Regional Reit Ltd. · LSE:RGL
Regional Reit — FY2021 Earnings Presentation
61 slides from Regional Reit's earnings presentation, March 2022
Slide 1: Investor Presentation Annual Results 2021
Investor Presentation Annual Results 2021 Reliable High Yielding Portfolio - Positioned for Growth
Slide 2: Introduction
Stephen Inglis Chief Executive Officer Introduction • Overview and Portfolio a Derek McDonald Managing Director • Appendix Simon Marriott Investment Director Offices held at London and Scottish Property Investment Management, Asset Manager to Regional REIT
Slide 3: A year of growth – Delivering a strong yield of 7.4%
A year of growth – Delivering a strong yield of 7.4% Performance Total Shareholder Return FTSE EPRA NAREIT UK Index • Since IPO* +47.6% +21.9% • 2021 +22.4% 28.9% • Annualised +6.5% +3.3% Dividend • Dividend 6.5p (2020: 6.4p) Progressive dividend policy • Yield c. 7.4%** Continues to be fu
Slide 4: Significant portfolio growth – Focused on income
Significant portfolio growth – Focused on income Proactive property asset management • £236m acquisition – NIY 7.8%; reversionary yield Focus on regional properties outside M25 11.0% Offices 89.8% (by value) • EPRA Occupancy (by ERV) 81.8% 64.9% - Business Parks (Dec’20: 89.4%) 29.0% - Centr
Slide 5: £906.1m Property Portfolio
£906.1m Property Portfolio IPO – November 2015 31 December 2020 Current Position Sector Split (% by value) 5.0% 4.1% 1.3% 3.7% 1.4% Office 5.1% 11.3% 11.1% Industrial Retail Other £386.1m £732.4m £906.1m 25.3% 58.4% 83.5% 89.8% Regional Split (% by value) South East 21.3% 5.3% Scotland 8.2% 3.9% 12.
Slide 6: Increased de-risking through diversification – Occupier Base
Increased de-risking through diversification – Occupier Base • Diversified income - large tenant mix across £906.1m of assets • Spread of assets – 168 properties 17.4% 14.5% • 1,077 tenants across 1,511 units • Broad spread of tenants businesses • A broad geographic spread 3.0% 11.4% 3.2% Occupier b
Slide 7: Significant acquisition of Property Portfolio
Significant acquisition of Property Portfolio Consideration £236m acquisition from Squarestone Growth Price LLP satisfied by: • £83.1m by the issuance of 84,230,000 Regional REIT new ordinary shares at 98.6 pence per share* Eagle Court Birmingham Newburn & Gateway House, Newcastle • £76.7m of existi
Slide 8: Significant acquisition of Property Assets
Significant acquisition of Property Assets Current Regional REIT assets plus the 31 recently acquired assets Lightyear, Glasgow Newburn & Gateway House, Newcastle HudsonHouse, Hudson House,Derby Derby Aspect House, Nottingham Origin, Bracknell Cromwell Place. Basingstoke 7 7
Slide 9: Regional REIT – Specialised Office Platform
Regional REIT – Specialised Office Platform Specialised Asset Management Team 74 Staff (fully recruited)* Expert • Hugely experienced senior Proven operational platform Management management team, managing Unique vertically integrated Team assets over the past 30 years, manager including previou
Slide 10: Debt Metrics - Cost of Debt at a Record Low
Debt Metrics - Cost of Debt at a Record Low 50.0 Net Loan to Value (%) 4 Weighted Average Cost of Debt (%) 45.0 3.8 3.8 45.0 3.8 42.4 40.8 3.6 39.7 39.8 40.0 3.5 38.9 38.3 3.4 3.4 3.3 3.3 3.3 35.0 3.2 30.0 3 FY FY FY HY FY HY FY FY FY FY HY FY HY FY 2017 2018 2019 2020 2020 2021 2021 2017 2018 2019
Slide 11: ESG - Committed to Responsible Management
ESG - Committed to Responsible Management Environment • Targeting EPC B rating for all properties by 2030 • Undertaking a portfolio wide updated EPC audit, following which individual EPC property plans will be revised and implemented • 2021 EPC Ratings Rating Rated Area A-B 9.92% C-E 83.40% Other 6.
Slide 12: ESG – Responsible Management
ESG – Responsible Management Social Working with the community • Continue to work with not-for-profit organisations which are making an impact in the communities we operate • The IM and AM have implemented staff well-being initiatives • LSPIM certified as a ‘Great Place to Work’ (GPTW) • We remain a
Slide 13: Summary & Outlook
Regional (~ REIT THE OFFICE SPECIALISTS Summary & Outlook regionalreit.com
Slide 14: Good progress achieved in 2021
Good progress achieved in 2021 Pivot of strategy to all • Increased offices (by value) to 89.8% (2020: 83.5%) office portfolio of the portfolio • Plans in progress to reduce none-core holdings Yield growth • Increased quarterly dividend from 6.4p to 6.5p (fully covered) The Lighthouse, Manchester •
Slide 15: Outlook – Dividend & Rent Collection & Experience
Outlook – Dividend & Rent Collection & Experience • Continues to be one of the highest yielding REITS Dividend • Uninterrupted high dividend (2020: 6.4pps) (2021: 6.5p) 2022 consensus forecast: 6.7p • Committed to paying regular quarterly dividends to our shareholders • Rent Collection remains stron
Slide 16: Outlook - Occupation
Outlook - Occupation • Outlook remains positive • Robust and growing levels of rent • Opportunity to buy assets well • Granular due diligence identifying opportunities and ensuring underwritten by alternative use • Opportunities include, but are not limited to: • Renewals at ERV (inflation uplifts e
Slide 17: Appendix
Appendix • Financial Information • Property Portfolio • Portfolio Activity • Performance • Glossary
Slide 18: Appendix: Financial Information
Financial Information Appendix
Slide 19: Delivering on Strategy
Delivering on Strategy Dec 2020 Dec 2021 Change Investment Property £732.4m £906.1m +£173.7m Acquisitions before costs £42.4m £236.0m +£193.6m Acquisition Net Initial Yield 9.8% 7.8% (200bpps) Portfolio – Active management Disposals net of costs £53.4m £76.9m +£23.5m Disposal Net Initial Yield 5.6%
Slide 20: Financial – Statement of Comprehensive Income
Financial – Statement of Comprehensive Income Year-end 2020 Year-end 2021 Change (£’000) (£’000) (£’000) Rental and property income 75,941 79,899 3,958 Property costs (22,662) (24,075) (1,413) Net rental and property income 53,279 55,824 2,545 Administrative & other expenses (11,329) (10,583) 746 Op
Slide 21: Financial – Statement of Financial Position
Financial – Statement of Financial Position Year-end Year-end Year-end Year-end Dec 2020 Dec 2021 Change Dec 2020 Dec 2021 Change (£’000) (£’000) (£’000) (£’000 Assets Non-current Assets Liabilities Current liabilities Current liabilities Investment properties 732,380 906,149 173,769 (49,083) (58,42
Slide 22: Cash Flow – Ample Liquidity
Cash Flow – Ample Liquidity 21 21
Slide 23: Income and Cost Focused
Income and Cost Focused Year ending 31 Dec 2020 Year ending 31 Dec 2021 Change* Net rental and property income £53.3m £55.8m +£2.5m Operating profit before gains/losses on property assets/other investments £42.0m £45.2m +£3.2m IFRS EPS (weighted average number of shares) (7.2p) 6.3p +13.5p EPRA EPS
Slide 24: Financial Position Remains Strong, Flexible and Defensive
Financial Position Remains Strong, Flexible and Defensive Year ending 31 December 2020 Year ending 31 December 2021 Change Investment Property £732.4m £906.1m +£173.7m IFRS NAV (fully diluted) 97.5p 97.4p (0.1p) EPRA NTA* (fully diluted) 98.6p 97.2p (1.4p) Borrowings (incl. retail eligible bond) £36
Slide 25: Positioned to Unlock Shareholder Value over the Long Term
Positioned to Unlock Shareholder Value over the Long Term • EPRA NTA*: £501.4m (97.2p fully diluted) (31 Dec ‘20: £425.6m, 98.6p fully diluted) • IFRS: £502.4m (97.4p fully diluted) (31 Dec ‘20: £420.6m, 97.5p fully diluted) * EPRA Net Reinstatement Value(NRV): 31 December 2021 97.2p (31 December 20
Slide 26: Debt Facilities – Defensive Strategy
Debt Facilities – Defensive Strategy Original Outstanding Gross Loan Annual Maturity Lender Facility Debt* to Value** Interest Rate Date £'000 £'000 % % Royal Bank of Scotland, Bank of Scotland & 128,000 127,220 Aug-26 43.4 2.40 Over 3mth £ Sonia Barclays Scottish Widows Ltd. & Aviva Investors Real
Slide 27: Property Portfolio
Regional (< REIT THE OFFICE SPECIALISTS Property Portfolio
Slide 28: Overview – Specialised Platform and Geographically Diverse Portfolio
Overview – Specialised Platform and Geographically Diverse Portfolio UK property locations Portfolio details as at 31 December 2021 as at 31 December 2021 Valuation Capital Values Sector Properties % by valuation (£m) (£psf) Office 138 813.4 89.8 134.77 Industrial 7 46.4 5.1 66.18 Retail 20 33.9 3.7
Slide 29: Blue Chip Tenants
Blue Chip Tenants ©. BANK OF ; ‘AN SCOTLAND a for Transport Department for q Communities and yy Z—~ I Local Government AA University J, of Glasgow BI AVIVA Z John Cléarblue 'M eo plc R REIT
Slide 30: Diversified Income Stream
Diversified Income Stream Portfolio details at 31 December 2021 Gross % by Occupancy WAULT to Average Sector Properties Valuation Sq. ft. rental ERV Capital rate Yield (%) valuation (EPRA) first break rent income (£m) (mil) (%) (yrs) (£m) (£psf) (£m) (£psf) Net initial Equivalent Reversionary Office
Slide 31: 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, Coventry Road, Birmingham Information and communication 1.8 112,147 1.8 2.5 Genesis Business Park, Wok
Slide 32: Top 15 Investments (Market Value)
Top 15 Investments (Market Value) Market EPRA Annualised % of Lettable area WAULT to value % of Occupancy gross rent gross Property Sector Anchor tenants first break portfolio rental (£m) (Sq Ft) (%) (£m) (years) income University of Glasgow, Glasgow Tay House Centre Ltd, 300 Bath Street, Glasgow Of
Slide 33: FY 2021 Portfolio Highlights
FY 2021 Portfolio Highlights Major lettings and renewals successfully secured across the regions The Coach Works, Leeds Howdens, Old Govan Road, Glasgow St James's Place Wealth Management Group Term extended to existing tenant (James Howden Plc has renewed three leases totalling 18,253 & Company Ltd
Slide 34: 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% 5 £16 £160 £13.78 £14.07 90% £14 £13.26 £134.77 £140 4.6 £132.23 4.5 £129.10 80% 4 4.5 £12 £120 70% £10 £100 60% 3 50% £8 £80 89.8% 2.6
Slide 35: Investment Property Activity – Proactive Strategy
Investment Property Activity – Proactive Strategy Table may not sum due to rounding. 34 34
Slide 36: Portfolio Activity
Portfolio Activity • Disposals • Acquisitions • Asset management Initiatives (CAPEX)
Slide 37: Disposals
Regional (< REIT THE OFFICE SPECIALISTS Disposals regionalreit.com
Slide 38: Summary – Disposals during 2021
Summary – Disposals during 2021 1.1% 20.5% • Disposals totalled £79.6m (before costs) reflecting an uplift Sector Split against valuation (Dec 20) of 8.3% Industrial Office • Reflecting an average net initial yield of 6.5% (6.6% Retail excluding vacant assets). • 16 assets and 3 part sales in total
Slide 39: Disposal of £45m Industrial Portfolio
Disposal of £45m Industrial Portfolio Disposal of 7 industrial assets in August 2021 for £45.0m. The sale price reflects a net initial yield of 6.75% and is 7.5% above the valuation as at 31 December 2020. After capital expenditure, the sale represents an uplift of 18.0% from the acquisition price.
Slide 40: Arena Point, Leeds
Arena Point, Leeds Acquired in March 2016 as part of the Wing portfolio. Disposal of asset for £10.65m, representing a substantial uplift of 15.8% against the 31 December 2020 valuation. The purchaser intends to demolish the 19-storey office block (76,176 sq. ft.) to make way for a 43-storey tower,
Slide 41: Marston Business Park, Tockwith, Wetherby
Marston Business Park, Tockwith, Wetherby Acquired in 2014 as part of the Empire portfolio. The 171,155 sq. ft. multi-let industrial, warehouse, and office park was purchased for £6.5m. Over the period of ownership of this property, several asset management initiatives have been instigated, includin
Slide 42: Acquisitions
Acquisitions regionalreit.com
Slide 43: Acquisition of £236m of Property Assets
Acquisition of £236m of Property Assets Portfolio Summary • Diversified income – 208 tenants across 31 properties • The portfolio is well spread across major UK cities • Geographic spread by value: England (78.2%), Scotland (17.1%), Wales (4.7%) • EPRA occupancy (by ERV) of 78.4% o EPRA occupancy (b
Slide 44: Acquisition of £236m of Property Assets
Acquisition of £236m of Property Assets 12% Diverse Tenant Mix 10% 3.2% • 192 tenants across the portfolio’s 27 office assets 8% • 3 tenants across the portfolio’s 2 industrial assets • 12 tenants in one residential asset Reversioary Yield 6% Net Initial Yield • Single tenant in retail unit 4% 7.8%
Slide 45: Lightyear – Glasgow Airport, Glasgow
Lightyear – Glasgow Airport, Glasgow
Slide 46: Eagle Court, Birmingham
Eagle Court, Birmingham
Slide 47: Newburn & Gateway House, Newcastle
Newburn & Gateway House, Newcastle
Slide 48: Asset Management Initiatives (CAPEX)
Asset Management Initiatives (CAPEX)
Slide 49: The Coach Works, Leeds
The Coach Works, Leeds Before After Acquired in 2013. Constructed in the early 1990’s, the asset consists of steel frame, brick construction office buildings providing 41,666 sq. ft. of space across 2 buildings. The building is well located in the city centre being a four minute walk from Leeds Cent
Slide 50: The Coach Works, Leeds
The Coach Works, Leeds Comprehensive refurbishment of multiple floors, across two buildings, including common areas, toilets and the creation of new showering facilities. The scope included the following key environment and energy efficiency improvements: • The refurbishment of opening windows to en
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Slide 53: iin ins SS ——
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Slide 54: 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 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 la
Slide 55: Performance
Regional (< REIT THE OFFICE SPECIALISTS Performance regionalreit.com
Slide 56: Total Return (since RGL IPO)
Dividends and Performance Total return (since RGL IPO) 200.0% Tritax Big Box Reit PLC 150.0% Londonmetric Property PLC 100.0% AEW UK REIT PLC Total Return (since RGL IPO) Picton Property Income Ltd 50.0% McKay Securities PLC Custodian REIT PLC Regional REIT Ltd BMO Real… Schroder Real Estate Investm
Slide 57: Consensus Dividend Yield
Consensus Dividend Yield Consensus Consensus dividend yield dividend yield (share price) (NAV) Regional REIT Ltd 7.41% 6.67% Town Centre Securities PLC 3.55% 1.81% Newriver Reit PLC 7.54% 4.92% Workspace Group PLC 3.16% 2.19% Derwent London PLC 2.57% 1.96% Shaftesbury PLC 1.55% 1.43% McKay Securitie
Slide 58: Cost Focused
Cost Focused EPRA cost ratio incl. direct costs EPRA cost ratio excl. direct costs Town Centre Securities PLC 64% Newriver REIT PLC 49% Newriver REIT PLC 55% McKay Securities PLC 27% McKay Securities PLC 35% Town Centre Securities PLC 23% Real Estate Investors PLC 34% Real Estate Investors PLC 21% R
Slide 59: Glossary
Regional (< REIT THE OFFICE SPECIALISTS Glossary regionalreit.com
Slide 60: 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 2021 £425,611,000 £501,400,0
Slide 61: Disclaimer
Disclaimer This document (“Document”) (references to which shall be deemed to include any information which has been This Document may include statements which involve known and unknown risks, uncertainties and other made or may be supplied orally in connection with this Document or in connection wi