Regional Reit Ltd. · LSE:RGL
Regional Reit — H1 2024 Earnings Presentation
54 slides from Regional Reit's earnings presentation, Jun 30, 2024
Slide 1: Investor Presentation Half Year to 30 June 2024
Investor Presentation Half Year to 30 June 2024 Resilient operational performance Post Period – Transformational Successful Equity Fundraise
Slide 2: Introduction
Stephen Inglis Chief Executive Officer Introduction Derek McDonald Chief Operating Officer Simon Marriott Investment Director
Slide 3: H1 2024 Summary
H1 2024 Summary Portfolio • £647.9m (2023: £700.7m) Highly geographically diversified 300 Bath Street, Glasgow • Like-for-like capital value decline of → Asset management initiatives helping to 5.1% after adjusting for disposals and mitigate valuation impact CAPEX Vs MSCI Rest of UK offices → 132 pr
Slide 4: H1 2024 Summary
H1 2024 Summary 300 Bath Street, Glasgow Key Portfolio • Robust rent collections 2024 → Very strong HY rent collection Update 98%* (2023: equivalent period 98.8%) • Tenants back in the office → 4.1 days a week is the average → 102% active occupancy Vs pre-pandemic levels • Rent roll £63.5m (2023: £6
Slide 5: Diversified portfolio – delivering income
Diversified portfolio – delivering income New Lettings: All Properties Proactive property asset management 3.0 2.6 2.5 2.1 2.0 • 44 new lettings; £2.1m pa gross rent roll - up → Focus on regional properties outside M25 £m 8.4% against December 2023 ERVs 1.5 1.2 (H1 2023: 45; £1.2m pa) 1.0 0.5 • EPRA
Slide 6: Capturing the income and value over the near term
Capturing the income and value over the near term Total return forecast (2024 - 2029) for UK Offices ahead of other • Total return for UK offices expected to reach 13.0% over the next 5 property sectors at 13.0% years. • The IMF forecast UK GDP growth of 0.5% in 2024 and 1.5% in 2025 UK - Offices 13
Slide 7: Blue Chip Tenants
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Slide 8: De-risking through diversification – Occupier Base
De-risking through diversification – Occupier Base • Diversified income - large tenant mix Information and communication across £647.9m of assets (2023: £700.7m) Professional, scientific and technical activities • Spread of assets – 132 properties (2023: 144) Administrative and support service activ
Slide 9: ESG – Focused on delivering sustainability – Good Progress Across Portfolio
ESG – Focused on delivering sustainability – Good Progress Across Portfolio Environment • On target to achieve current guidelines of EPC B rating by 2030 • EPC ratings progressing 31 December Rating 30 June 2024 Movement 2023 B plus and Exempt 42.1% 56.3% +1420bps C 31.6% 25.5% (614)bps D 15.7% 11.5
Slide 10: ESG – Focused on delivering sustainability – Good Progress Across Portfolio
ESG – Focused on delivering sustainability – Good Progress Across Portfolio Social • Working with not-for-profit organisations • Committed to making a positive difference in society with charitable donations; IM and AM match funding for good causes and encouraging staff to be active in their local c
Slide 11: Debt Facilities 30 June 2024
Debt Facilities 30 June 2024 Gross Annual Swap Original Outstanding Swaps\Caps: Maturity loan to Interest Rates Lender Facility Debt* Notional Date value** Rate Blend £'000 £'000 £’000 % % % Royal Bank of Over 3mth £ 71,000 0.97 Scotland, Bank of 128,000 115,961 Aug-26 56.1 2.40 SONIA 44,961 0.97 Sc
Slide 12: Net LTV – Proforma Post Equity Raise
Net LTV – Proforma Post Equity Raise 12
Slide 13: Summary – Disposal Programme Update
Summary – Disposal Programme Update H1 2024 Disposals by Sector • Disposals totalled £21.9m (net of costs) 3.6% • Reflecting an average net initial yield of 9.3% (10.7% excluding vacant assets) • 12 assets and 3 part sales in total during H1 2024 Office Retail • Disposals of non–core and assets at t
Slide 14: Summary of the Equity Capital Raise & Outlook
Summary of the Equity Capital Raise & Outlook
Slide 15: Key highlights of the £110m fully underwritten capital raise
Key highlights of the £110m fully underwritten capital raise Structure • Fully pre-emptive → 15 new ordinary shares for every 7 existing ordinary shares • Open offer • Fully underwritten Underwriter • Bridgemere Group → Founder Steve Morgan CBE • A board position appointment → Companies include: hou
Slide 16: Use of capital raise £110.5m gross proceeds
Use of capital raise £110.5m gross proceeds Repaid £50m retail bond August 2024 c. £26m to reduce bank borrowings - resulting in greater covenant headroom Significantly reduce the LTV towards the long term target of 40% c. £28m for accretive CAPEX and expenses 16
Slide 17: Proforma Statement of Financial Position - Post Equity Raise
Proforma Statement of Financial Position - Post Equity Raise 30 June 2024 Net Proceeds Bond Repayment 30 June 2024 (Post) £m £m £m £m Total Assets 729.7 104.7 (50.0) 784.4 Total Liabilities (463.1) - 50.0 413.1 Net Assets 266.6 104.7 - 371.3 Total Equity 266.6 104.7 - 371.3 LTV 58.8% 42.2% Shares in
Slide 18: Outlook
Outlook Balance Sheet • Short term liability removed → LTV pressure removed (c. 42%) • Senior liability well managed → Greater financial flexibility and liquidity headroom • Continued measured disposal programme Revenue • Rent collection remains strong → Evidenced over the life of the fund • ERV inf
Slide 19: Appendix
Appendix • Property Portfolio • Portfolio Activity Asset Management Initiatives (CAPEX) Disposals • Financial Information • Performance
Slide 20: Property Portfolio
Regional (s REIT Property Portfolio regionalreit.com
Slide 21: Overview – Specialised Platform and Geographically Diverse Portfolio
Overview – Specialised Platform and Geographically Diverse Portfolio UK property locations Portfolio details as at 30 June 2024 as at 30 June 2024 Valuation Capital Values Sector Properties % by valuation (£m) (£psf) Office 113 592.8 91.5 114.02 Retail 13 20.4 3.1 76.82 Industrial 4 22.3 3.4 53.12 O
Slide 22: £647.9m Property Portfolio
£647.9m Property Portfolio (H1 2023: £752.2m) IPO – November 2015 30 June 2023 30 June 2024 Sector Split (% by value) 3.1% 3.5% 1.5% 1.9% Office 5.0% 3.0% 3.4% Industrial 25.3% Retail Other £386.1m £752.2m £647.9m 58.4% 11.3% 92.0% 91.5% Regional Split (% by value) Midlands 5.8% South East 3.9% 5.1%
Slide 23: Diversified Income Stream
Diversified Income Stream Portfolio details at 30 June 2024 % by Oc cupancy WAULT to Gross re nta l Sec tor Properties Valuation Sq. ft . Average rent ERV Capita l rate Yield (% ) valuation (EP RA) first break inc om e (£m ) (m il) (% ) (yrs) (£m ) (£psf) (£m ) (£psf) Net initial Equiva lent Reversi
Slide 24: Top 15 Investments (Market Value)
Top 15 Investments (Market Value) Market Lettable EPRA Annualise d % of WAULT to value % of area Oc cupancy gross rent gross Property Sec tor Anc hor te nants first break portfolio rental (£m ) (Sq Ft ) (% ) (£m ) (ye ars ) inc om e Eagle Court, Coventry Road, Birmingham Office Virgin Media Ltd, Rex
Slide 25: Top 15 Occupiers (Share of Rental Income)
Top 15 Occupiers (Share of Rental Income) WAULT Annualise % of Lettable to first d gros s Gross Tenant Property Sec tor area bre ak rent rental (Sq Ft ) (ye ars ) (£m ) inc om e EDF Energy Ltd 800 Aztec West, Bristol Electricity, gas, steam and air conditioning 5.0 109,114 1.7 2.7 supply Endeavour H
Slide 26: Investment Property Activity
Investment Property Activity Chart may not sum due to rounding. 26
Slide 27: Geographically Diversified Office Led Portfolio Focused on the UK Regions
Geographically Diversified Office Led Portfolio Focused on the UK Regions Gross office assets by value % WAULT years Average rent & capital rate £psf 100% 5 £16 £160 £14.60 £14.74 £14.25 £142.92 90% £14 £140 92.0% 92.0% 91.5% 4.6 4.6 £123.92 80% 4 4.4 £12 £114.02 £120 70% £10 £100 60% 50% 3 £8 £80 4
Slide 28: H1 2023 Portfolio Highlights
H1 2023 Portfolio Highlights Major lettings and renewals successfully secured across the regions Ashby Park, Ashby De La Zouch Lightyear, Glasgow Airport, Glasgow Ashfield Healthcare Ltd. has let 18,942 sq. ft. of office space to Heathrow Airport Ltd. has let 15,154 sq. ft. July 2034, with an option
Slide 29: Rent Collections – remain strong
Rent Collections – remain strong Rent collected vs invoiced (%) 2023 2024 2023 2024 (%) Q1 Q2 Q1 Q2 Total Total Rent Paid 99.5 98.2 98.8 98.2 97.8 98.0 Qu arterly re nta l invoices in clud e contractual rent for the proceed ing quarter as at 30.08..2024 29
Slide 30: Portfolio Activity – Asset Management Initiatives (CAPEX)
Portfolio Activity – Asset Management Initiatives (CAPEX)
Slide 31: BEFORE: Ashby Park, Ashby De La Zouch
BEFORE: Ashby Park, Ashby De La Zouch • Acquired in March 2017 • Approximately £2.6 million has been spent on refurbishing a 1990’s office building which was being utilised by the former tenant as a hybrid unit with light industrial on ground floor and offices on first floor. The refurbishment conve
Slide 32: AFTER: Ashby Park, Ashby De La Zouch
AFTER: Ashby Park, Ashby De La Zouch • Following completion of works, Ashfield Healthcare Ltd. has let 18,942 sq. ft. of office space to July 2034, with an option to break in 2029, at a rental income of £350,427 pa (£18.50/ sq. ft.). • At acquisition the property was valued at £13.5m. The property i
Slide 33: BEFORE: Hampshire Corporate Park, Eastleigh
BEFORE: Hampshire Corporate Park, Eastleigh • Acquired in January 2015 • Q2 2023 Refurbishment of the remaining 1st floor void unit and common parts complete to provide high quality office space and building wide amenities for tenant. These include, 12 on site electrical car charges, new male, femal
Slide 34: AFTER: Hampshire Corporate Park, Eastleigh
AFTER: Hampshire Corporate Park, Eastleigh • At acquisition the property was valued at £14.0m. The property is now valued at £19.0m (2.7% of total portfolio value) • The asset is now fully let with an annual rent roll of £1.8m • EPC improvement from C to B 34
Slide 35: BEFORE: Coach Works, Leeds
BEFORE: Coach Works, Leeds • Acquired in 2013, the building is well located in Leeds City Centre in the heart of Leeds creative quarter • Extensive refurbishment project undertaken to reposition the property in the market. Phase 1 element covering a total of 20,126 sq. ft. of refurbishment costing £
Slide 36: AFTER: Coach Works, Leeds
AFTER: Coach Works, Leeds • In 2015 the property valued at £8.0m. The property is now valued at £10.7m (1.5% of total portfolio value) • The Coach Works is now 82.4% let with an annual rent roll of £0.9m • EPC improvement from C to B 36
Slide 37: AFTER: Coach Works, Leeds
AFTER: Coach Works, Leeds 37
Slide 38: Examples of future CAPEX
Examples of future CAPEX Central Park/Victoria Park, Leeds • Cap ex – est £350k - £500k (fees) • Project – c. 7-acre island site situated to south of river within 5 min walk of Leeds Station. Sites currently remain safeguarded for HS2. Planning advice sought from Quod advises if it was not for the e
Slide 39: Examples of future CAPEX
Examples of future CAPEX Eagle Court, Chilworth House, Clearblue Innovation Linford Wood, Milton Birmingham Eastleigh Centre, Bedford Keynes • Total cost: £0.8m • Total cost: £2.5m • Total cost: £4.2m • Total cost: £3.5m • Detail of works: • Detail of works: • Detail of works: • Detail of works: o E
Slide 40: Disposals
Regional (s REIT Disposals
Slide 41: Miller Court, Tewkesbury
Miller Court, Tewkesbury • Acquired in December 2017 for £7.0m • Sold for £5.7m. This represents a substantial uplift of 5.6% against the most recent valuation at 31 December 2023. • The 48,090 sq. ft. of business park office space comprising of 20 individual units let on 17 separate leases. The pro
Slide 42: Milburn House, Newcastle
Milburn House, Newcastle • Acquired in June 2013 for £3.0m • The 112,124 sq. ft. office property was multi-let to 34 tenants at time of disposal • Over the period of ownership of this property, the asset manager completed a number of new lettings and lease renewals • The site was sold in February 20
Slide 43: Financial Information
Regional (s REIT Financial Information regionalreit.com
Slide 44: Delivering on Strategy
Delivering on Strategy Dec 2023 Jun 2024 Change Portfolio – Active management Investment Property* £700.7m £647.9m (£52.8m) Acquisitions before costs - - - Acquisition Net Initial Yield - - - Disposals net of costs £25.0m £20.7m (£4.3m) Disposal Net Initial Yield 4.9% 9.3% 4.4pp CAPEX £10.2m £5.2m (
Slide 45: Financial – Statement of Comprehensive Income
Financial – Statement of Comprehensive Income Half Year End 2023 Half Year End 2024 Change (£0,000) (£’000) (£’000)* Rental and property income 44,415 44,232 (183) Property costs (18,438) (20,403) (1,965) Net rental and property income 25,977 23,829 (2,148) Administrative & other expenses (5,341) (4
Slide 46: Financial – Statement of Financial Position
Financial – Statement of Financial Position Year-end Half year-end Year-end Half year-end Dec 2023 Jun 2024 Change Dec 2023 Jun 2024 Change (£'000) (£’000) (£’000) (£’000) Liabilities Assets Non-current Assets Current liabilities (99,251) (103,215) (3,964) Investment properties* 687,695 633,166 (54,
Slide 47: Cash Flow
Cash Flow Table may not sum due to rounding. 47
Slide 48: Income and Cost Focused
Income and Cost Focused Half year-ended 30 June Half year-ended 30 June Change* 2023 2024 Net rental and property income £34.3m £32.2m (£2.1m) Operating profit before gains/losses on property assets/other £20.6m £19.1m (£1.5m) investments IFRS EPS (2.4p) (5.3p) (2.9p) EPRA EPS** 2.5p 2.1p (0.4p) EPR
Slide 49: Financial Position
Financial Position Year ending 31 Dec Half-year ending 30 June Change 2023 2024 Investment Property £700.7m £647.9m (£52.8m) IFRS NAV (fully diluted) 59.3p 51.7p (7.6p) 48.8p EPRA NTA* (fully diluted) 56.4p (7.6p) Borrowings (incl. retail eligible bond) £420.8m £403.3m (£17.5m) Weighted average cost
Slide 50: HY 2024 - Earnings
HY 2024 - Earnings • Earnings variance between 30 June 2023 Vs 30 June 2024 • Excluding the Recoverable service charge income/expenditure and other similar items Chart may not sum due to rounding. 50
Slide 51: EPRA NTA Bridge
EPRA NTA Bridge EPRA Net Tangible Asset - Bridge 30 June 2024 • EPRA NTA: £251.6m (48.8p basic and diluted) (31 Dec ‘23: £290.8m, 56.4p basic diluted) • IFRS: £266.6m (51.5p basic and diluted) (31 Dec ‘23: £306.1m, 59.3p basic and diluted) 31 ec 2023 et rental dmin e aluation et capital Loss on the
Slide 52: Performance
Regional (s REIT Performance regionalreit.com
Slide 53: Cost Focused
Cost Focused EPRA cost ratio excl. direct costs EPRA cost ratio incl. direct costs NewRiver 34% Regional REIT Ltd 41% AEW UK REIT 27% NewRiver 37% Warehouse REIT 23% AEW UK REIT 35% Picton Property 23% Picton Property 32% Urban Logistics REIT 21% Warehouse REIT 24% Custodian 18% Custodian 22% Region
Slide 54: Disclaimer
Disclaimer This document (“ ocument”) (re fer ences to which shall be dee me d to include any information based on this Document and any err ors or inaccuracies therein or omissio ns therefrom. which has bee n made or may be supplied ora lly in connection with this Document or in connection with any