Regional Reit Ltd. · LSE:RGL
Regional Reit — H1 2023 Earnings Presentation
50 slides from Regional Reit's earnings presentation, Jun 30, 2023
Slide 1: Investor Presentation Half Year to 30 June 2023
Investor Presentation Half Year to 30 June 2023 Resilient operational performance in challenging macroeconomic conditions
Slide 2: Introduction
Stephen Inglis Chief Executive Officer Introduction • Overview and Portfolio Derek McDonald Chief Operating Officer • Appendix Simon Marriott Investment Director
Slide 3: H1 23 Summary – Resilient Operational Performance
H1 23 Summary – Resilient Operational Performance in challenging macroeconomic environment Beeston Business Park, Nottingham Key Portfolio • 99% of tenants back in the office → 4.2 days a week is the average Update → 93% physical occupancy of pre- pandemic levels • Rent roll £69.8m (2022: £71.8m) →
Slide 4: H1 23 Summary
AD H1 23 Summary Portfolio £752.2m (2022: £789.5m) Highly geographically diversified Manchester Green, Manchester • Like-for-like capital value decline → 150 properties; offices 92.0% (by value) of 3.8% after adjusting for → 1,038 tenants; office tenants 952 disposals and CAPEX Vs MSCI → Regional of
Slide 5: Diversified portfolio – delivering income
Diversified portfolio – delivering income Lease Expiries Proactive property asset management • 45 new lettings; £1.2m pa gross rent roll - up → Focus on regional properties outside M25 13.5% against December 2022 ERVs (H1 2022: 47; £2.6m pa) 76% • £14.1m of disposals (net of costs) – NIY 2.4% → Offi
Slide 6: H2 - Earnings
H2 - Earnings • Earnings variance between 1 January 2022 to 30 June 2022 Vs 1 January 2023 to 30 June 2023 * Excluding the Recoverable service charge income/expenditure and other similar items 6
Slide 7: Debt Facilities – Fully Hedged
Debt Facilities – Fully Hedged Gross Annual Original Outstanding Swaps\Caps: Swap Rates Maturity loan to Interest Lender Facility Debt* Notional Blend Date value** Rate £'000 £'000 £’000 % % % Royal Bank of Over 3mth £ 73,000 0.97 Scotland, Bank of 128,000 125,677 Aug-26 52.7 2.40 SONIA 55,000 0.97
Slide 8: Net LTV
Net LTV 1000 60 906 918 £m % 900 51.9 788 790 800 737 50 718 732 49.5 752 700 40.6 45.0 600 42.4 43.2 40 502 40.8 38.3 38.9 500 404 400 30 384 397 391 390 300 332 25.4 307 299 275 200 20 204 100 105 0 10 FY FY FY FY FY FY FY HY FY HY 2015 2016 2017 2018 2019 2020 2021 2022 2022 2023 Investment Prope
Slide 9: What we are seeing – Return to the office (RTO)
What we are seeing – Return to the Zoom, has ordered staff back to the office office (RTO) BBC (7 August 2023) • Vast majority of tenants back in the office • 99% of our office tenants (by rental income) have returned either on a full- time or hybrid basis; Remote work experiment was a mistake- • Av
Slide 10: Office Market – Supply and Demand Dynamics
Office Market – Supply and Demand Dynamics • No substitute for face-to-face collaboration • Culture, community, creativity, value - add productivity • Collaborative working • Training • Talk of recession is drawing people back to the office 300 Bath Street, Glasgow • Hybrid working • Tailwind of the
Slide 11: ESG – Focused on delivering sustainability
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 Rating 31 December 2022 30 June 2023 Movement B plus and Exempt 23.6% 26.4% +280bps C 33.3% 33.2% (10)bps D 27.2% 26.1%
Slide 12: ESG – Focused on delivering sustainability
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 13: De-risking through diversification – Occupier Base
De-risking through diversification – Occupier Base • Diversified income - large tenant mix across £752.2m of assets Information and communication (2022: £789.5m) Professional, scientific and technical activities • Spread of assets – 150 properties (2022: 154) Administrative and support service activ
Slide 14: Blue Chip Tenants
Blue Chip Tenants “4, BANK OF L__| & 288 ent for hve he prpecsly ENERGY \S Communities and media Local Government Glasgow Department > ASA for Transport LLOYDS BANK eon &,, align By AVIVA icleaserve COVA <a, Clearblue LoGistics ST. JAMES’S PLACE WEALTH MANAGEMENT CARDIFF €@ COLLEGE Handelsbanken WwW
Slide 15: Summary and Outlook
REIT THE OFFICE SPECIALISTS Regional ‘ Summary and Outlook regionalreit.com
Slide 16: Outlook – Positioned for long term income, value and focus
Outlook – Positioned for long term income, value and focus Quarterly income • Continues to be one of the highest yielding REITs stream to our shareholders • Committed to paying regular quarterly dividends to our shareholders One North Bank, Sheffield Underpinned by rent • Rent collection remain stro
Slide 17: Appendix
Appendix • Property Portfolio • Portfolio Activity • Asset Management Initiatives (CAPEX) • Disposals • Financial Information • Performance
Slide 18: Property Portfolio
REIT THE OFFICE SPECIALISTS Regional ‘ Property Portfolio regionalreit.com
Slide 19: Overview – Specialised Platform and Geographically Diverse Portfolio
Overview – Specialised Platform and Geographically Diverse Portfolio UK property locations Portfolio details as at 30 June 2023 as at 30 June 2023 Valuation Capital Values Sector Properties % by valuation (£m) (£psf) Office 125 692.3 92.0 123.92 Retail 18 26.4 3.5 79.69 Industrial 4 22.3 3.0 53.17 O
Slide 20: £752.2m Property Portfolio
£752.2m Property Portfolio (HY 2022 £918.2m) IPO – November 2015 30 June 2022 30 June 2023 Sector Split (% by value) 3.1% 1.4% 3.0% 1.5% 5.0% 3.5%, 3.5% Office Retail 25.3% Industrial Other £386.1m £918.2m £752.2m 58.4% 11.3% 92.0% 92.0% 4.8% 5.1% Midlands Regional Split (% by value) 20.1% 3.9% 9.2%
Slide 21: Diversified Income Stream
Diversified Income Stream Portfolio details at 30 June 2023 % by Occupancy WAULT to Gross rental Sector Properties Valuation Sq. ft. Average rent ERV Capital rate Yield (%) valuation (EPRA) first break income (£m) (mil) (%) (yrs) (£m) (£psf) (£m) (£psf) Net initial Equivalent Reversionary Office 125
Slide 22: Top 15 Investments (Market Value)
Top 15 Investments (Market Value) Market Lettable EPRA Annualised % of WAULT to value % of area Occupancy gross rent gross Property Sector Anchor tenants first break portfolio rental (£m) (Sq Ft) (%) (£m) (years) income 300 Bath Street, Glasgow Office University of Glasgow, Glasgow Tay House Centre
Slide 23: Top 15 Occupiers (Share of Rental Income)
Top 15 Occupiers (Share of Rental Income) WAULT % of Lettable Annualised to first Gross Tenant Property Sector area gross rent break rental (Sq Ft) (£m) (years) income Virgin Media Ltd Eagle Court, Birmingham Information and communication 0.7 107,830 1.8 2.5% Southgate Park, Peterborough Shell Energ
Slide 24: Investment Property Activity
Investment Property Activity Table may not sum due to rounding. 24
Slide 25: 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 90% £14.28 £142.92 £13.78 £14 £132.23 £140 80% 4.6 £123.92 4.5 4 4.4 70% £12 £120 60% £10 £100 50% 3 92.0% 92.0% £8 £80 40% 83.
Slide 26: HY 2023 Portfolio Highlights
HY 2023 Portfolio Highlights Major lettings and renewals successfully secured across the regions Legal House, Glasgow Quadrant House, Dundee The Lord Advocate renewed its lease to The Care Inspectorate has extended the term of existing lease May 2028, with the option to break in (21,510 sq. ft.) for
Slide 27: New Lettings by Industry Type (% of Gross Rent)
New Lettings by Industry Type (% of Gross Rent) H1 2022 H1 2023 Information and communication 14.7% 25.2% Human health and social work activities 8.8% 14.1% Wholesale and retail trade 0.8% 10.5% Water supply, sewerage, waste management and remediation activities 0.0% 9.9% Professional, scientific an
Slide 28: Rent Collections – trending back to normality
Rent Collections – trending back to normality Rent collected Vs invoiced (%) 2021 2022 2023 Total 2021 2022 HY 2023 (%) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 ‡ Total Total Total Rent Paid 98.4 98.6 98.2 98.3 98.4 99.0 99.0 98.8 99.6 99.1 99.5 98.2 98.8 Quarterly rental invoices include contractual rent for
Slide 29: Portfolio Activity – Asset Management Initiatives (CAPEX)
Portfolio Activity – Asset Management Initiatives (CAPEX)
Slide 30: 300 Bath Street, Glasgow
300 Bath Street, Glasgow Before After • Acquired in 2013, 300 Bath Street is the largest single asset (by value) in the portfolio at £21.4m (2.8% of the portfolio) • Landmark Grade A office building (Grade A spec) in Glasgow City Centre offering column free floor plates up to 30,000 sq. ft. • At acq
Slide 31: 300 Bath Street, Glasgow
300 Bath Street, Glasgow Works on the proposed reception refurbishment, wellness and amenity space and show suite commenced in February 2022. The show suite is now complete and the reception and wellness amenity space will complete early July 2023. The project works present an opportunity for compre
Slide 32: Building 2, Bear Brook Office Park, Aylesbury
Building 2, Bear Brook Office Park, Aylesbury • Acquired in March 2016 • An ‘in town’ Campus purpose built high specification HQ building, known as the “Blue Leanie” (Building 2), acquired in March 2016 as part of the “Rainbow” portfolio. The property is situated adjacent to Aylesbury train station
Slide 33: Compass House, Dundee
Compass House, Dundee • Acquired in March 2017 • The property comprises an office building arranged over three floors, with a total floor area of 30,342 sq. ft. • The property is located on Riverside Drive in Dundee, which is on the banks of the River Tay and merges with the A92. Dundee Railway Stat
Slide 34: Quadrant House, Dundee
Quadrant House, Dundee • Acquired in June 2018 • The property comprises an office building arranged over three floors, with a total floor area of 21,510 sq. ft. • The property is located on Riverside Drive in Dundee, which is on the banks of the River Tay and merges with the A92. Dundee Railway Stat
Slide 35: Disposals
Regional (~< reir THE OFFICE SPECIALISTS Disposals regionalreit.com
Slide 36: Summary – Disposals during 2023
Summary – Disposals during 2023 • Disposals totalled £14.6m (before costs) • Reflecting an average net initial yield of 2.4% (9.4% excluding vacant assets) Office • 4 assets and 3 part sales in total during H1 2023 • Disposals of non–core and assets at the end of their business plans 100.0% 13.2% 16
Slide 37: Wakefield Business Park, Wakefield
Wakefield 41 Business Park, Wakefield • Acquired in December 2017 for £1.5m • The 25,845 sq. ft. office property was multi-let to six 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 so
Slide 38: Financial Information
REIT THE OFFICE SPECIALISTS Regional ‘ Financial Information regionalreit.com
Slide 39: Delivering on Strategy
Delivering on Strategy Dec 2022 Jun 2023 Change Portfolio – Active management Investment Property £789.5m £752.2m (£37.3m) Acquisitions before costs £74.7m - (£74.7m) Acquisition Net Initial Yield 8.4% - (8.4pps) Disposals net of costs £84.1m £14.1m (£70.0m) Disposal Net Initial Yield 4.9% 2.4% (2.5
Slide 40: Financial – Statement of Comprehensive Income
Financial – Statement of Comprehensive Income Half Year-end 2022 Half Year-end 2023 Change (£’000) (£’000) (£’000) Rental and property income 45,211 44,415 (796) Property costs (16,267) (18,438) (2,171) Net rental and property income 28,944 25,977 (2,967) Administrative & other expenses (5,568) (5,3
Slide 41: Financial – Statement of Financial Position
Financial – Statement of Financial Position Year-end Half year-end Year-end Half year-end Dec 2022 Jun 2023 Change Dec 2022 Jun 2023 Change (£’000) (£’000) (£’000) (£’000) Liabilities Assets Non-current Assets Current liabilities (56,591) (56,173) 418 Investment properties 789,480 752,226 (37,254) R
Slide 42: Cash Flow
Cash Flow Table may not sum due to rounding. 42
Slide 43: Income and Cost Focused
Income and Cost Focused Half year ending 30 June Half year ending 30 June Change* 2022 2023 Net rental and property income £37.1m £34.3m (£2.8m) Operating profit before gains/losses on property assets/other £23.4m £20.6m (£2.8m) investments IFRS EPS 5.5p (2.4p) (7.9p) EPRA EPS 2.9p 2.5p (0.4p) EPRA
Slide 44: Financial Position
Financial Position Year ending 31 December Half year ending 30 June Change 2022 2023 Investment Property £789.5m £752.2m (£37.3m) IFRS NAV (fully diluted) 78.1p 72.5p (5.6p) EPRA NTA* (fully diluted) 73.5p 66.9p (6.6p) Borrowings (incl. retail eligible bond) £440.8m £431.7m (£9.1m) Weighted average
Slide 45: Positioned to Unlock Shareholder Value over the Long Term
Positioned to Unlock Shareholder Value over the Long Term • EPRA NTA*: £344.9m (66.9p fully diluted) (31 Dec ‘22: £379.2m, 73.5p fully diluted) • IFRS: £373.8m (72.5p fully diluted) (31 Dec ‘22: £402.9m, 78.1p fully diluted) Table may not sum due to rounding. *EPRA Net Reinstatement Value(NRV): 30 J
Slide 46: Performance
REIT THE OFFICE SPECIALISTS Regional ‘ Performance regionalreit.com
Slide 47: Dividends and Performance Total Return (since RGL IPO)
Dividends and Performance Total return (since RGL IPO) 100.0% AEW UK REIT PLC 80.0% Tritax Big Box Reit PLC 60.0% LondonMetric Property PLC Picton Property 40.0% Income Ltd Total Return (since RGL IPO) Custodian Property Income REIT plc 20.0% Palace Capital PLC Ediston Property Investment Company PL
Slide 48: Consensus Dividend Yield
Consensus Dividend Yield Consensus dividend yield Consensus dividend yield (share price) (NAV) Regional REIT Ltd 15.10% 9.02% abrdn Property Income Trust Ltd 8.51% 4.77% Real Estate Investors PLC 8.47% 4.02% AEW UK REIT PLC 8.17% 7.47% Schroder Real Estate Investment Trust Ltd 7.90% 5.29% Newriver R
Slide 49: Cost Focused
Cost Focused EPRA cost ratio excl. direct costs EPRA cost ratio incl. direct costs Newriver REIT PLC 35% Town Centre Securities PLC 67% Warehouse REIT 27% Real Estate Investors PLC 43% AEW UK REIT PLC 26% Regional REIT Ltd 40% Picton Property Income Ltd 21% Newriver REIT PLC 39% Custodian REIT PLC 1
Slide 50: Disclaimer
Disclaimer This document (“Document”) (references to which shall be deemed to include any information based on this Document and any errors or inaccuracies therein or omissions therefrom. which has been made or may be supplied orally in connection with this Document or in connection with any further