2024 Half Year Results

About this update from Regional Reit Ltd.

[{"type":"text","content":"\n \n 10 September 2024 \n   \n Regional REIT Limited \n (\"Regional REIT\", the \"Group\" or the \"Company\") \n   \n   \n 2024 Half Year Results, Q2 Dividend Declaration \n & £110.5m Fundraise Successfully Completed Post Period End \n   \n   \n Regional REIT (LSE: RGL), the regional commercial property specialist today announces its half year results for the six months ended 30 June 2024. \n   \n Post-Period end highlights, Transformational Successful Fundraise: \n ·      18 July 2024 successfully completed £110.5m equity fund raise, supported by Shareholders \n ·     Proceeds used for the repayment of the £50m retail bond and £26.3m will be used to reduce bank facilities. The remaining net proceeds of £28.4m will be used in accretive capital expenditure projects on assets, enhancing earnings in the near term and value in the mid to long-term, further underpinning dividend payments going forward \n ·      29 July 2024 1 for every 10 ordinary share consolidation completed \n ·      6 August 2024 repaid in full the 4.50%, £50m retail bond \n ·      LTV reduced to 42.2% from 30 June 2024 58.3% \n   \n Financial Highlights: \n ·      Portfolio valuation of £647.9m (31 December 2023: £700.7m). On a like-for-like basis, the portfolio value reduced by 5.1% during the period, after adjusting for disposals and capital expenditure, comparing favourably against the MSCI Rest of UK offices Index return of -6.4% \n ·      Rent collection remained strong over the period at 98.0% (equivalent period for 30 June 2023: 98.8%). \n ·      Rent roll at £63.5m, 3% lower on a like-for-like basis (31 December 2023: £67.8m) \n ·      Net initial yield on the portfolio 6.1% (31 December 2023: 6.2%) \n ·      Covered dividend declared per share of Q1 2024 1.20 pence per share (\"pps\"); following the successful equity capital raise and 1 for 10 share consolidation the dividend for Q2 2024: 2.20pps (30 June 2023: 2.85pps) \n ·      The fully covered dividend target for 2024 for H2 2024 is 4.4pps \n ·      The Group's weighted average cost of debt continued to remain low at 3.5% (31 December 2023: 3.5%) \n ·      Operating profit before gains and losses on property assets and other investments for the six months ending 30 June 2024 amounted to £19.1m (30 June 2023: £20.6m) \n ·      The weighted average maturity of the bank debt was 3.0 years (31 December 2023: 3.5 years) \n ·      EPRA NTA 48.8pps (31 December 2023: 56.4pps); IFRS NAV of 51.7pps (31 December 2023: 59.3pps) \n ·      Prior to the 1 for 10 share consolidation on 29 July 2024: EPRA EPS of 2.1pps for the period (30 June 2023: 2.5pps); and post share consolidation 21.3p (30 June 2023: 24.6p) \n   \n Operational highlights: \n ·      As at 30 June 2024, 81.8% of portfolio properties had attained an EPC rating of C+ or higher, an improvement from 73.7% as recorded on 31 December 2023. Properties rated B+ and Exempt have surged to 56.3%, up from 42.1% at the end of the previous year. These milestones place us firmly on the path to better the Minimum Energy Efficiency Standard (MEES) target of an EPC rating of B well before the 2030 deadline \n ·      The Group made disposals amounting to £21.9m (before costs) during the period \n ·      At period end, 91.5% (31 December 2023 92.1%) of the portfolio by valuation was offices, 3.4% industrial (31 December 2023: 3.2%), 3.1% retail (31 December 2023 3.1%) and 1.9% other (31 December 2023: 1.7%) \n ·      At the period end, the portfolio valuation split by region was as follows: England 77.5% (31 December 2023: 78.4%), 16.7% Scotland (31 December 2023: 16.2%) and 5.8% Wales (31 December 2023: 5.4%). \n ·      By income, office assets accounted for 90.9% of gross rental income (30 June 2023: 91.4%) and 4.3% was retail (30 June 2023: 4.6%). The remaining balance was made up of industrial, 3.0% (30 June 2023: 2.7%) and other, 1.8% (30 June 2023: 1.4%) \n ·      The portfolio continues to remain diversified with 132 properties (31 December 2023: 144), 1,305 units (31 December 2023: 1,483) and 832 tenants (31 December 2023: 978) \n ·      EPRA Occupancy rate stood at 78.0% (31 December 2023: 80.0%) \n   \n Q2 2024 Dividend Declaration \n   \n The Company declares that it will pay a dividend of 2.20 pps for the period 1 April 2024 to 30 June 2024. The entire dividend will be paid as a REIT property income distribution (\"PID\"). \n   \n Shareholders have the option to invest their dividend in a Dividend Reinvestment Plan (\"DRIP\"), and more details can be found on the Company's website https://www.regionalreit.com/investors/investors-dividend/dividend-reinvestment-plan . \n   \n The key dates relating to this dividend are: \n   \n \n \n \n \n Ex-dividend date \n \n \n 19 September 2024 \n \n \n \n \n Record date \n \n \n 20 September 2024 \n \n \n \n \n Last day for DRIP election \n \n \n 27 September 2024 \n \n \n \n \n Payment date \n \n \n 18 October 2024 \n \n \n \n \n   \n The level of future payments of dividends will be determined by the Board having regard to, among other factors, the financial position and performance of the Group at the relevant time, UK REIT requirements, the interest of shareholders and the long term future of the Company. \n   \n Stephen Inglis, CEO of London and Scottish Property Investment Management, the Asset Manager: \n \"The period under review was another challenging period for the commercial real estate sector, with valuations reduced by persistently high interest rates and poor investor sentiment towards UK commercial real estate. However, the regional office market appears to be reaching an inflection point, with the recent cut to the base rate providing a helpful development. \n \"Post-period end, we repaid in full our 4.50% £50m retail bond, which we were able to achieve following a £110.5m capital raise in July. This also provides us with the opportunity to reduce the Company's borrowings with the LTV reducing to 42% and we continue to make efforts to reduce the LTV further to the long term target of 40%. The raise also provides greater flexibility for capital expenditure to improve the core assets in our portfolio and increase shareholder value going forward. \n \"We would again like to thank shareholders for their continued support during this challenging period and we look forward to updating them on our progress in enhancing shareholder value through active portfolio management.\" \n   \n Subsequent Events summary post 30 June 2024 \n   \n Since the quarter end, the Group has successfully completed an additional notable letting: \n   \n Lettings \n ·     The Courtyard, Macclesfield - Elior UK Services Ltd. has renewed existing lease for 23,100 sq. ft. of space to August 2028, at a rental income of £542,700 pa (£23.49/ sq. ft.) \n ·      1175 Century Way, Thorpe Park, Leeds - Greenbelt Group Ltd. has let 2,670 sq. ft. of office space to July 2029, at a rental income of £64,080 pa (£24.00 / sq. ft.). \n ·      Mandale Business Park, Durham - Avove Ltd. has let 5,000 sq. ft. of office space to July 2034 with the option to break in 2029, at a rental income of £58,750 pa (£11.75 / sq. ft.). \n ·      St James Business Park, Paisley - Maximus UK Services Ltd. has let 5,456 sq. ft. of office space to September 2029 with the option to break in 2025, at a rental income of £76,384 pa (£14.00 / sq. ft.). \n ·      Buchanan Gate, Stepps, Glasgow - RPS Environmental Management Ltd. has let 7,710 sq. ft. of office space to September 2029 with the option to break in 2027, at a rental income of £88,665 pa (£11.50 / sq. ft.). \n   \n Future asset disposal programme comprises of 54 sales totalling c £106m: \n ·      2 disposals contracted for c. £1.5m \n ·      10 disposals totalling c. £12.4m under offer and in legal due diligence \n ·      7 further disposals totalling c. £10.4m are in negotiation \n ·      7 further disposals totalling c. £9.1m are on the market \n ·      28 potential disposals totalling c. £73m are being prepared for the market \n   \n Forthcoming Events \n   \n \n \n \n \n   13 November 2024 \n \n \n Q3 2024 Trading Update \n \n \n \n \n   \n Enquiries: \n   \n \n \n \n \n Regional REIT Limited \n \n \n   \n \n \n \n \n Press enquiries through Burson Buchanan \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 Manager 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 London & Scottish Property Investment Management  \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 Burson Buchanan Communications \n \n \n Tel: +44 (0) 20 7466 5000 \n \n \n \n \n Financial Communications \n \n \n \n \n \n \n \n Charles Ryland, Henry Wilson, George Beale \n \n \n \n \n \n \n \n   \n About Regional REIT \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 London & Scottish Property Investment Management 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 and comprises, predominantly of offices located in the regional centres outside of the M25 motorway. The portfolio is geographically diversified, with 132 properties, 1,305 units and 832 tenants as at 30 June 2024, with a valuation of c.£647.9m. \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 ESMA Legal Entity Identifier (\"LEI\"): 549300D8G4NKLRIKBX73 \n   \n KEY FINANCIALS \n   \n Period ended 30 June 2024 \n   \n \n \n \n \n \n \n \n                   30 \n June \n 2024 \n \n \n 31 December 2023 \n   \n \n \n \n \n Portfolio Valuation \n \n \n £647.9m \n \n \n £700.7m \n \n \n \n \n IFRS NAV per Share \n \n \n 51.7p \n \n \n 59.3p \n \n \n \n \n EPRA* NTA per Share \n \n \n 48.8p \n \n \n 56.4p \n \n \n \n \n Net Loan to Value Ratio* \n \n \n 58.3% \n \n \n 55.1% \n \n \n \n \n Weighted Average Cost of Debt* \n \n \n 3.5% \n \n \n 3.5% \n \n \n \n \n Weighted Average Debt Duration* \n \n \n 3.0 yrs \n \n \n 3.5 yrs \n \n \n \n \n   \n The European Public Real Estate Association (\"EPRA\")* \n 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 in the full Half Year Report. \n   \n * Alternative Performance Measures. Details are provided in the Glossary of Terms in the full Half-Year Report. \n   \n   \n \"The Board's focus remained on the continued disposal of non-core assets and reducing the LTV, which has been achieved following the successful equity fundraise completed in July, whilst maintaining dividend payments to our shareholders.\" \n   \n Kevin McGrath \n Chairman \n   \n CHAIRMAN'S STATEMENT \n   \n Overview \n My below summary of the Group's performance for the six months to 30 June 2024, has been overshadowed by subsequent events with the completion on 18 July 2024 of the successful £110.5m equity capital raise. \n   \n The transformational raise enabled the Company's £50m Retail Bond to be fully repaid, eliminating this short-term liability and further reduced the constraints caused by the requirement to pay coupon distributions on the Retail Bond. In addition, some £26m are to be used to reduce bank facilities, which will result in the Company having greater headroom under the covenants in such facilities. The remaining proceeds of the net capital raise will provide additional flexibility to fund selective capital expenditure on assets, which will enhance earnings in the near term and value in the mid to long-term, further underpinning dividends going forward. \n   \n Notwithstanding the constrained commercial real estate transactional market conditions, our Asset Manager, in line with our strategy, continued to focus upon the disposal of non-core assets, which in the period under review amounted to £20.7m (net of costs) at a net initial yield of 9.3% (10.4% excluding vacant units). The proceeds from the disposals were promptly allocated to our stated near-term objectives of reducing borrowing levels, with £17.4m being repaid. Planned capital expenditure amounting to £5.2m was utilised to drive property values and increase occupancy. \n   \n After adjusting for disposals and capital expenditure during the period, the Company's portfolio experienced a £52.8m decrease in value to £647.9m (31 December 2023: £700.7m); this reflects a like-for-like decrease of 5.1%, with a Loan-to-Value (LTV) of 58.3%. The Group's post period end equity raise described below has substantially reduced this figure to 42.2%. \n   \n Rent collection remained strong throughout the period to 30 June 2024. As at 30 August 2024, rent collection for the period to 30 June 2024, amounted to 98.0% (equivalent period for the six months to 30 June 2023 98.8%.) Enquiry levels for space requirements continued to increase through the period under review, however, the continued wider macroeconomic conditions saw potential occupiers adopting a cautious approach with the EPRA occupancy standing at 78.0% at the period end (30 June 2023: 82.5%). If fully occupied the rental income is estimated at ERV £83.7m, reflects an equivalent yield of 10.2% (June 2023: 9.5%). EPRA earnings were 21.3p (six months to June 2023: 24.6p). * \n   \n The Board's focus remained on the continued disposal of non-core assets and reducing the LTV, which has been achieved following the successful fundraise completed in July, whilst maintaining dividend payments to our shareholders. \n   \n Financial Resources \n The EPRA NTA saw a reduction to £251.6m (IFRS NAV: £266.6m) as of 30 June 2024, a decrease from the 31 December 2023 £290.8m (IFRS NAV; £306.1m). This contraction is primarily attributed to the lower revaluation of the investment property portfolio, which mirrors the broader challenges faced by the market. \n   \n Despite these headwinds, the Company maintained a robust cash balance of £25.7m as of 30 June 2024 \n (31 December 2023: £34.5m), with £21.8m of this being unrestricted funds (31 December 2023: £30.7m). \n   \n Our debt strategy, characterised by 100% fixed and hedged interest rate debt, shielded the Company from \n rate fluctuations, maintaining a stable weighted average cost of debt at 3.5%. The maturity of the £50m 4.5% Retail Eligible Bond in August 2024 remained a focal point for the Board and more details can be found in the Subsequent Events section. \n   \n * Prior to the Company share consolidation of 1 new share for every 10 ordinary shares after the period end EPRA earnings per share would have been 2.1p (six months to June 2023: 2.5p). \n   \n Sustainability \n As of 30 June 2024, I am pleased to report that 81.8% of our properties have attained an EPC rating of C+ or higher, a significant improvement from 73.7% as recorded on 31 December 2023. Properties rated B+ and Exempt have surged to 56.3%, up from 42.1% at 31 December 2023. These milestones place us firmly on the path to surpassing the Minimum Energy Efficiency Standard (MESS) target of an EPC rating of B well before the 2030 deadline. \n   \n Board Composition \n As noted in the Prospectus published by the Company on 27 June 2024, both Dan Taylor and I, having each served on the Board for nine years, intend to step down from the Board, subject to replacement directors being appointed in our place. The Company and its new significant shareholder, Bridgemere, have agreed, through the Subscription Agreement of the Capital Raising, that Dan will be replaced by a director to be identified by Bridgemere. In addition to his non-executive Director duties, Dan currently also serves as our Senior Independent Director, therefore, as part of the Board's succession plan, one of the Board members will be appointed as the new Senior Independent Director to replace Dan. The Nomination Committee has commenced the process to identify a new non-executive Chair to replace me. We will report to shareholders on the progress, and expect to be able to make the appropriate announcements through a Regulatory Information Service in due course.  \n   \n Dividends \n For the period under review, the Company declared a covered dividend of 1.2pps for the first quarter 2024 and dividend of 2.2 pps* for the second quarter 2024, (declared on 9 September 2024) being post the capital raise and the subsequent share consolidation (six months to June 2023: 2.85pps). Please see Subsequent Events for more information. \n   \n *On 29 July 2024, the shares in issue were consolidated by a ratio of 1 new share for every 10 shares. \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 -50.8%, versus the return of -2.4% for the FTSE EPRA NAREIT UK Total return Index over the same period. The EPRA total return from listing on 6 November 2015 was 7.5% and the annualised EPRA Total Return was 0.8%. Total Shareholder Return since listing was -65.9%, compared with the FTSE EPRA NAREIT UK Total Return Index of -10.3%. \n   \n Subsequent Events \n Following shareholder support and approval at the extraordinary general meeting held on 18 July 2024, the Company successfully raised £110.5m 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. The Capital Raise was fully underwritten by Bridgemere Investments Limited, whom we now welcome as a significant new Shareholder with a holding of 18.7%. \n   \n As announced on 29 July 2024, the Company completed a share consolidation, representing a consolidation ratio of 1 consolidated share for every 10 ordinary shares. \n   \n The Company repaid in full the 4.50% £50m retail bond (ISIN XS1849479602), which matured on 6 August 2024. \n   \n ESR Europe Investment Management Ltd (\"ESR Europe\") obtained its FCA licence on the 1st August 2024 and the process of changing the AIFM for Regional REIT Ltd from Toscafund Asset Management LLP to ESR Europe IM completed on 30 August 2024. \n   \n On 9 September 2024, the Company declared a dividend of 2.20 pps in respect of the period 1 April 2024 to 30 June 2024. The dividend is payable to the 162,088,483 shares in issue on the record date of 20 September 2024. \n   \n Outlook \n   \n Continuing through 2024, the economic landscape in the UK's regions for regional offices is showing signs \n of improvement, with interest rates expected to reduce further following the sharp fall in headline inflation over recent months. However, the Board is conscious of the persistent macroeconomic headwinds that may challenge us in the near term. \n   \n The successful £110.5m capital raise in July 2024, has placed the Company on a much stronger footing with the £50m retail bond repaid in full, the continued reduction of debt, whilst providing the Company with greater financial flexibility to fund capital expenditure on assets to maximise value and income for shareholders over the long term. In addition, the Company continues its programme of disposal of non-core assets. \n   \n Operationally, our performance remains robust, as evidenced by our solid rent collections. The Board \n remains dedicated to providing vibrant, growth- conducive spaces for our tenants, which is fundamental to increasing occupancy and reducing the costs associated with vacant spaces. \n   \n With an eye on the future, we are committed to growing our rent roll and sustaining our dividend payments coupled with the execution of our asset management plans, which are expected to drive property values and ensure the long-term growth of the Company. \n   \n Kevin McGrath \n Chairman \n   \n 9 September 2024 \n   \n   \n ASSET AND INVESTMENT MANAGERS' REPORT \n   \n \"The six months to 30 June 2024 was another challenging period for UK commercial real estate, \n with persistently high interest rates and poor investor sentiment both consistent headwinds. Despite this, the Company's operational performance remained robust, and we are pleased to note that the regional office market has begun to show early signs of reaching an inflection point \n   \n During the six months to 30 June 2024, though the Company's portfolio valuation declined on a like-for-like basis by 5.1%, after adjusting for disposals and capital expenditure, it outperformed the MSCI UK regional office benchmark, which saw a decline of 6.4% over the same period.  In the main this was due to our high-quality, blue-chip tenant base, the continued asset management programme, and the diversification and quality of our portfolio in terms of sector and geography. Given the recent cut to the base rate, we hope to see wider market conditions improve in the coming months, confirming that valuations have passed their nadir. \n   \n In June 2024, we announced a capital raise of £110.5m, by way of a fully underwritten placing. We are pleased to note that this was strongly supported by Shareholders and it successfully completed post period end. This has enabled us to repay, in full, the 4.5% £50 million retail bond, provides us with greater headroom within the Group's covenants, greater flexibility for capital expenditure an \n opportunities to increase shareholder value. \n   \n Looking ahead to the remainder of 2024, we will continue to adopt an active approach to portfolio management, taking steps to improve the quality of core assets, reduce the Group's LTV, improve occupancy and EPC ratings, and grow the Company's rent roll. \n   \n We would again like to thank shareholders for their continued support during this period and we look forward to updating you on our progress over the coming months.\" \n   \n Stephen Inglis \n CEO of London & Scottish Property Investment Management, Asset Manager \n   \n Investment Activity in the UK Commercial Property Market \n Although 2023 proved to be a challenging year with investment in the UK commercial property market totalling £37.4billion, improving investment volumes in the final quarter suggested the market bottomed out in2023, signalling the early stages of an upward trend and a reason to be optimistic moving into 2024, according to research from Lambert Smith Hampton (\"LSH\") 1 . The most recent data from LSH shows that investment in UK commercial property improved in the first half of 2024 reaching £21.0 billion, 19.3% above the same period in 2023. Investment volumes in Q2 2024 reached £11.1 billion, 11.6% above Q1 volume of £9.9 billion, as a result of a rise in the number of deals that took place, with transaction activity approximately 5.0% above the five-year average. Recent investment levels show signs of recovery which is expected to continue in the second half of 2024. Although uncertainty remains in financial markets, the most recent ONS figures show that UK inflation (CPI) remains at the 2.0% target set by the Bank of England, a considerable improvement from the 7.9% recorded in June 2023 2 . Additionally, forecasts from HM Treasury indicate that interest rates are set to fall from 5.0% to 4.75% by the end of 2024 and to 3.75% at the end 2025 3 . \n   \n Single Asset Investment Activity \n Research by LSH highlights the importance of the regional markets, with the regions outperforming when compared to London for a third consecutive quarter. At £3.8 billion, investment in single assets across the UK regional markets in Q2 2024 was 21.9% higher than the level of investment in Greater London - well above the five-year quarterly average margin of 9.6%. Four regions experienced robust levels of investment in Q2 2024 when compared to their corresponding averages, namely Yorkshire and the Humber, Scotland, East Midlands and the North East. Data from LSH shows the South East of England accounted for the largest share of regional investment in Q2 2024 for the third successive quarter. \n   \n Single Office Investment Activity \n Overall, investment in regional offices reach £1.0 billion in H1 2024, 5.0% below the same period in 2023. As can be seen from the table on page 17 of the Full Half Year Report, LSH's data on the split between London and the regions is hard to interpret because of a growing proportion of portfolio transactions, some of which will include both London and Regional properties. Although investment in the regional office market was below trend in H1 2024, optimism is supported by positive office attendance figures. Data from the ONS shows that despite the rise in hybrid working as a result of Covid-19, the vast majority of people do not work from home, with 68.0% of employees reporting that they exclusively travel to work or worked on a hybrid basis, with only 11.0% of workers reporting that they worked exclusively from home - down from 26% in mid-January 2022. 4 Moreover, the most recent CEO Outlook published by KPMG shows that c. 87% of CEOs are more inclined to reward those employees that work from the office on a regular basis in the form of better projects, salary increases and promotions. The majority of respondents (64%) anticipate a full return to the office over the next three years 5 . \n   \n 1    Lambert Smith Hampton, UKIT, Q2 2024 \n 2    ONS, Labour Market Overview, UK, July 2024 \n 3    Colliers, UK Property Snapshot, July 2024 \n 4    ONS, Characteristics of homeworkers, June 2024    \n 5    KPMG, CEO Outlook, 2023 \n   \n Quarterly Investment Volumes \n Overseas investment in the UK commercial property market accounted for 53.9% of total investment in Q2 2024 and drove overall investment at the larger end of the market. Figures indicate that overseas investment reached £6.0 billion in Q2 2024, 54.8% higher than the previous quarter, and in line with the five-year quarterly average. International investment in the second quarter of the year brought the H1 2024 total to £9.8 billion, 8.3% above the same period in 2023. Overseas investment was largely supported by North American buyers with investment of £3.4 billion, which accounted for approximately 56.2% of all overseas investment. LSH research suggests that North American investors were the most acquisitive net buyers at £2.4 billion. Moreover, investors from Europe, the Far East and Middle East were also net buyers in Q2 2024 at £0.5 billion, £0.5 billion and £2.0 million, respectively. \n   \n Occupational Demand in the UK Regional Office Market \n Avison Young estimate that take-up of office space across the nine regional markets 6 reached 1.6 million sq. ft. in Q2 2024, bringing the half year total to 3.5 million sq. ft., 7.4% above the five-year average take-up for the first 6 month of the year. City Centre activity accounted for the largest proportion of take-up (61.6%) in H1 2024 at 2.2 million sq. ft., 9.2% above the five-year average. When comparing this to the same period in 2023, city centre take-up as a proportion of total take-up has increased from 58.5% in H1 2023. In the first half of 2024 approximately 1.3 million sq. ft. was transacted in the out-of-town market, 4.6% above the five-year average, and accounting for 38.4% of total H1 2024 take-up. \n   \n Occupational demand in the regional office markets continued to be driven by the professional services sector, which accounted for the highest proportion of take-up at 20.3% in the first six months of 2024. Moreover, public services, education & health, and technology, media & telecoms sector accounted for the second and third largest proportion of take-up in the regional cities, accounting for 16.6% and 14.2%, respectively 7 . Savills research indicates that although office market sentiment is going through a period of change, the same key sectors continue to drive demand for UK office stock as the three most active sectors prior to the Covid-19 pandemic remain in the top three in the first half of 2024. \n   \n Regional Supply: Annual Office Supply \n According to Savills, there was a rise in availability for regional office stock across six regional UK markets 8 , with total availability in H1 2024 to 10.5 million sq. ft. Despite the uptick in availability in the first half of 2024 supply across the six regional markets remains 3.5% below the long-term average. Research from PwC 9 suggests that there is likely to be a number of stranded assets, given an EPC rating of C will be required by 2027 in order to let a property and then a rating of B from 2030. Currently, approximately 8.9% of office properties in the UK are unlettable as they have an EPC rating of F or G. Additionally, 50.0% (261.5 million Sq. Ft.) of office floor space in the UK is rated D below, which PwC suggest may be classed as 'stranded' going forward due to the extensive capital expenditure (capex) that would be required, indicating the scale of the challenge faced by landlord. However, lower returns due to subdued market and subsequently lower rental growth will result in investors finding it more difficult to, justify cap Ultimately, this could lead to a fall in office stock going forward as stranded assets are repositioned for alternative use. At present, only 10.8% of assets have and EPC rating of B or above. \n   \n In terms of speculative development, it is estimated that approximately 3.4 million sq. ft. of office space is current under construction in the Big Nine regional markets, down from 3.7 million sq. ft. for the same period last year with Manchester, Bristol, and Leeds accounting for 27.4%, 20.1% and 12.7%, respectively. Approximately 32.6% of office buildings currently under construction are already pre-let. \n   \n 6  Nine regional office markets mentioned by Avison Young include: Birmingham, Bristol, Cardi \n Edinburgh, Glasgow, Leeds, Liverpool, Manchester, Newcastle \n 7  Savills, The Regional Office Market Review, Q2 2024 \n 8  Six regional office markets mentioned by Savills includes: Birmingham, Bristol, Edinburgh, Glasgow \n Leeds and Manchester \n 9  PwC, UK Office Outlook & Investor Consideration, September 2023 \n   \n Rental Growth in the UK Regional Office Market \n According to monthly data from MSCI, rental value growth slowed for the rest of UK office markets in the 12-month ended June 2024 with growth of 1.8%, 5.0% above trend Similarly, central London offices experienced a fall in rent growth to 1.9% over the same period. Avison Young expects rental growth to continue across most markets for the remainder of 2024 and into 2025. Demand for quality office space has put an upward pressure on rents, with growth of 4.5% recorded across the Big Nine regional markets in the first half of 2024, with average headline rents now sitting a £38.14 per sq. ft., according to research from Avison Young. \n   \n Regional REIT's Office Assets \n EPRA occupancy of the Group's regional offices as at 30 June 2024 was 77.0% (30 June 2023: 81.6%). A like-for-like comparison of the Group's regional offices EP occupancy, 30 June 2024 versus 30 June 2023, shows that occupancy of 77.0% (30 June 2023: 82.8%). \n   \n WAULT to first break was 2.8 years (30 June 2023: 2.8 years); like-for-like WAULT to first break was 2.8 years (30 June 2023: 2.8 years). \n   \n Property Portfolio \n As at 30 June 2024, the Group's property portfolio was valued at £647.9 million (30 June 2023: £752.2 million; 31 December 2024: £700.7 million), with rent roll of £63.5 million (30 June 2023: £69.8 million; 31 December 2023: £67.8 million), and an EPRA occupancy rate of 78.0% (30 June 2023: 82.5%; 31 December 2023: 80.0%). On a like-for-like basis, 30 June 2024 versus 30 June 2023 EPRA occupancy was 78.0% (30 June 2023: 83.8%). \n   \n There were 132 properties (30 June 2023: 150; 31 December 2023: 144), in the portfolio, with 1,305 units (30 June 2023: 1,535; 31 December 2023: 1,483) and 832 tenants (30 June 2023: 1,038; 31 December 2023: 978). If the portfolio was fully occupied at Colliers view of market rents, the rental income would be £83.7 million per annum (30 June 2023: £88.9 million; 31 December 2023: £87.0 \n million). \n   \n As at 30 June 2024, the net initial yield on the portfolio was 6.1% (30 June 2023: 6.1%; 31 December 2023: 6.2%), the equivalent yield was 10.2% (30 June 2023: 9.5%; 31 December 2023: 9.9%) and the reversionary yield was 11.2% (30 June 2023: 10.4%; 31 December 2023: 10.8%). \n   \n   \n   \n \n \n \n Property Portfolio by Sector as at 30 June 2024 \n   \n \n \n \n \n Sector \n \n \n   \n \n \n Valuation \n \n \n   \n \n \n Sq. ft. \n \n \n Occupancy (EPRA) \n \n \n WAULT to first break \n \n \n Gross rental income \n \n \n Average rent \n \n \n ERV \n \n \n Capital rate \n \n \n   \n \n \n \n \n   \n   \n   \n Properties \n \n \n   \n   \n   \n (£m) \n \n \n   \n   \n % by valuation \n \n \n   \n   \n   \n (m) \n \n \n   \n   \n   \n (%) \n \n \n   \n   \n   \n (yrs) \n \n \n   \n   \n   \n (£m) \n \n \n   \n   \n   \n (£psf) \n \n \n   \n   \n   \n (£m) \n \n \n   \n   \n   \n (£psf) \n \n \n EPRA Net yield initial \n (%) \n \n \n   \n   \n Equivalent yield \n (%) \n \n \n   \n   \n Reversionary yield \n (%) \n \n \n \n \n Office \n \n \n \n \n \n 113 \n \n \n 592.8 \n \n \n 91.5 \n \n \n 5.2 \n \n \n 77.0 \n \n \n 2.8 \n \n \n 57.7 \n \n \n 14.74 \n \n \n 78.3 \n \n \n 114.02 \n \n \n 6.0 \n \n \n 10.3 \n \n \n 11.5 \n \n \n \n \n Retail \n \n \n \n \n \n 13 \n \n \n 20.4 \n \n \n 3.1 \n \n \n 0.3 \n \n \n 94.0 \n \n \n 3.2 \n \n \n 2.7 \n \n \n 11.09 \n \n \n 2.3 \n \n \n 76.82 \n \n \n 8.8 \n \n \n 9.4 \n \n \n 9.9 \n \n \n \n \n Industrial \n \n \n \n \n \n 4 \n \n \n 22.3 \n \n \n 3.4 \n \n \n 0.4 \n \n \n 85.3 \n \n \n 4.6 \n \n \n 1.9 \n \n \n 5.38 \n \n \n 2.2 \n \n \n 53.12 \n \n \n 6.0 \n \n \n 7.8 \n \n \n 8.2 \n \n \n \n \n Other \n \n \n \n \n \n 2 \n \n \n 12.5 \n \n \n 1.9 \n \n \n 0.1 \n \n \n 98.5 \n \n \n 10.0 \n \n \n 1.1 \n \n \n 12.48 \n \n \n 0.9 \n \n \n 131.81 \n \n \n 8.3 \n \n \n 8.1 \n \n \n 6.8 \n \n \n \n \n Total \n \n \n   \n \n \n 132 \n \n \n 647.9 \n \n \n 100.0 \n \n \n 6.0 \n \n \n 78.0 \n \n \n 3.0 \n \n \n 63.5 \n \n \n 13.77 \n \n \n 83.7 \n \n \n 108.38 \n \n \n 6.1 \n \n \n 10.2 \n \n \n 11.2 \n \n \n \n \n   \n   \n Property Portfolio by Region as at 30 June 2024 \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Region \n \n \n   \n \n \n Valuation \n \n \n   \n \n \n Sq. ft. \n \n \n Occupancy (EPRA) \n \n \n WAULT to first break \n \n \n Gross rental income \n \n \n Average rent \n \n \n ERV \n \n \n Capital rate \n \n \n   \n \n \n \n \n Properties \n \n \n (£m) \n \n \n % by valuation \n \n \n (m) \n \n \n (%) \n \n \n (yrs) \n \n \n (£m) \n \n \n (£psf) \n \n \n (£m) \n \n \n (£psf) \n \n \n EPRA Net initial yield (%) \n \n \n Equivalent yield \n (%) \n \n \n Reversionary yield \n (%) \n \n \n \n \n Scotland \n \n \n \n \n \n 29 \n \n \n 108.3 \n \n \n 16.7 \n \n \n 1.1 \n \n \n 72.8 \n \n \n 4.0 \n \n \n 10.3 \n \n \n 13.34 \n \n \n 16.3 \n \n \n 95.16 \n \n \n 4.8 \n \n \n 10.7 \n \n \n 12.0 \n \n \n \n \n South East \n \n \n \n \n \n 26 \n \n \n 118.6 \n \n \n 18.3 \n \n \n 0.9 \n \n \n 77.7 \n \n \n 2.8 \n \n \n 11.5 \n \n \n 16.48 \n \n \n 15.5 \n \n \n 127.72 \n \n \n 6.1 \n \n \n 10.0 \n \n \n 11.2 \n \n \n \n \n North East \n \n \n \n \n \n 19 \n \n \n 99.4 \n \n \n 15.3 \n \n \n 0.8 \n \n \n 76.8 \n \n \n 2.7 \n \n \n 9.0 \n \n \n 13.40 \n \n \n 11.7 \n \n \n 117.13 \n \n \n 5.6 \n \n \n 9.7 \n \n \n 10.7 \n \n \n \n \n Midlands \n \n \n \n \n \n 23 \n \n \n 132.9 \n \n \n 20.5 \n \n \n 1.3 \n \n \n 81.9 \n \n \n 3.4 \n \n \n 14.0 \n \n \n 12.84 \n \n \n 17.0 \n \n \n 99.31 \n \n \n 7.0 \n \n \n 10.3 \n \n \n 11.3 \n \n \n \n \n North West \n \n \n \n \n \n 17 \n \n \n 89.6 \n \n \n 13.8 \n \n \n 0.9 \n \n \n 72.4 \n \n \n 1.8 \n \n \n 9.0 \n \n \n 13.48 \n \n \n 12.0 \n \n \n 100.74 \n \n \n 6.0 \n \n \n 10.6 \n \n \n 11.9 \n \n \n \n \n South West \n \n \n \n \n \n 12 \n \n \n 61.7 \n \n \n 9.5 \n \n \n 0.4 \n \n \n 85.4 \n \n \n 2.3 \n \n \n 5.9 \n \n \n 17.46 \n \n \n 7.1 \n \n \n 154.11 \n \n \n 7.1 \n \n \n 10.1 \n \n \n 10.8 \n \n \n \n \n Wales \n \n \n \n \n \n 6 \n \n \n 37.5 \n \n \n 5.8 \n \n \n 0.4 \n \n \n 87.6 \n \n \n 3.4 \n \n \n 3.7 \n \n \n 10.13 \n \n \n 4.1 \n \n \n 86.11 \n \n \n 7.5 \n \n \n 9.0 \n \n \n 9.5 \n \n \n \n \n Total \n \n \n 132 \n \n \n 647.9 \n \n \n 100.0 \n \n \n 6.0 \n \n \n 78.0 \n \n \n 3.0 \n \n \n 63.5 \n \n \n 13.77 \n \n \n 83.7 \n \n \n 108.38 \n \n \n 6.1 \n \n \n 10.2 \n \n \n 11.2 \n \n \n \n \n   \n Tables may not sum due to rounding. \n   \n \n \n Top 15 Investments (market value) as at 30 June 2024 \n   \n \n \n \n \n Property \n \n \n Sector \n \n \n Anchor tenants \n \n \n Market \n value (£m) \n \n \n % of \n portfolio \n \n \n Lettable \n area \n (Sq. Ft.) \n   \n \n \n EPRA \n Occupancy \n (%) \n \n \n Annualised \n gross rent (£m) \n \n \n % of gross rental income \n \n \n WAULT \n to \n first \n break \n (years) \n \n \n \n \n Eagle Court, Coventry Road, Birmingham \n \n \n Office \n \n \n Virgin Media Ltd, Rexel UK Ltd, Goldbeck Construction Ltd \n \n \n 18.3 \n \n \n 2.8 \n \n \n 132,690 \n \n \n 54.5% \n \n \n 1.3 \n \n \n 2.1 \n \n \n 3.1 \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, Silverstream Technologies (UK) Ltd \n \n \n 17.8 \n \n \n 2.7 \n \n \n 84,043 \n \n \n 100.0% \n \n \n 1.8 \n \n \n 2.8 \n \n \n 3.2 \n \n \n \n \n 300 Bath Street, Glasgow \n \n \n Office \n \n \n University of Glasgow, Glasgow Tay House Centre Ltd, Fairhurst Group LLP, London & Scottish Property Investment Management \n \n \n 17.5 \n \n \n 2.7 \n \n \n 156,853 \n \n \n 84.0% \n \n \n 1.2 \n \n \n 1.9 \n \n \n 1.4 \n \n \n \n \n Norfolk House, Smallbrook Queensway, Birmingham \n \n \n Office \n \n \n Global Banking School Ltd, Accenture (UK) Ltd \n \n \n 17.2 \n \n \n 2.7 \n \n \n 118,530 \n \n \n 98.9% \n \n \n 1.9 \n \n \n 3.1 \n \n \n 6.6 \n \n \n \n \n 800 Aztec West, Bristol \n \n \n Office \n \n \n NNB Generation Company (HPC) Ltd, EDF EPR Engineering UK Ltd \n \n \n 16.2 \n \n \n 2.5 \n \n \n 73,292 \n \n \n 100.0% \n \n \n 1.5 \n \n \n 2.4 \n \n \n 2.3 \n \n \n \n \n Manchester Green, Manchester \n \n \n Office \n \n \n Chiesi Ltd, Ingredion UK Ltd, Assetz SME Capital Ltd, Contemporary Travel Solutions Ltd \n \n \n 15.2 \n \n \n 2.3 \n \n \n 107,760 \n \n \n 79.3% \n \n \n 1.5 \n \n \n 2.3 \n \n \n 2.2 \n \n \n \n \n Beeston Business Park, Nottingham \n \n \n Office/ Industrial \n \n \n Metropolitan Housing Trust Ltd, SMS Electronics Ltd, SMS Product Services Ltd \n \n \n 15.2 \n \n \n 2.3 \n \n \n 215,330 \n \n \n 56.3% \n \n \n 1.1 \n \n \n 1.7 \n \n \n 5.5 \n \n \n \n \n Orbis 1, 2 & 3, Pride Park, Derby \n \n \n Office \n \n \n First Source Solutions UK Ltd, DHU Health Care C.I.C., Tentamus Pharma (UK) Ltd \n \n \n 13.7 \n \n \n 2.1 \n \n \n 121,883 \n \n \n 100.0% \n \n \n 1.8 \n \n \n 2.9 \n \n \n 2.9 \n \n \n \n \n Oakland House, Manchester \n \n \n Office \n \n \n Please Hold (UK) Ltd, A.M.London Fashion Ltd, CVS (Commercial Valuers & Surveyors) Ltd \n \n \n 12.9 \n \n \n 2.0 \n \n \n 161,502 \n \n \n 80.8% \n \n \n 1.1 \n \n \n 1.8 \n \n \n 1.7 \n \n \n \n \n Lightyear - Glasgow Office Airport, Glasgow \n \n \n Office \n \n \n Loganair Ltd, Rolls-Royce Submarines Ltd, Heathrow Airport Ltd \n \n \n 12.2 \n \n \n 1.9 \n \n \n 73,499 \n \n \n 95.5% \n \n \n 1.4 \n \n \n 2.2 \n \n \n 5.0 \n \n \n \n \n Linford Wood, Business Park, Milton Keynes \n \n \n Office \n \n \n IMServ Europe Ltd, Senceive Ltd, Aztech IT Solutions Ltd, Autotech Recruit Ltd \n \n \n 12.1 \n \n \n 1.9 \n \n \n 107,352 \n \n \n 100.0% \n \n \n 1.4 \n \n \n 2.2 \n \n \n 2.1 \n \n \n \n \n Ashby Park, Ashby De La Zouch \n \n \n Office \n \n \n Ashfield Healthcare Ltd, Ceva Logistics Ltd, Brush Electrical Machines Ltd \n \n \n 11.7 \n \n \n 1.8 \n \n \n 87,872 \n \n \n 100.0% \n \n \n 1.2 \n \n \n 1.9 \n \n \n 3.4 \n \n \n \n \n Portland Street, Manchester \n \n \n Office \n \n \n Evolution Money Group Ltd, Mott MacDonald Ltd, NCG (Manchester) Ltd, Simard Ltd \n \n \n 11.5 \n \n \n 1.8 \n \n \n 55,787 \n \n \n 95.9% \n \n \n 1.1 \n \n \n 1.7 \n \n \n 1.5 \n \n \n \n \n Capitol Park, Leeds \n \n \n Office \n \n \n Hermes Parcelnet Ltd, BDW Trading Ltd \n \n \n 10.9 \n \n \n 1.7 \n \n \n 86,758 \n \n \n 50.2% \n \n \n 0.7 \n \n \n 1.1 \n \n \n 3.4 \n \n \n \n \n 1-4 Llansamlet Retail Park, Natyffin Rd, Swansea \n \n \n Retail \n \n \n Wren Kitchens Ltd, NCF Furnishings Ltd, A Share & Sons Ltd, Carpetright Ltd \n \n \n 10.5 \n \n \n 1.6 \n \n \n 74,425 \n \n \n 100.0% \n \n \n 1.2 \n \n \n 1.9 \n \n \n 2.4 \n \n \n \n \n Total \n \n \n \n \n \n \n \n \n 212.7 \n \n \n 32.8 \n \n \n 1,657,576 \n \n \n 84.9% \n \n \n 20.4 \n \n \n 32.1 \n \n \n 3.2 \n \n \n \n \n   \n Tables may not sum due to rounding \n   \n   \n Top 15 Tenants (share of rental income) as at 30 June 2024 \n   \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n WAULT to first break \n \n \n Lettable area \n \n \n Annualised gross rent \n \n \n % of gross rental income \n \n \n \n \n Tenant \n \n \n Property  \n \n \n Sector  \n \n \n (years) \n \n \n (Sq. Ft) \n \n \n (£m) \n \n \n \n \n Virgin Media Ltd \n \n \n Eagle Court, Birmingham Southgate Park, Peterborough \n \n \n Information and communication \n \n \n 0.7 \n \n \n 107,830 \n \n \n 1.8 \n \n \n 2.5 \n \n \n \n \n Global Banking School Ltd \n \n \n Norfolk House, Smallbrook, Queensway, Birmingham \n \n \n Education \n   \n \n \n 8.4 \n \n \n 73,628 \n \n \n 1.4 \n \n \n 2.2 \n \n \n \n \n Virgin Media Ltd \n \n \n Eagle Court, Coventry Road, Birmingham \n \n \n Information and communication \n \n \n 3.2 \n \n \n 75,309 \n \n \n 1.3 \n \n \n 2.1 \n \n \n \n \n Secretary of State for \nHousing, Communities \nand Local Government \n   \n \n \n 1 Burgage Square, Merchant Square, Wakefield \n Albert Edward House, Preston Bennett House, Stoke On Trent Oakland House, Manchester Origin (Office), Bracknell \n Waterside Business Park, Swansea \n   \n \n \n Public sector \n   \n \n \n 4.6 \n \n \n 116,238 \n \n \n 1.2 \n \n \n 1.9 \n \n \n \n \n Firstsource Solutions UK Ltd \n   \n \n \n Orbis 1, 2 & 3, Pride Park, Derby \n \n \n Administrative and \n support service \n activities \n   \n \n \n 2.8 \n \n \n 62,433 \n \n \n 1.0 \n \n \n 1.6 \n \n \n \n \n E.ON UK Plc \n \n \n E.ON UK Plc \n \n \n Electricity, gas, steam \n and air conditioning \n supply \n \n \n 0.8 \n \n \n 99,142 \n \n \n 0.9 \n \n \n 1.5 \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 0.5 \n \n \n 53,253 \n \n \n 0.9 \n \n \n 1.4 \n \n \n \n \n NNB Generation Company (HPC) Ltd \n \n \n 800 Aztec West, Bristol \n \n \n Electricity, gas, steam \n and air conditioning \n supply \n \n \n 1.6 \n \n \n 41,743 \n \n \n 0.9 \n \n \n 1.4 \n \n \n \n \n SPD Development Company Ltd \n \n \n Clearblue Innovation Centre, Bedford \n \n \n Professional, scientific \n and technical activities \n \n \n 9.5 \n \n \n 58,167 \n \n \n 0.8 \n \n \n 1.3 \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 1.4 \n \n \n 42,612 \n \n \n 0.8 \n \n \n 1.2 \n \n \n \n \n Odeon Cinemas Ltd \n \n \n Kingscourt Leisure Complex, Dundee \n \n \n Information and \n communication \n \n \n 11.3 \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 \n Quadrant House, Dundee \n \n \n Public sector \n \n \n 3.8 \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 and technical activities \n   \n \n \n 1.2 \n \n \n 60,362 \n \n \n 0.6 \n \n \n 1.0 \n \n \n \n \n SpaMedica Ltd \n \n \n 1175 Century Way, Thorpe Park, Leeds \n Albert Edward House, Preston Fairfax House, Wolverhampton Southgate Park, Peterborough \n The Foundation Chester Business Park, Chester \n   \n \n \n Human health and social work activities \n \n \n 2.5 \n \n \n 40,529 \n \n \n 0.6 \n \n \n 1.0 \n \n \n \n \n University of Glasgow \n \n \n 300 Bath Street, Glasgow \n   \n \n \n Education \n \n \n 0.2 \n \n \n 29,885 \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 4.1 \n \n \n 955,809 \n \n \n 14.3 \n \n \n 22.5 \n \n \n \n \n   \n Table may not sum due to rounding \n   \n   \n PROPERTY PORTFOLIO SECTOR AND REGION SPLITS BY VALUATION AND INCOME AS AT 30 JUNE 2024 \n   \n By Valuation \n As at 30 June 2024, 91.5% (June 2023: 92.0%, December 2023: 92.1%) of the portfolio by market value was offices and 3.1% (June 2023: 3.5%, December 2023: 3.1%) was retail. The balance was made up of industrial, 3.4% (June 2023: 3.0%, December 2023: 3.2%) and other, 1.9% (June 2023: 1.5%, December 2023: 1.7%). By UK region, as at 30 June 2024, Scotland represented 16.7% (June 2023: 16.4%, December 2023: 16.2%) of the portfolio and England 77.5% (June 2023: 78.4%, December 2023: 78.4%) the balance of 5.8% (June 2023: 5.1%, December 2023: 5.4%) was in Wales. In England, the largest regions were the Midlands, South East and the North East. \n   \n By Income \n As at 30 June 2024, 90.9% (June 2023: 91.4%, December 2023: 91.3%) of the portfolio by income was offices and 4.3% (June 2023: 4.6%, December 2023: 4.2%) was retail. The balance was made up of industrial, 3.0% (June 2023: 2.7%, December 2023: 2.8%), and other, 1.8% (June 2023: 1.4%, December 2023: 1.7%). By UK region, as at 30 June 2024, Scotland represented 16.3% (June 2023: 16.5%, December 2023: 15.8%) of the portfolio and England 77.9% (June 2023: 78.1%, December 2023: 78.6%); the balance of 5.8% was in Wales (June 2023: 5.5%, December 2023: 5.6%). In England, the largest regions were the Midlands, the South East and the North East. \n   \n Lease Expiry Profile \n The WAULT on the portfolio is 4.7 years (30 June 2023: 4.8; 31 December 2023: 4.7); WAULT to first break is 3.0 years (30 June 2023: 3.0; 31 December 2023: 2.8). As at 30 June 2024, 12.1% (30 June 2023: 14.0%; 31 December 2023: 15.9%) of income was from leases, which will expire within one year, 13.1% (30 June 2023: 12.6%; 31 December 2023: 10.7%) between one and two years, 35.7% (30 June 2023: 30.9%; 31 December 2023: 33.3%) between two and five years and 39.1% (30 June 2023: 42.5%; 31 December 2023: 40.1%) after five years. \n   \n Tenants by Standard Industrial Classification as at 30 June 2024 \n As at 30 June 2024, 11.6% of income was from tenants in the information and communication sector (30 June \n 2023: 12.9%; 31 December 2023: 12.2%), 11.5% from the professional, scientific and technical activities sector (3 June 2023: 12.5%; 31 December 2023: 11.5%), 10.9% from the administrative and support service activities sector (30 June 2023: 10.9%; 31 December 2023: 10.4%), 8.1% from the wholesale and retail trade sector (30 June 2023: 7.8%; 31 December 2023: 8.0%), 7.0% from the financial and insurance activities (30 June 2023: 8.3%; 31 December 2023: 8.7%), 6.2% from the education sector (30 June 2023: 4.6%; 31 December 2023: 5.6%), and 6.1% from the electricity, gas, steam and air conditioning supply (30 June 2023: 7.2%; 31 December 2023: 6.5%). The remaining exposure is broadly spread. \n   \n No tenant represents more than 3% of the Group's rent roll as at 30 June 2024, the largest being 2.7% (30 June 2023: 2.5%; 31 December 2023: 2.5%). \n   \n Tenants by SIC Codes (% of gross rent) \n   \n \n \n \n \n SIC Code \n \n \n % of Headline Rent \n \n \n \n \n Information and communication \n \n \n 11.6% \n \n \n \n \n Professional, scientific and technical activities \n \n \n 11.5% \n \n \n \n \n Administrative and support service activities \n \n \n 10.9% \n \n \n \n \n Wholesale and retail trade \n \n \n 8.1% \n \n \n \n \n Financial and insurance activities \n \n \n 7.0% \n \n \n \n \n Education \n \n \n 6.2% \n \n \n \n \n Electricity, gas, steam and air conditioning supply \n \n \n 6.1% \n \n \n \n \n Human health and social work activities \n \n \n 5.5% \n \n \n \n \n Public Sector \n \n \n 5.5% \n \n \n \n \n Manufacturing \n \n \n 5.4% \n \n \n \n \n Construction \n \n \n 4.2% \n \n \n \n \n Other* \n \n \n 17.8% \n \n \n \n \n Total \n \n \n 100.0% \n \n \n \n \n   \n   \n * Other - Accommodation and food service activities, activities of extraterritorial organisations and bodies, activities of households as employers; undifferentiated goods, arts, entertainment and recreation, charity, mining and quarrying, other service activities, overseas company, public administration and defence; compulsory social security, real estate activities, registered society, transportation and storage, water supply, sewerage, waste management and remediation activities. \n   \n   \n \n \n   \n FINANCIAL REVIEW \n   \n Net Asset Value \n Between 1 January 2024 and 30 June 2024, the EPRA NTA* of the Group decreased to £251.6m (IFRS NAV: £266.6m) from £290.8m (IFRS NAV: £306.1m) as at 31 December 2023, equating to a decrease in the diluted EPRA NTA of 7.6pps to 48.8pps (IFRS: 51.7pps). This is after the dividends declared in the period amounting to 2.4pps. \n   \n In the six months to 30 June 2024, the investment property revaluation decrease amounted to £36.1m, for the properties held as at 30 June 2024. \n   \n The investment property portfolio was valued at £647.9m (30 June 2023: £752.2m; 31 December 2023: £700.7m). The decrease of £52.8m since the December 2023 year-end is a reflection of revaluation movement loss of £36.1m, £20.7m of net property disposals and £1.2m loss on the disposal of investment properties, offset by subsequent expenditure of £5.2m. Overall, on a like-for-like basis, the portfolio value decreased by 5.1% during the period. \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 \n Six months to 30 June 2024 \n \n \n Six months to June 2023 \n \n \n Year ended \n 31 December 2023 \n \n \n \n \n \n \n \n \n \n \n (£million) \n \n \n (£million) \n \n \n (£million) \n \n \n \n \n Acquisitions \n \n \n \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 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 0.0 \n \n \n \n \n Disposals \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n Net (after costs) \n \n \n 20.7 \n \n \n 14.1 \n \n \n 25.0 \n \n \n \n \n \n \n \n Gross (before costs) \n \n \n 21.9 \n \n \n 14.6 \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 \n \n \n Net (after dilapidations) \n \n \n 5.2 \n \n \n 6.7 \n \n \n 10.2 \n \n \n \n \n \n \n \n Gross (before dilapidations) \n \n \n 5.2 \n \n \n 6.8 \n \n \n 11.0 \n \n \n \n \n   \n The diluted EPRA NTA per share decreased to 48.8pps (31 December 2023: 56.4pps). The EPRA NTA is reconciled in the table below: \n \n \n \n \n \n \n \n Six months to 30 June 2024 \n   \n \n \n \n \n   \n \n \n £m \n \n \n   \n \n \n Pence per Share \n \n \n \n \n Opening EPRA NTA (31 December 2023) \n \n \n 290.8 \n \n \n   \n \n \n 56.4 \n \n \n \n \n Net rental and property income \n \n \n 23.8 \n \n \n \n \n \n 4.6 \n \n \n \n \n Administration and other expenses \n \n \n (4.7) \n \n \n \n \n \n (0.9) \n \n \n \n \n Loss on the disposal of investment properties \n \n \n (1.2) \n \n \n \n \n \n (0.2) \n \n \n \n \n Change in the fair value of investment properties \n \n \n (37.9) \n \n \n \n \n \n (7.3) \n \n \n \n \n Change in value of right of use \n \n \n (0.1) \n \n \n \n \n \n (0.0) \n \n \n \n \n EPRA NTA after operating profit \n \n \n 270.8 \n \n \n   \n \n \n 52.5 \n \n \n \n \n Net finance expense \n \n \n (8.1) \n \n \n \n \n \n (1.6) \n \n \n \n \n Realised gain on derivative financial instruments \n \n \n 1.3 \n \n \n \n \n \n 0.2 \n \n \n \n \n Taxation \n \n \n 0.0 \n \n \n \n \n \n 0.0 \n \n \n \n \n EPRA NTA before dividends paid \n \n \n 264.0 \n \n \n   \n \n \n 51.2 \n \n \n \n \n Dividends paid** \n \n \n (12.4) \n \n \n \n \n \n (2.4) \n \n \n \n \n Closing EPRA NTA (30 June 2024) \n \n \n 251.6 \n \n \n   \n \n \n 48.8 \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n   \n   \n \n \n \n \n \n \n \n \n \n \n   \n Tables may not sum due to rounding \n   \n * The Group has determined that EPRA net tangible assets (NTA) is the most relevant measure. Further detail on the new EPRA performance measures can be found in the full Annual Report. \n   \n **As at 30 June 2024, there were 515,736,583 Shares in issue. \n   \n Income Statement \n Operating profit before gains and losses on property assets and other investments for the six months ending 30 June 2024 amounted to £19.1m (six months to 30 June 2023: £20.6m). Loss after finance and before taxation of £27.1m (six months to 30 June 2023: loss £12.1m). The six months to 30 June 2024 included a full rent roll for the portfolio of properties held as at 30 June 2024, plus the partial rent roll for properties disposed of during the period. \n   \n Realised loss on the disposal of investment properties amounted to £1.2m (six months to 30 June 2023: loss £0.4m). The disposal losses were from the aggregate disposal of 12 properties and three-part property sales in the period, on which individual asset management plans had been completed. The change in the fair value of investment properties amounted to a loss of £37.9m (six months to 30 June 2023: loss of £29.5m). Net capital expenditure amounted to £5.2m (six months to 30 June 2023: £6.7m). The change in value of right of use asset amounted to a charge of £0.1m (six months to 30 June 2023: charge £0.1m). \n   \n Rental and property income amounted to £32.2m, excluding recoverable service charge income and other similar items (six months to 30 June 2023 £34.3m). The decrease was primarily the result of the rent roll being held over the six months to 30 June 2024. \n   \n Currently more than 80% of the rental income is collected within 30 days of the due date and the bad debts provision in the period amounted to £0.2m (30 June 2023: £0.4m). Trade and other receivables increased predominantly due to a one-off systems migration. Subsequently, it abated with rent collection at 30 August 2024 for the period ending 30 June 2024 at 98.0% (equivalent collection period in 2023: 98.8%) \n   \n Non-recoverable property costs, excluding recoverable service charge income and other similar costs, amounted to £8.4m (six months to 30 June 2023: £8.3m), and the rent roll decreased to £63.5m (six months to 30 June 2023: £69.8m). \n   \n Finance expenses amount to £8.2m (six months to 30 June 2023: £8.0m). The six months to 30 June 2023 was lower due to the decrease of amortisation of borrowings costs. \n   \n The EPRA cost ratio, including direct vacancy costs, was 40.6% (30 June 2023: 39.9%). The EPRA cost ratio, excluding direct vacancy costs was 13.4% (30 June 2023: 17.3%). The ongoing charges for the year ending 30 June 2024 were 9.1% (30 June 2023: 7.0%) and excluding direct vacancy costs 3.0% (30 June 2023: 3.1%). \n   \n The EPRA Total Return from Listing to 30 June 2024 was 7.5% (30 June 2023: 20.8%), with an annualised rate of 0.8% pa (30 June 2023: 2.5% pa). \n   \n Dividend \n During the period from 1 January 2024 to 30 June 2024, the Company declared dividends totalling 2.40pps (six months to 30 June 2023: 3.3pps). \n   \n Debt Financing and Gearing \n Borrowings comprise third-party bank debt and the retail eligible bond. The bank debt is secured over properties owned by the Group and repayable over the next two to five years. The weighted average maturity of the bank debt and retail eligible bond is 3.0 years (30 June 2023: 4.0 years; 31 December 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 Limited & Aviva Investors Real Estate Finance, Scottish Widows Limited, Santander UK. The total bank borrowing facilities at 30 June 2024 amounted to £353.3m (30 June 2023: £381.7m; 31 December 2023: £370.8m) (before unamortised debt issuance costs), with nil available to be drawn. In addition to the bank borrowings, the Group had a £50m 4.5% retail eligible bond, repaid in August 2024. In aggregate, the total debt available at 30 June 2024 amounted to £403.3m (30 June 2023: £437.4m; 31 December 2023: £420.8m). \n   \n At 30 June 2024, the Group's cash and cash equivalent balances amounted to £25.7m (30 June 2023: £41.2m; 31 December 2023: £34.5m), of which £21.8m (30 June 2023: £26.0m; 31 December 2023: £30.6m) was unrestricted cash. \n   \n The Group's net loan to value (\"LTV\") ratio stands at 58.3% (30 June 2023: 51.9%; 31 December 2023: 55.1%) before unamortised costs. The Board continues to target a net LTV ratio of 40%. \n   \n Debt Profile and LTV Ratios as at 30 June 2024 \n   \n \n \n \n \n   \n \n \n  Facility \n amount \n \n \n Outstanding debt* \n \n \n Maturity \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 date   \n \n \n  % \n \n \n  % \n \n \n \n \n Royal Bank of Scotland, Bank of Scotland & Barclays \n \n \n \n \n 115,961 \n \n \n \n \n 115,961 \n \n \n Aug-26 \n \n \n 56.10 \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 \n \n 147,500 \n \n \n \n \n 147,500 \n \n \n Dec-27 \n \n \n 54.80 \n \n \n 3.28 Fixed \n \n \n \n \n Scottish Widows Ltd. \n \n \n 36,000 \n \n \n 36,000 \n \n \n Dec-28 \n \n \n 48.80 \n \n \n 3.37 Fixed \n \n \n \n \n Santander UK \n \n \n \n 53,852 \n \n \n \n 53,852 \n \n \n Jun-29 \n \n \n 53.50 \n \n \n 2.20% over 3 months \n £ SONIA \n \n \n \n \n \n \n \n 353,313 \n \n \n 353,313 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Retail Eligible Bond*** \n \n \n \n 50,000 \n \n \n \n 50,000 \n \n \n Aug-24 \n \n \n N/A \n \n \n   \n 4.50 Fixed \n \n \n \n \n \n \n \n 403,313 \n \n \n 403,313 \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n Table may not sum due to rounding. \n   \n * Before unamortised debt issue costs \n ** Based on Colliers International Property Consultants Ltd \n *** The retail bond which matured on 6 August 2024 has been repaid in full. \n   \n   \n The Managers continue to monitor the borrowing requirements of the Group. As at 30 June 2024, the Group had sufficient headroom against its borrowing covenants. \n   \n The net gearing ratio (net debt to Ordinary Shareholders' equity of the Group was 141.6% as at 30 June 2024 (30 June 2023: 104.5%; 31 December 2023: 126.2%). \n   \n Interest cover, excluding amortised costs, stands at 2.6 times (30 June 2023: 2.8 times; 31 December 2023: 2.9 times) and including amortised costs, stands at 2.3 times (30 June 2023: 2.6 times; 31 December 2023: 2.7 times). \n   \n Hedging \n The Group applies an interest rate 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 Six months ended \n \n \n Six months ended \n \n \n Year ended \n \n \n \n \n \n \n \n  30 June 2024 \n \n \n 30 June 2023 \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 100.0 \n \n \n 101.6 \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 57.9 \n \n \n 56.4 \n \n \n 56.7 \n \n \n \n \n    Swap \n \n \n 28.9 \n \n \n 28.4 \n \n \n 28.6 \n \n \n \n \n    Cap \n \n \n 13.3 \n \n \n 16.6 \n \n \n 14.7 \n \n \n \n \n    Weighted Average Cost of Debt (\"WACD\") 10 \n \n \n 3.5 \n \n \n 3.5 \n \n \n 3.5 \n \n \n \n \n   \n Table may not sum due to rounding \n   \n 10 WACD - Weighted Average Effective Interest Rate including the cost of hedging \n   \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 As at 30 June 2024, the Group recognised a tax charge of nil (30 June 2023: nil tax charge). \n   \n PRINCIPAL RISKS AND UNCERTAINTIES \n   \n For Regional REIT, effective risk management is a cornerstone of delivering our strategy and integral to the achievement of our objective of delivering long term value through active asset management across the portfolio. The principal risks and uncertainties the Group faces are summarised below and described in detail on pages 58 to 70 of the 2023 Annual Report, which is available on the Group's website: www.regionalreit.com - Annual Report 2023. \n   \n The Audit Committee, which assists the Board with its responsibilities for managing risk, regularly reviews the risk appetite of the Company. Taking into consideration the latest information available, the Company is able to assess and respond quickly to new and emerging risks. \n   \n Despite the improvement in the operating environment, with the level of enquiries for office space remaining robust and the risks associated with Covid-19 pandemic considerably lessened, the continued conflicts in Ukraine, Israel and Palestine and the UK election process continued to impact the wider UK economy. \n   \n A summary of the Group's principal risks for the first half of 2024 is provided here. \n   \n Strategic risk \n Investment decisions could result in lower dividend income and capital returns to our Shareholders. \n   \n Valuation risk \n The valuation of the Group's portfolio, undertaken by the external valuer, Colliers International Property Consultants Ltd , could impact the Group's profitability and net assets. \n   \n Healthcare risk \n The economic disruption after-effects resulting from the pandemic, coupled with potential new strains of infectious diseases, could further impact rental incomes, the Group's property portfolio valuations, the ability to access funding at competitive rates, maintain a progressive dividend policy, and adhere to the HMRC REIT regime requirements. \n   \n Economic and Political risk \n The macro-health of the UK economy could impact on borrowing and hedging costs, demand by tenants for suitable properties and the quality of the tenants. Also, there is a risk that in the wake of wider geopolitical consequences of Russia's invasion of Ukraine and the conflict in the Middle East, property valuations could be impacted. \n   \n Funding risk \n The Group may not be able to secure further debt on acceptable terms, which could impinge upon investment opportunities and the ability to grow the Group. Bank reference rates maybe set to continue to become more volatile, accompanying volatile inflation. Breach of covenants within the Group's funding structure could lead to a cancellation of debt funding if the Company is unable to service the debt. \n   \n Tenant risk \n Type and concentration of tenants could result in a lower rental income. A higher concentration of lease term maturity and/or break options, could result in a more volatile rental income. \n   \n Financial and Tax Change risk \n Changes to UK financial legislation and the tax regime could result in lower rental income. \n   \n Operational risk \n Business disruption could result in lower rental income. Information security, cyber threats, and technology outages could result in data loss, or negative regulatory, reputational, operational (including GDPR), or financial impacts. \n   \n Accounting, Legal and Regulatory risk \n Changes to accounting, legal and regulatory requirements could affect current operating processes and the Board's ability to achieve the investment objectives and provide favourable returns to our Shareholders. Potential loss of REIT status. \n   \n Environmental and Energy Efficiency Standards \n Changes to the environment could impact upon the Group's cost base, operations and legal requirements which need to be adhered too. All of these risks could impinge upon the profitability of the Group. An Energy Performance Rating of E and below may impact the Company's ability to sell/lease an asset. \n   \n   \n INTERIM MANAGEMENT REPORT AND DIRECTORS' RESPONSIBILITY STATEMENT \n   \n Interim Management Report \n The important events that have occurred during the period under review, the principal risks and uncertainties and the key factors influencing the financial statements for the remaining six months of the year are set out in the Chairman's Statement and the Asset and Investment Managers' Report. \n   \n The principal risks and uncertainties faced by the Group are substantially unchanged since the date of the Annual Report and Accounts for the year ended 31 December 2023 and are summarised above. \n   \n The condensed consolidated financial statements for the period from 1 January 2024 to 30 June 2024 have not been audited or reviewed by auditors pursuant to the Financial Reporting Council guidance on Review of Interim Financial Information and do not constitute annual statutory accounts for the purposes of the Law. \n   \n Going Concern \n The Directors have made an assessment of the Group's ability to continue as a going concern. This assessment \n included consideration of the Group's cash resources, borrowing facilities, rental income, acquisition and disposals of investment properties, elective and committed capital expenditure and dividend distributions. \n   \n The Group ended the period under review with £25.7m of cash and cash equivalents, of which £21.8m was \n unrestricted cash. Borrowing facilities decreased from £420.8m at 31 December 2023 to £412.4m as at 30 June \n 2024, with an LTV of 58.3%, based upon the value of the Group's investment properties as at 30 June 2024. \n Following the announcement on 18 July 2024 of the successful £110.5m capital raise, the retail bond was repaid on 6 August 2024, in accordance with the maturity date. Borrowing facilities after repayment were £353.3m with an LTV of 42.2%*. The next bank facility to mature is the £116.0m facility in August 2026 which is held with the Royal Bank of Scotland, Bank of Scotland and Barclays. \n   \n Based on the above, the Directors are satisfied that the Group has adequate resources to continue in operational existence for a period of at least 12 months from the date these Financial Statements are approved. This is underpinned by the robust rent collections and the level of committed capital expenditure in the forthcoming 12 \n months. Furthermore, the Directors are not aware of any material uncertainties that may cast significant doubt \n upon the Group's ability to continue as a going concern. Accordingly, the Directors consider that it is appropriate to prepare the Financial Statements on a going concern basis. \n   \n *Based upon 30 June 2024 Colliers International Property Consultants Ltd. valuation of £647.9m, 30 June 2024 cash balance of £25.7m and the capital raise net proceeds of £104.7m less the repayment of the £50.0m retail bond. \n   \n Responsibility Statement of the Directors in respect of the Half-Yearly Report \n   \n In accordance with Disclosure Guidance and Transparency Rule 4.2.10R we, the Directors of the Company (whose names are listed in full at the end of this report), confirm that to the best of their knowledge: \n   \n ·      the condensed set of consolidated financial statements has been prepared in accordance with International Accounting Standard (IAS) 34, \"Interim Financial Reporting\", as contained in UK-adopted International Accounting Standards, as required by Disclosure Guidance and Transparency Rule DTR 4.2.4R, and gives a true and fair view of the assets, liabilities, financial position and profit of the Group; \n   \n ·      this Half-Yearly Report includes a fair review, required under DTR 4.2.7R, of the important events that have occurred during the first six months of the financial year, their impact on the condensed set of consolidated financial statements and a description of the principal risks and uncertainties for the remaining six months of the financial year; and \n   \n ·      this Half-Yearly Report includes a fair review, required under DTR 4.2.8R, of related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position and or performance of the Group during that period; and any changes in the related party transaction described in the last Annual Report that could do so. \n   \n This Half-Yearly Report was approved and authorised for issue by the Board of Directors on 9 September 2024 and the above responsibility statement was signed on its behalf by: \n   \n Kevin McGrath \n Chairman \n 9 September 2024 \n \n \n   \n CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME \n FOR THE SIX MONTHS ENDED 30 JUNE 2024 \n   \n \n \n \n \n \n \n \n   \n   \n   \n   \n   \n   \n Notes \n \n \n   \n Six months \n ended \n 30 June \n 2024 \n (unaudited) \n £'000  \n \n \n   \n Six months \n ended \n 30 June \n 2023 \n  (unaudited) \n £'000  \n \n \n   \n Year \n ended \n 31 December \n 2023 \n (audited) \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 44,232 \n \n \n 44,415 \n \n \n 91,880 \n \n \n \n \n Property costs \n \n \n 6 \n \n \n (20,403) \n \n \n (18,438) \n \n \n (38,161) \n \n \n \n \n Net rental and property income \n \n \n \n \n \n 23,829 \n \n \n 25,977 \n \n \n 53,719 \n \n \n \n \n Administrative and other expenses \n \n \n 7 \n \n \n (4,724) \n \n \n (5,341) \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   \n 19,105 \n \n \n   \n 20,636 \n \n \n   \n 43,093 \n \n \n \n \n Loss on disposal of investment properties \n \n \n 13 \n \n \n (1,156) \n \n \n (403) \n \n \n (726) \n \n \n \n \n Change in fair value of investment properties \n \n \n 13 \n \n \n (37,858) \n \n \n (29,491) \n \n \n (86,350) \n \n \n \n \n Change in fair value of right of use assets \n \n \n \n \n \n (69) \n \n \n (69) \n \n \n (139) \n \n \n \n \n Operating loss \n \n \n \n \n \n (19,978) \n \n \n (9,327) \n \n \n (44,122) \n \n \n \n \n Finance income \n \n \n 8 \n \n \n 134 \n \n \n 17 \n \n \n 79 \n \n \n \n \n Finance expenses \n \n \n 9 \n \n \n (8,229) \n \n \n (7,953) \n \n \n (16,210) \n \n \n \n \n Net movement in fair value of derivative financial instruments \n \n \n   \n 16 \n \n \n 962 \n \n \n 5,128 \n \n \n (7,194) \n \n \n \n \n Loss before tax \n \n \n \n \n \n (27,111) \n \n \n (12,135) \n \n \n (67,447) \n \n \n \n \n Taxation \n \n \n 10 \n \n \n - \n \n \n - \n \n \n (9) \n \n \n \n \n Total comprehensive loss for the period (attributable to owners of the parent Company) \n \n \n \n \n \n (27,111) \n \n \n (12,135) \n \n \n   \n   \n (67,456) \n \n \n \n \n   \n \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n Loss per Share - basic and diluted \n \n \n   \n 11 \n \n \n (52.6)p \n \n \n   \n (23.5)p \n \n \n (130.8)p \n \n \n \n \n   \n \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n Loss per Share - basic and diluted (prior to 1 for 10 share consolidation) \n \n \n   \n 11 \n \n \n   \n (5.3)p \n \n \n   \n (2.4)p \n \n \n   \n (13.1)p \n \n \n \n \n   \n Total comprehensive loss arises from continuing operations. \n   \n The notes below are an integral part of these condensed consolidated financial statements. \n   \n \n \n   \n CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION \n AS AT 30 JUNE 2024 \n   \n \n \n \n \n \n \n \n   \n   \n   \n Notes \n \n \n 30 June \n 2024 \n (unaudited) \n £'000   \n \n \n 30 June \n 2023 \n (unaudited) \n £'000  \n \n \n 31 December \n  2023 \n (audited) \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 13 \n \n \n 633,166 \n \n \n 752,226 \n \n \n 687,695 \n \n \n \n \n Right of use assets \n \n \n \n \n \n 10,918 \n \n \n 11,057 \n \n \n 10,987 \n \n \n \n \n Non-current receivables on tenant loan \n \n \n \n \n \n 337 \n \n \n 452 \n \n \n 385 \n \n \n \n \n Derivative financial instruments \n \n \n 16 \n \n \n 15,704 \n \n \n 29,577 \n \n \n 16,009 \n \n \n \n \n \n \n \n \n \n \n 660,125 \n \n \n 793,312 \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 \n \n \n 43,887 \n \n \n 33,068 \n \n \n 32,837 \n \n \n \n \n Cash and cash equivalents \n \n \n \n \n \n 25,690 \n \n \n 41,231 \n \n \n 34,505 \n \n \n \n \n \n \n \n \n \n \n 69,577 \n \n \n 74,299 \n \n \n 67,342 \n \n \n \n \n Total assets \n \n \n \n \n \n 729,702 \n \n \n 867,611 \n \n \n 782,418 \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \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 \n \n \n (38,071) \n \n \n (38,230) \n \n \n (33,039) \n \n \n \n \n Deferred income \n \n \n \n \n \n (14,452) \n \n \n (17,244) \n \n \n (15,597) \n \n \n \n \n Retail eligible bonds \n \n \n \n \n \n (49,984) \n \n \n - \n \n \n (49,907) \n \n \n \n \n Deferred tax liabilities \n \n \n \n \n \n (708) \n \n \n (699) \n \n \n (708) \n \n \n \n \n \n \n \n \n \n \n (103,215) \n \n \n (56,173) \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 14 \n \n \n (348,427) \n \n \n (376,331) \n \n \n (365,603) \n \n \n \n \n Retail eligible bonds \n \n \n 15 \n \n \n - \n \n \n (49,829) \n \n \n - \n \n \n \n \n Lease liabilities \n \n \n \n \n \n (11,460) \n \n \n (11,490) \n \n \n (11,475) \n \n \n \n \n \n \n \n \n \n \n (359,887) \n \n \n (437,650) \n \n \n (377,078) \n \n \n \n \n Total liabilities \n \n \n \n \n \n (463,102) \n \n \n (493,823) \n \n \n (476,329) \n \n \n \n \n   \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Net assets \n \n \n \n \n \n 266,600 \n \n \n 373,788 \n \n \n 306,089 \n \n \n \n \n Equity \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Stated capital \n \n \n 17 \n \n \n 513,762 \n \n \n 513,762 \n \n \n 513,762 \n \n \n \n \n Accumulated losses \n \n \n \n \n \n (247,162) \n \n \n (139,974) \n \n \n (207,673) \n \n \n \n \n Total equity attributable to owners of the parent Company \n \n \n   \n 266,600 \n \n \n   \n 373,788 \n \n \n   \n 306,089 \n \n \n \n \n   \n \n \n \n \n Net asset value per Share - basic and diluted \n \n \n   \n 18 \n \n \n   \n 51.7p \n \n \n   \n 72.5p \n \n \n   \n 59.3p \n \n \n \n \n   \n The notes below are an integral part of these condensed consolidated financial statements. \n   \n \n \n   \n CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY \n FOR THE SIX MONTHS ENDED 30 JUNE 2024 \n   \n \n \n \n \n \n \n \n \n \n \n Attributable to owners of the parent company \n \n \n \n \n \n \n \n   \n   \n Notes \n \n \n Stated \n capital \n £'000 \n \n \n Accumulated  \n losses  \n £'000   \n \n \n   \n Total  \n £'000  \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Balance at 1 January 2024 \n \n \n \n \n \n 513,762 \n \n \n (207,673) \n \n \n 306,089 \n \n \n \n \n Total comprehensive loss \n \n \n \n \n \n - \n \n \n (27,111) \n \n \n (27,111) \n \n \n \n \n Dividends paid \n \n \n 12 \n \n \n - \n \n \n (12,378) \n \n \n (12,378) \n \n \n \n \n Balance at 30 June 2024 \n \n \n \n \n \n 513,762 \n \n \n (247,162) \n \n \n 266,600 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n For the six months ended 30 June 2023 \n   \n \n \n \n \n \n \n \n \n \n \n Attributable to owners of the parent company \n \n \n \n \n \n \n \n   \n   \n Notes \n \n \n Stated \n capital \n £'000 \n \n \n Accumulated losses  \n £'000  \n \n \n   \n Total  \n £'000  \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Balance at 1 January 2023 \n \n \n \n \n \n 513,762 \n \n \n (110,820) \n \n \n 402,942 \n \n \n \n \n Total comprehensive income \n \n \n \n \n \n - \n \n \n (12,135) \n \n \n (12,135) \n \n \n \n \n Dividends paid \n \n \n 12 \n \n \n - \n \n \n (17,019) \n \n \n (17,019) \n \n \n \n \n Balance at 30 June 2023 \n \n \n \n \n \n 513,762 \n \n \n (139,974) \n \n \n 373,788 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n For the year ended 31 December 2023 \n   \n \n \n \n \n \n \n \n \n \n \n Attributable to owners of the parent company \n \n \n \n \n \n \n \n   \n   \n Notes \n \n \n Stated \n capital \n £'000 \n \n \n Accumulated losses \n £'000 \n \n \n   \n Total \n £'000 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Balance at 1 January 2023 \n \n \n \n \n \n 513,762 \n \n \n (110,820) \n \n \n 402,942 \n \n \n \n \n Total comprehensive loss \n \n \n \n \n \n - \n \n \n (67,456) \n \n \n (67,456) \n \n \n \n \n Dividends paid \n \n \n 12 \n \n \n - \n \n \n (29,397) \n \n \n (29,397) \n \n \n \n \n Balance at 31 December 2023 \n \n \n \n \n \n 513,762 \n \n \n (207,673) \n \n \n 306,089 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n The notes below are an integral part of these condensed consolidated financial statements. \n   \n \n \n   \n CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS \n FOR THE SIX MONTHS ENDED 30 JUNE 2024 \n   \n \n \n \n \n   \n   \n   \n   \n   \n \n \n   \n   \n 30 June  \n 2024 \n (unaudited) \n £'000   \n \n \n   \n   \n 30 June  \n 2023 \n (unaudited) \n £'000  \n \n \n   \n   \n 31 December  \n 2023 \n (audited) \n £'000  \n \n \n \n \n Cash flows from operating activities \n \n \n \n \n \n \n \n \n \n \n \n \n \n Loss for the year before taxation \n \n \n (27,111) \n \n \n (12,135) \n \n \n (67,447) \n \n \n \n \n - Change in fair value of investment properties \n \n \n 37,858 \n \n \n 29,491 \n \n \n 86,350 \n \n \n \n \n - Change in fair value of financial derivative instruments \n \n \n (962) \n \n \n (5,128) \n \n \n 7,194 \n \n \n \n \n - Loss on disposal of investment properties \n \n \n 1,156 \n \n \n 403 \n \n \n 726 \n \n \n \n \n - Change in fair value of right of use assets \n \n \n 69 \n \n \n 69 \n \n \n 139 \n \n \n \n \n Finance income \n \n \n (134) \n \n \n (17) \n \n \n (79) \n \n \n \n \n Finance expense \n \n \n 8,229 \n \n \n 7,953 \n \n \n 16,210 \n \n \n \n \n Increase in trade and other receivables \n \n \n (10,997) \n \n \n (2,679) \n \n \n (2,380) \n \n \n \n \n Increase/(decrease) in trade and other payables \n \n \n 4,997 \n \n \n (1,017) \n \n \n (3,611) \n \n \n \n \n (Decrease)/increase in deferred income \n \n \n (1,145) \n \n \n 584 \n \n \n (1,064) \n \n \n \n \n Cash generated from operations \n \n \n \n \n \n 11,960 \n \n \n 17,524 \n \n \n 36,038 \n \n \n \n \n Interest paid \n \n \n (7,236) \n \n \n (7,430) \n \n \n (14,775) \n \n \n \n \n Taxation paid \n \n \n (5) \n \n \n - \n \n \n - \n \n \n \n \n Net cash flow generated from operating activities \n \n \n 4,719 \n \n \n 10,094 \n \n \n 21,263 \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Investing activities \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Purchase of investment properties and subsequent expenditure \n \n \n (5,200) \n \n \n (6,755) \n \n \n (10,260) \n \n \n \n \n Sale of investment properties \n \n \n \n \n \n 20,715 \n \n \n 14,115 \n \n \n 24,969 \n \n \n \n \n Interest received \n \n \n \n \n \n 134 \n \n \n 28 \n \n \n 89 \n \n \n \n \n Net cash flow from investing activities \n \n \n 15,649 \n \n \n 7,388 \n \n \n 14,798 \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Financing activities \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Proceeds received on derivative financial instruments \n \n \n \n \n \n 1,267 \n \n \n \n \n \n 1,246 \n \n \n \n \n Dividends paid \n \n \n \n \n \n (12,342) \n \n \n (17,004) \n \n \n (31,978) \n \n \n \n \n Bank borrowings advanced \n \n \n \n \n \n - \n \n \n 1,944 \n \n \n 3,729 \n \n \n \n \n Bank borrowings repaid \n \n \n \n \n \n (17,437) \n \n \n (11,043) \n \n \n (23,771) \n \n \n \n \n Bank borrowing costs paid \n \n \n \n \n \n (453) \n \n \n (78) \n \n \n (495) \n \n \n \n \n Lease repayments \n \n \n \n \n \n (218) \n \n \n (218) \n \n \n (435) \n \n \n \n \n Net cash flow used in financing activities \n \n \n (29,183) \n \n \n (26,399) \n \n \n (51,704) \n \n \n \n \n Net decrease in cash and cash equivalents \n \n \n (8,815) \n \n \n (8,917) \n \n \n (15,643) \n \n \n \n \n Cash and cash equivalents at the start of the period \n \n \n 34,505 \n \n \n 50,148 \n \n \n 50,148 \n \n \n \n \n Cash and cash equivalents at the end of the period \n \n \n 25,690 \n \n \n 41,231 \n \n \n 34,505 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n The notes below are an integral part of these condensed consolidated financial statements. \n   \n   \n NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS \n FOR THE SIX MONTHS ENDED 30 JUNE 2024 \n   \n 1. Corporate information \n The condensed consolidated financial statements of the Group for the six months ended 30 June 2024 comprise the results of the Company and its subsidiaries (together constituting the \"Group\") and were approved by the Board and authorised for issue on 9 September 2024. \n   \n The Company is a company limited by shares incorporated in Guernsey under The Companies (Guernsey) Law, \n 2008, as amended (the \"Law\"). The Company's Ordinary Shares are admitted to the Official List of the Financial \n Conduct Authority (\"FCA\") and traded on the London Stock Exchange (\"LSE\"). \n   \n The Company was incorporated on 22 June 2015 and is registered with the Guernsey Financial Services \n Commission as a Registered Closed-Ended Collective Investment Scheme pursuant to The Protection of \n Investors (Bailiwick of Guernsey) Law, 2020, as amended, and the Registered Collective Investment Scheme Rules & Guidance 2021. \n   \n The Company did not begin trading until 6 November 2015 when its shares were admitted to trading on the LSE. \n   \n The nature of the Group's operations and its principal activities are set out in the Chairman's Statement. \n   \n The address of the registered office is: Mont Crevelt House, Bulwer Avenue, St. Sampson, Guernsey, GY2 4LH. \n   \n 2. Basis of preparation \n The condensed consolidated financial statements for the six months ended 30 June 2024 have been prepared on a going concern basis in accordance with the Disclosure Guidance and Transparency Rules of the FCA and with IAS 34, Interim Financial Reporting, as contained in UK-adopted International Accounting Standards. \n   \n The condensed consolidated financial statements have been prepared on a historical cost basis, as modified for the Group's investment properties and certain financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss. \n   \n The condensed consolidated interim financial information should be read in conjunction with the Group's audited financial statements for the year ended 31 December 2023, which have been prepared in accordance with International Financial Reporting Standards (\"IFRS\") as contained in UK-adopted International Accounting \n Standards. The results presented in this report have not been audited or reviewed in accordance with International Standard on Review Engagements (UK) 2410. \n   \n 2.1. Comparative period \n   \n The comparative financial information presented herein for the year ended 31 December 2023 do not constitute full statutory accounts within the meaning of the Law. The Group's Annual Report and Accounts for the year ended 31 December 2023 were delivered to the Guernsey Financial Services Commission. The Group's independent Auditor's report on those Accounts was unqualified but included a material uncertainty related to going concern. \n   \n 2.2.  Functional and presentation currency \n The consolidated financial information is presented in Pounds Sterling which is also the Group's functional currency, and all values are rounded to the nearest thousand (£'000s) pounds, except where otherwise indicated. \n   \n 2.3. Going concern \n   \n The Directors have made an assessment of the Group's ability to continue as a going concern. This assessment \n included consideration of the Group's cash resources, borrowing facilities, rental income, acquisition and disposals of investment properties, elective and committed capital expenditure and dividend distributions. \n   \n The Group ended the period under review with £25.7m of cash and cash equivalents, of which £21.8m was unrestricted cash. Borrowing facilities decreased from £420.8m at 31 December 2023 to £403.3m as at 30 June 2024, with an LTV of 58.3%, based upon the value of the Group's investment properties as at 30 June 2024. Following the announcement on 18 July 2024 of the successful £110.5m capital raise, the retail bond was repaid on 6 August 2024, in accordance with the maturity date. Borrowing facilities after repayment were £353.3m with an LTV of 42.2%*. The next bank facility to mature is the £116.0m facility in August 2026 which is held with the Royal Bank of Scotland, Bank of Scotland and Barclays. \n   \n Based on the above, the Directors are satisfied that the Group has adequate resources to continue in operational existence for a period of at least 12 months from the date these Financial Statements are approved. This is underpinned by the robust rent collections and the level of committed capital expenditure in the forthcoming 12 months. Furthermore, the Directors are not aware of any material uncertainties that may cast significant doubt upon the Group's ability to continue as a going concern. Accordingly, the Directors consider that it is appropriate to prepare the Financial Statements on a going concern basis. \n   \n *Based upon 30 June 2024 Colliers International Property Consultants Ltd. valuation of £647.9m, 30 June 2024 cash balance of £25.7m and the capital raise net proceeds of £104.7m less the repayment of the £50.0m retail bond. \n   \n 3. Significant accounting judgements, estimates and assumptions \n The preparation of the condensed consolidated financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods. \n   \n 3.1. Critical accounting estimates and assumptions \n The principal estimates that may be material to the carrying amount of assets and liabilities are as follows: \n   \n 3.1.1. Valuation of investment properties \n The fair value of investment property is determined by independent property valuation experts to be the estimated amount for which a property should exchange on the date of the valuation in an arm's length transaction, less the value of assets arising from rent smoothing. Properties have been valued on an individual basis. The valuation experts use recognised valuation techniques applying the principles of both IAS 40 Investment Property and IFRS 13 Fair Value Measurement. \n   \n The value of the properties has been assessed in accordance with the relevant parts of the current RICS Red Book. In particular, we have assessed the fair value as referred to in VPS4 item 7 of the RICS Red Book. Under these provisions, the term \"Fair Value\" means the definition adopted by the International Accounting Standards Board (\"IASB\") in IFRS 13, namely \"The price that would be received to sell an asset, or paid to transfer a liability in an orderly transaction between market participants at the measurement date\". Factors reflected include current market conditions, annual rentals, lease lengths and location. The significant methods and assumptions used by the valuers in estimating the fair value of investment property are set out in note 13 in the Full Half Year report and below. \n   \n The fair value of investment property is equal to the independent property valuer's valuation of £647,925,000 (31 December 2023: £700,720,000). This is presented net of the prepayment arising from rent smoothing £14,759,000 (31 December 2023: £13,025,000). This is detailed in note 13 of the report and is in accordance with IAS 40 paragraph 50, recognising the prepayment cannot be recovered when the investment properties are sold. Comparative figures for 30 June 2023 have not been restated as the effect on the accounts of £11,952,000 is not considered by the Directors to be material. \n   \n 3.1.2. Fair valuation of interest rate derivatives \n In In accordance with IFRS 13, the Group values its interest rate derivatives at fair value. The fair values are estimated by the respective counterparties with revaluation occur-ring on a quarterly basis. The counterparties will use a number of assumptions in determining the fair values, including estimations over future interest rates and there-fore future cash flows. The fair value represents the net present value of the difference between the cash flows produced by the contracted rate and the valuation rate. The significant methods and assumptions used in estimat-ing the fair value of the interest rate derivatives are set out in note 16 in the Full Half Year Report and below . \n   \n 3.2. Critical judgements in applying the Group's accounting policies \n In the process of applying the Group's accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognised in the condensed consolidated financial statements: \n   \n 3.2.1 Operating lease contracts - the Group as lessor \n The Group has acquired investment properties that are subject to commercial property leases with tenants. The Group has determined, based on an evaluation of the terms and conditions of the arrangements, particularly the duration of the lease terms and minimum lease payments, that it retains all of the significant risks and rewards of ownership of these properties and so accounts for the leases as operating leases. \n   \n 3.2.2. Recognition of income \n Service charges and other similar receipts are included in net rental and property income gross of the related costs as the Directors consider the Group acts as principal in this respect. \n   \n 3.2.3 Acquisition of subsidiary companies \n For each acquisition, the Directors consider whether the acquisition met the definition of the acquisition of a business or the acquisition of a group of assets and liabilities. \n   \n A business is defined in IFRS 3 as an integrated set of activities and assets that is capable of being conducted and managed for the purpose of providing a return in the form of dividends, lower costs or other economic benefits directly to investors or other owners, members or participants. Furthermore, a business consists of inputs and processes applied to those inputs that have the ability to create outputs. \n   \n The companies acquired in the year have comprised portfolios of investment properties and existing leases with multiple tenants over varying periods, with little in the way of processes acquired. It has therefore concluded in each case that the acquisitions did not meet the criteria for the acquisition of a business as outlined above. \n   \n 3.2.4 Consolidation of entities in which the Group holds less than 50% \n Management considered that up until 9 November 2018, the Group had de facto control of View Castle Limited and its 27 subsidiaries (the \"View Castle Sub Group\") by virtue of the amended and restated Call Option Agreement dated 3 November 2015. Following a restructure of the View Castle Sub Group, the majority of properties held within the View Castle Sub Group were transferred into two new special purpose vehicles (\"SPVs\") with two additional properties to be transferred into these SPVs at a later date. A new call option was entered into dated 9 November 2018 with View Castle Limited and five of its subsidiaries (the \"View Castle Group\"). As per the previous amended and restated Call Option Agreement, under this new option the Group may acquire any of the properties held by the View Castle Group for a fixed nominal consideration. Despite having no equity holding, the Group is deemed to have control over the View Castle Group as the Option Agreement means that the Group is exposed to, and has rights to, variable returns from its involvement with the View Castle Group, through its power to control. \n   \n 4. Summary of significant accounting policies \n With the exception of new accounting standards listed below, the accounting policies adopted in this report are consistent with those applied in the Group's statutory accounts for the year ended 31 December 2023 and are expected to be consistently applied for the current year ending 31 December 2024. The changes to the condensed consolidated financial statements arising from accounting standards effective for the first time are noted below: \n   \n Amendments to IAS 1 'Presentation of Financial Statements' \n (effective for periods beginning on or after 1 January 2024) clarify that liabilities are classified as either current or non-current, depending on the rights that exist at the end of the reporting period and not expectations of or actual events after the reporting date. The amendments also give clarification to the definition of settlement of a liability. The amendments have not had a material impact on the financial statements. \n   \n Amendments to IFRS 16 'Leases' \n (effective for periods beginning on or after 1 January 2024) include requirements to explain how an entity accounts for a sale and leaseback after the date of transaction. The amendments have not had a material impact on the financial statements. \n   \n Amendments to IAS 7 'Cash Flow Statements' and IFRS 7 'Financial Instruments: Disclosure' \n (effective for periods beginning on or after 1 January 2024) require disclosures to enhance the transparency of supplier finance arrangements and their effects on an entity's liabilities, cash flows and exposure to liquidity risk. The amendments have not had a material impact on the financial statements. \n   \n IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information (effective for periods beginning on or after 1 January 2024). \n   \n IFRS S2 Climate-related Disclosures (effective for periods beginning on or after 1 January 2024). \n   \n                                   \n 5. Rental and property income \n \n \n \n \n \n \n \n \n \n \n Six months \n ended \n 30 June \n 2024 \n (unaudited) \n £'000 \n \n \n Six months \n  ended \n 30 June \n 2023 \n  (unaudited) \n £'000 \n \n ...

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