Regional Reit Ltd. · LSE:RGL
Regional Reit — H1 2021 Earnings Presentation
56 slides from Regional Reit's earnings presentation, September 2021
Slide 1: Investor Presentation Half year to 30 June 2021
Investor Presentation Half year to 30 June 2021 The Regional Office Specialist regionalreit.com Strong Progress Transforming the Portfolio 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: H1 2021 Income Focused
H1 2021 Income Focused Total EPRA Accounting Return FTSE EPRA NAREIT UK Index Performance • Since IPO* +39.9% +4.7% • Annualised +6.1% +0.8% • Dividend 3.2p Targeting a FY 2021 6.5p dividend to Dividend • Yield c. 7.5%** continue our uninterrupted high yielding distribution for our shareholder
Slide 4: H1 2021 Portfolio Highlights – Income Focused
H1 2021 Portfolio Highlights – Income Focused Proactive property asset management Focus on regional properties outside M25 • EPRA Occupancy (by ERV) 85.7% (Dec’20: 89.4%) Offices 83.2% (by value) • Lettings 25; £1.3m gross rent roll 58.9% - Business Parks Portfolio • Expiries H1 2021: 70.0% of
Slide 5: Acquisition of £236m of Property Assets
Acquisition of £236m of Property Assets £236.0m to be satisfied by three components • £83.1m by the issuance of 84,230,000 Consideration Regional REIT new ordinary shares at 98.6 Price pence per share* • £76.7m of existing cash resources • £76.2m of additional borrowings • Net Initial: 7.8% Yield •
Slide 6: £904.9m Property Portfolio
£904.9m Property Portfolio Sector Split (% by value) 31 December 2020 30 June 2021 Current Position 4.1% 1.3% 1.4% 3.5% 1.4% 4.1% 11.1% 4.5% 11.3% Office Industrial £732.4m £729.1m £904.9m Retail Other 83.5% 83.2% 90.6% Regional Split (% by value) 4.8% 4.4% 4.4% 9.2% 11.0% 11.0% 25.2% 21.6% South Ea
Slide 7: Highly Diversified Portfolio
Highly Diversified Portfolio Diversified Occupier Base Occupier by SIC code, as a % of rent roll • Diversified income - large tenant Professional, scientific and technical activities mix across £904.9m of assets (14.1%) Administrative and support • Spread of assets – 171 service activities (14.0%) (
Slide 8: Acquisition of £236m of Property Assets
Acquisition of £236m of Property Assets The map below highlights current Regional REIT assets plus the 31 recently acquired assets regionalreit.com 7
Slide 9: Portfolio Overview After Disposals and Acquisitions
Portfolio Overview After Disposals and Acquisitions 30-Jun-21 Acquisitions Disposals* Current Position % by Valuation % by Valuation % by Valuation % by Sector Properties Valuation (£m) Properties Properties Properties valuation (£m) valuation (£m) valuation (£m) valuation Office 114 607.0 83.2% 27
Slide 10: Regional REIT – Pivot to Office
Regional REIT – Pivot to Office De-risked through diversification Large number of income streams • Occupier Across the regions • Geography Across 171 properties post acquisition Strategy – • Business Sector Across 904 tenants post acquisition Office focus • WAULT Lochside Avenue, Edinburgh Ass
Slide 11: ESG – Responsible Management
ESG – Responsible Management • Independent environmental report required for all potential acquisitions • Target EPC B rating for all properties • 70% of the portfolio EPC rated D and above; including post 30 June 2021 transaction activity EPC rated D and above marginally increases the rating • CAPE
Slide 12: ESG – Responsible Management
ESG – Responsible Management • The IM and AM implement staff well-being initiatives • LSPIM certified as a ‘Great Place to Work’ (GPTW). GPTW is one of the world’s leading authorities in helping employers to create high- performing workplaces where employees feel trusted and valued. Founded in 1992,
Slide 13: Appendix
Summary regionalreit.com Appendix
Slide 14: Delivering on Strategy
Delivering on Strategy Jun 2021 Dec 2020 Change Portfolio Management Investment Property £729.1m £732.4m (£3.3m) Acquisitions before costs £0.6m £42.4m (£41.8m) Acquisition Net Initial Yield 0.0% 9.8% (980bpps) Disposals net £10.8m £53.4m (£42.6m) Disposal Net Initial Yield 5.9% 5.6% +30bpps CAPEX £
Slide 15: Appendix
Appendix Financial Information Property Portfolio Portfolio Activity Performance Glossary regionalreit.com Appendix
Slide 16: Financial Information
Financial Information regionalreit.com Appendix
Slide 17: Financial – Statement of Comprehensive Income
Financial – Statement of Comprehensive Income Half year-end 2020 Half year-end 2021 Change (£’000) (£’000) (£’000) Rental and property income 36,964 36,335 (629) Property costs (12,886) (10,966) 1,920 Net rental and property income 24,078 25,369 1,291 Administrative & other expenses (5,945) (5,477)
Slide 18: Financial – Statement of Financial Position
Financial – Statement of Financial Position Year-end Half year-end Year-end Half year-end Dec 2020 Jun 2021 Change Dec 2020 Jun 2021 Change (£’000) (£’000) (£’000) (£’000) Assets Non-current Assets Liabilities Current liabilities Other current liabilities Investment properties 732,380 729,115 (3,265
Slide 19: Cash Flow – Ample Liquidity
Cash Flow – Ample Liquidity Tables may not sum due to rounding. regionalreit.com 18
Slide 20: Generating Diversified Stable Income
Generating Diversified Stable Income Half year ending 30 June 2020 Half year ending 30 Jun 2021 Change* Net rental and property income £29.4m £29.5m +£0.1m Operating profit before gains/losses on property assets/other investments £18.1m £19.9m +£1.8m IFRS EPS (fully diluted) (6.2p) 4.2p +10.4p EPRA
Slide 21: Financial Position Remains Strong, Flexible and Defensive
Financial Position Remains Strong, Flexible and Defensive Year ending 31 December 2020 Half year ending 30 June 2021 Change Investment Property £732.4m £729.1m (£3.3m) IFRS NAV (fully diluted) 97.5p 98.5p +1.0p EPRA NTA* (fully diluted) 98.6p 99.1p +0.5p Borrowings (incl. retail eligible bond) £366.
Slide 22: Positioned to Unlock Shareholder Value over the Long Term
Positioned to Unlock Shareholder Value over the Long Term • EPRA NTA: £427.7m (99.1p fully diluted) (31 Dec ‘20: £425.6m, 98.6p fully diluted) • IFRS: £425.2m (98.5p fully diluted) (31 Dec ‘20: £420.6m, 97.5p fully diluted) Tables may not sum due to rounding. regionalreit.com * EPRA Net Reinstatemen
Slide 23: 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) 9 45.0 4.0 8 7.8 3.8 3.8 7.3 41.2 3.8 40.8 7 6.8 39.9 39.7 39.8 40.0 6.4 6.4 38.9 6.0 38.3 3.6 6 3.5 3.5 5.4 3.4 5 3.4 35.0 3.3 3.3 4 3.2 3 30.0 3.0 2 HY FY HY FY HY FY H
Slide 24: 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 51,024 Jun-25 40.3 2.15 Over 3mth £ LIBOR Scottish Widows Ltd. & Aviva Investors Real Estate 165,000 165,000 Dec-27 4
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 2021 Portfolio details as at 30 June 2021 Capital Valuation % by Sector Properties Values (£m) valuation (£psf) Office 114 607.0 83.2 132.23 Industrial 15 82.6 11.3 49.57 Retail 20 29.7 4.1 66.77 Other 2 9.9 1.4 1
Slide 27: Diversified Income Stream
Diversified Income Stream Portfolio details at 30 June 2021 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 114
Slide 28: 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 Barclays Execution Services Ltd Tay House, Glasgow Administrative and support service activities 0.4 108,386 2.2 3.7 Waterfront Busi
Slide 29: 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 (£m) portfolio (Sq Ft) (%) (£m) rental (years) income Barclays Execution Services Ltd, University of Tay House, Glasgow Office 27.0 3.
Slide 30: H1 2021 Portfolio Highlights
H1 2021 Portfolio Highlights Major lettings and renewals successfully secured across the regions Oakland House, Manchester Howdens, Old Govan Road, Glasgow • AM London Ltd. has taken two new leases (16,390 sq. Term extended to existing tenant ft.) for 10 years at a rental income of £188,658 pa. (Jam
Slide 31: 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 £132.23 £140 £129.10 90% £14 £13.78 £13.26 5 £120 80% £12 £103.08 70% 4.7 4.6 4 4.5 £10.18 £100 £10 60% £80 50% 3 £8 40% 79.9% 83.5% 8
Slide 32: Investment Property Activity – Proactive Strategy
Investment Property Activity – Proactive Strategy regionalreit.com Table may not sum due to rounding. 31
Slide 33: £729.1m Property Portfolio
£729.1m Property Portfolio Sector Split (% by value) IPO – November 2015 31 December 2020 30 June 2021 5.0% 4.1% 1.3% 11.3% 4.1% 1.4% 11.1% 11.3% Office Industrial £386.1m £732.4m £729.1m Retail Other 25.3% 83.5% 58.4% 83.2% Regional Split (% by value) 3.9% 12.7% 4.4% 4.4% 10.9% 10.0% 13.3% 25.2% 25
Slide 34: Highly Diversified Portfolio
Highly Diversified Portfolio Diversified Occupier Base Occupier by SIC code, as a % of rent roll • Diversified income - large tenant mix with 847 tenants and 1,214 units 14.0% 14.1% Professional, scientific and technical activities • Large spread of tenants businesses Administrative and support serv
Slide 35: Portfolio Activity
Portfolio Activity • Disposals • Asset Management Initiatives (CAPEX) • Post 30 June 2021 Activity regionalreit.com Appendix
Slide 36: Disposals
Disposals regionalreit.com
Slide 37: Summary – Disposals during H1 2021
Summary – Disposals during H1 2021 Sector Split • Disposals totalled £11.2m (before costs) reflecting an 20.8% uplift against valuation (Dec 20) of 7.2% Office • Disposals totalled £10.8m (net of costs) Industrial • Reflecting an average net initial yield of 5.9% (6.8% excluding vacant assets). 77.0
Slide 38: 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 39: Asset Management Initiatives (CAPEX)
Asset Management Initiatives (CAPEX) regionalreit.com
Slide 40: 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 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 Cent
Slide 41: Ashby Park, Ashby De La Zouch
Ashby Park, Ashby De La Zouch Before After Acquired in March 2017 from The Conygar Investment Company Plc as part of a portfolio. Ashby Park is a large well established Business Park providing a mixed use location for office and industrial occupiers. Recent developments include the provision of some
Slide 42: Post 30 June 2021 Activity
Post 30 June 2021 Activity • Acquisitions • Disposals regionalreit.com
Slide 43: Acquisitions
Acquisitions regionalreit.com
Slide 44: 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 45: Acquisition of £236m of Property Assets
Acquisition of £236m of Property Assets 12% Diverse Tenant Mix 10% • 192 tenants across the portfolio’s 27 office assets 3.2% • 3 tenants across the portfolio’s 2 industrial assets 8% • 12 tenants in one residential asset • Single tenant in retail unit 6% Reversioary Yield Net Initial Yield Income G
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Slide 49: Disposals
Disposals regionalreit.com
Slide 50: 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 51: 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 52: Performance
Performance regionalreit.com 51
Slide 53: Total Return (since RGL IPO)
Dividends and Performance Total return (since RGL IPO) 200% 150% Tritax Big Box Reit PLC Londonmetric Property PLC Total Return (since RGL IPO) 100% GCP Student Living PLC 50% Picton Property Income Ltd Regional REIT Ltd Workspace Group PLC Custodian REIT PLC UK Commercial Property REIT Schroder Rea
Slide 54: Glossary
Glossary regionalreit.com 53
Slide 55: 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 56: 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