Regional Reit Ltd. · LSE:RGL
Regional Reit — FY2022 Earnings Presentation
55 slides from Regional Reit's earnings presentation, March 2023
Slide 1: Investor Presentation Annual Results 2022
Investor Presentation Annual Results 2022 Robust Operations Delivering a Sector-leading Covered Dividend
Slide 2: Introduction
Stephen Inglis Chief Executive Officer Introduction • Overview and Portfolio Derek McDonald Chief Operating Officer • Appendix Simon Marriott Investment Director
Slide 3: Collecting Rents - delivering a robust yield of 11.3%
Collecting Rents - delivering a robust yield of 11.3% AD Earnings • EPRA EPS 6.6p (2021: 6.6p) → Robust earnings despite increased costs Dividend • Dividend 6.6p (2021: 6.5p) → Continues to be fully covered 100% • Yield c. 11.3%* (2021: 102%) EPRA NTA • £379.2m; 73.5p (2021: £501.4m; 97.2p) → Impact
Slide 4: Diversified portfolio – delivering income
Diversified portfolio – delivering income New lettings (by rent) Proactive property asset management 8 6 £million • 114 new lettings; £5.9m p.a. gross rent roll → Focus on regional properties outside M25 4 (2021: 55, £2.5m) 2 • £74.7m of assets acquired (before costs) → Offices 91.8% (by value) (202
Slide 5: £789.5m Property Portfolio
£789.5m Property Portfolio (FY 21 £906.1m) IPO – November 2015 31 December 2021 31 December 2022 Sector Split (% by value) 3.1% 1.4% 5.1% Office 5.0% 1.4% 3.7% 3.5% Retail 25.3% Industrial Other £386.1m £906.1m £789.5m 58.4% 11.3% 92.0% 89.8% Regional Split (% by value) Midlands 5.0% 3.9% 5.3% South
Slide 6: De-risking through diversification – Occupier Base
De-risking through diversification – Occupier Base • Diversified income - large tenant mix across £789.5m of assets Professional, scientific and (2021: £906.1m) technical activities Information and communication • Spread of assets – 154 properties (2021: 168) Administrative and support service • 1,0
Slide 7: Blue Chip Tenants
Blue Chip Tenants © 4, BANK OF NHS fn a or e —— for hve Lienstiy ENERGY ‘communities ant fe Local Government Glasgow ° we a | ] n Department > ASA g for Transport LLOVDS BANK @-ori ©, By AVIVA 7 _ i Re CeVA\ eek, Clearblue LOGISTICS ST. JAMES S PLACE carvirr © THALES COLLEGE Handelsbanken R REIT
Slide 8: Debt Facilities – Defensive Debt Profile
Debt Facilities – Defensive Debt Profile 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 £ 73,000 0.97 Scotland, Bank of 128,000 125,676 Aug-26 50.8 2.40 SONIA 55
Slide 9: ESG – Focused on delivering sustainability
ESG – Focused on delivering sustainability Environment • On target to achieve current guidelines of EPC B rating by 2030 • EPC ratings progressing Rating 31 December 2021 31 December 2022 Movement B plus 9.9% 16.9% +700bps C 33.0% 33.3% +30bps D 32.8% 27.2% (560)bps E and below 18.2% 16.0% (220)bps
Slide 10: Summary and Outlook
REIT THE OFFICE SPECIALISTS Regional ‘ Summary and Outlook regionalreit.com
Slide 11: Office Market - What we are seeing
We face risks from a prolonged work- Office Market - What we are seeing from-home arrangement….. Silicon Valley Bank Annual Report (31 • Vast majority of tenants back in the office December 2022) • 99% of our office tenants (by rental income) have returned either on a full-time or hybrid basis Amazo
Slide 12: Office Market - What we are seeing
Office Market - What we are seeing • 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 300 Bath Street, Glasgow • Hybrid working • Tailwind of the return
Slide 13: Outlook – Positioned for long term income and value
Outlook – Positioned for long term income and value Quarterly income • Increased annual dividend 6.6p (2021: 6.5p) stream to our shareholders • Continues to be one of the highest yielding REITS • Committed to paying regular quarterly dividends to our shareholders One North Bank, Sheffield Underpinne
Slide 14: Appendix
Appendix • Property Portfolio • Portfolio Activity • Asset Management Initiatives (CAPEX) • Acquisitions • Disposals • Financial Information • Performance • Glossary
Slide 15: Property Portfolio
REIT THE OFFICE SPECIALISTS Regional ‘ Property Portfolio regionalreit.com
Slide 16: Overview – Specialised Platform and Geographically Diverse Portfolio
Overview – Specialised Platform and Geographically Diverse Portfolio UK property locations Portfolio details as at 31 December 2022 as at 31 December 2022 Valuation Capital Values Sector Properties % by valuation (£m) (£psf) Office 129 725.1 91.8% 125.88 Retail 18 28.5 3.6% 85.82 Industrial 4 24.6 3
Slide 17: Diversified Income Stream
Diversified Income Stream Portfolio details at 31 December 2022 % 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 18: 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 Limited Eagle Court, Coventry Road, Birmingham Information and communication 1.0 107,830 1.7 2.4% Southgate Park, Peter
Slide 19: Top 15 Investments (Market Value)
Top 15 Investments (Market Value) Market EPRA Annualised Lettable area % of gross value % of Occupancy gross rent WAULT to first Property Sector Anchor tenants rental portfolio break (years) (£m) (Sq Ft) (%) (£m) income University of Glasgow, Glasgow Tay House Centre 300 Bath Street Glasgow, Glasgow
Slide 20: Investment Property Activity – Proactive Strategy
Investment Property Activity – Proactive Strategy Table may not sum due to rounding. 20
Slide 21: 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 5 £16 £160 100% £14.07 £14.50 90% £14 £13.26 £140 £134.77 4.6 £129.10 £125.88 80% 4.5 4.5 4 £12 £120 70% £10 £100 60% 50% 3 £8 £80 89.8% 91.8%
Slide 22: Regional REIT – Specialised Office Platform
Regional REIT – Specialised Office Platform Specialised Asset Management Team → 73 Staff Expert • Hugely experienced senior → Proven operational platform Management management team, managing → Unique vertically integrated Team assets over the past 30 years, manager including previous downturns → Gra
Slide 23: FY 2022 Portfolio Highlights
FY 2022 Portfolio Highlights Major lettings and renewals successfully secured across the regions Portland Street, Manchester Evolution Money Group Ltd. renewed its lease for a further ten years, with the option to break in 2027, at a rental income of £290,000 pa (£24.77/ 300 Bath Street, Glasgow sq.
Slide 24: New Lettings by Industry Type (% of Gross Rent)
New Lettings by Industry Type (% of Gross Rent) 0.9% Education 15.6% Human health and social work activities 0.5% 15.4% Information and communication 22.9% 12.0% Registered Society 0.0% 8.5% Professional, scientific and technical activities 7.9% 7.4% Construction 3.3% 6.8% Administrative and support
Slide 25: Diverse Customer Base
Diverse Customer Base Tenant by SIC Code as at June 2020, June 2021 and June 2022 (% of gross rent) 2020 2021 2022 16% 14% 12% 10% 8% 6% 4% 2% 0% Professional, Information and Administrative Financial and Wholesale and Public sector Electricity, gas, Human health Manufacturing Education Construction
Slide 26: Rent Collections – trending back to normality
Rent Collections – trending back to normality Rent Collected vs invoiced (%) 2021 2022 Total (%) Q1 Q2 Q3 Q4 2021 Total Q1 Q2 Q3 Q4 2022† Total Rent Paid 98.3 98.0 97.7 96.8 97.7 99.2 99.0 98.3 98.3 98.7 Quarterly rental invoices include contractual rent for the proceeding quarter ‡ 98.7% Actual ren
Slide 27: Portfolio Activity – Asset Management Initiatives (CAPEX)
Portfolio Activity – Asset Management Initiatives (CAPEX)
Slide 28: 300 Bath Street, Glasgow
300 Bath Street, Glasgow • Acquired in 2013, 300 Bath Street is the largest single asset (by value) in the portfolio at £23.6m (3.0% 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 acquisition, the
Slide 29: 300 Bath Street, Glasgow
300 Bath Street, Glasgow Works on the proposed refurbishment commenced in February 2022 and are forecast to complete in April 2023 (basement works in March 2023). The works will present an opportunity for comprehensive repositioning of the asset in a market with limited supply of high-quality large
Slide 30: Central Park, Leeds
Central Park, Leeds BeforeBefore After After • Acquired in August 2021 • Situated in the southern office core of Leeds City Centre. Victoria Road running to the West is the main thoroughfare into Leeds from the south via the M621. Junction 3 of the M621 lies just to the south • Central Park comprise
Slide 31: Hampshire Corporate Park, Eastleigh
Hampshire Corporate Park, Before After Eastleigh • Acquired in January 2015 comprising Chilworth House and Hampshire House. Chilworth House was wholly let to Aviva Health until December 2018. Hampshire House combined lettings with the Royal Bank of Scotland, secured until 2021, and with Aviva, the l
Slide 32: Acquisitions
Regional (~< reir THE OFFICE SPECIALISTS Acquisitions regionalreit.com
Slide 33: Summary – Acquisition of £74.7m of Property Assets
Summary – Acquisition of £74.7m of Property Assets • Diversified income – 97 tenants across 6 office properties • Geographic spread by rental income: South East (39.2%), North East (33.7%), Midlands (27.2%) 27.2% 39.2% • EPRA occupancy (by ERV) of 98.6% South East North East • Total floor area of 39
Slide 34: Orbis 1, 2 & 3, Pride Park, Derby
Orbis 1, 2 & 3, Pride Park, Derby • Acquisition of office property for £19.8m, reflecting a net initial yield of 8.6% • Purchased in May 2022, the property is located in the heart of Pride Park, which is a substantial 180 acre business park, and is Derby’s premier business location. The site extends
Slide 35: Portfolio Acquisition - Accretive 8.0% Yield
Portfolio Acquisition - Accretive 8.0% Yield Three Yorkshire office assets were purchased for £26.5m in June 2022 • 1 North Bank, Sheffield (totalling 58,893 sq. ft.) o Five floors of recently refurbished Grade A office space; BREEAM 'Very Good'; EPC C with a clear plan to enhance the ratings furthe
Slide 36: Linford Wood Business Park, Milton Keynes
Linford Wood Business Park, Milton Keynes • Acquisition of office property for £15.9m, reflecting a net initial yield of 8.9% • The acquisition price is underpinned by increasing residential and industrial land values • Purchased in May 2022, the property is a freehold 5-building business park compr
Slide 37: Origin 1 & 2, Crawley
Origin 1 & 2, Crawley • Acquisition of office property for £12.5m, reflecting a net initial yield of 8.4% • The freehold asset is prominently located on a corner site in Crawley Town Centre, a strong south east commercial centre close to London Gatwick Airport • The property is situated on the High
Slide 38: Disposals
Regional (~< reir THE OFFICE SPECIALISTS Disposals regionalreit.com
Slide 39: Summary – Disposals during 2022
Summary – Disposals during 2022 • Disposals totalled £90.0m (before costs) 5.1% • Reflecting an average net initial yield of 4.9% (6.3% 22.0% excluding vacant assets) Office • 20 assets and 4 part sales in total during 2022 Industrial Retail • Disposals of non – core and assets at the end of their b
Slide 40: Howdens, Renfrew
Howdens, Renfrew • Acquired in November 2020 for £7.05m • The 204,414 sq. ft. industrial, warehouse is fully let to James Howden & Company Ltd • Over the period of ownership of this property, the asset manager completed an early regear on the tenant’s 2025 lease expiry. The existing tenant extended
Slide 41: Newport Retail Park, Newport
Newport Retail Park, Newport • Acquired in August 2021 as part of a major portfolio of 31 assets from Squarestone LLP • The 55,770 sq. ft. multi-let industrial, retail warehouse was purchased for £5.45m • Two fully let retail units that have separate customer and service access. The site is adjacent
Slide 42: Festival Court, Glasgow
Festival Court, Glasgow • Acquired in 2014 • The 36,854 sq. ft. office park was purchased for £3.8m • Three adjacent office buildings on a self-contained site located a short distance from the M8 motorway providing easy access to Glasgow city centre, Glasgow Airport and the local trunk road network.
Slide 43: Financial Information
REIT THE OFFICE SPECIALISTS Regional ‘ Financial Information regionalreit.com
Slide 44: Delivering on Strategy
Delivering on Strategy Dec 2021 Dec 2022 Change Portfolio – Active management Investment Property £906.1m £789.5m (£116.6m) Acquisitions before costs £236.0m £74.7m (£161.3m) Acquisition Net Initial Yield 7.8% 8.4% +0.6pps Disposals net of costs £76.9m £84.1m +£7.2m Disposal Net Initial Yield 6.5% 4
Slide 45: Financial – Statement of Comprehensive Income
Financial – Statement of Comprehensive Income Year-end 2021 Year-end 2022 Change (£’000) (£’000) (£’000) Rental and property income 79,899 93,318 13,419 Property costs (24,075) (30,672) (6,597) Net rental and property income 55,824 62,646 6,822 Administrative & other expenses (10,583) (11,421) (838)
Slide 46: Financial – Statement of Financial Position
Financial – Statement of Financial Position Year-end Year-end Year-end Year-end Dec 2021 Dec 2022 Change Dec 2021 Dec 2022 Change (£’000) (£’000) (£’000 (£’000 Liabilities Assets Non-current Assets Current liabilities (58,422) (56,591) 1,831 Investment properties 906,149 789,480 (116,669) Right of u
Slide 47: Cash Flow – Ample Liquidity
Cash Flow – Ample Liquidity Table may not sum due to rounding. Table may not sum due to rounding. 47
Slide 48: Income and Cost Focused
Income and Cost Focused Year ending 31 Dec 2021 Year ending 31 Dec 2022 Change* Net rental and property income £55.8m £62.6m +£6.8m Operating profit before gains/losses on property assets/other £45.2m £51.2m +£6.0m investments IFRS EPS 6.3p (12.6p) (18.9p) EPRA EPS 6.6p 6.6p +0.0p EPRA cost ratio (i
Slide 49: Financial Position Remains Robust, Flexible and Defensive
Financial Position Remains Robust, Flexible and Defensive Year ending 31 December Year ending 31 December Change 2021 2022 Investment Property £906.1m £789.5m (£116.6m) IFRS NAV (fully diluted) 97.4p 78.1p (19.3p) EPRA NTA* (fully diluted) 97.2p 73.5p (23.7p) Borrowings (incl. retail eligible bond)
Slide 50: Positioned to Unlock Shareholder Value over the Long Term
Positioned to Unlock Shareholder Value over the Long Term • EPRA NTA*: £379.2m (73.5p fully diluted) (31 Dec ‘21: £501.4m, 97.2p fully diluted) • IFRS: £402.9m (78.1p fully diluted) (31 Dec ‘21: £502.4m, 97.4p fully diluted) *EPRA Net Reinstatement Value(NRV): 31 December 2022 73.5p (31 December 202
Slide 51: Performance
REIT THE OFFICE SPECIALISTS Regional ‘ Performance regionalreit.com
Slide 52: Total Return (since RGL IPO)
Dividends and Performance Total shareholder return (since RGL IPO) 80.0% AEW UK REIT PLC 60.0% Tritax Big Box Reit PLC 40.0% Londonmetric Property PLC Picton Property Income Ltd Custodian Property Income Total Return (since RGL IPO) REIT plc 20.0% Schroder Real Estate Investment Trust Ltd Regional R
Slide 53: Consensus Dividend Yield
Consensus Dividend Yield Consensus dividend yield Consensus dividend yield (share price) (NAV) Regional REIT Ltd 11.4% 8.8% Shaftesbury Capital PLC 2.1% 1.2% Great Portland Estates PLC 2.5% 1.4% Derwent London PLC 3.5% 2.7% Town Centre Securities PLC 4.0% 1.9% Picton Property Income Ltd 4.9% 3.8% Tr
Slide 54: Cost Focused
Cost Focused EPRA cost ratio incl. direct costs EPRA cost ratio excl. direct costs Town Centre Securities PLC 67% Newriver REIT PLC 31% Real Estate Investors PLC 37% Warehouse REIT 25% AEW UK REIT PLC 37% AEW UK REIT PLC 24% Newriver REIT PLC 36% Ediston Property Investment Company PLC 24% Regional
Slide 55: 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