Regional Reit Ltd. · LSE:RGL
Regional Reit — FY2020 Earnings Presentation
54 slides from Regional Reit's earnings presentation, March 2021
Slide 1: Investor Presentation Annual Results 2020
Investor Presentation Annual Results 2020 The Regional Office Specialist regionalreit.com Consistently Delivering High Yield regionalreit.com
Slide 2: Introduction
Introduction Overview Stephen Inglis Chief Executive Officer Portfolio Derek McDonald Managing Director Appendix Simon Marriott Investment Director regionalreit.com Offices held at London and Scottish Property Investment Management Asset Manager to Regional REIT 1
Slide 3: Income Focused – Yield of 8.2%
Income Focused – Yield of 8.2% Total EPRA Accounting Return FTSE EPRA NAREIT UK Index • Since IPO* +36.3% (39.2p)** (5.4%) Performance & • Annualised +6.2% (1.1%) 2020 (15.9%) Dividend • Dividend 6.4p Uninterrupted high yielding dividend • Yield c. 8.2%*** for our shareholders EPRA EPS 6.5p (2
Slide 4: FY 2020 Portfolio Highlights – Income Focused
FY 2020 Portfolio Highlights – Income Focused Proactive property asset management Focus on regional properties outside M25 • EPRA Occupancy (by ERV) 89.4% (2019: 89.4%) Offices 83.5% Portfolio • Lettings 53; £2.0m gross rent roll 61.8% - Business Parks • Renewals 74.4% (by value) retained 5.
Slide 5: 2020 Portfolio Highlights
2020 Portfolio Highlights Major lettings and renewals successfully secured across the regions Gyleview House, Edinburgh Braidhurst House, Bellshill Existing tenant Citibase, has renewed the New five year lease agreed with ADT Fire current lease for occupancy of the entire and Security Plc for 8,416
Slide 6: Regional REIT – Pivot to Office Focus
Regional REIT – Pivot to Office Focus De-risked through diversification Large number of income streams • Occupier Across the regions Strategy – • Geography Office focus • Business Sector • WAULT Beeston Business Park, Specialised Asset Management Team 62 Staff Nottingham • Hugely experienced senio
Slide 7: Rent Collection by SIC
Rent Collection by SIC £12.0m £8.7m £8.7m £5.4m £6.2m £6.4m £4.8m £3.1m £5.6m £3.6m 97% 97% 97% 97% 99% 99% 100% 100% 100% 100% Other Professional, Administrative Wholesale and Information and Manufacturing Financial and Electricity, gas, Public Sector Banking scientific and and support retail trade
Slide 8: Occupiers – 52% Essential Services
Occupiers – 52% Essential Services Essential Services Breakdown by SIC Occupiers as a % of gross rent 1% 1% 1% 3% 1% 3% 1% 7% 20% 3% 4% 8% 5% 6% 10% 17% 7% 16% 9% 16% Manufacturing 52% Public Sector Financial and insurance activities (Other) 9% Information and communication Banking Essential Service
Slide 9: Outlook – Dividend & Rent Collection & Experience
Outlook – Dividend & Rent Collection & Experience • Uninterrupted high dividend (2020: 6.4pps) Dividend • Committed to paying regular quarterly dividends to our shareholders, subject to market conditions, the Company’s performance, its financial position and business outlook • Rent Collection 98.2%*
Slide 10: Outlook - Occupation
Outlook - Occupation • The future of the office is bright – majority of employers and employees recognise the importance of the office • Some of the advantages iterated by occupiers include: o Controls o Culture/ Community o Creativity/value add The future of the office o Collaborative working o Sec
Slide 11: Portfolio
Portfolio regionalreit.com
Slide 12: £732.4m Property Portfolio
£732.4m Property Portfolio Sector Split (% by value) IPO – November 2015 31 December 2019 31 December 2020 5.0% 4.1% 1.3% 11.3% 5.0% 1.4% 11.1% 13.7% Office Industrial £386.1m £787.9m £732.4m Retail Other 25.3% 58.4% 83.5% 79.9% Regional Split (% by value) 3.9% 12.7% 2.5% 4.4% 13.3% 10.3% 10.9% 29.6
Slide 13: Highly Diversified Portfolio
Highly Diversified Portfolio Diversified Occupier Base Occupier by SIC code, as a % of rent roll • Diversified income - large tenant mix with 898 tenants and 1,245 units 14.9% 13.5% Professional, scientific and technical activities • Large spread of tenants businesses Administrative and support serv
Slide 14: ESG – Responsible Management
ESG – Responsible Management • Independent environmental report required for all potential acquisitions • CAPEX programmes consider the choice of materials and equipment to mitigate impact and enhanced EPC rating • On going risk assessment of current and future tenants by on site inspection; Environ
Slide 15: Appendix
Summary regionalreit.com Appendix
Slide 16: Delivering on Strategy
Delivering on Strategy Dec 2019 Dec 2020 Change Portfolio Management Investment Property £787.9m £732.4m (£55.5m) Targeted disposals matched with and Acquisitions before costs £87.1m £42.4m (£44.7m) opportunistic acquisitions; disposals rationalising operations Acquisition Net Initial Yield 8.6% 9.8
Slide 17: Appendix
Appendix Financial Information Property Portfolio Portfolio Activity Performance Glossary regionalreit.com Appendix
Slide 18: Financial Information
Financial Information regionalreit.com Appendix
Slide 19: Financial – Statement of Comprehensive Income
Financial – Statement of Comprehensive Income Year-end 2019 Year-end 2020 Change (£’000) (£’000) (£’000) Rental and property income 75,645 75,941 296 Property costs (20,681) (22,662) (1,981) Net rental and property income 54,964 53,279 (1,685) Administrative & other expenses (10,904) (11,329) (425)
Slide 20: Financial – Statement of Financial Position
Financial – Statement of Financial Position Year-end Year-end Year-end Year-end Dec 2019 Dec 2020 Change Dec 2019 Dec 2020 Change (£’000) (£’000) (£’000) (£’000) Assets Non-current Assets Liabilities Current liabilities Other current liabilities Investment properties 787,915 732,380 (55,535) (36,190
Slide 21: Cash Flow – Ample Liquidity
Cash Flow – Ample Liquidity Tables may not sum due to rounding. regionalreit.com 20
Slide 22: Generating Diversified Stable Income
Generating Diversified Stable Income Year ending 31 Dec 2019 Year ending 31 Dec 2020 Change* Net rental and property income £55.0m £53.3m (£1.7m) Operating profit before gains/losses on property assets/other investments £44.1m £42.0m (£2.1m) IFRS EPS (fully diluted) 6.6p (7.2p) (13.8p) EPRA EPS (ful
Slide 23: Financial Position Remains Strong, Flexible and Defensive
Financial Position Remains Strong, Flexible and Defensive Year ending 31 December 2019 Year ending 31 December 2020 Change Investment Property £787.9m £732.4m (£55.5m) IFRS NAV (fully diluted) 112.1p 97.5p (14.6p) EPRA NTA* (fully diluted) 112.6p 98.6p (14.0p) Borrowings (incl. retail eligible bond)
Slide 24: Positioned to Unlock Shareholder Value over the Long Term
Positioned to Unlock Shareholder Value over the Long Term • EPRA NTA: £425.6m (98.6p fully diluted) (2019: £485.7m, 112.6p fully diluted) • IFRS: £420.6m (97.5p fully diluted) (2019: £483.7m, 112.1p fully diluted) Tables may not sum due to rounding. regionalreit.com *EPRA Net Reinstatement Value(NRV
Slide 25: Debt Metrics - Cost of Debt at a Record Low
Debt Metrics - Cost of Debt at a Record Low Net Loan to Value (%) Weighted Average Cost of Debt (%) Weighted Average Debt (years) 45.0 4.0 9 8 7.8 3.8 3.8 3.8 41.2 7.3 40.8 7 6.8 39.9 39.7 40.0 6.4 6.4 38.9 3.6 38.3 6 3.5 3.5 5.4 3.4 5 3.4 35.0 3.3 4 3.2 3 30.0 3.0 2 HY FY HY FY HY FY HY FY HY FY HY
Slide 26: Debt Facilities – Defensive Strategy
Debt Facilities – Defensive Strategy Lender Original Facility Outstanding Debt* Maturity Date Gross Loan to Annual Interest £'000 £'000 Value** % Rate % Royal Bank of Scotland 55,000 52,349 Jun-24 45.7 2.15 Over 3mth £ LIBOR Scottish Widows Ltd. & Aviva Investors Real Estate 165,000 165,000 Dec-27 4
Slide 27: Property Portfolio
Property Portfolio regionalreit.com
Slide 28: Overview – Specialised Platform and Diverse Assets
Overview – Specialised Platform and Diverse Assets UK property locations as at 31 December 2020 Portfolio details as at 31 December 2020 Capital Valuation % by Sector Properties Values (£m) valuation (£psf) Office 115 611.2 83.5 129.10 Industrial 16 81.3 11.1 42.87 Retail 20 30.0 4.1 67.41 Other 2 9
Slide 29: Diversified Income Stream
Diversified Income Stream Portfolio details at 31 December 2020 WAULT Gross % by Occupancy Average Capital Sector Properties Valuation Sq. ft. to first rental ERV Yield (%) valuation (EPRA) rent rate break income (£m) (mil) (%) (yrs) (£m) (£psf) (£m) (£psf) Net initial Equivalent Reversionary Office
Slide 30: Top 15 Occupiers (Share of Rental Income)
Top 15 Occupiers (Share of Rental Income) Tenant Property Sector WAULT to Lettable Annualised % of Gross first break area gross rent rental (years) (Sq Ft) (£m) income Barclays Execution Services Ltd Tay House, Glasgow Administrative and support service activities 0.8 108,386 2.2 3.5 Waterfront Busi
Slide 31: Top 15 Investments (Market Value)
Top 15 Investments (Market Value) Property Sector Anchor tenants Market % of Lettable EPRA Annualised % of WAULT to value portfolio area Occupancy gross rent gross first break (£m) (Sq Ft) (%) (£m) rental (years) income Tay House, Glasgow Office Barclays Execution Services Ltd, University of Glasgow
Slide 32: Geographically Diversified Office Led Portfolio Focused on the UK Regions
Geographically Diversified Office Led Portfolio Focused on the UK Regions Gross property assets by value - %* WAULT - years Average Rent & Capital rate - £psf 100% 6 £135.34 £140 90% £126.35 £129.10 £14 £13.35 £13.26 5 £12.66 £120 80% 5.0 5.0 £12 70% 4 4.6 £100 £10 60% £80 50% 3 £8 83.5% 3.0 3.0 40%
Slide 33: Investment Property Activity – Proactive Strategy
Investment Property Activity – Proactive Strategy regionalreit.com Table may not sum due to rounding. 32
Slide 34: Portfolio Activity
Portfolio Activity • Acquisitions • Asset Management Initiatives (CAPEX) • Disposals regionalreit.com Appendix
Slide 35: Recycling in Action - Summary
Recycling in Action - Summary Acquisitions Acquisitions: £42.4m (before costs) Net Initial Yield: 9.8% Rent: £4.4m Disposals Disposals: £53.4m (net of costs) Net Initial Yield: 5.1% Rent: £3.1m Capex Capital Expenditure: £8.8m regionalreit.com 34
Slide 36: Acquisitions
Acquisitions regionalreit.com
Slide 37: Summary – Acquisitions during 2020
Summary – Acquisitions during 2020 Sector Split • Acquisitions totalled £42.4m (before costs) 28.2% • Reflecting an average net initial yield of 9.8% Office Industrial • Providing a combined annualised gross rental income of c.£4.4m (as at 31 Dec 20) 71.8% • 5 assets acquired in total Regional Split
Slide 38: Beeston Business Park, Nottingham
Beeston Business Park, Nottingham Acquisition of office/ industrial property for £16.4m. The business park benefits from excellent transport links being adjacent to the Beeston Train Station which has direct connectivity to London St. Pancras International, and is located four miles from Nottingham
Slide 39: Global Reach, Cardiff
Global Reach, Cardiff Acquisition of a modern Grade A flagship office building in Cardiff for £8.4m, with a net initial yield of 8.9%. The four-floor Grade A office asset (61,641 sq. ft.) is set in a 6.0 acre site with some 200 dedicated car parking spaces and is located in Global Reach, Cardiff. It
Slide 40: Acquisition of Two Offices for £10.2m
Acquisition of Two Offices for £10.2m Waterside Business Park, Swansea 2410 Aztec West, Bristol Acquisition of two office properties in Swansea and Bristol for a total consideration of £10.2m, with a combined net initial yield of 10.1%. Waterside Business Park, Swansea The two-floor office asset com
Slide 41: Howden Site, Renfew
Howden Site, Renfew Acquisition of a headquartered manufacturing facility for £7.1m, in Braehead, Scotland, with a net initial yield of 10.1%. The manufacturing facility with associated yard space and an office asset (204,414 sq. ft.) is set in a self- contained secure 10.7 acres and benefits from e
Slide 42: Asset Management Initiatives (CAPEX)
Asset Management Initiatives (CAPEX) regionalreit.com
Slide 43: Chancellor Court, Leeds
Chancellor Court, Leeds Before After Acquired in 2013 Constructed in the early 1990’s, the asset consists of steel frame, brick construction office buildings which provide 41,666 sq. ft. of space across 2 buildings. The building is well located in Leeds City Centre, a four minute walk from Leeds Cen
Slide 44: 30-34 Hounds Gate, Nottingham
30-34 Hounds Gate, Nottingham Before After Acquired in May 2016 30/34 Hounds Gate comprises an attractive converted former Victorian mill with the original frontage. The property has been extended at the rear under a part pitched and part flat roof with glazed curtain wall side elevations to provide
Slide 45: Commercial Road, Bromborough
Commercial Road, Bromborough Before During Acquired in March 2016 The property comprises a large distribution warehouse incorporating a 2 storey office building on a large secure site of 6.5 acres. Commercial Road lies in the heart of the Wirral International Business Park, in close proximity to the
Slide 46: Disposals
Disposals regionalreit.com
Slide 47: Summary – Disposals during 2020
Summary – Disposals during 2020 Sector Split 0.5% 3.6% • Disposals totalled £56.4m (before costs) reflecting an uplift against valuation (Dec 19) of 3.8% 19.2% Industrial Office • Disposals totalled £53.4m (net of costs) Retail • Reflecting an average net initial yield of 5.1% (5.6% Other excluding
Slide 48: Juniper Park, Basildon
Juniper Park, Basildon Acquired in March 2016 as part of the Rainbow portfolio. The 277,760 sq. ft. multi-let industrial, warehouse, and office park was purchased for £20.1m. The park is situated on the A1174 and is located 10 minutes from Kinston upon Hull and provides a mix of office/trade counter
Slide 49: Building 2 & 3 The Oaks, Coventry
Building 2 & 3 The Oaks, Coventry Acquired May 2015 A 39,490 sq. ft. located on Westwood Business Park which is regarded as Coventry’s premier out of town business park. The property is located 5 miles (8 km) south west of Coventry city centre. The property comprises two detached office buildings ar
Slide 50: Performance
Performance regionalreit.com 49
Slide 51: Total Return (since RGL IPO)
Dividends and Performance Total return (since RGL IPO) 40% 30% Picton Property Income Ltd Custodian REIT PLC 20% Regional REIT Ltd Total Return (since RGL IPO) 10% Derwent London PLCUK Commercial Property REIT Ltd St Modwen Properties PLC McKay Securities PLC 0% Workspace Group PLC AEW UK REIT PLC B
Slide 52: Glossary
Glossary regionalreit.com 51
Slide 53: Glossary – EPRA
Glossary – 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. EPRA Performance Measure Definition 31 Dec 2020 31 Dec 2019 EPRA Net Asset Value Me
Slide 54: Disclaimer
Disclaimer This document (“Document”) (references to which shall be deemed to include any information which has been made or may be supplied orally in connection with this Document or in connection with any further enquiries) has been prepared by and is the sole responsibility of Toscafund Asset Man