Regional Reit Ltd. · LSE:RGL
Regional Reit — H1 2020 Earnings Presentation
46 slides from Regional Reit's earnings presentation, September 2020
Slide 1: Investor Presentation Half year to 30 June 2020
Investor Presentation Half year to 30 June 2020 Resilient Diversified Portfolio regionalreit.com Focused on Shareholder Income regionalreit.com
Slide 2: Introduction
Introduction Overview Stephen Inglis Chief Executive Officer H1 Update 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: Overview – Income Focused H1
Overview – Income Focused H1 Key Initiatives Maintaining Income Strong H1 rent collection* 97.6%** Total EPRA Accounting Return FTSE EPRA NAREIT UK Index • Since IPO*** +37.3% (14.6%) • Annualised +7.0% (3.3%) Performance • Dividend 3.4p Targeting a 6.4p dividend; • Yield c. 9%**** Uninterru
Slide 4: H1 2020 Portfolio Highlights – Income Focused
H1 2020 Portfolio Highlights – Income Focused Proactive property asset management • Q1 – 98.8%* (2019: 99.1%) Team effort (61 headcount, Collections • Q2 – 96.5%** (2019: 99.9% none furloughed by Managers) • H1 – 97.6%*** (2019: 99.4%) Unique integrated platform • EPRA Occupancy (by ERV) 89.0%
Slide 5: 2020 Portfolio Highlights
2020 Portfolio Highlights Major lettings and renewals successfully secured across the regions Gyleview House, Edinburgh Existing tenant Citibase, has renewed the current lease for occupancy of the entire Braidhurst House, Bellshill serviced office property (24,503 sq. ft.) for New five year lease ag
Slide 6: H1 Update
H1 Update regionalreit.com
Slide 7: Rent Collection by SIC
Rent Collection by SIC £3.0m £4.4m £5.2m £4.4m £3.2m £1.1m £2.1m £3.1m £1.6m £2.7m £1.8m 98% 98% 99% 99% 100% 100% 100% 100% 93% 96% 96% Wholesale and Professional, Other Administrative Information and Transportation Financial and Manufacturing Electricity, gas, Public Sector Banking retail trade sc
Slide 8: Cash Flow – Ample Liquidity
Cash Flow – Ample Liquidity regionalreit.com 7
Slide 9: COVID-19 & Our Occupiers
COVID-19 & Our Occupiers Essential Services Breakdown by SIC Tenants as a % of gross rent 1% 1% 2% 7% 3% 17% 2% 1% 3% 7% 4% 5% 8% 16% 6% 11% 7% 16% 14% Manufacturing 9% Information and communication 51% Public Sector 9% Financial and insurance activities (Other) Banking Essential Services Large UK L
Slide 10: Short Term - Outlook and Dividend
Short Term - Outlook and Dividend • Steady flow of lease renewals - no rush to exit • EPRA occupancy remains stable • Previous challenges witnessed: o Off-shoring o Flexible working o Hot desk • Employer focus on employee wellbeing is expected to be amplified The Future of the Office • IT companies
Slide 11: Portfolio
Portfolio regionalreit.com
Slide 12: £742.3m Property Portfolio
£742.3m Property Portfolio Sector Split (% by value) IPO – November 2015 31 December 2019 30 June 2020 5.0% 11.3% 5.0% 4.3% 1.5% 1.4% 13.7% 14.3% Office Industrial £386.1m £787.9m £742.3m Retail Other 25.3% 79.9% 58.4% 79.9% Regional Split (% by value) 3.9% 2.5% 10.1% 8.2% 12.7% 2.5% 10.3% 29.6% 30.
Slide 13: Highly Diversified Portfolio
Highly Diversified Portfolio Diversified Tenant Base Tenants by SIC code, as a % of rent roll • Diversified income - large tenant mix with 876 tenants and 1,249 units Professional, scientific and technical activities 13.0% 20.3% • Large spread of tenants businesses Administrative and support service
Slide 14: Forthcoming Events
Forthcoming Events Capital Markets Virtual Event – The strength of the office post COVID-19 Our unique insight into office and industrial around the regions Tay House, Glasgow What occupiers want post COVID-19 Strength of the regions and occupiers Date: Latter end of October 800 Aztec West, Br
Slide 15: Appendix
Appendix Financial Information Property Portfolio Portfolio Activity ESG Performance Glossary regionalreit.com Appendix
Slide 16: Financial Information
Financial Information regionalreit.com Appendix
Slide 17: Focus on Delivering on our Strategy
Focus on Delivering on our Strategy Dec 2019 Jun 2020 Change Portfolio Management Targeted and opportunistic acquisitions; Investment Property £787.9m £742.3m (£45.6m) disposals rationalising operations Acquisitions before costs £87.1m - (£87.1m) Acquisition Net Initial Yield 8.6% - - Disposals net
Slide 18: Financial – Statement of Comprehensive Income
Financial – Statement of Comprehensive Income Half year-end 2019 Half year-end 2020 Change (£’000) (£’000) (£’000) Rental and property income 35,411 36,964 1,553 Property costs (9,399) (12,886) (3,487) Net rental and property income 26,012 24,078 (1,934) Administrative & other expenses (5,430) (5,94
Slide 19: Financial – Statement of Financial Position
Financial – Statement of Financial Position Year-end Half year- end Year-end Half year- end Dec 2019 Jun 2020 Change Dec 2019 Jun 2020 Change (£’000) (£’000) (£’000) (£’000) Assets Non-current Assets Liabilities Current liabilities Other current liabilities Investment properties 787,915 742,300 (45,
Slide 20: Generating Diversified Stable Income
Generating Diversified Stable Income Half year ending 30 Jun 2019 Half year ending 30 Jun 2020 Change* Net rental and property income (excl. recoverable service charge income £29.9m £29.4m (£0.5m) and other similar items) Operating profit before gains/losses on property assets/other investments £20.
Slide 21: Financial Position Remains Strong, Flexible and Defensive
Financial Position Remains Strong, Flexible and Defensive Year ending 31 December 2019 Half year ending 30 June 2020 Change Investment Property £787.9m £742.3m (£45.6m) IFRS NAV (fully diluted) 112.1p 101.4p (10.7p) EPRA NAV* (fully diluted) 112.7p 102.6p (10.1p) Borrowings (incl. retail eligible bo
Slide 22: Delivering Returns to Shareholders
Delivering Returns to Shareholders • EPRA : £442.6m (102.6p fully diluted) (31 Dec’19: £486.3m, 112.7p fully diluted) • IFRS: £437.6m (101.4p fully diluted) (31 Dec’19: £483.7m, 112.1p fully diluted) regionalreit.com *EPRA Net Reinstatement Value(NRV): 30 June 2020 102.6p (31 Dec 2019: 112.7p); Net
Slide 23: 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 53,328 Jun-24 45.2 2.15 Over 3mth £ LIBOR Scottish Widows Ltd. & Aviva Investors Real Estate 165,000 165,000 Dec-27 4
Slide 24: 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) 50.0 4 9.0 8.0 7.8 3.8 3.8 3.8 3.8 7.3 45.0 45.0 7.0 6.8 6.4 41.2 3.6 6.0 6.0 39.9 39.7 3.5 3.5 5.4 40.0 38.9 38.3 3.4 5.0 3.4 4.0 35.0 3.2 3.0 30.0 3 2.0 FY HY FY HY FY
Slide 25: Property Portfolio
Property Portfolio regionalreit.com
Slide 26: Overview – Specialised Platform and Diverse Assets
Overview – Specialised Platform and Diverse Assets UK property locations as at 30 June 2020 Portfolio details as at 30 June 2020 Capital Valuation % by Sector Properties Values (£m) valuation (£psf) Office 112 593.4 79.9% 131.35 Industrial 17 105.8 14.3% 49.18 Retail 20 32.2 4.3% 72.22 Other 2 10.9
Slide 27: Diversified Income Stream
Diversified Income Stream Portfolio details at 30 June 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 112 593
Slide 28: Top 15 Tenants (Share of Rental Income)
Top 15 Tenants (Share of Rental Income) Tenant Property Sector WAULT Lettable area Annualised % of Gross to first (Sq Ft) gross rent rental break (£m) income (years) Barclays Execution Services Ltd Tay House, Glasgow Administrative and support service activities 1.4 108,386 2.2 3.6% Waterfront Busin
Slide 29: 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 Schenker Ltd, A Share & Sons Ltd, Vanguard Juniper Park, Basildon Industrial 31.
Slide 30: Diversified Office – Led Portfolio Focused on the UK Regions
Diversified Office – Led Portfolio Focused on the UK Regions Gross property assets by value - %* WAULT - years Average Rent & Capital rate - £psf 100% 6 £120 £12 £105.42 90% £103.08 13.7% 14.3% £100.82 14.3% £100 5 5.5 5.5 £10.17 £10.18 80% 5.3 £10 £9.64 70% 4 £80 £8 60% 50% 3 3.5 3.5 £60 3.4 £6 40%
Slide 31: Investment Property Activity – Proactive Strategy
Investment Property Activity – Proactive Strategy regionalreit.com Table may not sum due to rounding. 30
Slide 32: Portfolio Activity
Portfolio Activity • Asset Management Initiatives (CAPEX) • Disposals regionalreit.com Appendix
Slide 33: Asset Management Initiatives (CAPEX)
Asset Management Initiatives (CAPEX) regionalreit.com
Slide 34: Kingscourt Leisure Complex, Dundee
Kingscourt Leisure Complex, Dundee Acquired in March 2017 Kingscourt Leisure Complex, Dundee is an out of town retail park comprising of a cinema and four retail/leisure units. The site is served by a large surfaced car park. Odeon Cinema regeared from the current lease expiry in October 2025 to Oct
Slide 35: Chancellor Court, Leeds
Chancellor Court, Leeds 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 Central Station
Slide 36: Ashby Park, Ashby De La Zouch
Ashby Park, Ashby De La Zouch Acquired in March 2017 The property comprises a modern good quality office pavilions over 3 buildings providing a combined floor area of 91,034 sq. ft. The building is well located just off Junction 23 of the M1 Motorway and is part of a larger office business park whic
Slide 37: Disposals
Disposals regionalreit.com
Slide 38: Summary – Disposals During H1 2020
Summary – Disposals During H1 2020 Sector Split 12.6% 1.8% • Disposals totalled £15.1m (net of costs) Office • Reflecting an average net initial yield of 6.0% (7.6% excluding Industrial vacant assets). Retail • 9 assets and 1 part sale in total during the first six months of 2020 Other 24.6% 61.1% R
Slide 39: 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 40: ESG
ESG regionalreit.com 39
Slide 41: 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 Environment • On going risk assessment of current and future tenants by on site inspect
Slide 42: Performance
Performance regionalreit.com 41
Slide 43: Total Shareholder Return Since RGL IPO
Dividends and Performance 150% SRET 100% LMPL Total Shareholder Return Since RGL IPO BBOXT 50% DIGS CREI 0% RGLR AEWU DLN MCKS SMP GPOR WKP PCA SHB RLE -50% TOWNT NRRT -100% INTUP -150% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% Consensus Mean Dividend Yield Estimate regionalreit.com 42
Slide 44: Glossary
Glossary regionalreit.com 43
Slide 45: 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 30 Jun 2020 31 Dec 2019 £442,641,000 £486,280,0
Slide 46: 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