2024 Full Year Results

About this update from Regional Reit Ltd.

[{"type":"text","content":"\n \n   \n 25 March 2025 \n   \n Regional REIT Limited \n (\"Regional REIT\", the \"Group\" or the \"Company\") \n   \n 2024 Full Year Results \n   \n Strong operational delivery and transformed balance sheet provide pathway to recovery \n   \n Regional REIT (LSE: RGL), the regional office specialist, today announces its full year results for the 12 months to 31 December 2024. \n   \n Stephen Inglis, Head of ESR Europe LSPIM Ltd, the Asset Manager, said: \n \" While 2024 was another challenging year for both the property market and the regional office sector in particular, Regional REIT continued to deliver a strong operational performance, and the successful completion of the £110.5m equity raise has transformed the Company's balance sheet. With this increased flexibility, Regional REIT is well placed to take advantage of the significant opportunities for value creation within the portfolio. We now have the capital to refurbish assets to drive rental income growth while simultaneously pursuing accretive initiatives, such as securing planning consents ahead of sales, and this has the potential to deliver good shareholder value over the medium term. \n   \n \"We fully recognise that we remain at the start of the pathway to recovery and the company remains laser-focused on continuing to further reduce its LTV. There is a lot of work to do, and this will remain a priority through 2025, with £18.6m of disposals already in legal due diligence. \n   \n \"It is clear that we are starting to see an improvement in sentiment in the UK office market, albeit there will be a lag before we see this reflected in the Company's financial performance. There continues to be occupational headwinds, however the diversified nature of Regional REIT's tenant base combined with the high-quality nature of its occupiers and its competitive rents significantly mitigates any risk. With supportive fundamentals, extensive scope for value creation within the portfolio, and increased balance sheet flexibility, Regional REIT can look to the future with optimism.\" \n   \n Diversified portfolio with slowing valuation decline in H2 \n ·    Portfolio valuation £622.5m (2023: £700.7m), down 8.2% on a like-for-like basis, with a decrease of 3.1% in H2 \n ·    EPRA NTA £340.7m (2023: £290.8m) \n   \n Resilient operational performance underpinning fully covered \n ·    EPRA EPS 19.2pps (2023: restated 33.1pps) post share issuance and 1 for 10 share consolidation \n ·    Dividend declared of 7.8p* (2023: 5.25p) fully covered \n   \n *Q1 '24 dividend 1.2p, post the capital raise and subsequent share consolidation the Company declared Q2-Q4 dividends of 6.6p \n   \n Transformed balance sheet unlocks opportunities to create value across portfolio \n ·    Gross borrowings reduced to £316.7m (2023: £420.8m); cash and cash equivalents £56.7m (2023: £34.5m) \n ·    Net LTV 41.8% (2023: 55.1%) following successful £110.5m capital raise \n ·    Continued momentum in disposals programme; total disposals £28.6m (net of costs) across 18 assets \n ·    c.£107m of sites identified for sale, of which circa £18.6m either contracted, under offer, or in negotiation \n   \n New lettings 13.5% ahead of ERV supported by targeted Capex programme for value enhancing asset management \n ·    EPRA occupancy remains robust at 78% (2023: 80%) \n ·    Rent collection remains high at 98.6% (2023: 98.9%); 61 new lettings during the period totalling £3.2m rent roll, with lettings achieved 13.5% above 2023 ERV Gross annualised rent roll £60.7m (2023: £67.8m) \n ·    A further 14 notable new lettings and renewals/regears achieved post period end for 114,888 sq.ft. amounting to £1.6m \n   \n Progressing our sustainability strategy to improve the quality of the portfolio \n ·    c.82.7% of the portfolio EPC C or better (2023: 73.7%) \n   \n Portfolio strategy update \n Following the successful equity raise completed in the period, the Company announced that £28.4m of the proceeds would be used to fund accretive capital expenditure projects, including securing planning consents to reposition assets ahead of sales. Significant progress has already been made in identifying priority sites and preparing the pipeline. \n   \n Over the next four years, c.20 sites have been identified where planning applications will be submitted to change the use to alternatives such as student accommodation, residential or hotel use ahead of a sale, to maximise value for shareholders. It is anticipated that this programme will deliver good shareholder value over the medium term. This is in addition to the 43 sites marked for nearer-term disposal. \n   \n Along with £371.2m core assets that are well positioned to deliver income on an ongoing basis, there are a further £126.5m of assets strategically located in areas of high office demand where capex is required to bring the sites up to a grade A or B standard. \n   \n Currently, there are 7 capital projects underway for £5.4m, 11 projects scheduled to commence on-site works by the end of H1 '25 for £7.9m and 10 projects that have been identified for £8.9m. This amounts to a total investment of £22.2m. \n   \n Outlook \n With the average number of days spent in the office across the portfolio now up to four days a week, together with a lack of high quality and sustainable regional office space and no real new supply coming on stream, we believe Regional REIT is well positioned to deliver future rental growth. However, we anticipate that the business will not start seeing the benefits of this increased momentum until 2026. \n   \n Following the capital raise in 2024, Regional REIT's transformed balance sheet allows the company to advance its capex programme and pursue additional initiatives over the next 12 months. These initiatives include securing higher value planning consents to drive value. Additionally, proceeds from planned portfolio sales will be used to further reduce the Company's LTV. \n   \n - ENDS - \n   \n Enquiries: \n   \n \n \n \n \n Regional REIT Limited \n \n \n \n \n \n \n \n Press enquiries through FTI Consulting \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n ESR Europe Private Markets Limited \n \n \n Tel: +44 (0) 203 831 9776       \n \n \n \n \n Investment Adviser to the Group \n \n \n \n \n \n \n \n Adam Dickinson, Investor Relations, Regional REIT Limited \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n ESR Europe LSPIM Limited \n \n \n Tel: +44 (0) 141 248 4155       \n \n \n \n \n Asset Manager to the Group \n \n \n \n \n \n \n \n Stephen Inglis \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Shore Capital \n \n \n Tel: +44 (0) 20 7408 4050       \n \n \n \n \n Joint Broker and Financial Adviser \n \n \n \n \n \n \n \n Gillian Martin, Daphne Zhang (Corporate Advisory) \n \n \n \n \n \n \n \n Ben Canning / Henry Willcocks (Corporate Broking) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Peel Hunt \n \n \n Tel: +44 (0)20 7418 8900    \n \n \n \n \n Joint Broker and Financial Adviser \n \n \n \n \n \n \n \n Capel Irwin, Henry Nicholls (Corporate Advisory) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n FTI Consulting \n \n \n Tel: +44 (0)20 3727 1000 \n \n \n \n \n Financial Communications \n \n \n [email protected]      \n \n \n \n \n Dido Laurimore, Giles Barrie \n \n \n \n \n \n \n \n   \n About Regional REIT \n   \n Regional REIT Limited (\"Regional REIT\" or the \"Company\") and its subsidiaries (the \"Group\") is a United Kingdom (\"UK\") based real estate investment trust that launched in November 2015. It is managed by ESR Europe LSPIM Limited, the Asset Manager, and ESR Europe Private Markets Limited, the Investment Adviser. \n   \n Regional REIT's commercial property portfolio is comprised wholly of income producing UK assets, predominantly offices located in the regional centres outside of the M25 motorway. The portfolio is geographically diversified, with 126 properties, 1,271 units and 780 tenants as at 31 December 2024, with a valuation of c.£622.5m. \n                               \n Regional REIT pursues its investment objective by investing in, actively managing and disposing of regional Core and Core Plus Property assets. It aims to deliver an attractive total return to its Shareholders, targeting greater than 10% per annum, with a strong focus on income supported by additional capital growth prospects. \n   \n The Company's shares were admitted to the Official List of the UK's Financial Conduct Authority and to trading on the London Stock Exchange on 6 November 2015. For more information, please visit the Group's website at  www.regionalreit.com . \n   \n LEI: 549300D8G4NKLRIKBX73 \n   \n   \n \n \n   \n FINANCIAL KEY POINTS \n   \n Year Ended 31 December 2024 \n   \n Income focused - opportunistic buying and strategic selling, coupled with intensive asset management, continues to secure long-term income. \n   \n \n \n \n \n Portfolio Valuation       \n \n \n £622.5m (2023: £700.7m) \n \n \n \n \n IFRS NAV per Share* \n \n \n 216.9p (2023 restated: 376.2p) \n \n \n \n \n EPRA** NTA per Share* \n \n \n 210.2p (2023 restated: 357.4p) \n \n \n \n \n Dividend per share* \n \n \n 7.8p (2023: 5.25p) \n \n \n \n \n Net Loan to Value Ratio*** \n \n \n 41.8% (2023: 55.1%) \n \n \n \n \n Weighted Average Cost of Debt*** \n \n \n 3.4% (2023: 3.5%) \n \n \n \n \n Weighted Average Debt Duration*** \n \n \n 2.9 yrs (2023: 3.5 yrs) \n \n \n \n \n   \n * During the year the Company offered 15 new ordinary shares for every 7 existing shares. This resulted in an increase of 1,105,149,821 Ordinary Shares being issued. Subsequently there was a 10 for 1 split with the resulting Ordinary shares in issue being 162,088,483. See note 28 for details of the restatement. \n ** The European Public Real Estate Association (\"EPRA\"). The EPRA's mission is to promote, develop and represent the European public real estate sector. As an EPRA member, we fully support the EPRA Best Practices Recommendations. Specific EPRA metrics can be found in the Company's financial and operational highlights, with further disclosures and supporting calculations provided in the full Annual Report. \n *** Alternative Performance Measures. Details are provided in the full Annual Report. \n   \n Operational KEY POINTS \n   \n Year Ended 31 December 2024 \n   \n Income focused with intensive asset management. \n   \n \n \n \n \n Properties \n \n \n 126 \n \n \n \n \n Units \n \n \n 1,271 \n \n \n \n \n Tenants \n \n \n 780 \n \n \n \n \n Rent Roll \n \n \n £60.7m \n \n \n \n \n Portfolio by region and sector (by value) \n \n \n \n \n \n \n \n England & Wales \n \n \n 83.4% \n \n \n \n \n Office \n \n \n 90.7% \n \n \n \n \n Property disposal proceeds (net of costs) \n \n \n £28.6m \n \n \n \n \n Number of properties \n \n \n 18 \n \n \n \n \n EPRA Occupancy by ERV* \n \n \n 77.5% \n \n \n \n \n WAULT to expiry \n \n \n 4.6 yrs \n \n \n \n \n WAULT to first break by ERV* \n \n \n 2.9 yrs \n \n \n \n \n   \n * Alternative Performance Measures. Details are provided in the full Annual Report. \n   \n PERFORMANCE KEY POINTS \n   \n Year ended 31 December 2024 \n   \n A key focus on delivering high dividend distributions to shareholders. \n   \n \n \n \n \n Dividends declared per Share \n \n \n Pence per share \n \n \n \n \n 2024 \n \n \n 7.80 \n \n \n \n \n 2023 \n \n \n 5.25 \n \n \n \n \n 2022 \n \n \n 6.60 \n \n \n \n \n 2021 \n \n \n 6.50 \n \n \n \n \n 2020 \n \n \n 6.40 \n \n \n \n \n 2019 \n \n \n 8.25 \n \n \n \n \n 2018 \n \n \n 8.05 \n \n \n \n \n 2017 \n \n \n 7.85 \n \n \n \n \n 2016 \n \n \n 7.65 \n \n \n \n \n 2015 \n \n \n 1.00 \n \n \n \n \n   \n Chairman's Statement \n   \n \"Letting demand for our portfolio remained robust, with 2024 lettings having exceeded the prior year's estimated rental values by a significant 13.5%.\" \n   \n David Hunter , Chairman \n   \n As I begin my first months in this role, I, together with the rest of the Board fully acknowledge the unprecedented challenges our Company and shareholders have faced over recent years. However, the £110.5 million capital raise in July 2024 enabled the Company to fully repay the £50 million Retail Bond in August, reduce overall bank borrowings and focus on accretive capital expenditure projects. \n   \n Overview \n While it was another difficult year for the property market and the regional office sector, our active management strategy did enable the Company to outperform the MSCI Rest of UK Offices Index which declined by 8.9% over the year with our portfolio value falling by 8.2% on a like-for-like basis after adjustments for acquisitions, disposals, and capital expenditure. The bulk of that fall was in the first half of the year with some signs of stabilisation in values in the second half. \n   \n Throughout the year, the Board remained committed to delivering consistent quarterly dividend distributions to our shareholders, ensuring full compliance with the HMRC REIT guidelines and maintaining a covered annual dividend. Our strong operational performance - driven by effective asset management and robust rent collection - further supported these uninterrupted dividend payments. The Board recognises the importance of delivering dividend growth on a fully covered basis going forward, and that will remain an overriding priority. \n   \n Letting demand for our portfolio remained robust despite overall occupancy falling on a like for like basis, with 2024 lettings having exceeded the prior year's estimated rental values by a significant 13.5%. This encouraging element of performance reflects the appeal of our properties and ability to cater for all tenants' requirements from a single desk to a stand-alone headquarter office. We do firmly believe that our portfolio is well positioned to benefit from the continued return-to-office momentum across the United Kingdom. This will be enhanced in the medium term by a more favourable macroeconomic environment and easing UK monetary policy, supporting the quarterly dividends and adding shareholder value. \n   \n There is a lot of work to do and the Board remains committed to reducing LTV while progressing opportunities across the portfolio to generate sustainable, long-term value for shareholders.   \n   \n Financial Resources \n The Company's EPRA NTA increased to £340.7 million (IFRS NAV: £351.6 million) as at 31 December 2024, representing an increase of £49.9 million from £290.8 million (IFRS NAV: £306.1 million) as at 31 December 2023. This increase was driven by the £110.5 million equity capital raise, although it was partially offset by a challenging commercial real estate market that led to a decline in the property portfolio revaluation. A strong cash balance of £56.7 million was retained as of 31 December 2024 (2023: £34.5 million), of which £55.9 million was unrestricted (2023: £30.2 million). \n   \n The Company's debt position, which is comprised entirely of fixed and hedged interest rate debt, helped the Company mitigate rate volatility. With the repayment of the 4.5% £50 million Retail Bond, the weighted average cost of debt was reduced to 3.4% at the end of 2024 (2023: 3.5%), and the Net Loan-to-Value (LTV) decreased to 41.8% as of 31 December 2024, compared with 55.1% as at 31 December 2023. \n   \n The Company continues to execute its controlled disposal programme, consisting of 18 assets and three-part sales of assets, amounting to circa £28 million, net of costs. \n   \n Sustainability \n Once again, I am pleased to report the significant progress achieved by the ESG Working Party in 2024, which improved the Company's Global Real Estate Sustainability Benchmark (GRESB) from 66 to 73 and maintained a two Green Star Status. Additionally, we continued to achieve advancements in our EPC ratings and EPRA sustainability accreditation. Overall performance remains robust. \n   \n 82.7% of our portfolio attained EPC ratings C plus or better (compared with 73.7% on 31 December 2023), while EPC B plus and exempt rose steeply to 57.7% (compared with 31.6% on 31 December 2023). This progress moves us nearer to meeting the Minimum Energy Efficiency Standard ('MEES') target of EPC B, well ahead of the stated 2030 target. Importantly, with limited compliant office supply in the regions, providing high quality, energy efficient space can be a key differentiator for Regional REIT, driving improved occupancy and rental growth. \n   \n Market Environment \n UK office investment reached £1.8 billion in Q4 2024, bringing the annual total to £7.3 billion, a 27% decline from 2023. London saw the sharpest drop, with investment falling 34% to £4.7 billion, while regional markets declined 5.5% to £2.34 billion. Q4 2024 transactional yields for central London offices rose slightly to 6.02% and yields for the rest of the UK increased by 43 basis points to 7.75%. \n   \n Looking ahead, Lambert Smith Hampton (\"LSH\") 1 sees 2024 as an inflection point for office space sector. LSH forecasts total returns averaging c7.9% per annum citing improved staff occupancy and tighter supply. Underpinning LSH's forecast, Centre for Cities 2 notes London office attendance rose from 2.2 to 2.7 days weekly; KPMG 3 reports 76% of financial leaders plan to boost attendance; and Willis Towers Watson 4 finds 60% of firms enforce office-day policies, improving engagement (85%), culture (72%), and learning (69%). Regional REIT's own annual tenant survey found that current active office occupation is now above pre-pandemic active occupancy, while employee occupation has stabilised at an average of four days a week. \n   \n 1 UK Investment Transactions Bulletin, UKIT Q4 2024 by Lambert Smith Hampton (LSH), Jan. 2025 \n 2 The Future of Work, Centre for Cities report (in partnership with Imperial College London), Sep. 2024 \n 3 Financial Services employee survey, KPMG, Oct. 2024 \n 4 Flexible Work Models Pulse survey by WillisTowersWatson, Dec. 2024 \n   \n   \n Dividends \n The dividend remains a significant component of total shareholder returns. During the period under review, prior to the capital raise and share consolidation, the Company declared a Q1 2024 dividend of 1.2pps. Following the capital raise and subsequent share consolidation, the Company declared a Q2 2024 dividend of 2.2pps on 10 September 2024, a Q3 2024 dividend of 2.2pps on 13 November 2024, and has now declared a Q4 2024 dividend of 2.2pps. These dividend distributions ensure compliance with the HMRC REIT regime. Notably, the Company has paid a fully covered dividend for 2024, having also paid a covered dividend for 2023. Since inception, the Company has declared dividends amounting to 65.35pps noting the aforementioned one for ten share consolidation on 29 July 2024 and has distributed approximately £251.4 million in dividends to shareholders. \n   \n Performance \n The period under review was impacted by the announced equity capital raise on the 27 June 2024. The Company's total shareholder return was -40.5%, versus the return of -11.7% for the FTSE EPRA NAREIT UK Total return Index over the same period. The annualised EPRA Total Return was 0.6% p.a. (2023: 1.5% p.a.). \n   \n Board Changes \n As announced on 18 December 2024, following a thorough search process and in line with the Company's policy, I was appointed as an Independent Non-Executive Director and Chair designate. I have since been appointed to the Audit, Nomination, and Management Engagement & Remuneration Committees and, following a handover period, assumed the role of Chair of the Board on 18 March 2025, succeeding Kevin McGrath, who stepped down after completing his nine-year tenure. \n   \n On behalf of the Board and our shareholders I extend our thanks to Kevin for his leadership and unwavering commitment over the years. His guidance and dedication have been instrumental in the governance of the Company, particularly with regard to our successful £110.5 million equity capital raise in 2024. \n   \n As announced on 11 October 2024, Daniel Taylor stepped down as Senior Independent Director and Non-Executive Director (\"NED\") of the Company, having completed his nine-year tenure in accordance with the Company's policy. Again, I record our appreciation of Daniel's significant contribution during his tenure. \n   \n Also on 11 October, Massy Larizadeh was appointed as Senior Independent Director. An independent NED since June 2022, she chairs the Management Engagement & Remuneration and Nomination Committees. \n   \n Finally, as announced on 21 October 2024, Nicole Burstow was appointed as a Non-Executive Director, representing our new significant shareholder Bridgemere Investments Limited. Nicole, a chartered accountant with over 20 years of financial services experience, is currently CFO of Bridgemere Group and was previously Deputy CEO of DSW Capital. \n   \n Annual General Meeting \n The notice for the 2025 AGM will be published on our website and circulated to Shareholders in line with the Company's Articles of Incorporation. In accordance with the Company's Articles of Incorporation and the AIC Code, all Directors will stand for re-election at the AGM, except for Ms Burstow and myself, as we were appointed as Directors since the last AGM and will therefore stand for election. Directors maintain their professional development through regular briefings from the Company Secretary and the Company's other advisers. As well as being committed to orderly succession planning, the Board will enhance its skills base as necessary. The Board looks forward to engaging with Shareholders at the AGM. \n   \n Shareholder and Stakeholder Engagement \n We welcomed Bridgemere Investments Limited as a new significant shareholder following the successful completion of the capital raise and thank them and our existing shareholders for their support. We look forward to working with Bridgemere and all our stakeholders as we look to return to growth. \n   \n Tenant and stakeholder satisfaction is key to our success. We aim to provide high-quality workspaces that accommodate diverse business needs, from small flexible units to corporate headquarters. Engaging actively with tenants is central to our asset management strategy, helping us understand their needs, address challenges, and enhance our workspaces. We promote open and transparent communication, ensuring a collaborative approach that benefits all stakeholders and improves operational efficiency. The Company welcomes shareholder engagement, with further details available at www.regionalreit.com and in the full Annual Report. \n   \n Outlook \n The property market continues to adjust to the evolving economic conditions and cautious investor sentiment. While the management team is doing all it can to increase returns including through capex, leasing and sales, performance is to some extent inevitably dependent on recovery in the sector. However, demand for well-located, high-quality office space remains resilient, supported by the continued return to the office, and there are significant opportunities to create value within the portfolio by progressing accretive initiatives such as securing planning consents ahead of sales. The Company remains focused on active asset management to drive occupancy, enhance tenant retention, and optimise rental growth, underpinning sustainable dividend distributions. As businesses prioritise dynamic and engaging workspaces, the Company is well placed for recovery, which will support long-term value creation and benefit shareholders as confidence gradually returns to the commercial property market. \n   \n David Hunter \n Chairman \n 24 March 2025 \n   \n ASSET MANAGER AND INVESTMENT ADVISERS' REPORT \n   \n \"We are beginning to see an improvement in sentiment in the UK office market, with the average number of days in the office having stabilised at four days a week. There is also a growing recognition of the vital role the office plays in driving productivity and strengthening a company's culture.\" \n   \n Stephen Inglis \n Head of ESR Europe LSPIM Ltd. \n Asset Manager \n   \n While 2024 has undoubtedly been another challenging year for the property market and the regional office market in particular, with the successful equity raise in July Regional REIT enters 2025 with cautious optimism. We are beginning to see an improvement in sentiment in the UK office market, with the average number of days in the office having stabilised at four days a week across our portfolio. There is also a growing recognition of the vital role the office plays in driving productivity a strengthening a company's culture. \n   \n We anticipate a slow and steady improvement to the occupational market in 2025, however, it will take time for the impact of these changes to flow through to our financial performance. On a like-for-like basis the valuation of the portfolio fell by 8.2% in the year to £622.5m, although the pace of this reduction slowed to 3.1% in the second half. If, as is widely forecast, interest rates continue to fall then this will bring stability and confidence and ultimately be beneficial to real estate values. \n   \n Our operational performance continues to be robust. At an operational level, the business delivered 61 new lettings last year at 13.5% above 2023 ERV, totalling £3.2m rent roll. Rent collection remained high at 98.6%, and occupancy amounted to 77.5% compared to 80.0% in 2023. This slight reduction was in part due to the business holding some buildings vacant while it progresses planning applications to add value. \n   \n Importantly, the combination of our ongoing controlled disposals programme and the successful £110.5m equity raise have transformed Regional REIT's balance sheet, taking LTV to 41.8% at the end of the year from 55.1% in 2023. This ensures that we have the resources and flexibility to take advantage of the opportunities we see to create value across our portfolio. Further reducing LTV via selected disposals remains a priority, and a total of 43 sites totalling c. £106.7m have been earmarked for sale, with nine sales totalling £18.6m either contracted, under offer, or in negotiation. \n   \n Looking ahead, along with a targeted capex programme to bring selected assets up to the necessary standard to optimise rents, a key objective will be maximising the opportunities we see in the portfolio to add value by securing planning consents ahead of sales. Over the medium term, based on current property values we estimate that there is the potential to add substantial value through these initiatives. \n   \n There is a lot of work to do. However, the team is laser focused on delivering against our restated strategy and with a transformed balance sheet there are extensive opportunities across the portfolio. Regional REIT is well placed to deliver against its objective of being a high dividend paying REIT, while also pursuing added capital value. \n   \n KEY POINTS FROM 2024 \n   \n ·    High Level of Rent Collection \n Achieved a high level of rent collection. As at 14 March 2025, rent collection remains robust, with FY 2024 at 98.6%, adjusting for monthly rent and agreed collections plans, which is similar to the equivalent date in 2024 when 98.9% had been collected. \n   \n ·    Increase in Average Rent \n Average rent by let sq. ft. increased by 1.1% from £13.82 per sq. ft. in December 2023 to £13.92 per sq. ft. in December 2024. \n ·    New Lettings - Greater than ERV \n Completed 61 new lettings in 2024, totalling 191,541 sq. ft and 13.5% above ERV, which when fully occupied will provide a gross rental income of c. £3.2 million. \n ·    Increase in GRESB Score \n The Company submitted its Fourth Global Real Estate Sustainability Benchmark (\"GRESB\") assessment resulting in an increased score of 73 from 66. \n ·    Disposals Programme \n Disposals during 2024 totalled £28.6 million (net of costs), reflecting a net initial yield of 8.3% (10.6% excluding vacant assets). \n ·    Outperform the MSCI Monthly Data \n The like-for-like value of the portfolio decreased by 8.2% from 31 December 2023 to 31 December 2024 after adjusting for capital expenditure, acquisitions and disposals during the period (7.1% excluding capital expenditure adjustment). Noting that some assets are being held for repurposing potential, MSCI monthly data shows a capital value decline of 8.9% for the rest of the UK offices over the same period. \n   \n UK Office Investment Activity \n Investment in UK offices reached £1.8 billion in Q4 2024, bringing the total for the year to £7.3 billion, 27% lower than 2023 1 . The decline in overall office investment was primarily driven by a significant drop in London, where investment fell by 34% to £4.7 billion in 2024 down from £7.2 billion in 2023. The regional office markets also experienced decline in investment in 2024 when compared to 2023 of 5.5%, an annual total of £2.34 billion from £2.48 billion. \n   \n Transactional yields 2 for central London offices we marginally up for Q4 2024 at 6.02% against the same period in Q4 2023. In contrast the transactional yields for the rest of the UK were 7.75% for Q4 2024, an increase of 0.5% on the Q4 2023. \n   \n Looking ahead, Lambert Smith Hampton (\"LSH\"), see 2024 as an inflection point for the office sector. LSH forecast to returns averaging c7.9% per annum citing improved staff occupancy and tighter supply. \n   \n Underpinning LSH's forecast, the Office for Nation Statistics (\"ONS\") data 3 shows that in 2024, 42% of workers in the UK on average travelled exclusively to work, while only 13% worked from home full-time, a drop from 25% in 2021. Additionally, approximately 26% of the UK workforce were hybrid working in 2024. \n   \n Recent surveys underscore a growing trend toward increased office attendance across the UK, driven by new policies, improved team engagement, and recognised in-office benefits. \n   \n ·    Centre for Cities Survey 4 : In London, workers increased their office attendance from 2.2 days per week in 2023 2.7 days in 2024, signalling a gradual return. \n ·    KPMG Survey 5 : A survey of financial services leaders shows that 76% plan to increase attendance, with 37% expecting employees to be in the office at least four days weekly. \n ·    Willis Towers Watson Survey 6 : 'Flexible Work Models Pulse' reports that 60% of UK companies now enforce a minimum office-days policy, boosting engagement (85% culture (72%), and learning (69%). \n   \n These findings continue to highlight the benefits and productivity companies observe from in person collaboration. \n   \n 1 UK Investment Transactions Bulletin, UKIT Q4 2024 by Lambert Smith Hampton (LSH), Jan. 2025 \n 2 Transactional Yield focuses on the yield at the point of purchase, based on the current property income \n 3 ONS, Public opinions and social trends, Great Britain: social mobility, Jan. 2025 \n 4 The Future of Work, Centre for Cities report (in partnership with Imperial College London), Sep. 2024 \n 5 Financial Services employee survey, KPMG, Oct. 2024 \n 6 Flexible Work Models Pulse survey by WillisTowersWatson, Dec. 2024 \n   \n Occupational Demand in the UK Regional Office Market \n Avison Young announced that the take-up of office space across the nine 7 regional markets reached 2.2 million square feet (sq.ft.) in Q4 2024, on par with the previous quarter and the highest since Q4 2022, 33.9% above the previous quarter and 18.2% above the five year quarterly average take-up. The annual total was 10% higher than 2023, at 7.9m sq.ft. with positive occupier sentiment, particularly from larger corporates. \n   \n The high demand and short supply across the nine regional markets continue to keep rental growth high, with an average of 6.6% prime rental growth. Occupational demand in the regional office markets continued to be driven by the financial and professional services sector, with both accounting for 18.0% share each in Q4 2024. However, the sector with the most growth was Education and training with 39% annual increase. \n   \n In terms of the development pipeline, in 2025 it is estimated that approximately 2.0 million sq.ft. of office space is currently under construction in the Big Nine 8 regional markets, with 36% already pre-let. The estimated pipeline total is the lowest since 2017 and therefore likely to produce supply shortages. 2024 saw refurbishments take a 38% share, up from 24% in 2023 and this trend is expected to continue into 2025. The data supports LSH's comment (See UK Office Activity) on tighter supply of office space in the forthcoming years. \n   \n 7 Nine regional office markets mentioned by Avison Young include: Birmingham, Bristol, Cardiff, Edinburgh, Glasgow, Leeds, Liverpool, Manchester, Newcastle \n 8 The Big Nine, Quarterly update of regional office activity, Q4 2024 by Avison Young, Feb. 2025 \n   \n Rental Growth in the UK Regional Office Market \n According to monthly data from MSCI, rental value growth finished the year on a high for 'Rest of UK Office' markets with growth of 2.4%. Conversely, central London offices experienced modest growth of 1.2% over the same period. Avison Young report that seven of the Big Nine's cities saw an increase in their prime rents this quarter; with the top three being an increase of: \n   \n • 14.1% to Bristol with £48.50 per square foot (psf) \n • 13.7% to Liverpool at £29.00 psf \n • 12% to Cardiff at £28.00 psf \n   \n This brought the Big Nine's average annual prime rental growth to 6.6% in Q4. \n   \n Regional REIT's Office Assets \n EPRA occupancy of the Group's regional offices of 76.4% as at 31 December 2024 (2023: 79.2%). A like-for-like comparison of the Group's regional offices' EPRA occupancy, as at 31 December 2024 versus 31 December 2023, shows occupancy of 76.4% (2023: 80.5%). WAULT to first break was 2.7 years (2023: 2.6 years); like-for-like WAULT to first break of 2.7 years (2023: 2.6 years). \n   \n Property Portfolio \n As at 31 December 2024, the Group's property portfolio was valued at £622.5 million (2023: £700.7 million), with rent roll of £60.7 million (2023: £67.8 million), and an EPRA occupancy of 77.5% (2023: 80.0%). On a like-for-like basis, 31 December 2024 versus 31 December 2023, EPRA occupancy was 77.5% (2023: 81.3%). \n   \n There were 126 properties (2023: 144) in the portfolio, with 1,271 units (2023: 1,483) and 780 tenants (2023: 978). If the portfolio was fully occupied at Colliers International Property Consultants view of market rents, the rental income would be £83.2 million per annum as at 31 December 2024 (2023: £87.0 million). \n   \n As at 31 December 2024, the net initial yield on the portfolio was 5.9% (2023: 6.2%), the equivalent yield was 10.4% (2023: 9.9%) and the reversionary yield was 11.6% (2023: 10.8%). \n \n \n \n Property Portfolio by Sector \n   \n \n \n \n \n Sector \n \n \n Properties \n \n \n Valuation (£m) \n \n \n % by valuation \n \n \n Sq. ft. (m) \n \n \n Occupancy (EPRA) (%) \n \n \n WAULT to first break (yrs) \n \n \n Gross rental income (£m) \n \n \n Average rent (£psf) \n \n \n ERV (£m) \n \n \n Capital rate (£psf) \n \n \n Net Initial Yield (%) \n \n \n Equivalent yield (%) \n \n \n Reversionary yield (%) \n \n \n \n \n Office \n \n \n 107 \n \n \n 564.7 \n \n \n 90.7 \n \n \n 5.1 \n \n \n 76.4 \n \n \n 2.7 \n \n \n 54.9 \n \n \n 14.97 \n \n \n 77.6 \n \n \n 110.99 \n \n \n 5.8 \n \n \n 10.5 \n \n \n 11.9 \n \n \n \n \n Retail \n \n \n 13 \n \n \n 22.6 \n \n \n 3.6 \n \n \n 0.3 \n \n \n 91.7 \n \n \n 3.4 \n \n \n 2.7 \n \n \n 11.14 \n \n \n 2.6 \n \n \n 85.10 \n \n \n 7.2 \n \n \n 9.6 \n \n \n 10.3 \n \n \n \n \n Industrial \n \n \n 4 \n \n \n 23.1 \n \n \n 3.7 \n \n \n 0.4 \n \n \n 90.8 \n \n \n 4.1 \n \n \n 1.9 \n \n \n 5.38 \n \n \n 2.1 \n \n \n 55.02 \n \n \n 6.5 \n \n \n 7.7 \n \n \n 8.0 \n \n \n \n \n Other \n \n \n 2 \n \n \n 12.2 \n \n \n 2.0 \n \n \n 0.1 \n \n \n 98.5 \n \n \n 9.5 \n \n \n 1.1 \n \n \n 12.48 \n \n \n 0.9 \n \n \n 128.64 \n \n \n 8.5 \n \n \n 8.3 \n \n \n 7.0 \n \n \n \n \n Total \n \n \n 126 \n \n \n 622.5 \n \n \n 100.0 \n \n \n 5.9 \n \n \n 77.5 \n \n \n 2.9 \n \n \n 60.7 \n \n \n 13.92 \n \n \n 83.2 \n \n \n 106.10 \n \n \n 5.9 \n \n \n 10.4 \n \n \n 11.6 \n \n \n \n \n   \n Property Portfolio by Region \n \n \n \n \n Region \n \n \n Properties \n \n \n Valuation (£m) \n \n \n % by valuation \n \n \n Sq. ft. (m) \n \n \n Occupancy (EPRA) (%) \n \n \n WAULT to first break (yrs) \n \n \n Gross rental income (£m) \n \n \n Average rent (£psf) \n \n \n ERV (£m) \n \n \n Capital rate (£psf) \n \n \n Net Initial Yield (%) \n \n \n Equivalent yield (%) \n \n \n Reversionary yield (%) \n \n \n \n \n Scotland \n \n \n 28 \n \n \n 103.5 \n \n \n 16.6 \n \n \n 1.1 \n \n \n 68.7 \n \n \n 4.0 \n \n \n 9.7 \n \n \n 13.93 \n \n \n 16.3 \n \n \n 93.64 \n \n \n 5.0 \n \n \n 11.2 \n \n \n 12.6 \n \n \n \n \n Southeast \n \n \n 23 \n \n \n 109.8 \n \n \n 17.6 \n \n \n 0.9 \n \n \n 78.0 \n \n \n 2.6 \n \n \n 10.9 \n \n \n 16.39 \n \n \n 14.6 \n \n \n 126.25 \n \n \n 6.1 \n \n \n 10.3 \n \n \n 11.7 \n \n \n \n \n Northeast \n \n \n 18 \n \n \n 98.2 \n \n \n 15.8 \n \n \n 0.8 \n \n \n 71.0 \n \n \n 3.1 \n \n \n 8.1 \n \n \n 13.40 \n \n \n 11.8 \n \n \n 117.47 \n \n \n 5.4 \n \n \n 9.7 \n \n \n 10.8 \n \n \n \n \n Midlands \n \n \n 22 \n \n \n 125.1 \n \n \n 20.1 \n \n \n 1.3 \n \n \n 89.3 \n \n \n 3.0 \n \n \n 13.9 \n \n \n 12.83 \n \n \n 16.9 \n \n \n 93.89 \n \n \n 6.4 \n \n \n 10.6 \n \n \n 11.9 \n \n \n \n \n Northwest \n \n \n 17 \n \n \n 87.4 \n \n \n 14.0 \n \n \n 0.9 \n \n \n 69.7 \n \n \n 1.8 \n \n \n 8.5 \n \n \n 13.79 \n \n \n 12.2 \n \n \n 98.35 \n \n \n 5.2 \n \n \n 10.4 \n \n \n 11.9 \n \n \n \n \n Southwest \n \n \n 12 \n \n \n 59.3 \n \n \n 9.5 \n \n \n 0.4 \n \n \n 85.0 \n \n \n 2.0 \n \n \n 5.9 \n \n \n 17.59 \n \n \n 7.1 \n \n \n 148.17 \n \n \n 7.6 \n \n \n 10.3 \n \n \n 11.1 \n \n \n \n \n Wales \n \n \n 6 \n \n \n 39.3 \n \n \n 6.3 \n \n \n 0.4 \n \n \n 88.8 \n \n \n 3.7 \n \n \n 3.6 \n \n \n 10.2 \n \n \n 4.3 \n \n \n 90.24 \n \n \n 6.9 \n \n \n 9.3 \n \n \n 9.9 \n \n \n \n \n Total \n \n \n 126 \n \n \n 622.5 \n \n \n 100.0 \n \n \n 5.9 \n \n \n 77.5 \n \n \n 2.9 \n \n \n 60.7 \n \n \n 13.92 \n \n \n 83.2 \n \n \n 106.10 \n \n \n 5.9 \n \n \n 10.4 \n \n \n 11.6 \n \n \n \n \n \n Tables may not sum due to rounding \n \n \n   \n Top 15 Investments (market value) as at 31 December 2024 \n \n \n \n \n Property \n \n \n Sector \n \n \n Anchor tenants \n \n \n Market value \n (£m) \n \n \n % of portfolio \n \n \n Lettable area \n (sq. ft) \n \n \n EPRA Occupancy \n (%) \n \n \n Annualised gross rent \n (£m) \n \n \n % of gross rental income \n \n \n WAULT to first break (years) \n \n \n \n \n 300 Bath Street, Glasgow \n \n \n Office \n \n \n Glasgow Tay House Centre \n Ltd, University of Glasgow, \n Fairhurst Group LLP, ESR \n Europe LSPIM Ltd \n \n \n 17.9 \n \n \n 2.9 \n \n \n 156,853 \n \n \n 82.7 \n \n \n 0.8 \n \n \n 1.4 \n \n \n 2.6 \n \n \n \n \n Hampshire Corporate Park, Eastleigh \n \n \n Office \n \n \n Aviva Central Services UK Ltd, Lloyd's Register EMEA, Complete Fertility Ltd \n \n \n 17.5 \n \n \n 2.8 \n \n \n 84,043 \n \n \n 100.0 \n \n \n 1.8 \n \n \n 3.0 \n \n \n 2.7 \n \n \n \n \n Norfolk House, \n Smallbrook \n Queensway, \n Birmingham \n \n \n Office \n \n \n Global Banking School Ltd, Accenture (UK) Ltd \n \n \n 17.3 \n \n \n 2.8 \n \n \n 118,530 \n \n \n 98.9 \n \n \n 1.9 \n \n \n 3.2 \n \n \n 6.1 \n \n \n \n \n 800 Aztec West, \n Bristol \n \n \n Office \n \n \n NNB Generation Company \n (HPC) Ltd, EDF Energy Ltd \n \n \n 15.8 \n \n \n 2.5 \n \n \n 73,292 \n \n \n 100.0 \n \n \n 1.5 \n \n \n 2.5 \n \n \n 1.8 \n \n \n \n \n Eagle Court, \n Coventry Road, \n Birmingham \n \n \n Office \n \n \n Virgin Media Ltd, Rexel UK Ltd, Goldbeck Construction Ltd \n \n \n 15.2 \n \n \n 2.4 \n \n \n 132,690 \n \n \n 75.8 \n \n \n 1.3 \n \n \n 2.2 \n \n \n 2.7 \n \n \n \n \n Manchester Green, \n Manchester \n \n \n Office \n \n \n Chiesi Ltd, Ingredion UK Ltd, Assetz SME Capital Ltd \n \n \n 14.9 \n \n \n 2.4 \n \n \n 107,760 \n \n \n 78.9 \n \n \n 1.5 \n \n \n 2.4 \n \n \n 1.7 \n \n \n \n \n Beeston Business \n Park, Nottingham \n \n \n Office/ \n Industrial \n \n \n Metropolitan Housing Trust Ltd, SMS Electronics Ltd, SMS Product Services Ltd \n \n \n 14.6 \n \n \n 2.3 \n \n \n 215,330 \n \n \n 72.4 \n \n \n 1.1 \n \n \n 1.7 \n \n \n 5.0 \n \n \n \n \n 1-4 Llansamlet \n Retail Park, \n Nantyffin Rd, \n \n \n Retail \n \n \n Wren Kitchens Ltd, Dreams Ltd, NCF Furnishings Ltd, ScS \n Upholstery \n \n \n 13.3 \n \n \n 2.1 \n \n \n 74,425 \n \n \n 100.0 \n \n \n 1.2 \n \n \n 2.0 \n \n \n 3.5 \n \n \n \n \n Oakland House, \n Manchester \n \n \n Office \n \n \n Please Hold (UK) Ltd, \n A.M.London Fashion Ltd, \n CVS (Commercial Valuers & Surveyors) Ltd \n \n \n 12.9 \n \n \n 2.1 \n \n \n 161,502 \n \n \n 80.8 \n \n \n 1.1 \n \n \n 1.9 \n \n \n 1.3 \n \n \n \n \n Orbis 1, 2 & 3, Pride \n Park, Derby \n \n \n Office \n \n \n Firstsource Solutions UK \n Ltd, DHU Health Care C.I.C., Tentamus Pharma (UK) Ltd \n \n \n 12.1 \n \n \n 1.9 \n \n \n 121,883 \n \n \n 100.0 \n \n \n 1.8 \n \n \n 3.0 \n \n \n 2.4 \n \n \n \n \n Ashby Park, Ashby \n De La Zouch \n \n \n Office \n \n \n Ceva Logistics Ltd, Ashfield Healthcare Ltd, Brush Electrical Machines Ltd \n \n \n 11.6 \n \n \n 1.9 \n \n \n 87,872 \n \n \n 92.8 \n \n \n 1.2 \n \n \n 2.1 \n \n \n 3.3 \n \n \n \n \n Lightyear - Glasgow \n Airport, Paisley \n \n \n Office \n \n \n Loganair Ltd, Rolls-Royce \n Submarines Ltd, Heathrow \n Airport Ltd \n \n \n 11.5 \n \n \n 1.8 \n \n \n 73,499 \n \n \n 94.4 \n \n \n 1.5 \n \n \n 2.4 \n \n \n 4.3 \n \n \n \n \n Linford Wood \n Business Park, \n Milton Keynes \n \n \n Office \n \n \n IMServ Europe Ltd, Senceive Ltd, Aztech IT Solutions Ltd \n \n \n 11.3 \n \n \n 1.8 \n \n \n 107,352 \n \n \n 78.8 \n \n \n 1.2 \n \n \n 2.0 \n \n \n 2.0 \n \n \n \n \n Capitol Park, Leeds \n \n \n Office \n \n \n Hermes Parcelnet Ltd, BDW Trading Ltd \n \n \n 11.0 \n \n \n 1.8 \n \n \n 86,758 \n \n \n 55.3 \n \n \n 0.7 \n \n \n 1.2 \n \n \n 3.1 \n \n \n \n \n The Coach Works, \n Leeds \n \n \n Office \n \n \n St James's Place Wealth \n Management Group Ltd, \n Abstract Tech Ltd, Canal & River Trust \n \n \n 10.5 \n \n \n 1.7 \n \n \n 41,121 \n \n \n 68.9 \n \n \n 0.7 \n \n \n 1.2 \n \n \n 1.4 \n \n \n \n \n Total \n \n \n   \n \n \n   \n \n \n 207.0 \n \n \n 33.3 \n \n \n 1,642,910 \n \n \n 86.4 \n \n \n 19.6 \n \n \n 32.3 \n \n \n 3.0 \n \n \n \n \n   \n Tables may not sum due to rounding \n   \n Top 15 Tenants (share of rental income) as at 31 December 2024 \n \n \n \n \n Tenant \n \n \n Property \n \n \n Sector \n \n \n WAULT to first break (years) \n \n \n Lettable area \n (sq. ft) \n \n \n Annualised gross rent (£m) \n \n \n % of gross rental income \n \n \n \n \n EDF Energy Ltd \n \n \n 800 Aztec West, Bristol \nEndeavour House, Sunderland \n \n \n Electricity, gas, steam and air conditioning supply \n \n \n 4.5 \n \n \n 109,114 \n \n \n 1.7 \n \n \n 2.8 \n \n \n \n \n Global Banking School Ltd \n \n \n Norfolk House, Smallbrook Queensway, Birmingham \n \n \n Education \n \n \n 7.9 \n \n \n 73,628 \n \n \n 1.4 \n \n \n 2.3 \n \n \n \n \n Virgin Media Ltd \n \n \n Eagle Court, Coventry Road, Birmingham \nSouthgate Park, Peterborough \n \n \n Information and communication \n \n \n 2.7 \n \n \n 75,309 \n \n \n 1.3 \n \n \n 2.2 \n \n \n \n \n The Secretary of \nState for Housing, \nCommunities and Local \nGovernment \n \n \n 1 Burgage Square, Merchant Square, Wakefield \nAlbert Edward House, Preston \nBennett House, Stoke-On-Trent \nOakland House, Manchester \nOrigin (Office), Bracknell \nWaterside Business Park, Swansea \n \n \n Public sector \n \n \n 4.1 \n \n \n 116,238 \n \n \n 1.2 \n \n \n 2.0 \n \n \n \n \n First Source Solutions UK Ltd \n \n \n Orbis 1, 2 & 3, Pride Park, Derby \n \n \n Administrative and support service activities \n \n \n 2.3 \n \n \n 62,433 \n \n \n 1.0 \n \n \n 1.7 \n \n \n \n \n E.ON UK Plc \n \n \n Two Newstead Court, Nottingham \n \n \n Electricity, gas, steam and air conditioning supply \n \n \n 0.3 \n \n \n 99,142 \n \n \n 0.9 \n \n \n 1.6 \n \n \n \n \n Shell Energy Retail Ltd \n \n \n Columbus House, Coventry \n \n \n Electricity, gas, steam and air conditioning supply \n \n \n 0.0 \n \n \n 53,253 \n \n \n 0.9 \n \n \n 1.5 \n \n \n \n \n NNB Generation Company (HPC) Ltd \n \n \n 800 Aztec West, Bristol \n \n \n Electricity, gas, steam and air conditioning supply \n \n \n 1.1 \n \n \n 41,743 \n \n \n 0.9 \n \n \n 1.4 \n \n \n \n \n SPD Development Co Ltd \n \n \n Clearblue Innovation Centre, Bedford \n \n \n Professional, scientific and technical activities \n \n \n 9.0 \n \n \n 58,167 \n \n \n 0.8 \n \n \n 1.4 \n \n \n \n \n Aviva Central Services UK Ltd \n \n \n Hampshire Corporate Park, Eastleigh \n \n \n Other service activities \n \n \n 0.9 \n \n \n 42,612 \n \n \n 0.8 \n \n \n 1.3 \n \n \n \n \n Odeon Cinemas Ltd \n \n \n Kingscourt Leisure Complex, Dundee \n \n \n Information and communication \n \n \n 10.8 \n \n \n 41,542 \n \n \n 0.8 \n \n \n 1.2 \n \n \n \n \n Care Inspectorate \n \n \n Compass House, Dundee \nQuadrant House, Dundee \n \n \n Public Sector \n \n \n 3.3 \n \n \n 51,852 \n \n \n 0.7 \n \n \n 1.1 \n \n \n \n \n Please Hold (UK) Ltd \n \n \n Oakland House, Manchester \n \n \n Professional, scientific \n and technical activities \n \n \n 0.9 \n \n \n 60,362 \n \n \n 0.6 \n \n \n 1.0 \n \n \n \n \n SpaMedica Limited \n \n \n 1175 Century Way, Thorpe Park, Leeds, \nAlbert Edward House, Preston \nFairfax House, Wolverhampton, \nSouthgate Park, Peterborough, \nThe Foundation Chester Business Park, Chester \n \n \n Human health and social work activities \n \n \n 3.1 \n \n \n 40,529 \n \n \n 0.6 \n \n \n 1.0 \n \n \n \n \n DHU Health Care C.I.C. \n \n \n Orbis 1, 2 & 3, Pride Park, Derby \n \n \n Human health and \n social work activities \n \n \n 1.3 \n \n \n 42,301 \n \n \n 0.6 \n \n \n 0.9 \n \n \n \n \n Total \n \n \n \n \n \n \n \n \n 3.7 \n \n \n 968,225 \n \n \n 14.3 \n \n \n 23.5 \n \n \n \n \n Tables may not sum due to rounding. \n \n \n Property Portfolio Sector and Region Splits by Valuation and Income as at 31 December 2024 \n   \n By Valuation \n As at 31 December 2024, 90.7% (2023: 92.1%) of the portfolio by market value was offices and 3.6% (2023: 3.1%) was retail. The balance was made up of industrial, 3.7% (2023: 3.2%) and other, 2.0% (2023: 1.7%). By UK region, as at 31 December 2024, Scotland represented 16.6% (2023: 16.2%) of the portfolio and England 77.1% (2023: 78.4%); the balance of 6.3% (2023: 5.4%) was in Wales. In England, the largest regions were the Midlands, the South-East and the North-East. \n   \n By Income \n As at 31 December 2024, 90.5% (2023: 91.3%) of the portfolio by income was offices and 4.4% (2023: 4.2%) was retail. The balance was made up of industrial, 3.2% (2023: 2.8%), and other, 1.9% (2023: 1.7%). By UK region, as at 31 December 2024, Scotland represented 16.0% (2023:15.8%) of the portfolio and England 78.0% (2023: 78.6%); the balance of 6.0% was in Wales (2023: 5.6%). In England, the largest regions were the Midlands, the South-East and the North-West. \n   \n Lease Expiry Profile \n The WAULT on the portfolio is 4.6 years (2023: 4.7 years); WAULT to first break is 2.9 years (2023: 2.8 years). As at 31 December 2024, 13.8% (2023: 15.9%) of income was from leases, which will expire within one year, 10.5% (2023: 10.7%) between one and two years, 39.7% (2023: 33.3%) between two and five years and 36.1% (2023: 40.1%) after five years. \n   \n Tenants by Standard Industrial Classification (SIC) \n As at 31 December 2024, 11.8% of income was from tenants in the professional, scientific and technical activities sector (2023: 11.5%), 11.2% from the administrative and support service activities sector (2023: 10.4%), 10.5% from the information and communication activities sector (2023: 12.2%), 8.7% from the wholesale and retail trade sector (2023: 8.0%) and 6.4% from the  electricity, gas, steam and air conditioning supply sector (2023: 6.5%). The remaining exposure is broadly spread. \n   \n No tenant represents more than 3.0% of the Group's rent roll as at 31 December 2024, the largest being 2.8% (2023: 2.5%). \n   \n Financial Review \n   \n Net Asset Value \n In the year ended 31 December 2024, the EPRA NTA* of the Group increased to £340.7 million (IFRS NAV: £351.6 million) from £290.8 million (IFRS NAV: £306.1 million) as at 31 December 2023, with an EPRA NTA of 210.2pps (IFRS: 216.9pps). \n   \n The EPRA NTA increase of £50.0 million since 31 December 2023 was predominately due to the equity capital raise proceeds of £110.5 million, offset by a £54.7 million reduction in the revaluation of the property portfolio held as at 31 December 2024, £2.0 million from lease incentives and £3.2 million realised loss on the disposal of properties. \n   \n The investment property portfolio valuation as at 31 December 2024 amounted to £622.5 million (2023: £700.7 million). The property valuation decrease since the December 2023 year end is a reflection of £54.7 million in property revaluation, £28.6 million of net property disposals and loss on the disposals of £3.2 million, offset by subsequent expenditure of £8.2 million. \n   \n Overall, on a like-for-like basis, the portfolio value decreased by 8.2% during the year. \n   \n The table below sets out the acquisitions, disposals and capital expenditure for the respective periods: \n   \n \n \n \n \n \n \n \n \n \n \n Year ended \n \n \n Year ended \n \n \n \n \n \n \n \n \n \n \n 31 December \n 2024 \n \n \n 31 December \n 2023 \n \n \n \n \n \n \n \n \n \n \n (£m) \n \n \n (£m) \n \n \n \n \n Acquisitions \n \n \n \n \n \n \n \n \n \n \n \n \n \n Net (after costs) \n \n \n 0.0 \n \n \n 0.1 \n \n \n \n \n \n \n \n Gross (before costs) \n \n \n 0.0 \n \n \n 0.0 \n \n \n \n \n Disposals \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Net (after costs) \n \n \n 28.6 \n \n \n 25.0 \n \n \n \n \n \n \n \n Gross (before costs) \n \n \n 30.8 \n \n \n 26.1 \n \n \n \n \n Capital Expenditure \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Net (after dilapidations) \n \n \n 8.2 \n \n \n 10.2 \n \n \n \n \n \n \n \n Gross (before dilapidations) \n \n \n 8.5 \n \n \n 11.0 \n \n \n \n \n   \n *Further details of the new EPRA performance measures are provided in the full Annual Report. \n   \n The EPRA NTA is reconciled in the table below: \n   \n \n \n \n \n   \n \n \n Year ended \n 31 December 2024 \n (£m) \n \n \n \n \n Opening EPRA NTA (31 December 2023) \n \n \n   \n \n \n 290.8 \n \n \n \n \n Net rental and property income \n \n \n \n \n \n 46.0 \n \n \n \n \n Administration and other expenses \n \n \n \n \n \n (9.9) \n \n \n \n \n Gain/(Loss) on the disposal of investment properties \n \n \n \n \n \n (3.2) \n \n \n \n \n Change in the fair value of investment properties \n \n \n \n \n \n (56.7) \n \n \n \n \n Change in value of right of use \n \n \n \n \n \n (0.1) \n \n \n \n \n EPRA NTA after operating profit \n \n \n   \n \n \n 266.8 \n \n \n \n \n Net finance expense \n \n \n \n \n \n (13.8) \n \n \n \n \n Realised gain on derivative financial instruments \n \n \n \n \n \n 2.7 \n \n \n \n \n Taxation \n \n \n \n \n \n (0.0) \n \n \n \n \n EPRA NTA before dividends paid \n \n \n   \n \n \n 255.7 \n \n \n \n \n Dividends declared \n \n \n \n \n \n (19.4) \n \n \n \n \n EPRA NTA before capital raise \n \n \n \n \n \n 236.3 \n \n \n \n \n Capital raise \n \n \n \n \n \n 110.5 \n \n \n \n \n Capital raise expenses \n \n \n \n \n \n (6.0) \n \n \n \n \n Closing EPRA NTA (31 December 2024) \n \n \n   \n \n \n 340.7 \n \n \n \n \n   \n Table may not sum due to rounding \n   \n Income Statement \n   \n Operating profit before gains and losses on property assets and other investments for the year ended 31 December 2024 amounted to £36.1 million (2023: £43.1 million). Loss after finance and before taxation of £39.5 million (2023: loss £67.5 million). 2024 included the rent roll for properties held from 31 December 2023, plus the partial rent roll for properties disposed of during the year.  Rental and property income amounted to £65.2 million, excluding recoverable service charge income and other similar items (2023: £70.1 million), the decrease is due to a reduction in the rent roll being held during the year to 31 December 2024. \n   \n More than 80% of the rental income was collected within 30 days of the due date and the allowance for doubtful debts in the year amounted to £0.5 million (2023: £0.5 million). \n   \n Non-recoverable property costs, excluding recoverable service charge income and other similar costs, amounted to £19.3 million (2023: £16.3 million), and the rent roll amounted to £60.7 million (2023: £67.8 million). \n   \n Realised losses on the disposal of investment properties amounted to £3.2 million (2023: loss £0.7 million). The loss on the disposals were from the aggregate disposal of 18 properties and three-part sales in the period, on which individual asset management plans had been completed and/or were of sub-optimal asset size. The change in the fair value of investment properties amounted to a loss of £54.7 million (2023: loss of £73.3 million), and an adjustment of £2.0 million (2023: £13.0 million) from rent smoothing. \n   \n Net capital expenditure amounted to £8.2 million (2023: £10.2 million). The change in value of right of use assets amounted to a charge of £0.1 million (2023: charge £0.1 million). \n   \n Interest income amounted to £1.4 million (2023: £0.1 million). \n   \n Finance expenses amount to £15.2 million (2023: £16.2 million). The decrease is due to the 4.5% £50 million of Retail Bonds being repaid in August 2024 and net borrowings being repaid during the year, amounting to £54.0m in the year. \n   \n The EPRA* cost ratio, including direct vacancy costs, was 44.7% (2023: 38.5%). The increase in the cost ratio is ostensibly a reflection of the increase in Other property expenses and irrecoverable costs. The EPRA cost ratio, excluding direct vacancy costs was 17.4% (2023: 16.4%). The ongoing charges for the year ending 31 December 2024 were 9.3% (2023: 7.5%) and 3.5% excluding void costs (2023: 3.2%). \n   \n The EPRA Total Return from Listing to 31 December 2024 was 5.6% (2023: 12.7%), with an annualised rate of 0.6% pa (2023: 1.5% pa). \n   \n *Further details of the new EPRA performance measures are provided in the full Annual Report. \n   \n Dividend \n In relation to the year from 1 January 2024 to 31 December 2024, the Company declared dividends totalling 7.80pps (2023: 5.25pps). Prior to the capital raise and share consolidation, the Company declared a Q1 2024 dividend of 1.2pps. Following the capital raise and subsequent share consolidation, the Company declared a Q2 2024 dividend of 2.2pps on 10 September 2024, a Q3 2024 dividend of 2.2pps on 13 November 2024, and a Q4 2024 dividend of 2.2pps on 20 February 2024. A schedule of dividends can be found in the full Annual Report. \n   \n Debt Financing and Gearing \n Borrowings comprise of third-party bank debt. The bank debt is secured over properties owned by the Group and repayable over the coming five years. The weighted average maturity of the bank debt 2.9 years (2023: 3.5 years). \n   \n The Group's borrowing facilities are with: the Royal Bank of Scotland, Bank of Scotland and Barclays; Scottish Widows Ltd. & Aviva Investors Real Estate Finance; Scottish Widows Ltd. and Santander UK. The total bank borrowing facilities at 31 December 2024 amounted to £316.7 million (2023: £370.8 million) before unamortised debt issuance costs. \n   \n At 31 December 2024, the Group's cash and cash equivalent balances amounted to £56.7 million (2023: £34.5 million), of which £55.9 million (2023: £30.7 million) was unrestricted cash. \n   \n The Group's net loan to value (\"LTV\") ratio stands at 41.8% (2023: 55.1%) before unamortised costs. \n   \n Debt Profile and LTV Ratios as at 31 December 2024 \n \n \n \n \n   \n \n \n Facility \n \n \n Outstanding debt* \n \n \n Maturity date \n \n \n Gross loan to value** \n \n \n Annual interest rate \n \n \n \n \n Lender \n \n \n £'000 \n \n \n £'000 \n \n \n % \n \n \n % \n \n \n \n \n Royal Bank of Scotland, Bank of Scotland & Barclays \n \n \n 99,789 \n \n \n 99,789 \n \n \n Aug-26 \n \n \n 51.3 \n \n \n 2.40 over 3 months \n £ SONIA \n \n \n \n \n Scottish Widows Ltd. and Aviva Investors Real Estate Finance \n \n \n 132,630 \n \n \n 132,630 \n \n \n Dec-27 \n \n \n 51.3 \n \n \n 3.28 Fixed \n \n \n \n \n Scottish Widows Ltd. \n \n \n 34,467 \n \n \n 34,467 \n \n \n Dec-28 \n \n \n 47.5 \n \n \n 3.37 Fixed \n \n \n \n \n Santander UK \n \n \n 49,848 \n \n \n 49,848 \n \n \n Jun-29 \n \n \n 51.0 \n \n \n 2.20 over 3 months \n £ SONIA \n \n \n \n \n \n \n \n 316,734 \n \n \n 316,734 \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n Table may not sum due to rounding. \n   \n As at 31 December 2024, the Group had headroom against its borrowing covenants. \n   \n The net gearing ratio (net debt to Ordinary Shareholders' equity (diluted)) of the Group was 73.9% as at 31 December 2024 (2023: 126.2%). \n   \n Interest cover, excluding amortised costs, stands at 2.7 times (2023: 2.9 times) and including amortised costs, stands at 2.4 times (2023: 2.7 times). \n   \n * Before unamortised debt issue costs \n ** Based on Colliers International Property Consultants Ltd. \n   \n Hedging \n The Group applies an interest hedging strategy that is aligned to the property management strategy and aims to mitigate interest rate volatility on at least 90% of the debt exposure. \n   \n \n \n \n \n \n \n \n \n \n \n 31 December 2024 \n \n \n 31 December 2023 \n \n \n \n \n \n \n \n \n \n \n % \n \n \n % \n \n \n \n \n Borrowings interest rate hedged \n \n \n \n \n \n 100.0 \n \n \n 100.0 \n \n \n \n \n Thereof: \n \n \n \n \n \n \n \n \n \n \n \n \n \n Fixed \n \n \n \n \n \n 52.7 \n \n \n 56.7 \n \n \n \n \n Swap \n \n \n \n \n \n 30.4 \n \n \n 28.6 \n \n \n \n \n Cap \n \n \n \n \n \n 16.9 \n \n \n 14.7 \n \n \n \n \n WACD 1 \n \n \n \n \n \n 3.4 \n \n \n 3.5 \n \n \n \n \n   \n Table may not sum due to rounding \n   \n 1 WACD - Weighted Average Effective Interest Rate including the cost of hedging \n   \n There is no over-hedged position as at 31 December 2024. \n   \n Tax \n The Group entered the UK REIT regime on 7 November 2015 and all of the Group's UK property rental operations became exempt from UK corporation tax from that date. The exemption remains subject to the Group's continuing compliance with the UK REIT rules. \n   \n On 9 January 2018, the Company registered for VAT purposes in England. \n   \n During 2024, the Group recognised a deferred tax charge of £64,590 (2023: £8,431). \n   \n PRINCIPAL RISKS AND UNCERTAINTIES \n   \n Effective risk management is embedded throughout Regional REIT and underpins the execution of the Company's strategy, the positioning of the business for growth and maintaining the regular income over a long-term sustainable horizon. \n   \n Risk Framework and Approach \n The Board acknowledges the importance of embedding a framework to identify, actively monitor, managing and mitigating its risks, which include, but are not limited to: strategic, valuation, healthcare, economic and political, funding, tenant, financial and tax charges, operational, regulatory, environmental risks and emerging risks. \n   \n The Board has overall responsibility for the Company's system of risk management and internal controls. It is supported by the Audit Committee in the management of risk. The Audit Committee is responsible for determining the principal risks facing the business and reviewing, at least annually, the effectiveness of the Company's financial control, risk management and internal control processes. \n   \n Over the long term, the business will face other challenges and emerging threats for which it remains vigilant. \n   \n However, the Board also views the risks as opportunities that, when effectively managed, can enhance performance. Thus, having an effective risk management process is key to support the delivery of the Company's strategy. \n   \n Approach to Managing Risk - Identification, Evaluation And Mitigation \n The risk management process emphasis is upon awareness and is structured to identify, evaluate, manage and mitigate, rather than eliminate, risks faced. The Company maintains a detailed and formal matrix of current principal risks, which uses risk scoring to evaluate risks consistently. This allows the risks to be monitored and mitigated as part of a risk management process with the Audit Committee undertaking, at a minimum on a six-monthly basis or more frequently if required, a robust evaluation of these risks facing the Company. \n   \n Risks are identified and assessed according to their potential impact on the Company and to their likelihood occurrence. The Audit Committee utilises the risk matrix to prioritise individual risks, allocating scores to each risk for both the likelihood of its occurrence and the severity its impact. Those with the highest gross rating in terms of impact are highlighted as top risks within the matrix and are defined as principal risks. \n   \n Although the Board believes that it has a robust framework of internal controls in place, it recognises it can provide only reasonable, and not absolute, assurance against material financial misstatement or loss and is designed to manage, not eliminate, risk. \n   \n Risk Appetite \n Taking risks is an essential and inherent facet of operating any business. As such the risk management approach is not to eliminate all risk but to ensure that appropriate strategies are in place to identify, actively monitor, manage and mitigate the key risks. \n   \n The Board is responsible for defining the level of risk that the Company assumes and ensuring that it remains in-line with the Company's strategy. Risk appetite is integral to the Board's approach to risk management, business planning and decision making. The level and type of risk that the Company is willing to bear will vary over time. \n   \n The Board, in collaboration with the Asset Manager and Investment Manager, and with the latest information available, regularly reviews the risk appetite of the Company allowing a prompt response to identified emerging risks. \n   \n Emerging Risks \n The Board is cognisant of emerging risks defined as potential trends, sudden events or changing risks, which are characterised by a high degree of uncertainty in terms of probability of occurrence and possible effects on the Company. Once emerging risks become sufficiently clear, they may be classed as a principal risk and added to the risk matrix. \n   \n To help manage emerging risks and discuss other wider matters affecting property, the Board has an annual strategy meeting. The Board considers having a clear strategy is the key to managing and mitigating emerging risk. \n   \n The Company's principal risks consist of the ten most significant risks which are composed of eight strategic and two operational risks. The strategic risks relate to investment strategy, valuation, healthcare, economics and political, funding, tenant, financial and tax changes, and environmental and energy efficiency standards; operational risk encompasses business disruption, and accounting, legal and regulatory. \n   \n The below list, in no particular order, sets out the current identifiable principal and emerging risks, including their impact and the actions taken by the Company to mitigate them. It does not purport to be an exhaustive list of all the risks faced by the Company. \n   \n Principal Risk Summary \n \n \n \n \n Principal Risk \n \n \n Evolution of the trend during the year \n \n \n \n \n 1.   \n \n \n Strategic \n \n \n ó \n \n \n \n \n 2.   \n \n \n Valuation \n \n \n ö \n \n \n \n \n 3.   \n \n \n Healthcare      \n \n \n ó \n \n \n \n \n 4.   \n \n \n Economic and political \n \n \n ó \n \n \n \n \n 5.   \n \n \n Funding \n \n \n ⇩ \n \n \n \n \n 6.   \n \n \n Tenant \n \n \n ó \n \n \n \n \n 7.   \n \n \n Financial and tax changes      \n \n \n ó \n \n \n \n \n 8.   \n \n \n Operational \n \n \n ó \n \n \n \n \n 9.   \n \n \n Accounting, legal and regulatory \n \n \n ó \n \n \n \n \n 10. \n \n \n Environmental and energy efficiency standards \n \n \n ó \n \n \n \n \n   \n 1.   Strategic \n \n \n \n \n \n \n \n \n Potential Impact \n \n \n Mitigation \n \n \n Movement in the period ó \n \n \n \n \n An inappropriate investment strategy, and/or failure to implement the strategy could result in lower income and capital returns to Shareholders. \n \n \n ·    A clearly defined investment strategy, which is reviewed annually. \n ·    A defined and rigorous investment appraisal process. \n ·    Acquire portfolios, which offer Shareholders diversification of investment risk by investing in a range of geographical areas, number of properties. \n ·    Supply and demand market information is reviewed continuously to assist in acquisitions and disposals. \n ·    All the above steps are monitored to ensure the strategy is implemented. \n   \n \n \n ·    The property portfolio remains balanced across a range of geographical areas and a large number of investment properties. \n \n \n \n \n \n \n \n ·    Predominately, acquiring office properties in the UK and outside of the M25 motorway. However, the Group may invest in property portfolios in which up to 50% of the properties (by market value) are situated within the M25 motorway. \n   \n \n \n ·    The Company continues to purchase properties in the UK outside the M25 motorway. \n \n \n \n \n \n \n \n ·    No single property, in the ordinary course of business, is expected to exceed 10% of the Company's aggregate Investment Properties valuation. However, the Board may, in exceptional circumstances, consider a property having a value of up to 20% of the Company's investment property value at the time of investment. \n   \n \n \n ·    300 Bath Street (2023: 300 Bath Street) is the highest valued property, which equates to 2.9% (2023: 2.8%) of the Company's investment properties. \n \n \n \n \n \n \n \n ·    No more than 20% of the Company's investment property value shall be exposed to any single tenant or group undertaking of that tenant. \n \n \n ·    The Company's largest single tenant exposure is 2.8% (2023: 2.5%) of gross rental income, being EDF Energy Ltd. (2023: EDF Energy Ltd.). \n   \n \n \n \n \n \n \n \n ·    Speculative development (i.e., properties under construction, but excluding any refurbishment works, which have not been pre-let) is prohibited. \n   \n \n \n ·    No speculative construction was undertaken during the year under review. \n \n \n \n \n \n \n \n ·    The value of the properties is protected as far as possible by an active asset management programme, which is regularly reviewed against the business plan for each property. \n \n \n ·    The Asset Manager continues to actively manage the investment properties in accordance with market conditions and the individual asset programme. \n \n \n \n \n \n \n \n \n \n   \n 2.   Valuation \n \n \n \n \n Potential Impact \n \n \n Mitigation \n \n \n Movement in the period ö \n \n \n \n \n The valuation of the Company's portfolio affects its profitability and net assets. \n \n \n ·    The Company's external valuer, Colliers International Property Consultants Ltd, provide independent valuations for all properties on a six-monthly basis in accordance with the RICS Red Book. \n ·    The Audit Committee has the opportunity to discuss the basis of the valuations with the external valuer. The Audit Committee membership includes an experienced chartered surveyor. \n ·    The Asset Manager's experience and extensive knowledge of the property market. The Asset Manager is able to challenge the external valuers' findings. \n ·    The Company's Auditor engages an independent third party to evaluate the Colliers International Property Consultants Ltd valuations. \n \n \n ·    Colliers International Property Consultants Ltd. independently provides the valuation for the entire portfolio, valuing each individual asset. \n \n \n \n \n   \n 3.   Healthcare \n \n \n \n \n Potential Impact \n \n \n Mitigation \n \n \n Movement in the period ó \n \n \n \n \n The economic disruption resulting from social health issues could impact rental income; the ability of Valuers to discern valuations; the ability to access funding at competitive rates, adherence to banking \n covenants, maintain a progressive dividend policy, and adhere to the HMRC REIT regime requirements. \n   \n \n \n ·    The Asset Manager continues to adapt and, as required, to support tenants. \n ·    The property portfolio has been deliberately constituted to ensure a diverse range of tenants by standard industrial classification; which ensured the many tenants, being designated as essential services, continued to operate throughout the recent pandemic. \n ·    Close relationships with lenders ensuring continued dialogue around covenants and ability to access funding as required at competitive rates. \n ·    Initial vetting of all third-party providers with annual due diligence reviews, including the review of business continuity capabilities to minimise when remote working has been necessitated. \n \n \n ·    The Company has continued to scrutinise all current risk mitigation approaches employed and to work closely with all parties. \n   \n \n \n \n \n   \n 4.   Economic and Political \n \n \n \n \n \n \n \n \n Potential Impact \n \n \n Mitigation \n \n \n  Movement in the period ó \n \n \n \n \n Significant political events could impact the health of the UK economy, resulting in borrowing constraints, changes in demand by tenants for suitable properties, the quality of the tenants, and ultimately the property portfolio value. \n \n \n ·    The Company operates with a sole focus on the UK regions, with no foreign currency exchange exposure. It remains well positioned with a deliberately diverse standard industry classification of tenants generating 780 (2023: 978) income streams which are located in areas of expected economic growth. \n ·    The Board receives advice on macro-economic risks from the Asset and Investment Manager and other advisers and acts accordingly. \n   \n \n \n ·    There remains a risk that property valuations and the occupancy market may be impacted by change in the political landscape. \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n 5.   Funding \n \n \n \n \n Potential Impact \n \n \n Mitigation \n \n \n Movement in the period ⇩ \n \n \n \n \n The Company may not be able to secure \n further debt or on acceptable terms, which may impinge upon investment opportunities, the ability to grow the Company and distribute an attractive dividend. \n   \n \n \n ·    The Asset Manager has a Corporate Finance team dedicated to optimising the Company's funding requirements. \n ·    Funding options are constantly reviewed with an emphasis on reducing the weighted average cost of capital and lengthening the weighted average debt to maturity. \n ·    Borrowings are currently provided by a range of institutions with targeted staggered maturities. \n ·    Strong relationships with key long-term lenders. \n ·    Continual monitoring of LTV. \n   \n \n \n ·    LTV decreased to 41.8% (2023: 55.1%) \n ·    Weighted average debt term decreased to 2.9 years (2023: 3.5 years). \n ·    Weighted average cost of capital, including hedging costs was 3.4% (2023: 3.5%). \n \n \n \n \n Bank reference interest rates may be set to become more volatile, accompanying volatile inflation \n \n \n ·    Policy of hedging at least 90% of variable interest rate borrowings. Fixed, swapped and capped borrowing amounted to 100.0% (31 December 2023: 100.0%) \n ·    Borrowings are currently provided by a range of institutions with targeted staggered maturities. \n   \n \n \n ·    Continued adherence to the hedging policy. \n \n \n \n \n Breach of covenants within the Company's funding structure could lead to a cancellation of debt funding if the Company is unable to service the debt. \n \n \n ·    The Asset Manager's corporate finance team reviews the applicable covenants on a regular basis and these are considered in future operational decisions. \n ·    Compliance certificates and requested reports are prepared as scheduled. \n \n \n ·    The Company continues to have headroom against the applicable borrowing covenants. \n \n \n \n \n   \n 6.   Tenant \n \n \n \n \n Potential Impact \n \n \n Mitigation \n \n \n Movement in the period ó \n \n \n \n \n Type of tenant and concentration of tenant could result in lower income from reduced lettings or defaults. \n \n \n ·    An active asset management programme with a focus on the Asset Manager working with individual tenants to assess any occupational issues and to manage any potential bad debts. \n ·    Diversified portfolio of properties let, where possible, to a large number of low-risk tenants across a wide range of standard industrial classifications throughout the UK. \n ·    Potential acquisitions are reviewed for tenant overlap and potential disposals are similarly reviewed for tenant standard industrial classification concentration. \n   \n \n \n ·    This risk remains stable in view of the increasing diversification of properties, tenants and geographies in the portfolio. \n ·    The tenant mix and their underlying activity has continued to increasingly diversify, with the number of tenants amounting to 780 at the year-end (2023:978). \n \n \n \n \n A high concentration of lease term maturity and/or break options could result in a more volatile contracted rent roll. \n \n \n ·    The portfolio lease and maturity concentrations are monitored by the experienced Asset Manager to minimise concentration. \n ·    There is a focus on securing early renewals and increased lease periods. \n ·    The requirement for suitable tenants and the quality of the tenant is managed by the experienced Asset Manager who maintains close relationships with current tenants and with letting agents. \n \n \n ·    The WAULT to first break as at 31 December 2024 was 2.9 years (2023: 2.8 years) \n ·    The largest tenant is 2.8% (2023: 2.5%) of the gross rental income, being EDF Energy Limited. \n ·    The Asset Management team remains vigilant to the financial well-being of our current tenants and continues to liaise with tenants and agents. \n \n \n \n \n \n \n \n \n \n 7.    Financial and Tax Changes \n \n \n \n \n Potential Impact \n \n \n Mitigation \n \n \n Movement in the period ó \n \n \n \n \n Changes to the UK REIT and non-REIT regimes tax and financial legislation. \n \n \n ·    The Board receives advice on these changes where appropriate and will act accordingly. \n \n \n ·    Advice is received from several corporate advisers, including tax adviser KPMG LLP and the Company adapts to changes as required. \n \n \n \n \n   \n 8.     Operational \n \n \n \n \n Potential Impact \n \n \n Mitigation \n \n \n Movement in the period ó \n \n \n \n \n Business disruption could impinge on the normal operations of the Company. \n \n \n ·    The Asset Manager and Investment Adviser each have contingency plans in place to ensure there are no disruptions to the core infrastructure which would impinge on the normal operations of the Company. \n   \n \n \n ·    Both the Asset Manager and Investment Adviser annually review their Disaster and Business Continuity Plans. \n   \n \n \n \n \n ·    An annual due diligence exercise is carried out on all principal third-party service providers. \n \n \n ·    The annual due diligence visits were undertaken with the Company's principal third-party service providers. No concerns were identified from the visits. \n   \n \n \n \n \n ·    As an externally managed investment company, there is a continued reliance on the Asset Manager and Investment Adviser and other third-party service providers. \n   \n \n \n ·    Both the Asset and Investment Adviser are viable going concerns. \n   \n \n \n \n \n ·    All acquisitions undergo a rigorous due diligence process and all multi-let properties undergo an annual comprehensive fire risk. \n   \n \n \n ·    The Asset Manager continues to monitor changes in Health and Safety regulations. \n   \n \n \n \n \n ·    The impact of physical damage and destruction to investment properties is mitigated by ensuring all are covered by a comprehensive building, loss of rent and service charge plus terrorism insurance with the exception of a small number of \"self-insure\" arrangements covered under leases. \n   \n \n \n ·    The Asset Manager reviews the adequacy of insurance cover on an ongoing basis. \n \n \n \n \n Information security and cyber threat resulting in data loss, or negative regulatory, reputational, operational (including GDPR), or financial impact. \n \n \n ·    The Asset Manager and Investment Adviser each has a dedicated Information Technology team which monitors information security, privacy risk and cyber threats ensuring their respective operations are not interrupted. \n ·    As required the building management systems are reviewed for cyber security risk. \n \n \n ·    The Managers review the respective Information Technology policies and the material third-party service suppliers as required to ensure they reflect current and possible future threats. \n \n \n \n \n   \n 9.  Accounting, Legal, and Regulatory \n \n \n \n \n Potential Impact \n \n \n Mitigation \n \n \n Movement in the period ó \n \n \n \n \n Changes to accounting, legal and/or regulatory legislation, including sanctions could result in changes to current operating processes. \n \n \n ·    Robust processes are in place to ensure adherence to accounting, legal and regulatory requirements, including sanctions and Listing Rules. \n ·    All contracts are reviewed by the Company's legal advisors. \n ·    The Administrator, Sub-Administrator and the Company Secretary attend relevant Board meetings in order to be aware of all announcements that need to be made. \n ·    All compliance issues are raised with the Company's Financial Adviser. \n \n \n ·    The Company continues to receive advice from its corporate advisers and has incorporated changes where required. \n ·    The Administrator and Company Secretary continue to attend all Board meetings and advise on Listing Rule requirements in conjunction with the Corporate Broker and Financial Adviser. \n   \n \n \n \n \n Loss of REIT status \n \n \n ·    The HMRC REIT regime requirements are monitored by the Asset and Investment Manager, and external advisors including the Company's tax adviser KPMG LLP and its Sub-Administrator Waystone Administration Solutions (UK) Limited. \n \n \n ·    The Company continues to receive advice from external advisers on any anticipated future changes to the REIT regime. \n \n \n \n \n   \n 10. Environmental and Energy Efficiency Standards \n \n \n \n \n Potential Impact \n \n \n Mitigation \n \n \n Movement in the period ó \n \n \n \n \n The Company's cost base could be impacted, and management time diverted, due to climate changes and associated legislation. \n \n \n ·    The Board receives regular updates on environmental, social, governance and potential legislation changes from its advisers. \n ·    The Company has engaged an environmental consultancy, CBRE, to assist with improving the Global Real Industry Sustainability Benchmark (GRESB). \n   \n \n \n ·    Additional attention continues to be devoted to this area to ensure the appropriate approach is applied and embedded in Company activities. \n \n \n \n \n Changes to the environment could impact upon the operations of the Company. \n \n \n ·    Property acquisitions undergo a rigorous due diligence process, including an environmental assessment. \n ·    The Asset Manager monitors the portfolio for any detrimental environmental impact, by way of frequent inspections of the properties, and the annual insurance review process. \n   \n \n \n ·    The rigour of the environmental assessments process continues to be reviewed with the aim of enhancing it. \n \n \n \n \n An Energy Performance Rating of E and below may impact the Company's ability to sell or lease an asset. \n \n \n ·    The Company continues to review each property to ensure adherence with Energy Performance Rating requirements. \n ·    The energy efficiency of investment acquisitions is fully considered as part of the due diligence process for the acquisition of a property. \n \n \n ·    The Asset Manager is continually reviewing the feasibility of enhancing Energy Performance Ratings to exceed the minimum requirement. \n \n \n \n \n   \n Changes to the Principal Risks and Uncertainties \n The Board, via the Audit Committee, has reviewed and agreed the movement during the year to each of the identified principal risks and uncertainties following review of these risks, having considered the characteristics of these and the broader economic and geopolitical factors  influencing them. \n   \n A potential emerging risk is the adoption of artificial intelligence in office-based roles, which could pose both a risk and opportunity for the demand of office space. The Board, alongside the Asset and Investment Manager, continues to monitor developments in this area. \n   \n The potential impact of these risks on the Company's long-term strategy is considered evaluated to ensure informed decision-making and proactive management. \n   \n SUSTAINABILITY REPORT \n The Sustainability Report is provided in the full Annual Report. \n   \n Extract FROM the Directors' REPORT \n The full Directors' Report, which includes the Corporate Governance Statement, is provided in the full Annual Report. \n   \n Share Capital \n As at 31 December 2024, the Company's total issued share capital was 162,088,483* Ordinary Shares (2023: 515,736,583). \n   \n On 18 July 2024, shareholders approved a Capital Raising and Share Consolidation and the Company raised approximately £110.5 million of gross proceeds, in aggregate, by way of a fully underwritten Placing, Overseas Placing and Open Offer of 1,105,149,821 New Ordinary Shares. Following completion of the Capital Raising, the Ordinary Shares were consolidated at the Consolidation Ratio of one Consolidated Share for every 10 Ordinary Shares. \n   \n All of the Company's Ordinary Shares are listed on the Main Market segment of the London Stock Exchange and each Ordinary Share carries one vote. \n   \n There is only one class of Ordinary Shares in issue for the Company, in adherence to the REIT requirements. The only other shares the Company may issue are particular types of non-voting restricted preference shares, of which none (2023: none) are currently in issue. \n   \n At the AGM held on 5 August 2024, the Directors were granted authority to allot Ordinary Shares on a non- pre-emptive basis for cash up to a maximum number of 16,208,864 Shares (being 10% of the issued share capital on 19 July 2024). The Directors were also granted the authority to disapply pre-emption rights in respect of the allotment of Ordinary Shares up to a maximum number of 16,208,864 Shares (being 10% of the issued share capital on 19 July 2024) where the allotment of such Shares is for the sole purpose of financing an acquisition or other capital investment as defined by the Pre-Emption Group's Statement of Principles. \n   \n No shares were issued under these authorities during the year under review, and the authorities will expire at the Company's 2025 AGM where resolutions for their renewal will be sought, or, if sooner, on 5 November 2025. \n   \n At the AGM held on 5 August 2024, the Company was authorised to purchase up to a maximum of 16,208,864 of its own Ordinary Shares (being 10% of the Company's issued share capital on 19 July 2024). \n   \n No shares have been purchased under this authority during the year under review, which will expire at the Company's 2025 AGM where a resolution for its renewal will be sought, or, if sooner, on 5 November 2025. \n   \n * During the year the Company offered 15 new ordinary shares for every 7 existing shares. This resulted in an increase of 1,105,149,821 Ordinary Shares being issued. Subsequently there was a 10 for 1 split with the resulting Ordinary shares in issue being 162,088,483. \n   \n Restrictions on the Transfer of Shares \n Subject to the Articles, as well as applicable foreign securities laws, a shareholder may transfer all or any of their Ordinary Shares in any manner which is permitted by Guernsey law or in any other manner which is from time to time approved by the Board. \n   \n If any Ordinary Shares are owned directly, indirectly or beneficially by a person believed by the Board to be a \"Non-Qualified Holder\" (see below), the Board may give notice to such person requiring them either: (i) to provide the Board within 30 days of receipt of such notice with sufficient satisfactory documentary evidence to satisfy the Board that such person is not a Non-Qualified Holder, or (ii) to sell or transfer their Ordinary Shares to a person who is not a Non-Qualified Holder within 30 days and within such 30 days to provide the Board with satisfactory evidence of such sale or transfer and pending such sale or transfer, the Board may suspend the exercise of any voting or consent rights and rights to receive notice of or attend any meeting of the Company and any rights to receive dividends or other distributions with respect to such Ordinary Shares. \n   \n Where condition (i) or (ii) is not satisfied within 30 days after the serving of the notice, (i) the person will be deemed, upon the expiration of such 30 days, to have forfeited their Ordinary Shares or (ii) if the Board in its absolute discretion so determines, the Company may dispose of the Ordinary Shares at the best price reasonably obtainable and pay the net proceeds of such a disposal to the former holder. \n   \n A Non-Qualifying Holder is defined as any person whose ownership of Ordinary Shares, or the transfer of Ordinary Shares to such person, may: \n   \n • cause the Company's assets to be deemed \"plan assets\" for the purposes of the US Internal Revenue Code of 1986 (as amended), or US Employee Retirement Income Security Act of 1974 (as amended); \n • cause the Company to be required to register as an \"investment company\" under the US Investment Company Act 1940; \n • cause the Company or any of its securities to be required under the US Exchange Act, the US Securities Act or any similar legislation; \n • cause the Company not being considered a \"Foreign Private Issuer\", as such term is defined in rule 3b-4(c) under the US Exchange Act; \n • cause the Investment Adviser to be required to register as a municipal Adviser under the US Exchange Act; \n • result in the Company being disqualified from issuing securities pursuant to Rule 506 of Regulation D under the US Securities Act; \n • cause a loss of partnership status for US federal income tax purposes or a termination of the US partnership under US Internal Revenue Code of 1986 (as amended), Section 708; \n • result in a person holding Ordinary Shares in violation of the transfer restrictions put forth in any prospectus published by the Company from time to time; or \n • cause the Company to be a \"controlled foreign corporation\" for the purposes of Section 957 of the US Internal Revenue Code of 1986, (as amended), or may cause the Company to suffer any pecuniary or tax disadvantage or any person who is deemed to be a Non-Qualified Holder by virtue of their refusal to provide the Company with information that it requires in order to comply with its obligations under exchange of information agreements. \n   \n Restrictions on Voting Rights \n Other than those discussed above, the Company does not have any restrictions on shareholder voting rights. \n   \n STATEMENT OF DIRECTORS' RESPONSIBILITIES \n   \n The Directors are responsible for preparing the Annual Report and the Group Financial Statements in accordance with applicable laws and regulations. \n   \n Guernsey company law requires the Directors to prepare financial statements for each financial year. The Directors are required under the UK Listing Rules of the Financial Conduct Authority to prepare the group financial statements in accordance with UK-adopted International Accounting Standards.  \n   \n The financial statements of the Group are required by law to give a true and fair view of the state of the Group's affairs at the end of the financial period and of the profit or loss of the Group for that period and are required by UK-adopted International Accounting Standards to present fairly the financial position and performance of the Group. \n   \n In preparing each of the Group financial statements, the Directors are required to: \n   \n ·    select suitable accounting policies and then apply them consistently; \n ·   present a true and fair view of the financial position, financial performance and cash flows of the Company; \n ·   present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information; \n ·      make judgements and accounting estimates that are reasonable and prudent; \n ·   state whether they have been prepared in accordance with UK-adopted International Accounting Standards; and \n ·     prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business. \n   \n The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group's transactions; disclose with reasonable accuracy at any time the financial position of the Group; enable them to ensure that the financial statements comply with the requirements of The Companies (Guernsey) Law 2008 and, as regards the Group financial statements, the UK-adopted International Accounting Standards. They are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. \n   \n The Directors are responsible for the maintenance and integrity of the corporate and financial information included on Regional REIT's website. \n   \n Legislation in Guernsey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. \n   \n RESPONSIBILITY STATEMENT OF THE DIRECTORS IN RESPECT OF THE CONSOLIDATED ANNUAL REPORT \n   \n Each of the Directors, whose names and functions are found within the full Annual Report, confirms that to the best of each person's knowledge: \n   \n • the financial statements, prepared in accordance with UK-adopted International Accounting Standards, give a true and fair view of the assets, liabilities, financial position and profit of the Group and the undertakings included in the consolidation taken as a whole; \n   \n • the Strategic Report, including the Asset and Investment Managers' Report, includes a fair review of the development and performance of the business and the position of the Group and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties they face; and \n   \n • the Annual Report and financial statements for the year ended 31 December 2024, taken as a whole, are fair, balanced and understandable and provide the information necessary for Shareholders to assess the Group's position, performance, business model and strategy. \n   \n This responsibility statement was approved by the Board of Directors and signed on its behalf by: \n \nDavid Hunter \n Chairman \n 24 March 2025 \n \n \n   \n FINANCIAL STATEMENTS \n   \n Consolidated Statement of Comprehensive Income for the Year Ended 31 December 2024 \n \n \n \n \n \n \n \n   \n   \n   \n Notes \n \n \n Year ended \n 31 December \n 2024 \n £'000 \n \n \n \n \n \n Year ended \n 31 December  2023 \n £'000 \n \n \n \n \n Continuing Operations \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Revenue \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Rental and property income \n \n \n 5 \n \n \n 90,981 \n \n \n \n \n \n 91,880 \n \n \n \n \n Property costs \n \n \n 6 \n \n \n (45,021) \n \n \n \n \n \n (38,161) \n \n \n \n \n Net rental and property income \n \n \n \n \n \n 45,960 \n \n \n   \n \n \n 53,719 \n \n \n \n \n Administrative and other expenses \n \n \n 7 \n \n \n (9,851) \n \n \n \n \n \n (10,626) \n \n \n \n \n Operating profit before gains and losses on property assets and other investments \n \n \n \n \n \n 36,109 \n \n \n   \n \n \n 43,093 \n \n \n \n \n Loss on disposal of investment properties \n \n \n 14 \n \n \n (3,180) \n \n \n \n \n \n (726) \n \n \n \n \n Change in fair value of investment properties \n \n \n 14 \n \n \n (56,732) \n \n \n \n \n \n (86,350) \n \n \n \n \n Change in fair value of right of use assets \n \n \n 26 \n \n \n (138) \n \n \n \n \n \n (139) \n \n \n \n \n Operating loss \n \n \n \n \n \n (23,941) \n \n \n   \n \n \n (44,122) \n \n \n \n \n Finance income \n \n \n 9 \n \n \n 1,394 \n \n \n \n \n \n 79 \n \n \n \n \n Finance expenses \n \n \n 10 \n \n \n (15,224) \n \n \n \n \n \n (16,210) \n \n \n \n \n Net movement in fair value of derivative financial instruments \n \n \n   \n 25 \n \n \n (1,703) \n \n \n   \n   \n \n \n   \n (7,194) \n \n \n \n \n Loss before tax \n \n \n \n \n \n (39,474) \n \n \n   \n \n \n (67,447) \n \n \n \n \n Taxation \n \n \n 11 \n \n \n (65) \n \n \n \n \n \n (9) \n \n \n \n \n Total comprehensive losses for the year \n (attributable to owners of the parent company) \n \n \n \n \n \n (39,539) \n \n \n   \n \n \n   \n (67,456) \n \n \n \n \n   \n \n \n \n \n Loss per Share - basic and diluted (2023 restated) \n \n \n 12 \n \n \n (33.5)p \n \n \n   \n \n \n (82.9)p \n \n \n \n \n   \n The notes below are an integral part of these consolidated financial statements. \n   \n Total comprehensive losses all arise from continuing operations. \n   \n Consolidated Statement of Financial Position as at 31 December 2024 \n \n \n \n \n \n \n \n   \n   \n Notes \n \n \n 31 December \n 2024 \n £'000 \n \n \n \n \n \n 31 December \n  2023 \n £'000 \n \n \n \n \n Assets \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Non-current assets \n \n \n \n \n \n   \n \n \n \n \n \n   \n \n \n \n \n Investment properties \n \n \n 14 \n \n \n 607,458 \n \n \n \n \n \n 687,695 \n \n \n \n \n Right of use assets \n \n \n 26 \n \n \n 10,849 \n \n \n \n \n \n 10,987 \n \n \n \n \n Investments in associates \n \n \n 16 \n \n \n 276 \n \n \n \n \n \n - \n \n \n \n \n Non-current receivables on tenant loan \n \n \n 17 \n \n \n 144 \n \n \n \n \n \n 385 \n \n \n \n \n Derivative financial instruments \n \n \n 25 \n \n \n 11,608 \n \n \n \n \n \n 16,009 \n \n \n \n \n   \n \n \n \n \n \n 630,335 \n \n \n \n \n \n 715,076 \n \n \n \n \n Current assets \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Trade and other receivables \n \n \n 18 \n \n \n 35,079 \n \n \n \n \n \n 32,837 \n \n \n \n \n Cash and cash equivalents \n \n \n 19 \n \n \n 56,719 \n \n \n \n \n \n 34,505 \n \n \n \n \n   \n \n \n \n \n \n 91,798 \n \n \n \n \n \n 67,342 \n \n \n \n \n Total assets \n \n \n \n \n \n 722,133 \n \n \n \n \n \n 782,418 \n \n \n \n \n Liabilities \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Current liabilities \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Trade and other payables \n \n \n 20 \n \n \n (31,647) \n \n \n \n \n \n (33,039) \n \n \n \n \n Deferred income \n \n \n 21 \n \n \n (14,364) \n \n \n \n \n \n (15,597) \n \n \n \n \n Retail eligible bonds \n \n \n 24 \n \n \n - \n \n \n \n \n \n (49,907) \n \n \n \n \n Deferred tax liabilities \n \n \n 22 \n \n \n (741) \n \n \n \n \n \n (708) \n \n \n \n \n   \n \n \n \n \n \n (46,752) \n \n \n \n \n \n (99,251) \n \n \n \n \n Non-current liabilities \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Bank and loan borrowings \n \n \n 23 \n \n \n (312,323) \n \n \n \...

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