Regional Reit Ltd. · LSE:RGL
Regional Reit — FY2023 Earnings Presentation
48 slides from Regional Reit's earnings presentation, March 2024
Slide 1: Investor Presentation Year End to 31 December 2023
Investor Presentation Year End to 31 December 2023 Resilient performance in challenging macroeconomic conditions
Slide 2: Introduction
Stephen Inglis Chief Executive Officer Introduction Derek McDonald Chief Operating Officer Simon Marriott Investment Director
Slide 3: FY 23 Summary – Resilient Operational Performance
FY 23 Summary – Resilient Operational Performance in challenging macroeconomic environment 300 Bath Street, Glasgow Key Portfolio • Tenants back in the office 4.1 days a week is the average Update 102% active occupancy Vs pre-pandemic levels • Rent roll £67.8m (2022: £71.8m) 71.1% retention ra
Slide 4: FY 23 Summary – Resilient Operational Performance
FY 23 Summary – Resilient Operational Performance AD in challenging macroeconomic environment 300 Bath Street, Glasgow Portfolio • £700.7m (2022: £789.5m) Highly geographically diversified • Like-for-like capital value decline of Asset management initiatives helping to 9.3% after adjusting for dis
Slide 5: Summary – Disposal Programme Update
Summary – Disposal Programme Update • Disposals totalled £25.0m (net of costs) 2023 Disposals by Sector • Reflecting an average net initial yield of 4.5% (7.9% excluding 8.4% vacant assets) • 10 assets and 4 part sales in total during 2023 Office • Disposals of non–core and assets at the end of thei
Slide 6: Diversified portfolio – delivering income
Diversified portfolio – delivering income New Lettings: Office Properties Proactive property asset management 6.0 5.7 5.0 4.0 3.6 3.0 £m • 88 new lettings; £3.8m pa gross rent roll - up Focus on regional properties outside M25 3.0 1.7 7.1% against December 2022 ERVs 2.0 (2022: 114; £5.9m pa) 1.0 0
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 £ 71,000 0.97 Scotland, Bank of 128,000 122,221 Aug-26 54.5 2.40 SONIA 51,221 0.97
Slide 8: Net LTV – FY 23
Net LTV – FY 23 1000 60 906.1 % 900 £m 789.5 55.1 800 787.9 51.9 50 718.4 732.4 752.2 737.3 49.5 700 45.0 700.7 600 40.6 42.4 40 40.8 38.3 38.9 500 502.4 400 30 384 391 390 386 300 332 307 299 275 200 20 204 100 0 10 FY FY FY FY FY FY FY HY FY 2016 2017 2018 2019 2020 2021 2022 2023 2023 Investment
Slide 9: What we are seeing – Return to the office
Deutsche Bank draws remote-work line What we are seeing – Return to the office in the sand, banning WFH on Friday and the following Monday Bloomberg (16 Feb 2024) • Vast majority of tenants back in the office • 71.4% active office occupation across the portfolio (65.4% H1 2023) United Parcel Service
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 • Hybrid working 300 Bath Street, Glasgow • Tailwind of the
Slide 11: 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 31 December Rating Movement 2022 2023 B plus and Exempt 23.6% 42.1% +18.50pps C 33.3% 31.6% (1.70)pps D 27.2
Slide 12: 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 13: De-risking through diversification – Occupier Base
De-risking through diversification – Occupier Base • Diversified income - large tenant mix across £700.7m of assets (2022: Information and communication £789.5m) Professional, scientific and technical • Spread of assets – 144 activities properties (2022: 154) Administrative and support service • 978
Slide 14: Blue Chip Tenants
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Slide 15: Summary and Outlook
Regional (s REIT Summary and Outlook regionalreit.com
Slide 16: Outlook
Outlook Focus • Significant preparatory work has been undertaken to date in respect of both the debt and equity refinancing options of the £50m August 2024 retail bond • Continue to execute the disposals programme to help reduce LTV to long term target 40% • Maintaining strong rent collections Orbis
Slide 17: Appendix
Appendix • Property Portfolio • Portfolio Activity Asset Management Initiatives (CAPEX) Disposals • Financial Information • Performance
Slide 18: Property Portfolio
Regional (s REIT 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 31 December 2023 as at 31 December 2023 Valuation Capital Values Sector Properties % by valuation (£m) (£psf) Office 122 645.0 92.1 117.14 Retail 15 21.9 3.1 81.93 Industrial 4 22.1 3.2
Slide 20: £700.7m Property Portfolio (FY 2022 £789.5m)
£700.7m Property Portfolio (FY 2022 £789.5m) IPO – November 2015 31 December 2022 31 December 2023 Sector Split (% by value) 1.4% 3.1% 3.2% 5.0% 1.7% 3.6% 3.1% Office Retail 25.3% Industrial Other £386.1m £789.5m £700.7m 58.4% 11.3% 91.8% 92.1% Regional Split (% by value) 5.0% 5.4% Midlands 20.4% 3.
Slide 21: Diversified Income Stream
Diversified Income Stream Portfolio details at 31 December 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
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 EDF Energy Ltd Eagle Court, Birmingham Electricity, gas, steam and air conditioning 4.3 109,114 1.7 2.5 supply Southgate Park, Peter
Slide 24: Investment Property Activity
Investment Property Activity Chart 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 90% £14.50 £14.72 £14.07 £14 £134.77 £140 80% £125.88 4.5 4.5 4.6 £117.14 4 £12 £120 70% 60% £10 £100 50% 3 £8 £80 89.8% 91.8% 92.1% 4
Slide 26: FY 2023 Portfolio Highlights
FY 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) 2022 2023 15.6% Education 17.0% Human health and social work activities 15.4% 15.0% Professional, scientific and technical activities 7.4% 12.8% Not specified 5.0% 11.9% Manufacturing 4.8% 8.7% Information and communication 12.0% 7.8% 4.6% Wholesale an
Slide 28: Rent Collections – remain strong
Rent Collections – remain strong Rent collected Vs invoiced (%) 2022 2023 2022 2023 (%) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Total Total Rent Paid 99.2 99.0 98.3 98.3 98.7 99.8 98.5 98.4 99.1 99.0 Quarterly rental invoices include contractual rent for the proceeding quarter as at 15.03.2024 28
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 Completion of the comprehensive reconfiguration of the entrance to the building from Bath Street creating a new hosted reception, lounge and event space, wellness facilities including cycle storage, fully equipped gym, and showers, updated branding and marketing of the avail
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: Norfolk House, Birmingham
Norfolk House, Birmingham • Acquired in February 2019 • Norfolk House occupies a 0.52 acre island site in the centre of Birmingham close to Birmingham New Street Station and adjacent to the Bullring Shopping Centre. The building is split over six floors with 12 retail units at the ground floor level
Slide 34: Disposals
Regional (s REIT Disposals
Slide 35: Venlaw and Elmbank Gardens, Glasgow
Venlaw and Elmbank Gardens, Glasgow • Acquired in December 2013 for £5.0m • Sold for £6.25m. This represents a substantial uplift of 26.3% against the most recent valuation at 30 June 2023. • The 51,775 sq. ft. of office and ancillary leisure space comprises 23 individual units let on 13 separate le
Slide 36: Wakefield 41 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 37: Financial Information
Regional (s REIT Financial Information regionalreit.com
Slide 38: Delivering on Strategy
Delivering on Strategy Dec 2022 Dec 2023 Change Portfolio – Active management Investment Property £789.5m £700.7m* (£88.8m) Acquisitions before costs £74.7m - (£74.7m) Acquisition Net Initial Yield 8.4% - (8.4pps) Disposals net of costs £84.1m £25.0m (£59.1m) Disposal Net Initial Yield 4.9% 4.5% (0.
Slide 39: Financial – Statement of Comprehensive Income
Financial – Statement of Comprehensive Income Year ended 31 Dec Year ended 31 Change 2022 (£’000) Dec 2023 (£’000) (£’000) Rental and property income 93,318 91,880 (1,438) Property costs (30,672) (38,161) (7,489) Net rental and property income 62,646 53,719 (8,927) Administrative & other expenses (1
Slide 40: Financial – Statement of Financial Position
Financial – Statement of Financial Position Year-end Year-end Year-end Year-end Dec 2022 Dec 2023 Change Dec 2022 Dec 2023 Change (£’000) (£’000) (£’000) (£’000) Liabilities Assets Non-current Assets Current liabilities (56,591) (99,251) (42,660) Investment properties 789,480 687,695* (101,785) Righ
Slide 41: Cash Flow
Cash Flow Table may not sum due to rounding. 41
Slide 42: Income and Cost Focused
Income and Cost Focused Year ending 31 Dec 2022 Year ending 31 Dec 2023 Change* Net rental and property income £62.6m £53.7m (£8.9m) Operating profit before gains/losses on property assets/other £51.2m £43.1m (£8.1m) investments IFRS EPS (12.6p) (13.1p) (0.5p) EPRA EPS 6.6p 5.2p (1.4p) EPRA cost rat
Slide 43: Financial Position
Financial Position Year ending 31 Dec 2022 Year ending 31 Dec 2023 Change Investment Property £789.5m £700.7m (£88.8m) IFRS NAV (fully diluted) 78.1p 59.3p (18.8p) EPRA NTA* (fully diluted) 73.5p 56.4p (17.1p) Borrowings (incl. retail eligible bond) £440.8m £420.8m (£20.0m) Weighted average cost of
Slide 44: FY 23 - Earnings
FY 23 - Earnings • Earnings variance between 31 December 2022 to 31 December 2023 • Excluding the Recoverable service charge income/expenditure and other similar items Chart may not sum due to rounding. 44
Slide 45: Positioned to Unlock Shareholder Value over the Long Term
Positioned to Unlock Shareholder Value over the Long Term • EPRA NTA*: £290.8m (56.4p fully diluted) (31 Dec ‘22: £379.2m, 73.5p fully diluted) • IFRS: £306.1m (59.3p fully diluted) (31 Dec ‘22: £402.9m, 78.1p fully diluted) Table may not sum due to rounding. *EPRA Net Reinstatement Value(NRV): 31 D
Slide 46: Performance
Regional (s REIT Performance regionalreit.com
Slide 47: Cost Focused
Cost Focused EPRA cost ratio excl. direct costs EPRA cost ratio incl. direct costs Newriver REIT PLC 36% Town Centre Securities PLC 71% Warehouse REIT 22% Real Estate Investors PLC 44% AEW UK REIT PLC 14% Regional REIT Ltd 39% Picton Property Income Ltd 15% Newriver REIT PLC 39% Custodian REIT PLC 8
Slide 48: 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