up.
Occupational demand in the regional office markets continued to be driven by the professional services sector, which accounted for the highest proportion of take-up at 20.3% in the first six months of 2024. Moreover, public services, education & health, and technology, media & telecoms sector accounted for the second and third largest proportion of take-up in the regional cities, accounting for 16.6% and 14.2%, respectively7. Savills research indicates that although office market sentiment is going through a period of change, the same key sectors continue to drive demand for UK office stock as the three most active sectors prior to the Covid-19 pandemic remain in the top three in the first half of 2024.
Regional Supply: Annual Office Supply
According to Savills, there was a rise in availability for regional office stock across six regional UK markets8, with total availability in H1 2024 to 10.5 million sq. ft. Despite the uptick in availability in the first half of 2024 supply across the six regional markets remains 3.5% below the long-term average. Research from PwC9 suggests that there is likely to be a number of stranded assets, given an EPC rating of C will be required by 2027 in order to let a property and then a rating of B from 2030. Currently, approximately 8.9% of office properties in the UK are unlettable as they have an EPC rating of F or G. Additionally, 50.0% (261.5 million Sq. Ft.) of office floor space in the UK is rated D below, which PwC suggest may be classed as 'stranded' going forward due to the extensive capital expenditure (capex) that would be required, indicating the scale of the challenge faced by landlord. However, lower returns due to subdued market and subsequently lower rental growth will result in investors finding it more difficult to, justify cap Ultimately, this could lead to a fall in office stock going forward as stranded assets are repositioned for alternative use. At present, only 10.8% of assets have and EPC rating of B or above.
In terms of speculative development, it is estimated that approximately 3.4 million sq. ft. of office space is current under construction in the Big Nine regional markets, down from 3.7 million sq. ft. for the same period last year with Manchester, Bristol, and Leeds accounting for 27.4%, 20.1% and 12.7%, respectively. Approximately 32.6% of office buildings currently under construction are already pre-let.
6 Nine regional office markets mentioned by Avison Young include: Birmingham, Bristol, Cardi
Edinburgh, Glasgow, Leeds, Liverpool, Manchester, Newcastle
7 Savills, The Regional Office Market Review, Q2 2024
8 Six regional office markets mentioned by Savills includes: Birmingham, Bristol, Edinburgh, Glasgow
Leeds and Manchester
9 PwC, UK Office Outlook & Investor Consideration, September 2023
Rental Growth in the UK Regional Office Market
According to monthly data from MSCI, rental value growth slowed for the rest of UK office markets in the 12-month ended June 2024 with growth of 1.8%, 5.0% above trend Similarly, central London offices experienced a fall in rent growth to 1.9% over the same period. Avison Young expects rental growth to continue across most markets for the remainder of 2024 and into 2025. Demand for quality office space has put an upward pressure on rents, with growth of 4.5% recorded across the Big Nine regional markets in the first half of 2024, with average headline rents now sitting a £38.14 per sq. ft., according to research from Avison Young.
Regional REIT's Office Assets
EPRA occupancy of the Group's regional offices as at 30 June 2024 was 77.0% (30 June 2023: 81.6%). A like-for-like comparison of the Group's regional offices EP occupancy, 30 June 2024 versus 30 June 2023, shows that occupancy of 77.0% (30 June 2023: 82.8%).
WAULT to first break was 2.8 years (30 June 2023: 2.8 years); like-for-like WAULT to first break was 2.8 years (30 June 2023: 2.8 years).
Property Portfolio
As at 30 June 2024, the Group's property portfolio was valued at £647.9 million (30 June 2023: £752.2 million; 31 December 2024: £700.7 million), with rent roll of £63.5 million (30 June 2023: £69.8 million; 31 December 2023: £67.8 million), and an EPRA occupancy rate of 78.0% (30 June 2023: 82.5%; 31 December 2023: 80.0%). On a like-for-like basis, 30 June 2024 versus 30 June 2023 EPRA occupancy was 78.0% (30 June 2023: 83.8%).
There were 132 properties (30 June 2023: 150; 31 December 2023: 144), in the portfolio, with 1,305 units (30 June 2023: 1,535; 31 December 2023: 1,483) and 832 tenants (30 June 2023: 1,038; 31 December 2023: 978). If the portfolio was fully occupied at Colliers view of market rents, the rental income would be £83.7 million per annum (30 June 2023: £88.9 million; 31 December 2023: £87.0
million).
As at 30 June 2024, the net initial yield on the portfolio was 6.1% (30 June 2023: 6.1%; 31 December 2023: 6.2%), the equivalent yield was 10.2% (30 June 2023: 9.5%; 31 December 2023: 9.9%) and the reversionary yield was 11.2% (30 June 2023: 10.4%; 31 December 2023: 10.8%).
Property Portfolio by Sector as at 30 June 2024
| Sector |
| Valuation |
| Sq. ft. | Occupancy (EPRA) | WAULT to first break | Gross rental income | Average rent | ERV | Capital rate |
| |||
|
Properties |
(£m) |
% by valuation |
(m) |
(%) |
(yrs) |
(£m) |
(£psf) |
(£m) |
(£psf) | EPRA Net yield initial (%) |
Equivalent yield (%) |
Reversionary yield (%) | ||
| Office | | 113 | 592.8 | 91.5 | 5.2 | 77.0 | 2.8 | 57.7 | 14.74 | 78.3 | 114.02 | 6.0 | 10.3 | 11.5 |
| Retail | | 13 | 20.4 | 3.1 | 0.3 | 94.0 | 3.2 | 2.7 | 11.09 | 2.3 | 76.82 | 8.8 | 9.4 | 9.9 |
| Industrial | | 4 | 22.3 | 3.4 | 0.4 | 85.3 | 4.6 | 1.9 | 5.38 | 2.2 | 53.12 | 6.0 | 7.8 | 8.2 |
| Other | | 2 | 12.5 | 1.9 | 0.1 | 98.5 | 10.0 | 1.1 | 12.48 | 0.9 | 131.81 | 8.3 | 8.1 | 6.8 |
| Total |
| 132 | 647.9 | 100.0 | 6.0 | 78.0 | 3.0 | 63.5 | 13.77 | 83.7 | 108.38 | 6.1 | 10.2 | 11.2 |
|
Property Portfolio by Region as at 30 June 2024
| | | | | | | | | | | | | | |
| Region |
| Valuation |
| Sq. ft. | Occupancy (EPRA) | WAULT to first break | Gross rental income | Average rent | ERV | Capital rate |
| |||
| Properties | (£m) | % by valuation | (m) | (%) | (yrs) | (£m) | (£psf) | (£m) | (£psf) | EPRA Net initial yield (%) | Equivalent yield (%) | Reversionary yield (%) | ||
| Scotland | | 29 | 108.3 | 16.7 | 1.1 | 72.8 | 4.0 | 10.3 | 13.34 | 16.3 | 95.16 | 4.8 | 10.7 | 12.0 |
| South East | | 26 | 118.6 | 18.3 | 0.9 | 77.7 | 2.8 | 11.5 | 16.48 | 15.5 | 127.72 | 6.1 | 10.0 | 11.2 |
| North East | | 19 | 99.4 | 15.3 | 0.8 | 76.8 | 2.7 | 9.0 | 13.40 | 11.7 | 117.13 | 5.6 | 9.7 | 10.7 |
| Midlands | | 23 | 132.9 | 20.5 | 1.3 | 81.9 | 3.4 | 14.0 | 12.84 | 17.0 | 99.31 | 7.0 | 10.3 | 11.3 |
| North West | | 17 | 89.6 | 13.8 | 0.9 | 72.4 | 1.8 | 9.0 | 13.48 | 12.0 | 100.74 | 6.0 | 10.6 | 11.9 |
| South West | | 12 | 61.7 | 9.5 | 0.4 | 85.4 | 2.3 | 5.9 | 17.46 | 7.1 | 154.11 | 7.1 | 10.1 | 10.8 |
| Wales | | 6 | 37.5 | 5.8 | 0.4 | 87.6 | 3.4 | 3.7 | 10.13 | 4.1 | 86.11 | 7.5 | 9.0 | 9.5 |
| Total | 132 | 647.9 | 100.0 | 6.0 | 78.0 | 3.0 | 63.5 | 13.77 | 83.7 | 108.38 | 6.1 | 10.2 | 11.2 | |
Tables may not sum due to rounding.
Top 15 Investments (market value) as at 30 June 2024
| Property | Sector | Anchor tenants | Market value (£m) | % of portfolio | Lettable area (Sq. Ft.)
| EPRA Occupancy (%) | Annualised gross rent (£m) | % of gross rental income | WAULT to first break (years) |
| Eagle Court, Coventry Road, Birmingham | Office | Virgin Media Ltd, Rexel UK Ltd, Goldbeck Construction Ltd | 18.3 | 2.8 | 132,690 | 54.5% | 1.3 | 2.1 | 3.1 |
| Hampshire Corporate Park, Eastleigh | Office | Aviva Central Services UK Ltd, Lloyd's Register EMEA, Complete Fertility Ltd, Silverstream Technologies (UK) Ltd | 17.8 | 2.7 | 84,043 | 100.0% | 1.8 | 2.8 | 3.2 |
| 300 Bath Street, Glasgow | Office | University of Glasgow, Glasgow Tay House Centre Ltd, Fairhurst Group LLP, London & Scottish Property Investment Management | 17.5 | 2.7 | 156,853 | 84.0% | 1.2 | 1.9 | 1.4 |
| Norfolk House, Smallbrook Queensway, Birmingham | Office | Global Banking School Ltd, Accenture (UK) Ltd | 17.2 | 2.7 | 118,530 | 98.9% | 1.9 | 3.1 | 6.6 |
| 800 Aztec West, Bristol | Office | NNB Generation Company (HPC) Ltd, EDF EPR Engineering UK Ltd | 16.2 | 2.5 | 73,292 | 100.0% | 1.5 | 2.4 | 2.3 |
| Manchester Green, Manchester | Office | Chiesi Ltd, Ingredion UK Ltd, Assetz SME Capital Ltd, Contemporary Travel Solutions Ltd | 15.2 | 2.3 | 107,760 | 79.3% | 1.5 | 2.3 | 2.2 |
| Beeston Business Park, Nottingham | Office/ Industrial | Metropolitan Housing Trust Ltd, SMS Electronics Ltd, SMS Product Services Ltd | 15.2 | 2.3 | 215,330 | 56.3% | 1.1 | 1.7 | 5.5 |
| Orbis 1, 2 & 3, Pride Park, Derby | Office | First Source Solutions UK Ltd, DHU Health Care C.I.C., Tentamus Pharma (UK) Ltd | 13.7 | 2.1 | 121,883 | 100.0% | 1.8 | 2.9 | 2.9 |
| Oakland House, Manchester | Office | Please Hold (UK) Ltd, A.M.London Fashion Ltd, CVS (Commercial Valuers & Surveyors) Ltd | 12.9 | 2.0 | 161,502 | 80.8% | 1.1 | 1.8 | 1.7 |
| Lightyear - Glasgow Office Airport, Glasgow | Office | Loganair Ltd, Rolls-Royce Submarines Ltd, Heathrow Airport Ltd | 12.2 | 1.9 | 73,499 | 95.5% | 1.4 | 2.2 | 5.0 |
| Linford Wood, Business Park, Milton Keynes | Office | IMServ Europe Ltd, Senceive Ltd, Aztech IT Solutions Ltd, Autotech Recruit Ltd | 12.1 | 1.9 | 107,352 | 100.0% | 1.4 | 2.2 | 2.1 |
| Ashby Park, Ashby De La Zouch | Office | Ashfield Healthcare Ltd, Ceva Logistics Ltd, Brush Electrical Machines Ltd | 11.7 | 1.8 | 87,872 | 100.0% | 1.2 | 1.9 | 3.4 |
| Portland Street, Manchester | Office | Evolution Money Group Ltd, Mott MacDonald Ltd, NCG (Manchester) Ltd, Simard Ltd | 11.5 | 1.8 | 55,787 | 95.9% | 1.1 | 1.7 | 1.5 |
| Capitol Park, Leeds | Office | Hermes Parcelnet Ltd, BDW Trading Ltd | 10.9 | 1.7 | 86,758 | 50.2% | 0.7 | 1.1 | 3.4 |
| 1-4 Llansamlet Retail Park, Natyffin Rd, Swansea | Retail | Wren Kitchens Ltd, NCF Furnishings Ltd, A Share & Sons Ltd, Carpetright Ltd | 10.5 | 1.6 | 74,425 | 100.0% | 1.2 | 1.9 | 2.4 |
| Total | | | 212.7 | 32.8 | 1,657,576 | 84.9% | 20.4 | 32.1 | 3.2 |
Tables may not sum due to rounding
Top 15 Tenants (share of rental income) as at 30 June 2024
|
|
|
| WAULT to first break | Lettable area | Annualised gross rent | % of gross rental income |
| Tenant | Property | Sector | (years) | (Sq. Ft) | (£m) | |
| Virgin Media Ltd | Eagle Court, Birmingham Southgate Park, Peterborough | Information and communication | 0.7 | 107,830 | 1.8 | 2.5 |
| Global Banking School Ltd | Norfolk House, Smallbrook, Queensway, Birmingham | Education
| 8.4 | 73,628 | 1.4 | 2.2 |
| Virgin Media Ltd | Eagle Court, Coventry Road, Birmingham | Information and communication | 3.2 | 75,309 | 1.3 | 2.1 |
| Secretary of State for
| 1 Burgage Square, Merchant Square, Wakefield Albert Edward House, Preston Bennett House, Stoke On Trent Oakland House, Manchester Origin (Office), Bracknell Waterside Business Park, Swansea
| Public sector
| 4.6 | 116,238 | 1.2 | 1.9 |
| Firstsource Solutions UK Ltd
| Orbis 1, 2 & 3, Pride Park, Derby | Administrative and support service activities
| 2.8 | 62,433 | 1.0 | 1.6 |
| E.ON UK Plc | E.ON UK Plc | Electricity, gas, steam and air conditioning supply | 0.8 | 99,142 | 0.9 | 1.5 |
| Shell Energy Retail Ltd | Columbus House, Coventry | Electricity, gas, steam and air conditioning supply | 0.5 | 53,253 | 0.9 | 1.4 |
| NNB Generation Company (HPC) Ltd | 800 Aztec West, Bristol | Electricity, gas, steam and air conditioning supply | 1.6 | 41,743 | 0.9 | 1.4 |
| SPD Development Company Ltd | Clearblue Innovation Centre, Bedford | Professional, scientific and technical activities | 9.5 | 58,167 | 0.8 | 1.3 |
| Aviva Central Services UK Ltd | Hampshire Corporate Park, Eastleigh | Other service activities | 1.4 | 42,612 | 0.8 | 1.2 |
| Odeon Cinemas Ltd | Kingscourt Leisure Complex, Dundee | Information and communication | 11.3 | 41,542 | 0.8 | 1.2 |
| Care Inspectorate | Compass House, Dundee Quadrant House, Dundee | Public sector | 3.8 | 51,852 | 0.7 | 1.1 |
| Please Hold (UK) Ltd | Oakland House, Manchester | Professional, scientific and technical activities
| 1.2 | 60,362 | 0.6 | 1.0 |
| SpaMedica Ltd | 1175 Century Way, Thorpe Park, Leeds Albert Edward House, Preston Fairfax House, Wolverhampton Southgate Park, Peterborough The Foundation Chester Business Park, Chester
| Human health and social work activities | 2.5 | 40,529 | 0.6 | 1.0 |
| University of Glasgow | 300 Bath Street, Glasgow
| Education | 0.2 | 29,885 | 0.6 | 0.9 |
| Total | |
| 4.1 | 955,809 | 14.3 | 22.5 |
Table may not sum due to rounding
PROPERTY PORTFOLIO SECTOR AND REGION SPLITS BY VALUATION AND INCOME AS AT 30 JUNE 2024
By Valuation
As at 30 June 2024, 91.5% (June 2023: 92.0%, December 2023: 92.1%) of the portfolio by market value was offices and 3.1% (June 2023: 3.5%, December 2023: 3.1%) was retail. The balance was made up of industrial, 3.4% (June 2023: 3.0%, December 2023: 3.2%) and other, 1.9% (June 2023: 1.5%, December 2023: 1.7%). By UK region, as at 30 June 2024, Scotland represented 16.7% (June 2023: 16.4%, December 2023: 16.2%) of the portfolio and England 77.5% (June 2023: 78.4%, December 2023: 78.4%) the balance of 5.8% (June 2023: 5.1%, December 2023: 5.4%) was in Wales. In England, the largest regions were the Midlands, South East and the North East.
By Income
As at 30 June 2024, 90.9% (June 2023: 91.4%, December 2023: 91.3%) of the portfolio by income was offices and 4.3% (June 2023: 4.6%, December 2023: 4.2%) was retail. The balance was made up of industrial, 3.0% (June 2023: 2.7%, December 2023: 2.8%), and other, 1.8% (June 2023: 1.4%, December 2023: 1.7%). By UK region, as at 30 June 2024, Scotland represented 16.3% (June 2023: 16.5%, December 2023: 15.8%) of the portfolio and England 77.9% (June 2023: 78.1%, December 2023: 78.6%); the balance of 5.8% was in Wales (June 2023: 5.5%, December 2023: 5.6%). In England, the largest regions were the Midlands, the South East and the North East.
Lease Expiry Profile
The WAULT on the portfolio is 4.7 years (30 June 2023: 4.8; 31 December 2023: 4.7); WAULT to first break is 3.0 years (30 June 2023: 3.0; 31 December 2023: 2.8). As at 30 June 2024, 12.1% (30 June 2023: 14.0%; 31 December 2023: 15.9%) of income was from leases, which will expire within one year, 13.1% (30 June 2023: 12.6%; 31 December 2023: 10.7%) between one and two years, 35.7% (30 June 2023: 30.9%; 31 December 2023: 33.3%) between two and five years and 39.1% (30 June 2023: 42.5%; 31 December 2023: 40.1%) after five years.
Tenants by Standard Industrial Classification as at 30 June 2024
As at 30 June 2024, 11.6% of income was from tenants in the information and communication sector (30 June
2023: 12.9%; 31 December 2023: 12.2%), 11.5% from the professional, scientific and technical activities sector (3 June 2023: 12.5%; 31 December 2023: 11.5%), 10.9% from the administrative and support service activities sector (30 June 2023: 10.9%; 31 December 2023: 10.4%), 8.1% from the wholesale and retail trade sector (30 June 2023: 7.8%; 31 December 2023: 8.0%), 7.0% from the financial and insurance activities (30 June 2023: 8.3%; 31 December 2023: 8.7%), 6.2% from the education sector (30 June 2023: 4.6%; 31 December 2023: 5.6%), and 6.1% from the electricity, gas, steam and air conditioning supply (30 June 2023: 7.2%; 31 December 2023: 6.5%). The remaining exposure is broadly spread.
No tenant represents more than 3% of the Group's rent roll as at 30 June 2024, the largest being 2.7% (30 June 2023: 2.5%; 31 December 2023: 2.5%).
Tenants by SIC Codes (% of gross rent)
| SIC Code | % of Headline Rent |
| Information and communication | 11.6% |
| Professional, scientific and technical activities | 11.5% |
| Administrative and support service activities | 10.9% |
| Wholesale and retail trade | 8.1% |
| Financial and insurance activities | 7.0% |
| Education | 6.2% |
| Electricity, gas, steam and air conditioning supply | 6.1% |
| Human health and social work activities | 5.5% |
| Public Sector | 5.5% |
| Manufacturing | 5.4% |
| Construction | 4.2% |
| Other* | 17.8% |
| Total | 100.0% |
* Other - Accommodation and food service activities, activities of extraterritorial organisations and bodies, activities of households as employers; undifferentiated goods, arts, entertainment and recreation, charity, mining and quarrying, other service activities, overseas company, public administration and defence; compulsory social security, real estate activities, registered society, transportation and storage, water supply, sewerage, waste management and remediation activities.
FINANCIAL REVIEW
Net Asset Value
Between 1 January 2024 and 30 June 2024, the EPRA NTA* of the Group decreased to £251.6m (IFRS NAV: £266.6m) from £290.8m (IFRS NAV: £306.1m) as at 31 December 2023, equating to a decrease in the diluted EPRA NTA of 7.6pps to 48.8pps (IFRS: 51.7pps). This is after the dividends declared in the period amounting to 2.4pps.
In the six months to 30 June 2024, the investment property revaluation decrease amounted to £36.1m, for the properties held as at 30 June 2024.
The investment property portfolio was valued at £647.9m (30 June 2023: £752.2m; 31 December 2023: £700.7m). The decrease of £52.8m since the December 2023 year-end is a reflection of revaluation movement loss of £36.1m, £20.7m of net property disposals and £1.2m loss on the disposal of investment properties, offset by subsequent expenditure of £5.2m. Overall, on a like-for-like basis, the portfolio value decreased by 5.1% during the period.
The table below sets out the acquisitions, disposals and capital expenditure for the respective periods:
|
|
| Six months to 30 June 2024 | Six months to June 2023 | Year ended 31 December 2023 |
| | | (£million) | (£million) | (£million) |
| Acquisitions | | | | |
| | Net (after costs) | 0.0 | 0.1 | 0.1 |
| | Gross (before costs) | 0.0 | 0.0 | 0.0 |
| Disposals |
| | | |
| | Net (after costs) | 20.7 | 14.1 | 25.0 |
| | Gross (before costs) | 21.9 | 14.6 | 26.1 |
| Capital Expenditure |
| | | |
| | Net (after dilapidations) | 5.2 | 6.7 | 10.2 |
| | Gross (before dilapidations) | 5.2 | 6.8 | 11.0 |
The diluted EPRA NTA per share decreased to 48.8pps (31 December 2023: 56.4pps). The EPRA NTA is reconciled in the table below:
| | Six months to 30 June 2024
| ||
|
| £m |
| Pence per Share |
| Opening EPRA NTA (31 December 2023) | 290.8 |
| 56.4 |
| Net rental and property income | 23.8 | | 4.6 |
| Administration and other expenses | (4.7) | | (0.9) |
| Loss on the disposal of investment properties | (1.2) | | (0.2) |
| Change in the fair value of investment properties | (37.9) | | (7.3) |
| Change in value of right of use | (0.1) | | (0.0) |
| EPRA NTA after operating profit | 270.8 |
| 52.5 |
| Net finance expense | (8.1) | | (1.6) |
| Realised gain on derivative financial instruments | 1.3 | | 0.2 |
| Taxation | 0.0 | | 0.0 |
| EPRA NTA before dividends paid | 264.0 |
| 51.2 |
| Dividends paid** | (12.4) | | (2.4) |
| Closing EPRA NTA (30 June 2024) | 251.6 |
| 48.8 |
|
| | | |
|
| | | |
Tables may not sum due to rounding
* The Group has determined that EPRA net tangible assets (NTA) is the most relevant measure. Further detail on the new EPRA performance measures can be found in the full Annual Report.
**As at 30 June 2024, there were 515,736,583 Shares in issue.
Income Statement
Operating profit before gains and losses on property assets and other investments for the six months ending 30 June 2024 amounted to £19.1m (six months to 30 June 2023: £20.6m). Loss after finance and before taxation of £27.1m (six months to 30 June 2023: loss £12.1m). The six months to 30 June 2024 included a full rent roll for the portfolio of properties held as at 30 June 2024, plus the partial rent roll for properties disposed of during the period.
Realised loss on the disposal of investment properties amounted to £1.2m (six months to 30 June 2023: loss £0.4m). The disposal losses were from the aggregate disposal of 12 properties and three-part property sales in the period, on which individual asset management plans had been completed. The change in the fair value of investment properties amounted to a loss of £37.9m (six months to 30 June 2023: loss of £29.5m). Net capital expenditure amounted to £5.2m (six months to 30 June 2023: £6.7m). The change in value of right of use asset amounted to a charge of £0.1m (six months to 30 June 2023: charge £0.1m).
Rental and property income amounted to £32.2m, excluding recoverable service charge income and other similar items (six months to 30 June 2023 £34.3m). The decrease was primarily the result of the rent roll being held over the six months to 30 June 2024.
Currently more than 80% of the rental income is collected within 30 days of the due date and the bad debts provision in the period amounted to £0.2m (30 June 2023: £0.4m). Trade and other receivables increased predominantly due to a one-off systems migration. Subsequently, it abated with rent collection at 30 August 2024 for the period ending 30 June 2024 at 98.0% (equivalent collection period in 2023: 98.8%)
Non-recoverable property costs, excluding recoverable service charge income and other similar costs, amounted to £8.4m (six months to 30 June 2023: £8.3m), and the rent roll decreased to £63.5m (six months to 30 June 2023: £69.8m).
Finance expenses amount to £8.2m (six months to 30 June 2023: £8.0m). The six months to 30 June 2023 was lower due to the decrease of amortisation of borrowings costs.
The EPRA cost ratio, including direct vacancy costs, was 40.6% (30 June 2023: 39.9%). The EPRA cost ratio, excluding direct vacancy costs was 13.4% (30 June 2023: 17.3%). The ongoing charges for the year ending 30 June 2024 were 9.1% (30 June 2023: 7.0%) and excluding direct vacancy costs 3.0% (30 June 2023: 3.1%).
The EPRA Total Return from Listing to 30 June 2024 was 7.5% (30 June 2023: 20.8%), with an annualised rate of 0.8% pa (30 June 2023: 2.5% pa).
Dividend
During the period from 1 January 2024 to 30 June 2024, the Company declared dividends totalling 2.40pps (six months to 30 June 2023: 3.3pps).
Debt Financing and Gearing
Borrowings comprise third-party bank debt and the retail eligible bond. The bank debt is secured over properties owned by the Group and repayable over the next two to five years. The weighted average maturity of the bank debt and retail eligible bond is 3.0 years (30 June 2023: 4.0 years; 31 December 2023: 3.5 years).
The Group's borrowing facilities are with the Royal Bank of Scotland, Bank of Scotland and Barclays, Scottish Widows Limited & Aviva Investors Real Estate Finance, Scottish Widows Limited, Santander UK. The total bank borrowing facilities at 30 June 2024 amounted to £353.3m (30 June 2023: £381.7m; 31 December 2023: £370.8m) (before unamortised debt issuance costs), with nil available to be drawn. In addition to the bank borrowings, the Group had a £50m 4.5% retail eligible bond, repaid in August 2024. In aggregate, the total debt available at 30 June 2024 amounted to £403.3m (30 June 2023: £437.4m; 31 December 2023: £420.8m).
At 30 June 2024, the Group's cash and cash equivalent balances amounted to £25.7m (30 June 2023: £41.2m; 31 December 2023: £34.5m), of which £21.8m (30 June 2023: £26.0m; 31 December 2023: £30.6m) was unrestricted cash.
The Group's net loan to value ("LTV") ratio stands at 58.3% (30 June 2023: 51.9%; 31 December 2023: 55.1%) before unamortised costs. The Board continues to target a net LTV ratio of 40%.
Debt Profile and LTV Ratios as at 30 June 2024
|
| Facility amount | Outstanding debt* | Maturity | Gross loan to value** | Annual interest rate | |
| Lender | £'000 | £'000 | date | % | % | |
| Royal Bank of Scotland, Bank of Scotland & Barclays | 115,961 | 115,961 | Aug-26 | 56.10 | 2.40 over 3 months £ SONIA | |
| Scottish Widows Ltd. and Aviva Investors Real Estate Finance | 147,500 | 147,500 | Dec-27 | 54.80 | 3.28 Fixed | |
| Scottish Widows Ltd. | 36,000 | 36,000 | Dec-28 | 48.80 | 3.37 Fixed | |
| Santander UK | 53,852 | 53,852 | Jun-29 | 53.50 | 2.20% over 3 months £ SONIA | |
| | 353,313 | 353,313 | | | | |
| Retail Eligible Bond*** | 50,000 | 50,000 | Aug-24 | N/A |
4.50 Fixed | |
| | 403,313 | 403,313 |
| | | |
Table may not sum due to rounding.
* Before unamortised debt issue costs
** Based on Colliers International Property Consultants Ltd
*** The retail bond which matured on 6 August 2024 has been repaid in full.
The Managers continue to monitor the borrowing requirements of the Group. As at 30 June 2024, the Group had sufficient headroom against its borrowing covenants.
The net gearing ratio (net debt to Ordinary Shareholders' equity of the Group was 141.6% as at 30 June 2024 (30 June 2023: 104.5%; 31 December 2023: 126.2%).
Interest cover, excluding amortised costs, stands at 2.6 times (30 June 2023: 2.8 times; 31 December 2023: 2.9 times) and including amortised costs, stands at 2.3 times (30 June 2023: 2.6 times; 31 December 2023: 2.7 times).
Hedging
The Group applies an interest rate 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.
| | Six months ended | Six months ended | Year ended |
| | 30 June 2024 | 30 June 2023 | 31 December 2023 |
|
| % | % | % |
| Borrowings interest rate hedged | 100.0 | 101.6 | 100.0 |
| Thereof : |
| | |
| Fixed | 57.9 | 56.4 | 56.7 |
| Swap | 28.9 | 28.4 | 28.6 |
| Cap | 13.3 | 16.6 | 14.7 |
| Weighted Average Cost of Debt ("WACD")10 | 3.5 | 3.5 | 3.5 |
Table may not sum due to rounding
10 WACD - Weighted Average Effective Interest Rate including the cost of hedging
Tax
The Group entered the UK REIT regime on 7 November 2015 and all of the Group's UK property rental 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.
As at 30 June 2024, the Group recognised a tax charge of nil (30 June 2023: nil tax charge).
PRINCIPAL RISKS AND UNCERTAINTIES
For Regional REIT, effective risk management is a cornerstone of delivering our strategy and integral to the achievement of our objective of delivering long term value through active asset management across the portfolio. The principal risks and uncertainties the Group faces are summarised below and described in detail on pages 58 to 70 of the 2023 Annual Report, which is available on the Group's website: www.regionalreit.com - Annual Report 2023.
The Audit Committee, which assists the Board with its responsibilities for managing risk, regularly reviews the risk appetite of the Company. Taking into consideration the latest information available, the Company is able to assess and respond quickly to new and emerging risks.
Despite the improvement in the operating environment, with the level of enquiries for office space remaining robust and the risks associated with Covid-19 pandemic considerably lessened, the continued conflicts in Ukraine, Israel and Palestine and the UK election process continued to impact the wider UK economy.
A summary of the Group's principal risks for the first half of 2024 is provided here.
Strategic risk
Investment decisions could result in lower dividend income and capital returns to our Shareholders.
Valuation risk
The valuation of the Group's portfolio, undertaken by the external valuer, Colliers International Property Consultants Ltd, could impact the Group's profitability and net assets.
Healthcare risk
The economic disruption after-effects resulting from the pandemic, coupled with potential new strains of infectious diseases, could further impact rental incomes, the Group's property portfolio valuations, the ability to access funding at competitive rates, maintain a progressive dividend policy, and adhere to the HMRC REIT regime requirements.
Economic and Political risk
The macro-health of the UK economy could impact on borrowing and hedging costs, demand by tenants for suitable properties and the quality of the tenants. Also, there is a risk that in the wake of wider geopolitical consequences of Russia's invasion of Ukraine and the conflict in the Middle East, property valuations could be impacted.
Funding risk
The Group may not be able to secure further debt on acceptable terms, which could impinge upon investment opportunities and the ability to grow the Group. Bank reference rates maybe set to continue to become more volatile, accompanying volatile inflation. Breach of covenants within the Group's funding structure could lead to a cancellation of debt funding if the Company is unable to service the debt.
Tenant risk
Type and concentration of tenants could result in a lower rental income. A higher concentration of lease term maturity and/or break options, could result in a more volatile rental income.
Financial and Tax Change risk
Changes to UK financial legislation and the tax regime could result in lower rental income.
Operational risk
Business disruption could result in lower rental income. Information security, cyber threats, and technology outages could result in data loss, or negative regulatory, reputational, operational (including GDPR), or financial impacts.
Accounting, Legal and Regulatory risk
Changes to accounting, legal and regulatory requirements could affect current operating processes and the Board's ability to achieve the investment objectives and provide favourable returns to our Shareholders. Potential loss of REIT status.
Environmental and Energy Efficiency Standards
Changes to the environment could impact upon the Group's cost base, operations and legal requirements which need to be adhered too. All of these risks could impinge upon the profitability of the Group. An Energy Performance Rating of E and below may impact the Company's ability to sell/lease an asset.
INTERIM MANAGEMENT REPORT AND DIRECTORS' RESPONSIBILITY STATEMENT
Interim Management Report
The important events that have occurred during the period under review, the principal risks and uncertainties and the key factors influencing the financial statements for the remaining six months of the year are set out in the Chairman's Statement and the Asset and Investment Managers' Report.
The principal risks and uncertainties faced by the Group are substantially unchanged since the date of the Annual Report and Accounts for the year ended 31 December 2023 and are summarised above.
The condensed consolidated financial statements for the period from 1 January 2024 to 30 June 2024 have not been audited or reviewed by auditors pursuant to the Financial Reporting Council guidance on Review of Interim Financial Information and do not constitute annual statutory accounts for the purposes of the Law.
Going Concern
The Directors have made an assessment of the Group's ability to continue as a going concern. This assessment
included consideration of the Group's cash resources, borrowing facilities, rental income, acquisition and disposals of investment properties, elective and committed capital expenditure and dividend distributions.
The Group ended the period under review with £25.7m of cash and cash equivalents, of which £21.8m was
unrestricted cash. Borrowing facilities decreased from £420.8m at 31 December 2023 to £412.4m as at 30 June
2024, with an LTV of 58.3%, based upon the value of the Group's investment properties as at 30 June 2024.
Following the announcement on 18 July 2024 of the successful £110.5m capital raise, the retail bond was repaid on 6 August 2024, in accordance with the maturity date. Borrowing facilities after repayment were £353.3m with an LTV of 42.2%*. The next bank facility to mature is the £116.0m facility in August 2026 which is held with the Royal Bank of Scotland, Bank of Scotland and Barclays.
Based on the above, the Directors are satisfied that the Group has adequate resources to continue in operational existence for a period of at least 12 months from the date these Financial Statements are approved. This is underpinned by the robust rent collections and the level of committed capital expenditure in the forthcoming 12
months. Furthermore, 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 prepare the Financial Statements on a going concern basis.
*Based upon 30 June 2024 Colliers International Property Consultants Ltd. valuation of £647.9m, 30 June 2024 cash balance of £25.7m and the capital raise net proceeds of £104.7m less the repayment of the £50.0m retail bond.
Responsibility Statement of the Directors in respect of the Half-Yearly Report
In accordance with Disclosure Guidance and Transparency Rule 4.2.10R we, the Directors of the Company (whose names are listed in full at the end of this report), confirm that to the best of their knowledge:
· the condensed set of consolidated financial statements has been prepared in accordance with International Accounting Standard (IAS) 34, "Interim Financial Reporting", as contained in UK-adopted International Accounting Standards, as required by Disclosure Guidance and Transparency Rule DTR 4.2.4R, and gives a true and fair view of the assets, liabilities, financial position and profit of the Group;
· this Half-Yearly Report includes a fair review, required under DTR 4.2.7R, of the important events that have occurred during the first six months of the financial year, their impact on the condensed set of consolidated financial statements and a description of the principal risks and uncertainties for the remaining six months of the financial year; and
· this Half-Yearly Report includes a fair review, required under DTR 4.2.8R, of related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position and or performance of the Group during that period; and any changes in the related party transaction described in the last Annual Report that could do so.
This Half-Yearly Report was approved and authorised for issue by the Board of Directors on 9 September 2024 and the above responsibility statement was signed on its behalf by:
Kevin McGrath
Chairman
9 September 2024
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 JUNE 2024
| |
Notes |
Six months ended 30 June 2024 (unaudited) £'000 |
Six months ended 30 June 2023 (unaudited) £'000 |
Year ended 31 December 2023 (audited) £'000 |
| Continuing Operations | | | | |
| Revenue | | | | |
| Rental and property income | 5 | 44,232 | 44,415 | 91,880 |
| Property costs | 6 | (20,403) | (18,438) | (38,161) |
| Net rental and property income | | 23,829 | 25,977 | 53,719 |
| Administrative and other expenses | 7 | (4,724) | (5,341) | (10,626) |
| Operating profit before gains and losses on property assets and other investments | |
19,105 |
20,636 |
43,093 |
| Loss on disposal of investment properties | 13 | (1,156) | (403) | (726) |
| Change in fair value of investment properties | 13 | (37,858) | (29,491) | (86,350) |
| Change in fair value of right of use assets | | (69) | (69) | (139) |
| Operating loss | | (19,978) | (9,327) | (44,122) |
| Finance income | 8 | 134 | 17 | 79 |
| Finance expenses | 9 | (8,229) | (7,953) | (16,210) |
| Net movement in fair value of derivative financial instruments |
16 | 962 | 5,128 | (7,194) |
| Loss before tax | | (27,111) | (12,135) | (67,447) |
| Taxation | 10 | - | - | (9) |
| Total comprehensive loss for the period (attributable to owners of the parent Company) | | (27,111) | (12,135) |
(67,456) |
|
| |
|
|
|
| Loss per Share - basic and diluted |
11 | (52.6)p |
(23.5)p | (130.8)p |
|
| |
|
|
|
| Loss per Share - basic and diluted (prior to 1 for 10 share consolidation) |
11 |
(5.3)p |
(2.4)p |
(13.1)p |
Total comprehensive loss arises from continuing operations.
The notes below are an integral part of these condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2024
| |
Notes | 30 June 2024 (unaudited) £'000 | 30 June 2023 (unaudited) £'000 | 31 December 2023 (audited) £'000 |
| Assets | | | | |
| Non-current assets | | | | |
| Investment properties | 13 | 633,166 | 752,226 | 687,695 |
| Right of use assets | | 10,918 | 11,057 | 10,987 |
| Non-current receivables on tenant loan | | 337 | 452 | 385 |
| Derivative financial instruments | 16 | 15,704 | 29,577 | 16,009 |
| | | 660,125 | 793,312 | 715,076 |
| Current assets | |
| | |
| Trade and other receivables | | 43,887 | 33,068 | 32,837 |
| Cash and cash equivalents | | 25,690 | 41,231 | 34,505 |
| | | 69,577 | 74,299 | 67,342 |
| Total assets | | 729,702 | 867,611 | 782,418 |
| | |
| | |
| Liabilities | |
| | |
| Current liabilities | |
| | |
| Trade and other payables | | (38,071) | (38,230) | (33,039) |
| Deferred income | | (14,452) | (17,244) | (15,597) |
| Retail eligible bonds | | (49,984) | - | (49,907) |
| Deferred tax liabilities | | (708) | (699) | (708) |
| | | (103,215) | (56,173) | (99,251) |
| Non-current liabilities | |
| | |
| Bank and loan borrowings | 14 | (348,427) | (376,331) | (365,603) |
| Retail eligible bonds | 15 | - | (49,829) | - |
| Lease liabilities | | (11,460) | (11,490) | (11,475) |
| | | (359,887) | (437,650) | (377,078) |
| Total liabilities | | (463,102) | (493,823) | (476,329) |
|
| |
| | |
| Net assets | | 266,600 | 373,788 | 306,089 |
| Equity | |
| | |
| Stated capital | 17 | 513,762 | 513,762 | 513,762 |
| Accumulated losses | | (247,162) | (139,974) | (207,673) |
| Total equity attributable to owners of the parent Company |
266,600 |
373,788 |
306,089 | |
| Net asset value per Share - basic and diluted |
18 |
51.7p |
72.5p |
59.3p |
The notes below are an integral part of these condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 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 | | - | (27,111) | (27,111) |
| Dividends paid | 12 | - | (12,378) | (12,378) |
| Balance at 30 June 2024 | | 513,762 | (247,162) | 266,600 |
| | | | | |
For the six months ended 30 June 2023
| | | Attributable to owners of the parent company | ||
| |
Notes | Stated capital £'000 | Accumulated losses £'000 |
Total £'000 |
| | | | | |
| Balance at 1 January 2023 | | 513,762 | (110,820) | 402,942 |
| Total comprehensive income | | - | (12,135) | (12,135) |
| Dividends paid | 12 | - | (17,019) | (17,019) |
| Balance at 30 June 2023 | | 513,762 | (139,974) | 373,788 |
| | | | | |
For the year ended 31 December 2023
| | | Attributable to owners of the parent company | ||
| |
Notes | Stated capital £'000 | Accumulated losses £'000 |
Total £'000 |
| | | | | |
| Balance at 1 January 2023 | | 513,762 | (110,820) | 402,942 |
| Total comprehensive loss | | - | (67,456) | (67,456) |
| Dividends paid | 12 | - | (29,397) | (29,397) |
| Balance at 31 December 2023 | | 513,762 | (207,673) | 306,089 |
| | | | | |
The notes below are an integral part of these condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 30 JUNE 2024
|
|
30 June 2024 (unaudited) £'000 |
30 June 2023 (unaudited) £'000 |
31 December 2023 (audited) £'000 | |
| Cash flows from operating activities | | | | |
| Loss for the year before taxation | (27,111) | (12,135) | (67,447) | |
| - Change in fair value of investment properties | 37,858 | 29,491 | 86,350 | |
| - Change in fair value of financial derivative instruments | (962) | (5,128) | 7,194 | |
| - Loss on disposal of investment properties | 1,156 | 403 | 726 | |
| - Change in fair value of right of use assets | 69 | 69 | 139 | |
| Finance income | (134) | (17) | (79) | |
| Finance expense | 8,229 | 7,953 | 16,210 | |
| Increase in trade and other receivables | (10,997) | (2,679) | (2,380) | |
| Increase/(decrease) in trade and other payables | 4,997 | (1,017) | (3,611) | |
| (Decrease)/increase in deferred income | (1,145) | 584 | (1,064) | |
| Cash generated from operations | | 11,960 | 17,524 | 36,038 |
| Interest paid | (7,236) | (7,430) | (14,775) | |
| Taxation paid | (5) | - | - | |
| Net cash flow generated from operating activities | 4,719 | 10,094 | 21,263 | |
| | |
| | |
| Investing activities | |
| | |
| Purchase of investment properties and subsequent expenditure | (5,200) | (6,755) | (10,260) | |
| Sale of investment properties | | 20,715 | 14,115 | 24,969 |
| Interest received | | 134 | 28 | 89 |
| Net cash flow from investing activities | 15,649 | 7,388 | 14,798 | |
| | |
| | |
| Financing activities | |
| | |
| Proceeds received on derivative financial instruments | | 1,267 | | 1,246 |
| Dividends paid | | (12,342) | (17,004) | (31,978) |
| Bank borrowings advanced | | - | 1,944 | 3,729 |
| Bank borrowings repaid | | (17,437) | (11,043) | (23,771) |
| Bank borrowing costs paid | | (453) | (78) | (495) |
| Lease repayments | | (218) | (218) | (435) |
| Net cash flow used in financing activities | (29,183) | (26,399) | (51,704) | |
| Net decrease in cash and cash equivalents | (8,815) | (8,917) | (15,643) | |
| Cash and cash equivalents at the start of the period | 34,505 | 50,148 | 50,148 | |
| Cash and cash equivalents at the end of the period | 25,690 | 41,231 | 34,505 | |
| | | | | |
The notes below are an integral part of these condensed consolidated financial statements.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2024
1. Corporate information
The condensed consolidated financial statements of the Group for the six months ended 30 June 2024 comprise the results of the Company and its subsidiaries (together constituting the "Group") and were approved by the Board and authorised for issue on 9 September 2024.
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 its shares were admitted to trading on the LSE.
The nature of the Group's operations and its principal activities are set out in the Chairman's Statement.
The address of the registered office is: Mont Crevelt House, Bulwer Avenue, St. Sampson, Guernsey, GY2 4LH.
2. Basis of preparation
The condensed consolidated financial statements for the six months ended 30 June 2024 have been prepared on a going concern basis in accordance with the Disclosure Guidance and Transparency Rules of the FCA and with IAS 34, Interim Financial Reporting, as contained in UK-adopted International Accounting Standards.
The condensed consolidated financial statements have been prepared on a historical cost basis, as modified for the Group's investment properties and certain financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.
The condensed consolidated interim financial information should be read in conjunction with the Group's audited financial statements for the year ended 31 December 2023, which have been prepared in accordance with International Financial Reporting Standards ("IFRS") as contained in UK-adopted International Accounting
Standards. The results presented in this report have not been audited or reviewed in accordance with International Standard on Review Engagements (UK) 2410.
2.1. Comparative period
The comparative financial information presented herein for the year ended 31 December 2023 do not constitute full statutory accounts within the meaning of the Law. The Group's Annual Report and Accounts for the year ended 31 December 2023 were delivered to the Guernsey Financial Services Commission. The Group's independent Auditor's report on those Accounts was unqualified but included a material uncertainty related to going concern.
2.2. Functional and presentation currency
The consolidated financial information is presented in Pounds Sterling which is also the Group's functional currency, and all values are rounded to the nearest thousand (£'000s) pounds, except where otherwise indicated.
2.3. Going concern
The Directors have made an assessment of the Group's ability to continue as a going concern. This assessment
included consideration of the Group's cash resources, borrowing facilities, rental income, acquisition and disposals of investment properties, elective and committed capital expenditure and dividend distributions.
The Group ended the period under review with £25.7m of cash and cash equivalents, of which £21.8m was unrestricted cash. Borrowing facilities decreased from £420.8m at 31 December 2023 to £403.3m as at 30 June 2024, with an LTV of 58.3%, based upon the value of the Group's investment properties as at 30 June 2024. Following the announcement on 18 July 2024 of the successful £110.5m capital raise, the retail bond was repaid on 6 August 2024, in accordance with the maturity date. Borrowing facilities after repayment were £353.3m with an LTV of 42.2%*. The next bank facility to mature is the £116.0m facility in August 2026 which is held with the Royal Bank of Scotland, Bank of Scotland and Barclays.
Based on the above, the Directors are satisfied that the Group has adequate resources to continue in operational existence for a period of at least 12 months from the date these Financial Statements are approved. This is underpinned by the robust rent collections and the level of committed capital expenditure in the forthcoming 12 months. Furthermore, 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 prepare the Financial Statements on a going concern basis.
*Based upon 30 June 2024 Colliers International Property Consultants Ltd. valuation of £647.9m, 30 June 2024 cash balance of £25.7m and the capital raise net proceeds of £104.7m less the repayment of the £50.0m retail bond.
3. Significant accounting judgements, estimates and assumptions
The preparation of the condensed consolidated financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent 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 properties
The fair 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 Investment Property and IFRS 13 Fair Value Measurement.
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 13 in the Full Half Year report and below.
The fair value of investment property is equal to the independent property valuer's valuation of £647,925,000 (31 December 2023: £700,720,000). This is presented net of the prepayment arising from rent smoothing £14,759,000 (31 December 2023: £13,025,000). This is detailed in note 13 of the report and is in accordance with IAS 40 paragraph 50, recognising the prepayment cannot be recovered when the investment properties are sold. Comparative figures for 30 June 2023 have not been restated as the effect on the accounts of £11,952,000 is not considered by the Directors to be material.
3.1.2. Fair valuation of interest rate derivatives
In In accordance with IFRS 13, the Group values its interest rate derivatives at fair value. The fair values are estimated by the respective counterparties with revaluation occur-ring on a quarterly basis. The counterparties will use a number of assumptions in determining the fair values, including estimations over future interest rates and there-fore future cash flows. The fair value represents the net present value of the difference between the cash flows produced by the contracted rate and the valuation rate. The significant methods and assumptions used in estimat-ing the fair value of the interest rate derivatives are set out in note 16 in the Full Half Year Report and below.
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 condensed consolidated 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. 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.
3.2.3 Acquisition of subsidiary companies
For each acquisition, the Directors consider whether the acquisition met the definition of the acquisition of a business or the acquisition of a group of assets and liabilities.
A business is defined in IFRS 3 as an integrated set of activities and assets that is capable of being conducted and managed for the purpose of providing a return in the form of dividends, lower costs or other economic benefits directly to investors or other owners, members or participants. Furthermore, a business consists of inputs and processes applied to those inputs that have the ability to create outputs.
The companies acquired in the year have comprised portfolios of investment properties and existing leases with multiple tenants over varying periods, with little in the way of processes acquired. It has therefore concluded in each case that the acquisitions did not meet the criteria for the acquisition of a business as outlined above.
3.2.4 Consolidation of entities in which the Group holds less than 50%
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 were transferred into two new special purpose vehicles ("SPVs") with two additional properties to be transferred into these SPVs at a later date. 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 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.
4. Summary of significant accounting policies
With the exception of new accounting standards listed below, the accounting policies adopted in this report are consistent with those applied in the Group's statutory accounts for the year ended 31 December 2023 and are expected to be consistently applied for the current year ending 31 December 2024. The changes to the condensed consolidated financial statements arising from accounting standards effective for the first time are noted below:
Amendments to IAS 1 'Presentation of Financial Statements'
(effective for periods beginning on or after 1 January 2024) clarify that liabilities are classified as either current or non-current, depending on the rights that exist at the end of the reporting period and not expectations of or actual events after the reporting date. The amendments also give clarification to the definition of settlement of a liability. The amendments have not had a material impact on the financial statements.
Amendments to IFRS 16 'Leases'
(effective for periods beginning on or after 1 January 2024) include requirements to explain how an entity accounts for a sale and leaseback after the date of transaction. The amendments have not had a material impact on the financial statements.
Amendments to IAS 7 'Cash Flow Statements' and IFRS 7 'Financial Instruments: Disclosure'
(effective for periods beginning on or after 1 January 2024) require disclosures to enhance the transparency of supplier finance arrangements and their effects on an entity's liabilities, cash flows and exposure to liquidity risk. The amendments have not had a material impact on the financial statements.
IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information (effective for periods beginning on or after 1 January 2024).
IFRS S2 Climate-related Disclosures (effective for periods beginning on or after 1 January 2024).
5. Rental and property income
| | | Six months ended 30 June 2024 (unaudited) £'000 | Six months ended 30 June 2023 (unaudited) £'000 | Year ended 31 December 2023 (audited) £'000 |
|
| | | | |
| Rental income - freehold property | 26,250 | 28,360 | 57,845 | |
| Rental income - long leasehold property | 5,940 | 5,949 | 12,210 | |
| Recoverable service charge income and other similar items | 12,042 | 10,106 | 21,825 | |
| Total | 44,232 | 44,415 | 91,880 | |
|
| | | | |
6. Property costs
| |
| Six months ended 30 June 2024 (unaudited) £'000 | Six months ended 30 June 2023 (unaudited) £'000 | Year ended 31 December 2023 (audited) £'000 |
|
| | | | |
| Other property expenses and irrecoverable costs | 8,361 | 8,332 | 16,336 | |
| Recoverable service charge expenditure and other similar costs | 12,042 | 10,106 | 21,825 | |
| Total | 20,403 | 18,438 | 38,161 | |
Property costs represent direct operating expenses which arise on investment properties generating rental income.
7. Administrative and other expenses
| |
| Six months ended 30 June 2024 (unaudited) £'000 | Six months ended 30 June 2023 (unaudited) £'000 | Year ended 31 December 2023 (audited) £'000 |
|
| | | | |
| Investment management fees | 720 | 1,035 | 1,944 | |
| Property management fees | 1,161 | 1,324 | 2,677 | |
| Asset management fees | 719 | 1,034 | 1,944 | |
| Directors' remuneration | 132 | 157 | 293 | |
| Administration fees | 313 | 317 | 727 | |
| Legal and professional fees | 1,360 | 914 | 2,203 | |
| Marketing and promotion | 37 | 38 | 87 | |
| Other administrative costs | 94 | 111 | 194 | |
| Allowance/(credit) for doubtful debts | 181 | 397 | 542 | |
| Bank charges | 7 | 14 | 15 | |
| Total | 4,724 | 5,341 | 10,626 | |
|
| | | | |
8. Finance income
| |
| Six months ended 30 June 2024 (unaudited) £'000 | Six months ended 30 June 2023 (unaudited) £'000 | Year ended 31 December 2023 (audited) £'000 |
|
| | | | |
| Interest income | 134 | 17 | 79 | |
| Total | 134 | 17 | 79 | |
| | | | | |
9. Finance expense
| |
| Six months ended 30 June 2024 (unaudited) £'000 | Six months ended 30 June 2023 (unaudited) £'000 | Year ended 31 December 2023 (audited) £'000 |
|
| | | | |
| Interest payable on bank borrowings | 6,107 | 6,301 | 12,517 | |
| Amortisation of loan arrangement fees | 714 | 243 | 875 | |
| Bond interest | 1,125 | 1,125 | 2,250 | |
| Bond issue costs amortised | 77 | 77 | 155 | |
| Bond expenses | 4 | 4 | 8 | |
| Lease interest | 202 | 203 | 405 | |
| Total | 8,229 | 7,953 | 16,210 | |
|
| | | | |
10. Taxation
| |
| Six months ended 30 June 2024 (unaudited) £'000 | Six months ended 30 June 2023 (unaudited) £'000 | Year ended 31 December 2023 (audited) £'000 |
|
| | | | |
| Corporation tax charge | - | - | - | |
| Decrease in deferred tax liability | - | - | 9 | |
| Total | - | - | 9 | |
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 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.
Income tax, corporation tax and deferred tax above arise on entities which form part of the Group's condensed 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 obtain approval in 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 due to unpredictability of future taxable profits.
As a REIT, Regional REIT Ltd is required to pay PIDs 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.
11. Earnings per Share
Earnings per share ("EPS") amounts are calculated by dividing profits for the period attributable to ordinary equity holders of the Company by the weighted average number of Ordinary Shares in issue during the period.
The calculation of basic and diluted earnings per share is based on the following:
|
| | Six months ended 30 June 2024 (unaudited) £'000 | Six months ended 30 June 2023 (unaudited) £'000 | Year ended 31 December 2023 (audited) £'000 |
| Calculation of earnings per Share | | | | |
| Net loss attributable to Ordinary Shareholders | (27,111) | (12,135) | (67,456) | |
| Adjustments to remove: |
|
| | |
| Changes in value of investment properties | 37,858 | 29,491 | 86,350 | |
| Changes in fair value of right of use assets | 69 | 69 | 139 | |
| Loss on disposal of investment property | 1,156 | 403 | 726 | |
| Change in fair value of interest rate derivates and financial assets |
(962) |
(5,128) |
7,194 | |
| Deferred tax charge | - | - | 9 | |
|
|
|
|
| |
| EPRA net profit attributable to Ordinary Shareholders | 11,010 | 12,700 | 26,962 | |
| Weighted average number of Ordinary Shares | 51,573,685 | 51,573,685 | 51,573,685 | |
| |
|
| | |
| Loss per Share - basic and diluted | (52.6)p | (23.5)p | (130.8)p | |
| EPRA earnings per Share - basic and diluted | 21.3p | 24.6p | 52.3p | |
|
Earnings per Share (prior to 1 for 10 consolidation) |
| | | |
| Weighted average number of Ordinary Shares | 515,736,853 | 515,736,853 | 515,736,583 | |
| Loss per Share - basic and diluted | (5.3)p | (2.4)p | (13.1)p | |
| EPRA earnings per Share - basic and diluted | 2.1p | 2.5p | 5.2p | |
12. Dividends
| |
| Six months ended 30 June 2024 (unaudited) £'000 | Six months ended 30 June 2023 (unaudited) £'000 | Year ended 31 December 2023 (audited) £'000 |
| Dividends | | | | |
| Dividend of 1.20 (2023: 1.65) pence per Ordinary Share for the period 1 October - 31 December | 6,189 | 8,509 | 8,509 | |
| Dividend of 1.20 (2023: 1.65) pence per Ordinary Share for the period 1 January - 31 March | 6,189 | 8,510 | 8,510 | |
| Dividend of nil (2023: 1.20) pence per Ordinary Share for the period 1 April - 30 June |
- | - | 6,189 | |
| Dividend of nil (2023: 1.20) pence per Ordinary Share for the period 1 July - 30 September | - | - | 6,189 | |
| Total | 12,378 | 17,019 | 29,397 | |
On 22 February 2024, the Company announced a dividend of 1.20 pps in respect of the period 1 October 2023 to 31 December 2023. The dividend was paid on 5 April 2024 to Shareholders on the register as at 1 March 2024.
On 22 May 2024, the Company announced a dividend of 1.20 pps in respect of the period 1 January 2024 to 31 March 2024. The dividend was paid on 12 July 2024 to Shareholders on the register as at 31 May 2024.
13. 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 Ltd, a Chartered Surveyor who is 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 valuation has been prepared in accordance with the Red Book and incorporates the recommendations of the International Valuation Standards Committee which are consistent with the principles set out in IFRS 13.
Investment property valuations in comparative periods were carried out by Colliers.
The valuation is 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 six months ended 30 June 2024 (unaudited) | | Freehold property £'000 | Long Leasehold property £'000 | Total £'000 |
| | | | | |
| Valuation at 1 January 2024 | | 562,395 | 138,325 | 700,720 |
| Property additions - acquisitions | | - | - | - |
| Property additions - subsequent expenditure | | 4,274 | 926 | 5,200 |
| Property disposals | | (20,715) | - | (20,715) |
| Loss on disposals of investment properties | | (1,156) | - | (1,156) |
| Change in fair value during the period | | (28,198) | (7,926) | (36,124) |
| Valuation at 30 June 2024 (unaudited) | | 516,600 | 131,325 | 647,925 |
| Group Movement in investment properties for the six months ended 30 June 2024 (unaudited) | | Freehold property £'000 | Long Leasehold property £'000 | Total £'000 |
| | | | | |
| Value advised by the property valuers | | 516,600 | 131,325 | 647,925 |
| Less adjustment for rent smoothing assets | | (10,590) | (4,169) | (14,759) |
| Fair value at 30 June 2024 | | 506,010 | 127,156 | 633,166 |
| | |
|
|
|
| Change in fair value during the period | | (28,198) | (7,926) | (36,124) |
| Adjustment for rent smoothing assets at 30 June 2024 | | (10,590) | (4,169) | (14,759) |
| Adjustment for rent smoothing assets at 31 Dec 2023 | | 9,532 | 3,493 | 13,025 |
| | |
| | |
| Change in fair value of investment properties |
| (29,256) | (8,602) | (37,858) |
| | | | | |
|
| | | | |
| Group Movement in investment properties for the six months ended 30 June 2023 (unaudited) | | | |
|
|
| | | | |
| Valuation at 1 January 2023 | | 643,630 | 145,850 | 789,480 |
| Property additions - acquisitions | | 6 | 85 | 91 |
| Property additions - subsequent expenditure | | 4,631 | 2,033 | 6,664 |
| Property disposals | | (14,168) | 53 | (14,115) |
| Loss on the disposal of investment properties | | (350) | (53) | (403) |
| Change in fair value during the period | | (28,543) | (948) | (29,491) |
| Valuation at 30 June 2023 (unaudited) |
| 605,206 | 147,020 | 752,226 |
|
| | | | |
| Group Movement in investment properties for the year ended 31 December 2023 (audited) | | | |
|
| | | | | |
| Valuation at 1 January 2023 | | 643,630 | 145,850 | 789,480 |
| Property additions - acquisitions | | 5 | 85 | 90 |
| Property additions - subsequent expenditure | | 7,921 | 2,249 | 10,170 |
| Property disposals | | (25,004) | 35 | (24,969) |
| Loss on the disposal of investment properties | | (691) | (35) | (726) |
| Change in fair value during the period | | (63,466) | (9,859) | (73,325) |
| Valuation at 31 December 2023 (audited) |
| 562,395 | 138,325 | 700,720 |
|
|
| | | |
| Valuation advised by the property valuers |
| 562,395 | 138,325 | 700,720 |
| Less adjustment for rent smoothing assets |
| (9,532) | (3,493) | (13,025) |
| Fair value at 31 December 2023 |
| 552,863 | 134,832 | 687,695 |
The total change in fair value during the period was a decrease of £37,858,000 (30 June 2023: £29,491,000; 31 December 2023: £86,350,00).
The historic cost of the properties is £857,120,000 (30 June 2023: £908,464,000; 31 December 2023: £899,236,000).
The net book value of properties disposed of during the period amounted to £21,871,000 (30 June 2023: £14,518,000; 31 December 2023: £25,695,000).
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 valuers assessment of the value of investment properties secured at 30 June 2024 was £644,425,000 (30 June 2023 £747,425,000; 31 December 2023 £700,720,000).
The following table provides the fair value measurement hierarchy for investment properties:
|
Date of valuation: |
Total £'000 |
Quoted active prices (level 1) £'000 | Significant observable inputs (level 2) £'000 | Significant unobservable inputs (level 3) £'000 |
| | | | | |
| 30 June 2024 | 647,925 | - | - | 647,925 |
| | | | | |
| 30 June 2023 | 752,226 | - | - | 752,226 |
| | | | | |
| 31 December 2023 | 700,720 | - | - | 700,720 |
| | | | | |
The hierarchy levels are defined in note 16.
It has been determined that the entire investment properties portfolio should be classified under the level 3
category.
There have been no transfers between levels during the period.
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, capital values of fixtures and fittings, 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 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 30 June 2024, 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.
Techniques used for valuing investment properties
The following descriptions and definitions relate to valuation techniques and key unobservable inputs made
in determining the fair values:
Valuation technique: market comparable method
Under the market comparable method (or market approach), a property 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 £16,200-£3,247,200 per annum (30 June 2023: £12,500 - £3,589,000 per annum; 31 December 2023: £16,200-£3,237,000 per annum).
Significant input: rental growth
The decrease in rent is based on contractual agreements: 5.42% (30 June 2023: 3.18%; 31 December 2023 6.49%). There is a gross contracted rent reduction, as per normal operations it is a combination of property disposals, space under refurbishment and lease expiries.
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 input (level 3) are sensitive to the changes in the estimated future cash flows from investment properties such as increases and decreases in contract rents, operating expenses and capital expenditure, plus transactional activity in the real estate market.
Geographical and sector specific market evidence reviewed in the course of preparing the June 2024 valuation had an initial yield range of 2.83% to 17.41% (30 June 2023: 5.59% to 9.33%; 31 December 2023: 5.78% to 15.0%).
As set out within the significant accounting estimates and judgements above, 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.
Equivalent yield range by sector:
| | Fair value |
|
|
|
Sector |
£'000 | ERV Range (per sq ft per annum) |
Equivalent Yield Range |
| Industrial | £22,275.00 | £3.50 - £9.49 | 7.00% - 27.31% |
| Retail | £20,375.00 | £4.50 - £45.02 | 6.00% - 30.96% |
| Alternatives/ Other | £12,450.00 | £5.00 - £13.50 | 4.25% - 9.67% |
| Office by Region | | | |
| Office South East | £114,625.00 | £5.07 - £29.01 | 8.65% - 22.90% |
| Office South West | £61,650.00 | £12.28 - £22.90 | 9.11% - 13.39% |
| Office Midlands | £124,170.00 | £3.01 - £35.07 | 9.08% - 11.93% |
| Office North West | £88,975.00 | £6.61 - £29.59 | 8.25% - 15.25% |
| Office North East | £94,400.00 | £6.26 - £30.05 | 7.61% - 14.03% |
| Office Wales | £19,150.00 | £10.00 - £13.50 | 8.92% - 10.74% |
| Office Scotland | £89,855.00 | £4.50 - £24.02 | 9.43% - 14.26% |
| Total | £647,925.00 | | |
The impact of changes to the significant unobservable inputs:
|
| 30 June 2024 Impact on statement of comprehensive income £'000 | 30 June 2024 Impact on statement of financial position £'000
| 31 December 2023 Impact on statement of comprehensive income £'000 | 31 December 2023 Impact on statement of financial position £'000
|
|
| | | | |
| Improvement in ERV by 5% | 28,758 | 28,758 | 31,464 | 31,464 |
| Worsening in ERV by 5% | (28,313) | (28,313) | (30,966) | (30,966) |
| Improvement in yield by 0.125% | 9,308 | 9,308 | 10,361 | 10,361 |
| Worsening in yield by 0.125% | (9,102) | (9,102) | (10,101) | (10,101) |
|
| | | | |
14. Bank and loan borrowings
Bank borrowings are secured by charges over individual 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 period end are offset against amounts drawn on the facilities as shown in the table below:
|
| 30 June 2024 (unaudited) £'000 | 30 June 2023 (unaudited) £'000 | 31 December 2023 (audited) £'000 |
|
| | | |
| Bank borrowings drawn at start of period | 370,750 | 390,792 | 390,792 |
| Bank borrowings drawn | - | 1,944 | 3,729 |
| Bank borrowings repaid | (17,437) | (11,043) | (23,771) |
| Bank borrowings drawn at end of period | 353,313 | 381,693 | 370,750 |
| |
| | |
| Less: unamortised costs at start of period | (5,147) | (5,527) | (5,527) |
| Less: loan issue costs incurred in the period | (453) | (78) | (495) |
| Add: loan issue costs amortised in the period | 714 | 243 | 875 |
| At end of period | 348,427 | 376,331 | 365,603 |
|
|
| | |
| Maturity of bank borrowings |
| | |
| Repayable within 1 year | - | - | - |
| Repayable between 1 to 2 years | - | - | - |
| Repayable between 2 to 5 years | 353,313 | 283,177 | 310,721 |
| Repayable after more than 5 years | - | 98,516 | 60,029 |
| Unamortised loan issue costs | (4,886) | (5,362) | (5,147) |
|
| 348,427 | 376,331 | 365,603 |
|
| | | |
As detailed in note 15 below, the Group has £50,000,000 (30 June 2023: £50,000,000; 31 December 2023: £50,000,000) retail eligible bonds in issue.
The table below lists the Group's borrowings.
|
Lender |
Facility Amount |
Outstanding debt* |
Maturity date | Gross loan to value** |
Annual interest rate |
Amortisation |
| | £'000 | £'000 | | | | |
| | | | | | | |
|
Royal Bank of Scotland, Bank of Scotland and Barclays |
115,961 | 115,961 | August 2026 | 56.10%
| 2.40% over 3 months £ SONIA | Mandatory prepayment |
|
Scottish Widows Ltd & Aviva Investors Real Estate Finance |
147,500 | 147,500 | December 2027 | 54.80% |
3.28% Fixed |
None |
|
Scottish Widows Ltd |
36,000 | 36,000 | December 2028 | 49.00% | 3.37% Fixed | None |
|
Santander UK |
53,852 | 53,852 | June 2029 | 53.50% | 2.20% over 3 months £ SONIA | Mandatory prepayment |
|
Total bank borrowings |
353,313 | 353,313 | | | | |
|
Retail eligible bond | 50,000 | 50,000 | August 2024 | | 4.50% Fixed | None |
| Total | 403,313 | 403,313 |
| | | |
SONIA = Sterling Over Night Indexed Average
* Before unamortised debt issue costs.
** Based upon Colliers International Property Consultants limited property valuation
The percentage of borrowings at variable rates of interest was 42.1% (30 June 2023: 43.6%; 31 December 2023: 43.3%).
The weighted average term to maturity of the Group's debt at the period end was 3.0 years (30 June 2023: 4.0 years; 31 December 2023: 3.5 years).
The weighted average interest rate payable by the Group on its debt portfolio, excluding hedging, as at the period end was 5.2% per annum (30 June 2023: 4.9% per annum; 31 December 2023: 5.4% per annum).
The Group weighted average interest rate, including the retail eligible bonds and hedging activity at the year end, amounted to 3.5% per annum (31 December 2023: 3.5% per annum).
The Group has been in compliance with all of the financial covenants of the above facilities as applicable throughout the period covered by these condensed consolidated financial statements. Each facility has distinct covenants which generally include: historic interest cover, projected interest cover, loan-to-value cover and debt to rent 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 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 16 below, the Group uses a combination of interest rate swaps and fixed rate bearing loans to hedge against interest rate risks. The Group's exposure to interest rate volatility is minimal.
15. Retail eligible bonds
The Company has in issue £50,000,000 of 4.5% retail eligible bonds with a maturity date of 6 August 2024. The bonds are listed on the LSE ORB platform.
|
| 30 June 2024 (unaudited) £'000 | 30 June 2023 (unaudited) £'000 | 31 December 2023 (audited) £'000 |
|
| | | |
| Bond principal at start of period | 50,000 | 50,000 | 50,000 |
| Unamortised issue costs at start of period | (93) | (248) | (248) |
| Amortisation of issue costs | 77 | 77 | 155 |
| At end of period | 49,984 | 49,829 | 49,907 |
16. 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.
During the period the notional amount on derivative instruments was reduced with a cash amount realised of £1,267,000 (30 June 2023: £nil; 31 December 2023: £1,246,000).
|
| 30 June 2024 (unaudited) £'000 | 30 June 2023 (unaudited) £'000 | 31 December 2023 (audited) £'000 |
|
|
| | |
| Fair value at start of period | 16,009 | 24,449 | 24,449 |
| Proceeds received from a reduction in notional amounts |
(1,267) |
- |
(1,246) |
| Revaluation in the period | 962 | 5,128 | (7,194) |
| Fair value at end of period | 15,704 | 29,577 | 16,009 |
| | |
|
|
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.
The fair value of interest rate caps and swaps represents the net present value of the difference between the cash flows produced by the contracted rate and the current market rate over the life of the instrument.
The table below details the hedging and swap notional amounts and rates against the details of the Group's loan facilities.
|
Lender |
Facility amount £'000 |
Outstanding debt* £'000 |
Maturity date |
Annual interest rate |
Notional amount £'000 |
Rate |
| Royal Bank of Scotland, Bank of Scotland and Barclays | 115,961 | 115,961 | August 2026 |
2.40% over 3months £ SONIA | swap £71,000 cap £44,961 | 0.97% 0.97% |
| Scottish Widows Ltd. & Aviva Investors Real Estate Finance | 147,500 | 147,500 | December 2027 |
3.28% Fixed |
n/a |
n/a |
| Scottish Widows Ltd | 36,000 | 36,000 | December 2028 |
3.37% Fixed | n/a | n/a |
| Santander UK | 53,852 | 53,852 | June 2029 |
2.20% over 3 months £ SONIA | swap £45,522 cap £8,529 | 1.39% 1.39% |
| Total | 353,313 | 353,313 | | | | |
SONIA = Sterling Over Night Indexed Average
As at 30 June 2024, the swap arrangements were £116.5m (30 June 2023: £122.4m; 31 December 2023: £120.4m) and the cap notional arrangements amounted to £53.5m (30 June 2023: £71.5m; 31 December 2023: £61.8m).
The Group weighted average cost of debt of 3.5% (30 June 2023: 3.5%; 31 December 2023: 3.5%) is inclusive of hedging costs and the Retail Eligible Bond.
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 loan portfolio using fixed-rate facilities or interest rate derivatives. The hedging on all of the facilities matches the term. As at the period end date, the total proportion of hedged debt equated to 100.1% (30 June 2023: 101.6%; 31 December 2023: 100.0%), as shown below.
|
| 30 June 2024 (unaudited) £'000 | 30 June 2023 (unaudited) £'000 | 31 December 2023 (audited) £'000 |
| | | | |
| Total bank borrowings | 353,313 | 381,693 | 370,750 |
| Notional value of interest rate caps and swaps | 170,012
| 193,870
| 182,250
|
| Value of fixed rate debts | 183,500
| 193,500
| 188,500 |
| | 353,512 | 387,370 | 370,750 |
| Proportion of hedged debt | 100.1% | 101.6% | 100.0% |
Fair value hierarchy
The following table provides the fair value measurement hierarchy for interest rate derivatives. 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 condensed 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.
|
Date of valuation: |
Total £'000 |
Quoted active prices (level 1) £'000 | Significant observable inputs (level 2) £'000 | Significant unobservable inputs (level 3) £'000 |
|
| | | | |
| 30 June 2024 | 15,704 | - | 15,704 | - |
|
|
|
|
|
|
| 30 June 2023 | 29,577 | - | 29,577 | - |
|
| | | | |
| 31 December 2023 | 16,009 | - | 16,009 | - |
The fair values of these contracts are recorded in the Condensed Consolidated Statement of Financial Position and are determined by forming an expectation that interest rates will exceed strike rates and by discounting these future cash flows at the prevailing market rates as at the period end.
There have been no transfers between levels during the period.
The Group has not adopted hedge accounting.
17. Stated capital
Stated capital represents the consideration received by the Company for the issue of Ordinary Shares.
|
| 30 June 2024 (unaudited) £'000 | 30 June 2023 (unaudited) £'000 | 31 December 2023 (audited) £'000 |
| Issued and fully paid Shares of no par value | | | |
| At start and end of period | 513,762 | 513,762 | 513,762 |
| Number of Shares in issue At start and end of period | 515,736,583 | 515,736,583 | 515,736,583 |
18. Net asset value per Share (NAV)
Basic NAV per share is calculated by dividing the net assets in the Condensed Consolidated Statement of Financial Position attributable to ordinary equity holders of the parent by the number of Ordinary Shares in issue at the end of the period.
EPRA net asset value is a key performance measure used in the real estate industry which highlights the fair value of net assets on an ongoing long-term basis. Assets and liabilities that are not expected to crystallise in normal circumstances such as the fair value of derivatives and deferred taxes on property valuation surpluses are therefore excluded.
Net asset values have been calculated as follows:
| |
| 30 June 2024 (unaudited) £'000 | 30 June 2023 (unaudited) £'000 | 31 December 2023 (audited) £'000 |
| Net asset value per Condensed Consolidated Statement of Financial Position | 266,600 | 373,788
| 306,089
| |
| Adjustment for calculating EPRA net tangible assets: |
| | | |
| Derivative financial instruments | (15,704)
| (29,577)
| (16,009)
| |
| Deferred tax liability | 708
| 699
| 708
| |
| EPRA Net Tangible Assets | 251,604 | 344,910 | 290,788 | |
|
| |
| | |
|
| |
| | |
| Number of Ordinary Shares in issue * | 515,736,583 | 515,736,583 | 515,736,583 | |
|
| |
| | |
| Net asset value per Share - basic and diluted | 51.7p | 72.5p |
59.3p | |
| EPRA Net Tangible Assets per Share - basic and diluted | 48.8p | 66.9p | 56.4p | |
*Prior to the Company share consolidation, of 1 new share for every 10 ordinary shares after the period end.
19. Segmental information
After a review of the information provided for management purposes, it was determined that the Group had one operating segment and therefore segmental information is not disclosed in these condensed consolidated financial statements.
20. Transactions with related parties
Transactions with the Asset Manager, London & Scottish Property Investment Management Limited and the Property Manager, London & Scottish Property Asset Management Limited.
Stephen Inglis is a non-executive Director of the Company, as well as being the Chief Executive Officer of London & Scottish Property Investment Management Limited ("LSPIM"), which is the parent company of L&S PM Limited. LSPIM has been contracted to act as the Asset Manager of the Group and L&S PM Limited contracted as the Property Manager.
In consideration for the provision of services provided, the Asset Manager is entitled in each financial year (or part thereof) to 50% of an annual management fee on a scaled rate of (i) 1.1% of the EPRA NTA up to and equal to £500,000,000; (ii) 0.9% of EPRA NTA above £500,000,000 and up to or equal to £1,000,000,000; (iii) 0.7% of EPRA NTA above £1,000,000,000 and up to or equal to £1,500,000,000; and (iv) 0.5% of EPRA NTA above £1,500,000,000.
In respect of each portfolio property the Investment Manager has procured and shall, with the Company in future, procure that London & Scottish Property Investment Management Limited is appointed as the Property Manager. A property management fee of 4% per annum is charged by the Property Manager on a quarterly basis: 31 March, 30 June, 30 September and 31 December, based upon the gross rental yield. Gross rental yield means the rents due under the property's lease for the peaceful enjoyment of the property, including any value paid in respect of rental renunciations, but excluding any sums paid in connection with service charges or insurance costs.
The Investment Manager is also entitled to a performance fee. Details of the performance fee are given below. The following tables show the fees charged in the period and the amount outstanding at the end of the period:
|
| Six months ended 30 June 2024 (unaudited) £'000 | Six months ended 30 June 2023 (unaudited) £'000 | Year ended 31 December 2023 (audited) £'000 |
| | | | |
| Asset management fees charged1 | 719
| 1,034
| 1,944
|
| Property management fees charged1 | 1,161
| 1,324
| 2,677
|
| Performance fees charged | - | - | - |
|
Total | 1,880 | 2,358 | 4,621 |
| | | | |
|
| 30 June 2024 (unaudited) £'000 | 30 June 2023 (unaudited) £'000 | 31 December 2023 (audited) £'000 |
| | | | |
| Total fees outstanding* | 340 | 1,279 | 1,170
|
| | | | |
* Including irrecoverable VAT charged where appropriate
Transactions with the Investment Manager, Toscafund Asset Management LLP and the Investment Adviser, ESR Europe Private Markets Limited.
With effect from 11 October 2023, ESR Europe Private Markets Limited ("ESR Europe") was appointed as the
Company's Investment adviser and on the same date replaced Toscafund Asset Management's entitlement of the 50% annual management fee as detailed in the 2023 Annual Report.
In consideration for the provision of services provided, the Investment Manager is entitled in each financial year (or part thereof) to 50% of an annual management fee on a scaled rate of (i) 1.1% of the EPRA NTA up to and equal to £500,000,000; (ii) 0.9% of EPRA NTA above £500,000,000 and up to or equal to £1,000,000,000; (iii) 0.7% of EPRA NTA above £1,000,000,000 and up to or equal to £1,500,000,000; and (iv) 0.5% of EPRA NTA above £1,500,000,000.
The Investment Adviser is also entitled to a Performance Fee. Details of the Performance Fee are given below.
The following tables show the fees charged in the period and the amount outstanding at the end of the period:
|
| Six months ended 30 June 2024 (unaudited) £'000 | Six months ended 30 June 2023 (unaudited) £'000 | Year ended 31 December 2023 (audited) £'000 |
| | | | |
| Investment management fees charged | 720 | 1,035 | 1,944 |
| Performance fees charged | - | - | - |
| Total | 720 | 1,035 | 1,944 |
| |
| | |
|
| 30 June 2024 (unaudited) £'000 | 30 June 2023 (unaudited) £'000 | 31 December 2023 (audited) £'000 |
| |
| | |
| Total fees outstanding | 398 | 519 | 478 |
Performance fee
The Asset Manager and the Investment Manager are each entitled to 50% of a performance fee. The fee is calculated at a rate of 15% of the total shareholder return in excess of the hurdle rate of 8% per annum for the relevant performance period. Total shareholder return for any financial year consists of the sum of any increase or decrease in EPRA NAV per Ordinary Share and the total dividends per Ordinary Share declared in the financial year. A performance fee is only payable in respect of a performance period where the EPRA NAV per Ordinary Share exceeds the high-water mark which is equal to the greater of the highest year-end EPRA NAV Ordinary Share in any previous performance period. The performance fee was calculated initially on 31 December 2018 and annually thereafter.
The performance fees are now payable 34% in cash and 66% in Ordinary Shares, at the prevailing price per share, with 50% of the shares locked-in for one year and 50% of the shares locked-in for two years.
No performance fee has been earned for the six months ended 30 June 2024 or 30 June 2023 or the year ended
31 December 2023.
21. Subsequent events
On 22 May 2024, the Company declared a dividend of 1.20 pps in respect of the period 1 January 2024 to 31 March 2024. The dividend was paid on 12 July 2024 to Shareholders on the register as at 31 May 2024. These condensed consolidated financial statements do not reflect this dividend.
Following shareholder approval at the extraordinary general meeting held on the 18 July 2024, the Company successfully raised £110.5m of gross proceeds in aggregate, by way of a fully underwritten Placing, Overseas Placing and Open Offer of 1,105,149,821 New Ordinary Shares. The Capital Raise was fully underwritten by Bridgemere Investments Limited whom we now welcome as a significant new Shareholder with a holding of 18.7%.
As announced on 29 July 2024, the Company completed a share consolidation, representing a consolidation ratio of 1 new share for every 10 ordinary shares.
The Company repaid in full the 4.50% £50m retail bond (ISIN XS1849479602), which matured on 6 August 2024.
ESR Europe Investment Management Ltd ("ESR Europe") obtained its FCA licence on 1 August 2024 and the process of changing the AIFM for Regional REIT Ltd from Toscafund Asset Management LLP to ESR Europe completed on 30 August 2024.
On 9 September 2024, the Company declared a dividend of 2.20 pps in respect of the period 1 April 2024 to 30 June 2024. The dividend is payable to the 162,088,483 shares in issue on the record date of 20 September 2024.
EPRA PERFORMANCE MEASURES
The Group is a member of the European Public Real Estate Association ("EPRA").
EPRA has developed and defined the following performance measures to give transparency, comparability and relevance of financial reporting across entities which may use different accounting standards. The Group is pleased to disclose the following measures which are calculated in accordance with EPRA guidance:
| EPRA Performance Measure |
Definition | EPRA Performance Measure | Period ended 30 June 2024 | Period ended 31 December 2023 |
| EPRA EARNINGS | Earnings from operational activities |
EPRA Earnings
|
£11,010,000
|
£26,962,000
|
|
EPRA Earnings per Share (basic and diluted)
|
21.3p
|
52.3p
| ||
| The EPRA NAV set of metrics make adjustments to the NAV per the IFRS financial statements to provide stakeholders with the most relevant information on the fair value of the assets and liabilities of a real estate investment company, under different scenarios. | ||||
| EPRA Net Reinstatement Value |
EPRA NAV metric which assumes that entities never sell assets and aims to represent the value required to rebuild the entity. | EPRA Net Reinstatement Value
|
£294,327,000
| £337,030,000
|
| EPRA Net Reinstatement Value per Share (diluted)
|
57.1p | 65.3p
| ||
| EPRA Net Tangible Assets |
EPRA NAV metric which assumes that entities buy and sell assets, thereby crystallising certain levels of unavoidable deferred tax.
|
EPRA Net Tangible Assets
|
£251,604,000
|
£290,788,000
|
| EPRA Net Tangible Assets per Share (diluted) | 48.8p
| 56.4p | ||
| EPRA Net Disposal Value | EPRA NAV metric which represents the Shareholders' value under a disposal scenario, where deferred tax, financial instruments and certain other adjustments are calculated to the full extent of their liability, net of any resulting tax. |
EPRA Net Disposal Value |
£275,561,000
|
£320,775,000
|
| EPRA Net Disposal Value per Share (diluted) |
53.4p | 62.2p
| ||
| EPRA Net Initial Yield (NIY) | Annualised rental income based on the cash rents passing at the balance sheet date, less non-recoverable property operating expenses, divided by the market value of the property with (estimated) purchasers' costs. |
|
6.5% |
6.6% |
| EPRA 'Topped-up' NIY | This measure incorporates an adjustment to the EPRA NIY in respect of the expiration of rent-free-periods (or other unexpired lease incentives such as discounted rent periods and stepped rents). |
|
7.5% |
7.5% |
| EPRA Vacancy Rate | Estimated Market Rental Value (ERV) of vacancy space divided by ERV of the whole portfolio. | EPRA Vacancy Rate |
22.0%
|
20.0%
|
| EPRA Costs Ratio | Administrative and operating costs (including and excluding costs of direct vacancy) divided by gross rental income. |
EPRA Costs Ratio
|
40.6%
|
38.5%
|
|
EPRA Costs Ratio (excluding direct vacancy costs)
|
13.4%
|
16.4%
| ||
| EPRA LTV | Debt divided by the market value of property | EPRA LTV |
61.2% | 58.6% |
NOTES TO THE CALCULATION OF THE EPRA PERFORMANCE MEASURES
1. EPRA earnings and Company Adjusted Earnings
For calculations, please refer to note 11 to the financial statements above.
2. EPRA Net Reinstatement Value
|
| 30 June 2024 £'000 | | 31 December 2023 £'000 |
| |
| | |
| NAV per the financial statements | 266,600 | | 306,089 |
| Fair value of derivative financial instruments | (15,704) | | (16,009) |
| Deferred tax liability | 708 | | 708 |
| Purchase costs | 42,723 | | 46,242 |
| EPRA Net Reinstatement Value | 294,327 | | 337,030 |
| |
| | |
| Dilutive number of Shares prior to the Company share consolidation, of 1 new share for every 10 ordinary shares after the period end. | 515,736,583 | | 515,736,583 |
| |
| | |
| EPRA Net Reinstatement Value per share | 57.1p | | 65.3p |
|
Comparatives have been updated for purchaser costs.
|
| | |
3. EPRA Net Tangible Assets
|
| 30 June 2024 £'000 | | 31 December 2023 £'000 |
| |
| | |
| NAV per the financial statements | 266,600 | | 306,089 |
| Fair value of derivative financial instruments | (15,704) | | (16,009) |
| Deferred tax liability | 708 | | 708 |
| EPRA Net Tangible Assets | 251,604 | | 290,788 |
| Dilutive number of Shares prior to the Company share consolidation, of 1 new share for every 10 ordinary shares after the period end. | 515,736,583 | | 515,736,583 |
|
EPRA Net Tangible Assets per Share | 48.8p | | 56.4p |
| |
| |
|
4. EPRA Net Disposal Value
|
| 30 June 2024 £'000 | | 31 December 2023 £'000 |
| |
| | |
| NAV per the financial statements | 266,600 | | 306,089 |
| Adjustment for the fair value of bank borrowings | 8,352 | | 11,479 |
| Adjustment for the fair value of retail eligible bonds | 609 | | 3,207 |
| EPRA Net Disposal Value | 275,561 | | 320,775 |
| Dilutive number of Shares (prior to the Company share consolidation, of 1 new share for every 10 ordinary shares after the period end) | 515,736,583 | | 515,736,583 |
| EPRA Net Disposal Value per Share | 53.4p | | 62.2p |
5. EPRA Net Initial Yield
Calculated as the value of investment properties divided by annualised net rents:
|
| 30 June 2024 £'000 |
| 31 December 2023 £'000 |
| |
| | |
| Investment properties | 647,925 | | 700,720 |
| Purchaser costs | 42,773 | | 46,241 |
| | 690,698 | | 746,961 |
| Annualised cash passing rental income | 55,739 |
| 59,522 |
| Property outgoings | (10,569) |
| (10,077) |
| Annualised net rents | 45,170 | | 49,445 |
| Add notional rent expiration of rent-free periods or other lease incentives | 6,813 | | 6,670 |
| Topped-up net annualised rent | 51,983 | | 56,115 |
| EPRA NIY | 6.5% | | 6.6% |
| EPRA topped up NIY | 7.5% | | 7.5% |
6. EPRA Vacancy Rate
|
| Six months ended 30 June 2024 £'000 | | Year ended 31 December 2023 £'000 |
| |
| | |
| Estimated Market Rental Value (ERV) of vacant space | 17,766 | | 16,650 |
| Estimated Market Rental value (ERV) of whole portfolio | 80,596 | | 83,314 |
| EPRA Vacancy Rate | 22.0% | | 20.0% |
| |
| | |
7. EPRA Cost Ratios
|
| Six month ended 30 June 2024 £'000 | | Year ended 31 December 2023 £'000 |
| |
| | |
| Property costs | 20,403 | | 38,161 |
| Less recoverable service charge income and other similar costs | (12,042) | | (21,825) |
| Add administrative and other expenses | 4,724 | | 10,626 |
| EPRA costs (including direct vacancy costs) | 13,085 | | 26,962 |
| Direct vacancy costs | (8,776) | | (15,441) |
| EPRA costs (excluding direct vacancy costs) | 4,309 | | 11,521 |
| |
| | |
| Gross rental income | 44,232 | | 91,880 |
| Less recoverable service charge income and other similar items | (12,042) | | (21,825) |
| Gross rental income less ground rents | 32,190 | | 70,055 |
| EPRA Cost Ratio (including direct vacancy costs) | 40.6% | | 38.5% |
| EPRA Cost Ratio (excluding direct vacancy costs) | 13.4% | | 16.4% |
| |
| | |
The Group has not capitalised any overhead or operating expenses in the accounting years disclosed above.
8. EPRA LTV
|
| 30 June 2024 £'000 | | 31 December 2023 £'000 |
| |
| | |
| Borrowings from financial institutions | 353,313 | | 370,750 |
| Bond loans | 50,000 | | 50,000 |
| Net payables | 10,077 | | 17,188 |
| Cash and cash equivalents | (25,690) | | (34,505) |
| EPRA Net debt | 387,700 | | 403,433 |
| |
| | |
| Investment properties at fair value | 633,166 | | 687,695 |
| Financial Assets - loans | 530 | | 578 |
| Total property value | 633,696 | | 688,273 |
| EPRA LTV | 61.2% | | 58.6% |
PROPERTY RELATED CAPITAL EXPENDITURE ANALYSIS
|
| Six months ended 30 June 2024 £'000 | | Year ended 31 December 2023 £'000 |
| |
| | |
| Acquisitions | - | | 5 |
| Development | - | | - |
| Investment properties | - | | |
| Incremental lettable space | - | | - |
| Enhancing lettable space | 5,200 | | 10,255 |
| Tenant incentives | - | | - |
| Other material non-allocated types of expenditure | - | | - |
| Capitalised interest |
| | - |
| Total Capital Expenditure | 5,200 | | 10,260 |
| Conversion from accruals to cash basis | - | | - |
| Total Capital Expenditure on cash basis | 5,200 | | 10,260 |
| |
| | |
Acquisitions - this represents the purchase cost of investment properties and associated incidental purchase expenses such as stamp duty land tax, legal fees, agents' fees, valuations and surveys.
Subsequent capital expenditure - this represents capital expenditure which has taken place post the initial acquisition of an investment property.
ALTERNATIVE PERFORMANCE MEASURES
Net LTV
|
| 30 June 2024 £'000 | | 31 December 2023 £'000 |
| |
| | |
| Borrowings from financial institutions | 353,313 | | 370,750 |
| Bond loans | 50,000 | | 50,000 |
| Cash and cash equivalents | (25,690) | | (34,505) |
| Net debt | 377,623 | | 386,245 |
| Investment properties at fair value | 647,925 | | 700,720 |
| Net LTV | 58.3% | | 55.1% |
SHAREHOLDER INFORMATION
Share register enquiries: Link Group.
Please phone: 0371 664 0300 for any questions about:
• changing your address or other details
• your Shares
• buying and selling Shares.
Calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. The Registrar is open between 9.00 and - 17.30, Monday to Friday excluding public holidays in England and Wales. For Shareholder enquiries please email shareholderenquiries@linkgroup.co.uk.
Forthcoming events
| October 2024 | Q2 Dividend Payment |
| November 2024 | Q3 Trading Update and Dividend Declaration |
| February 2025 | Q4 Dividend Declaration |
| March 2025 | 2024 Preliminary Results |
| May 2025 | Q1 2024 Trading Update and Dividend Declaration |
Note: all future dates are provisional and subject to change.
Other Information
Listing (ticker): LSE Main Market (RGL)
Date of listing: 6 November 2015
Joint Brokers: Peel Hunt LLP and Panmure Liberum Limited
Financial PR: Buchanan Communications
Incorporated: Guernsey
ISIN: GG00BSY2LD72
SEDOL: BSY2LD7
Legal Entity Identifier: 549300D8G4NKLRIKBX73
Website: www.regionalreit.com
COMPANY INFORMATION
Directors
Kevin McGrath (Chairman and Independent Non-Executive Director)
Daniel Taylor (Senior Independent Non-Executive Director)
Frances Daley (Independent Non-Executive Director and Audit Committee Chairman)
Massy Larizadeh (Independent Non-Executive Director and Chair of the Management Engagement & Remuneration Committee and Nomination Committee)
Stephen Inglis (Non-Executive Director)
| Administrator Jupiter Fund Services Limited Mont Crevelt House Bulwer Avenue St. Sampson Guernsey GY2 4LH
| Independent Auditor RSM UK Audit LLP Third Floor Centenary House 69 Wellington Street Glasgow G2 6HG | Registrar Link Market Services (Guernsey) Limited Mont Crevelt House Buwler Avenue St Sampson Guernsey GY2 4LH |
|
|
|
|
| Asset Manager London & Scottish Property Investment Management Limited 300 Bath Street, Glasgow G2 4JR | Investment Adviser ESR Europe Private Markets Limited Ferguson House 15 Marylebone Road London NW1 5JD | Sub-Administrator Link Alternative Fund Administrators Limited Broadwalk House Southernhay West Exeter EX1 1TS |
|
|
|
|
| Company Secretary Link Company Matters Limited Central Square 29 Wellington Street Leeds LS1 4DL | Legal Adviser to the Company Macfarlanes LLP 20 Cursitor Street London EC4A 1LT
| Tax Adviser KPMG LLP 319 St Vincent Street Glasgow G2 5AS |
|
|
|
|
| Depositary Ocorian Depositary (UK) Limited 20 Fenchurch Street London EC3M 3BY
| Public Relations Burson Buchanan Communications Limited 107 Cheapside London EC2V 6DN
| Registered office Regional REIT Limited Mont Crevelt House Bulwer Avenue St. Sampson Guernsey GY2 4LH |
|
|
|
|
| Financial Adviser and Joint Broker Peel Hunt LLP 7th Floor 100 Liverpool Street London EC2M 2AT | Joint Broker Panmure Liberum Ropemaker Place 25 Ropemaker Street London EC2Y 9AN
| Property Valuer Colliers International Property Consultants Limited 95 Wigmore Street London W1U 1DJ |
Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of this announcement.
National Storage Mechanism
A copy of the Half-Yearly Report will be submitted shortly to the National Storage Mechanism ("NSM") and will be available for inspection at the NSM, which is situated at: https://data.fca.org.uk/#/nsm/nationalstoragemechanism
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