Annual Financial Report 2025 Full Year Results

About this update from Regional Reit Ltd.

[{"type":"text","content":"\n \n   \n 24 March 2026 \n   \n Regional REIT Limited \n (\"Regional REIT\", the \"Group\" or the \"Company\") \n   \n 2025 Full Year Results \n   \n Resilient operational performance in challenging market in 2025 \n   \n Positioning the business for the future in 2026 \n   \n Regional REIT (LSE: RGL), the regional commercial property specialist, today announces its full year results for the 12 months to 31 December 2025. \n   \n Stephen Inglis, Head of ESR Europe LSPIM, Investment Adviser, said: \n   \n \"Regional REIT delivered good progress last year against its main targets despite continued challenging market conditions. We strengthened the balance sheet with a successful multi-bank refinancing of £72.4m of debt, completed £51.6m of disposals at 1.3% above book value and reduced the LTV to 40.4% at the end of the year. In addition, in a testing letting market the company secured 64 new market lettings at 3.9% above 2024 ERV. We are focussed on continuing this progress in 2026. \n   \n However, against a prolonged downturn in the property cycle and with the war in the Middle East adding to geopolitical and economic uncertainty, the leasing market remains subdued, with some tenants taking longer to make decisions, and often choosing not to move at all. While this backdrop continues to temper near‑term activity, emerging supply constraints for quality, energy‑efficient space across key UK regional markets provide a supportive medium‑term outlook. \n   \n In this context, the Board feels it is right to act with increased prudence, targeting* an 8p dividend per share for 2026; distributing a minimum 90% of the profit from the property rental business going forward in alignment to the REIT regulation. This will give the Company additional flexibility as we continue our accretive and essential capital expenditure programme to improve our assets and benefit from increasing occupier demand for quality space. \n   \n Along with our key objectives to maximise leasing activity and reduce void costs, we remain focused on strengthening the balance sheet further. We are aiming to achieve disposals at a similar level in 2026 as they were in 2025, while progressing targeted asset repositioning to drive long‑term value. \n   \n The investment case for regional offices remains clear. There is an increasing supply and demand imbalance for quality office space in the regions, and a looming shortage of Grade A accommodation conforming to EPC A and B. These structural trends, supported by limited new construction in recent years, will ultimately drive higher occupancy in the Regional REIT portfolio and at higher rents, which will underpin improved valuations over the medium term.\" \n   \n * The dividend target stated in this announcement is a target only and not a profit forecast. There can be no assurance that this target will be met, or that the Company will make any distributions at all and it should not be taken as an indication of the Company's expected future results.  \n Portfolio valuation \n ·    Portfolio valuation £555.2m (2024: £622.5m) - driven in part by the sales programme \n ·    Like-for-like portfolio valuation decreased by 5.0% year-on-year, (3.0% decline excluding capital expenditure adjustment, with the benefits yet to be captured in the valuation); reflecting a decline of 2.9% in the second half \n ·    EPRA NTA £315.2m (2024: £340.8m) \n \n Resilient operational performance supporting fully covered dividend \n ·    EPRA EPS 11.8p (2024: 19.2p) \n ·    Dividend declared of 10p (2024:7.8p); fully covered \n ·    Plan to distribute a minimum 90% of the profit from the property rental business going forward; targeting a dividend of 8 pence per share dividend for 2026 \n   \n Continued focus on strengthening the balance sheet \n ·    Disposals at £51.6m (before costs) (2024: £30.8m) \n ·    2026 targeting a similar quantum of disposals to 2025, with c. £41m either completed, contracted, under offer, or in negotiation to date \n ·    Net LTV 40.4% (2024: 41.8%) \n ·    Gross borrowings down to £266.2m (2024: 316.7m) \n ·    Cash and cash equivalents £37.7m (2024: £56.7m) \n ·    Successfully refinanced £72.4m debt facility on competitive terms \n   \n Strong leasing performance \n ·    Completed 64 new market lettings totalling £3.2m of rent at 3.9% above 2024 ERV \n ·    EPRA occupancy 75.9% by ERV (2024:77.5%) \n ·    Net rental income £40.3m (2024: £46.0m) \n ·    Rent collection strong at 99.3% (2024: 98.6%) \n   \n Executing capital expenditure programme to improve EPC ratings and drive value \n 84.5% of our portfolio has now attained EPC ratings C plus or better (2024: 82.7%), while EPC B plus and exempt continued to rise to 60.0% (2024: 57.7%). \n   \n Portfolio strategy update \n Regional REIT continued to make progress in executing its portfolio strategy in 2025, advancing sales while investing capex to build the core category and selectively maximising opportunities to enhance the value of non-core sites ahead of disposal. As this strategy develops, and as the remaining portfolio strengthens, these disposals will improve the business's overall occupancy figures. \n   \n The Group completed 18 capital expenditure projects in 2025 at a total cost of £10.1m. These projects span commencement dates in 2024 and 2025. A further 10 projects are currently on site with an estimated cost of £3.9m, and 13 additional projects have been identified for the next stage at a projected cost of c. £9.4m. \n   \n Portfolio segmentation as at 31 December 2025: \n   \n \n \n \n \n Segment \n \n \n £m \n \n \n Portfolio (%) \n \n \n EPRA Occupancy (%) \n \n \n \n \n Core \n \n \n 349.0 \n \n \n 62.9% \n \n \n 86.5% \n \n \n \n \n Capex to Core \n \n \n 103.4 \n \n \n 18.6% \n \n \n 66.4% \n \n \n \n \n Value Add \n \n \n 55.8 \n \n \n 10.0% \n \n \n 46.1% \n \n \n \n \n Sales \n \n \n 47.0 \n \n \n 8.5% \n \n \n 54.8% \n \n \n \n \n   \n Core - well positioned to deliver sustainable long-term income \n Capex to Core - targeted investment to upgrade assets to secure lettings \n Value Add - assets with potential for repositioning and planning gains \n Sales - assets targeted for disposal programme \n   \n Outlook \n There remains a structural supply and demand imbalance in the regional office market. This is driven by prohibitively high construction costs with the lowest new UK office construction starts for at least 15 years** and the clear need for high quality, well located, and energy efficient space outside of London. \n   \n However, market conditions are expected to remain challenging in the near term, with the broader macroeconomic uncertainty leading to a more cautious letting market, and the business is likely to face increased costs as a result of the conflict in the Middle East, the long-term impact of which remains unclear. In addition, as announced last year, we experienced some significant tenant breaks in 2025, the full effects of which will be reflected in our financial metrics in 2026. \n   \n Even so, Regional REIT's leasing activity in 2025 combined with the successful execution of our ongoing disposal programme demonstrates our ability to deliver upon the strategy for shareholders. With occupiers prioritising high quality, well located and energy efficient workspace, on the back of the business's capital expenditure programme, it is well positioned to benefit when market conditions stabilise. \n   \n We hope for a swift end to hostilities in the Middle East and a normalisation of oil prices, allowing interest rates to resume their downward trend and economic confidence to resume. \n   \n **CoStar, 2026 Regional Office Outlook, Q1 2026 \n   \n Post period end \n   \n Disposals \n Since 31 December 2025, the Company has completed 5 disposals and three part sales for an aggregate total of £12.3m (before costs). \n   \n Borrowings \n Following the post period end disposals, Group borrowings have been further reduced by £7.8m to £258.4m. \n   \n Lettings \n A further 7 notable new lettings and renewals achieved post period end for 44,693 sq.ft. amounting to £0.7m, reflecting 17.0% above ERV. \n   \n ·    The Royals, Altrincham Road, Manchester - Existing tenant Threesixty Services LLP has renewed existing lease of 8,117 sq. ft. of space at a rental income of £125,850 (£15.50/ sq. ft.). The lease is to June 2030. \n ·    Woodlands Court, Bristol - Hill Partnerships Ltd. has let 3,584 sq. ft. of office space to January 2036, with an option to break in 2031, at a rental income of £73,930 pa (£20.63/ sq. ft.). \n ·    Century Park, Altrincham - Existing tenant Odema Ltd. has renewed existing lease of 2,618 sq. ft. of space at a rental income of £37,500 (£14.33/ sq. ft.). The lease is to September 2030. \n ·    300 Bath Street, Glasgow - Securigroup Ltd. has let 9,618 sq. ft. of space to November 2035 with a break option in 2031, at a rental income of £246,023 (£25.58/ sq. ft.). \n o  Additionally, the tenant let a further 2,945 sq. ft. of space to December 2030 with a break option in 2028, at a rental income of £42,702 (£14.50/ sq. ft.). \n ·    Mochdre Commerce Park, Colwyn Bay - A Nelson & Co Ltd. has renewed existing lease of 12,971 sq. ft. of space to November 2026 with an option to break in April 2026, at a rental income of £58,370 pa (£4.50/ sq. ft.). \n ·    1 Burgage Square, Merchant Square, Wakefield - Ikaro Group Ltd. has renewed existing lease of 4,840 sq. ft. of space to October 2032 at a rental income of £72,600 pa (£15.00/ sq. ft.). \n   \n   \n Forthcoming Events \n   \n \n \n \n \n 19 May 2026 \n \n \n Q1 2026 Trading update \n \n \n \n \n \n \n \n Q1 2026 Dividend declaration \n \n \n \n \n \n \n \n AGM \n   \n \n \n \n \n 8 September 2026 \n \n \n 2026 Interim Results \n \n \n \n \n   \n   \n - ENDS - \n   \n   \n Enquiries: \n   \n \n \n \n \n Regional REIT Limited \n \n \n \n \n \n \n \n Press enquiries through FTI Consulting \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n ESR Europe Europe LSPIM Ltd. \n \n \n \n \n \n \n \n Investment Adviser to the Group \n \n \n \n \n \n \n \n Adam Dickinson, Investor Relations, Regional REIT Ltd. \n \n \n Tel: +44 (0) 203 831 9776 \n \n \n \n \n \n \n \n \n \n \n \n \n Stephen Inglis, Head of ESR Europe LSPIM Ltd. \n \n \n Tel: +44 (0) 141 248 4155 \n \n \n \n \n \n \n \n \n \n \n \n \n FTI Consulting \n \n \n  Tel: +44 (0)20 3727 1000 \n \n \n \n \n Financial Communications \n \n \n [email protected] \n \n \n \n \n Dido Laurimore, Giles Barrie, Bryn Woodward \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n About Regional REIT \n   \n Regional REIT Limited (\"Regional REIT\" or the \"Company\") and its subsidiaries (the \"Group\") is a United Kingdom (\"UK\") based real estate investment trust that launched in November 2015. It is managed by ESR Europe LSPIM Limited, the Investment Adviser, and ESR Europe Investment Management Limited, the AIFM. \n   \n Regional REIT's commercial property portfolio is comprised wholly of income producing UK assets, predominantly offices located in the regional centres outside of the M25 motorway. The portfolio is geographically diversified, with 112 properties, 1,146 units and 659 tenants as at 31 December 2025, with a valuation of c.£555.2m. \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, with a strong focus on income supported by additional capital growth prospects. \n   \n The Company's shares were admitted to the Official List of the UK's Financial Conduct Authority and to trading on the London Stock Exchange on 6 November 2015. For more information, please visit the Group's website at  www.regionalreit.com . \n   \n LEI: 549300D8G4NKLRIKBX \n   \n \n \n   \n FINANCIAL KEY POINTS \n   \n Year Ended 31 December 2025 \n   \n Income focused - opportunistic buying and strategic selling, coupled with intensive asset management, continues to secure long-term income. \n   \n \n \n \n \n Portfolio Valuation       \n \n \n £555.2m (2024: £622.5m) \n \n \n \n \n IFRS NAV per Share \n \n \n 197.0p (2024: 216.9p) \n \n \n \n \n EPRA** NTA per Share \n \n \n 194.4p (2024: 210.2p) \n \n \n \n \n Dividend per share \n \n \n 10.0p (2024: 7.8p)* \n \n \n \n \n Net Loan to Value Ratio*** \n \n \n 40.4% (2024: 41.8%) \n \n \n \n \n Weighted Average Cost of Debt*** \n \n \n 3.3% (2024: 3.4%) \n \n \n \n \n Weighted Average Debt Duration*** \n \n \n 2.6 yrs (2024: 2.9 yrs) \n \n \n \n \n   \n * During 2024 the Company offered 15 new Ordinary Shares for every 7 existing Ordinary Shares. This resulted in an increase of 1,105,149,821 Ordinary Shares being issued. Subsequently there was a 10 for 1 split with the resulting Ordinary Shares in issue being 162,088,483. See note 28 for details of the restatement. \n ** The European Public Real Estate Association (\"EPRA\"). The EPRA's mission is to promote, develop and represent the European public real estate sector. As an EPRA member, we fully support the EPRA Best Practices Recommendations. Specific EPRA metrics can be found in the Company's financial and operational highlights, with further disclosures and supporting calculations provided in the full Annual Report. \n *** Alternative Performance Measures. Details are provided in the Glossary of Terms and the EPRA Performance Measures in the full Annual Report. \n   \n Operational KEY POINTS \n   \n Year Ended 31 December 2025 \n   \n Income focused with intensive asset management. \n   \n \n \n \n \n Properties \n \n \n 112 (2024: 126) \n \n \n \n \n Units \n \n \n 1,146 (2024: 1,271) \n \n \n \n \n Tenants \n \n \n 659 (2024:780) \n \n \n \n \n Rent Roll \n \n \n £50.4m (2024: £60.7m) \n \n \n \n \n Portfolio by region and sector (by value) \n \n \n \n \n \n \n \n England & Wales \n \n \n 83.4% (2024: 83.4%) \n \n \n \n \n Office \n \n \n 90.3% (2024: 90.7%) \n \n \n \n \n Property disposal proceeds (net of costs) \n \n \n £48.4m (2024: £28.6m) \n \n \n \n \n Number of properties \n \n \n 14 assets and 4 part sales \n \n \n \n \n EPRA Occupancy by ERV* \n \n \n 75.9% (2024: 77.5%) \n \n \n \n \n WAULT to expiry \n \n \n 4.5 yrs (2024: 4.6 yrs) \n \n \n \n \n WAULT to first break by ERV* \n \n \n 2.7 yrs (2024: 2.9yrs) \n \n \n \n \n Net rental & Property income \n \n \n £40.3m (2024: £46.0m) \n \n \n \n \n Average rent* (per sq ft) \n \n \n £14.20 (2024: £13.92) \n \n \n \n \n Average property value \n \n \n £5.0m (2024: £4.9m) \n \n \n \n \n Reversionary yield \n \n \n 12% (2024: 11.6%) \n \n \n \n \n   \n * Alternative Performance Measures. Details are provided in the Glossary of Terms and the EPRA Performance Measures in the full Annual Report . \n   \n PERFORMANCE KEY POINTS \n   \n Year ended 31 December 2025 \n   \n A key focus on delivering high dividend distributions to shareholders. \n   \n \n \n \n \n Dividends declared per Share \n \n \n Pence per share \n \n \n \n \n 2025* \n \n \n 10.0 \n \n \n \n \n 2024* \n \n \n 7.80 \n \n \n \n \n 2023 \n \n \n 5.25 \n \n \n \n \n 2022 \n \n \n 6.60 \n \n \n \n \n 2021 \n \n \n 6.50 \n \n \n \n \n 2020 \n \n \n 6.40 \n \n \n \n \n 2019 \n \n \n 8.25 \n \n \n \n \n 2018 \n \n \n 8.05 \n \n \n \n \n 2017 \n \n \n 7.85 \n \n \n \n \n 2016 \n \n \n 7.65 \n \n \n \n \n 2015 \n \n \n 1.00 \n \n \n \n \n   \n * During 2024 the Company offered 15 new Ordinary Shares for every 7 existing Ordinary Shares. This resulted in an increase of 1,105,149,821 Ordinary Shares being issued with effect from 19 July 2024. Subsequently there was a 10 for 1 consolidation which took effect on the 29 July 2024, with the resulting Ordinary Shares in issue being 162,088,483. \n   \n Member of FTSE All-Share Index since March 2016. \n Member of FTSE EPRA NAREIT UK Index since June 2016. \n   \n Chairman's Statement \n   \n \"Key achievements include delivering significant disposals to reduce debt, securing refinancing on attractive terms, further aligning the Investment Adviser's remuneration with shareholder returns, and continuing to improve the portfolio's EPC ratings.\" \n   \n David Hunter , Chairman \n   \n In my first year as Chairman of Regional REIT the Company has made meaningful progress against its strategy. Key achievements include delivering significant disposals to reduce debt, securing refinancing on attractive terms, further aligning the Investment Adviser's remuneration with shareholder returns, and continuing to improve the portfolio's EPC ratings. However, market conditions have delayed a recovery in values and in leasing, suppressing earnings, and we have also had to contend with several significant tenant lease breaks, which have created income shortfalls and unwelcome void costs. It was, however, encouraging to see yields stabilise during the year. \n   \n Overview \n 2025 marked a year of meaningful strategic delivery for the Company, albeit there remains much work to do. We completed £51.6m (before costs) of disposals, ahead of target, which supported a reduction in LTV to 40.4% by year end. The year also saw the early refinancing of a £72.4m debt facility previously due to mature in August 2026, and the restructuring of the management contract. The latter takes effect from 1 January 2026 and when in full force will generate c.£0.9m of annual fee savings and strengthen shareholder alignment. Alongside this, the continued focus on improving the sustainability profile of the portfolio resulted in 84.5% of assets achieving EPC C or better, with 60.0% now rated EPC B or above. \n   \n The repositioning of the portfolio across the four segments - Core, Capex to Core, Value Add, and Sales - progressed well during the year. While the leasing market remained subdued and void costs weighed on income, there was sustained focus on accelerating the ongoing sales programme. Enquiry levels for our high quality, energy efficient space demonstrated the continued appeal of well \n located regional offices. Disciplined capital expenditure continued to underpin improved letting prospects and supported the long-term performance of Core assets, while disposals continued to streamline the portfolio. \n   \n The focus for 2026 is to continue to invest capital to improve the quality and letting prospects of key properties, reducing void costs and at the same time to continue to sell under performing and non-core assets. However, we naturally watch with concern the war in the Middle East and its impact on interest rates, inflation and growth, all of which inevitably affect real estate markets. \n   \n Financial Resources \n The Company's EPRA NTA decreased to £315.2m (IFRS NAV: £319.3m) as at 31 December 2025, representing a decrease of £25.6m from £340.8m (IFRS NAV: £351.6m) as at 31 December 2024. This decrease was largely a reflection of previous changes in income following tenant breaks. A strong cash balance of £37.7m was retained as of 31 December 2025 (2024: £56.7m), of which £37.7m was \n unrestricted (2024: £55.9m). \n   \n The Company's debt position, which is comprised entirely of fixed and hedged interest rate debt, helped the Company mitigate rate volatility. Though the weighted average cost of debt reduced to 3.3% at the end of 2025 (2024: 3.4%), the refinancing announced on the 24 December will increase it. The Net Loan-to-Value (LTV) decreased to 40.4% as of 31 December 2025 (2024: 41.8%). \n   \n The Company continues to execute its controlled disposal programme, which during the period consisted of 14 assets and 4-part sales of assets, amounting to £51.6m, before costs. The Company will be targeting at least the same quantum of disposals in 2026. \n   \n Sustainability \n I am again pleased to report the significant progress achieved by the ESG Working Party in 2025, with the Company's Global Real Estate Sustainability Benchmark (GRESB) improving to 76 from 73, with a two Green Star status. Additionally, we continued to achieve advancements in our EPC ratings and EPRA sustainability accreditation. \n   \n 84.5% of our portfolio has now attained EPC ratings C plus or better (compared with 82.7% on 31 December 2024), while EPC B plus and exempt continued to rise to 60.0% (compared with 57.7% on 31 December 2024). This progress moves us nearer to meeting the Minimum Energy Efficiency Standard ('MEES') target of EPC B, well ahead of the stated 2030 target. Importantly, with limited office supply in the regions, providing high quality, energy efficient space can be a key differentiator for Regional REIT, driving improved occupancy and rental growth. \n   \n Market Environment \n In 2025, although the UK regional office market began to stabilise after three years of decline, with total investment rising 1.2% year-on-year to £3.1 billion, according to Lambert Smith Hampton (LSH) 1 , the year was marked by a slow start. The first three quarters were below the five-year quarterly average, but ended strongly in Q4 when investment surged to £1.5 billion-nearly three times Q3 levels and 65% higher than Q4 2024. Growth was driven primarily by non-London South East offices, which jumped from £0.1 billion in Q3 to £1.2 billion in Q4, while the rest of the UK contributed steadily at £0.3 billion. Smaller office parks also showed a moderate rebound in the mid-year quarters. Although total investment remains below the five-year average, these trends indicate growing investor confidence in the long-term prospects of regional offices. Cautious optimism is supported by strong demand for modern, flexible office space, limited prime stock in key regional cities, and supportive local economic conditions. Workforce trends continue to influence demand, with 44% of UK employees commuting exclusively to work, 28% working on a hybrid basis, 13% working fully from home, and the remaining 15% operating with no fixed place of work or other arrangements in 2025 2 .Regional office values are adjusting, with genuine yield compression expected, particularly for prime assets completing through 2026. Secondary yields appear to have bottomed at around 13%, reflecting opportunities at cyclical lows amid constrained supply 3 . Transaction volumes are projected to continue to recover in 2026, driven by quality and sustainability-focused deals, while the Royal Institution of Chartered Surveyors suggests the market may be at its cyclical low or entering the early stages of a recovery 4 . \n   \n 1 Lambert Smith Hampton (January 2026) UK Investment Transactions: Q4 2025 \n 2 ONS: Opinions and Lifestyle Survey from the Office for National Statistics, 2025 \n 3 Lambert Smith Hampton (January 2026) UK Investment Transactions: Q4 2025 \n 4 RICS (March 2025) RICS survey calls the bottom of the UK commercial real estate market as yields \n harden across all sectors, Royal Institution of Chartered Surveyors. \n   \n Dividends \n The dividend remains a significant component of total shareholder returns. During the period under review, the Company declared total dividends of 10.0pps (2024: 7.80pps*). In line with our policy, the Company has paid a fully covered dividend for 2025, having also paid a covered dividend for 2024. Since inception, the Company has declared dividends amounting to 75.35pps and has distributed approximately £267.6m in dividends to shareholders. \n   \n Going forward, the Company will distribute a minimum 90% of the profit from the property rental business, which is in accordance with regulatory requirements, targeting** a fully covered 8 pence per share dividend for 2026 but will retain earnings where possible to support the Company's accretive and essential capital expenditure programme. The Board believes this approach is firmly in shareholders' long ‑ term interests of improving the quality of the portfolio to benefit from rental and capital uplift and remains confident in the Company's strategy and medium ‑ term outlook. \n   \n * During 2024 the Company offered 15 new Ordinary Shares for every 7 existing Ordinary Shares. This resulted in an increase of 1,105,149,821 Ordinary Shares being issued. Subsequently there was a 10 for 1 consolidation with the resulting Ordinary Shares in issue being 162,088,483. \n ** The dividend target stated in this announcement is a target only and not a profit forecast. There can be no assurance that this target will be met, or that the Company will make any distributions at all and it should not be taken as an indication of the Company's expected future results. \n   \n Performance \n The Company's total shareholder return for 2025 was +1.1%, versus the return of +11.1% for the FTSE EPRA NAREIT UK Total return Index over the same period. The annualised EPRA Total Return was +0.4% p.a. (2024: +0.6% p.a.). \n   \n Board Changes \n As noted in last year's annual report, I was appointed to the Board with effect from 2 January 2025, replacing Kevin McGrath as the chairman in March 2025 after the completion of a handover period. \n   \n As announced on 21 July 2025, Sarah Whitney was appointed as an Independent Non-Executive Director to the Board on 4 August 2025, and has subsequently been appointed to the Audit, Nomination and Management Engagement and Remuneration Committees. Sarah brings a breadth of relevant experience as a Chartered Accountant following over 35 years advising companies on strategy, corporate finance, real estate and economic development matters. \n   \n Annual General Meeting \n The notice for the 2026 AGM will be published on our website and circulated to Shareholders in line with the Company's Articles of Incorporation. In accordance with the Company's Articles of Incorporation and the AIC Code, all Directors will stand for re-election at the AGM and Sarah Whitney will stand for election. Directors maintain their professional development through regular briefings from the Company Secretary and the Company's other advisers. As well as being committed to orderly succession planning, the Board will enhance its skills base as necessary. The Board looks forward to engaging with Shareholders at the AGM. \n   \n Shareholder and Stakeholder Engagement \n The satisfaction of tenants is fundamental to our ongoing success. We are committed to providing high-quality workspaces that accommodate diverse business needs, from small, flexible offices to expansive corporate headquarters. Proactive engagement with tenants forms an integral component of our asset management approach, enabling us to better understand their requirements, address challenges, and enhance their working environments, particularly in an era where hybrid working has created a need for more generous working spaces with ancillary facilities. \n   \n We are also committed to open and transparent communication with Shareholders to ensure that the Company's strategy is understood. The Company also supports shareholder participation; additional information can be accessed at www.regionalreit.com and within this Annual Report. \n   \n Outlook \n The supply and demand dynamics for well-located, high-quality office space continue to support rental performance, enabling reversionary income capture through targeted investment. Although office conditions remain challenging, adjusted pricing and selective disposals demonstrate our ability to crystallise value, alongside initiatives to raise occupancy and reduce vacancy related costs. With occupiers prioritising efficient, sustainable and engaging workplaces, the Company is positioned to benefit from stabilising market conditions using prudent leverage as confidence strengthens across the commercial property sector. \n   \n We hope for a swift end to hostilities in the Middle East and a normalisation of oil prices, allowing interest rates to resume their downward trend and economic confidence to resume. \n   \n David Hunter \n Chairman \n 23 March 2026 \n   \n INVESTMENT ADVISER'S REPORT \n   \n Stephen Inglis \n Head of ESR Europe LSPIM Ltd \n Investment Adviser \n   \n Overview \n The UK commercial property market remained challenging through 2025, particularly across regional office markets, where subdued leasing activity and broader economic uncertainty continued to influence sentiment. Nevertheless, stabilising yields, a tightening supply of high-quality regional workspace and increased occupier focus on efficient, sustainable buildings provided early signs of improving fundamentals. In this environment, Regional REIT's portfolio valuation concluded the year at £555.2m, representing a like-for-like decline of 5.0%, primarily reflecting income changes from a small number of tenant lease breaks. Encouragingly, yields remained stable throughout the second half of the year. \n   \n A disciplined and proactive disposals programme underpinned much of the strategic progress delivered during 2025. Total disposals reached £51.6m (before costs), ahead of the targeted disposal amount of £50.0m for 2025. These sales contributed directly to strengthening the balance sheet, reducing loan-to-value to 40.4% by year-end. In December, the Company also completed the refinancing of £72.4m of debt originally due to mature in August 2026, thereby mitigating near-term refinancing risk and improving funding clarity. \n   \n Operational performance remained resilient despite market headwinds. During the year, the business completed 64 new market lettings totalling £3.2m of rent at 3.9% above 2024 ERV, demonstrating continued demand for well-presented and well-located space. Rent collection remained extremely strong at 99.3%, supporting income stability. EPRA occupancy stood at 75.9%, a modest year-on-year reduction in line with expectations following lease breaks and disposal activity. Capital expenditure increased to £11.8m, reinforcing the Company's commitment to improving sustainability, energy performance and overall tenant appeal. This programme contributed to further improvement in EPC ratings across the portfolio. \n   \n As the business looks ahead to 2026, the priority will be disciplined capital allocation and continued portfolio repositioning to enhance letting prospects and reduce void costs. Retaining earnings where appropriate will allow the Company to fund essential investment in the assets most capable of delivering long-term value. This approach reflects the impact of previous lease breaks, the subdued \n leasing environment and the need to maintain financial flexibility in the face of evolving debt costs. Supported by a strengthened balance sheet, stabilising market conditions and a clear strategic focus, Regional REIT enters the new year with determination and confidence in its ability to deliver sustained operational progress and long-term value creation for shareholders. \n   \n KEY POINTS FROM 2025 \n   \n High Level of Rent Collection \n Achieved a high level of rent collection. As at 13 March 2026, rent collection remains robust, with FY 2025 at 99.3%, adjusting for monthly rent and agreed collections plans, which is similar to the equivalent date in 2025 when 98.6% had been collected. \n   \n Increase in Average Rent \n Average rent by let sq. ft. increased by 2.0% from £13.92 per sq. ft. in December 2024 to £14.20 per \n sq. ft. in December 2025. \n   \n New Lettings - Greater than ERV \n During 2025, 64 new market lettings were completed totalling £3.2m rent roll, with these lettings being 3.9% above 2024 ERV. \n   \n Increase in GRESB Score \n The Company submitted its Fourth Global Real Estate Sustainability Benchmark (\"GRESB\") assessment resulting in an increased score of 76 from 73. \n   \n Disposals Programme \n Disposals at £51.6m (before costs), (2024: £30.8m). \n   \n Debt Refinance and Cost Savings \n Early refinancing of a £72.4m debt facility previously due to mature in August 2026, and the restructuring of the management contract. The latter takes effect from 1 January 2026 and when in full force will generate c.£0.9m of annual fee savings and strengthen shareholder alignment. \n   \n Investment Activity in the UK Commercial Property Market \n In 2025, the UK economy exhibited modest growth but the macro-economic backdrop was mixed. Real GDP expanded by around 1.3% over the year, up from 1.1% in 2024. Inflation remained above the Bank of England's 2.0% target, averaging around 3.4%, driven in part by rising energy and core services prices. Labour market conditions softened, with unemployment rising to 5.2%, while job vacancies remained subdued, indicating increased slack. Overall, 2025 was characterised by subdued GDP expansion, persistent inflation above target, and a softening labour market, creating a difficult backdrop for policymakers and markets. \n   \n In 2025, the UK regional office market showed signs of stabilisation with data from Lambert Smith Hampton (LSH) indicating that total investment edged up 1.2 % year-on-year to £3.1 billion, ending a three-year period of decline. Investment volumes highlight an improving year-end performance, with Q4 driving a strong and positive finish reaching £1.5 billion, nearly three times the Q3 2025 level and 65.1% higher than the same quarter in 2024. The rest of South East Offices led this increase, rising sharply from £0.5 billion in Q3 to £1.2 billion in the final quarter of the year. Investment volumes in the rest of the UK were more modest, at £0.5 billion in Q4 2025, but remained consistent with previous quarters, providing a stable contribution to the total performance. Office parks, while smaller in scale, contributed steadily throughout the year and showed a moderate rebound in the middle quarters, adding positively to Q4 2025 results. The first three quarters of 2025 remained below the five-year quarterly average, reflecting a slow start. Overall, 2025 reflects a slow start followed by a strong, yet concentrated, year-end finish 1 . Although investment remains below the five-year average, recent trends suggest growing confidence among investors in the long-term prospects of regional office. \n   \n There are several reasons for cautious optimism: strong demand for modern, flexible office space, limited prime stock in key regional cities, and supportive local economic drivers. While macroeconomic risks persist, these factors indicate the market may be positioned for a gradual upturn. The broader UK office market is evolving, and although each subsector faces its own headwinds, businesses continue to require quality office space. Furthermore, the Office for National Statistics (\"ONS\") data 2 shows that in 2025, 44% of workers in the UK on average travelled exclusively to work, while only 13% worked from home fulltime, a drop from 25% in 2021. Additionally, approximately 28% of the UK workforce were hybrid working in 2025. A recent survey by Savills highlights that more than 90% of HR professionals believe that real estate is an important driver in attracting and retaining talent 3 . \n   \n Regional office values are adjusting, and genuine yield compression is expected, particularly for prime transactions completing through 2026. Following significant price corrections, investors can now access opportunities at cyclical lows amid constrained supply. Transaction volumes are projected to recover through 2026, driven by deals that prioritise quality and sustainability. Meanwhile, after a sustained period of outward yield shift, notional secondary regional yields appear to have bottomed out in Q4 at around 13%, according to Lambert Smith Hampton 4 . \n   \n 1 JLL (December 2025): The shifting landscape of UK offices \n 2 ONS: Opinions and Lifestyle Survey from the Office for National Statistics, 2025 \n 3 Savills & Personnel Today, 2025 \n 4 Lambert Smith Hampton (January 2026) UK Investment Transactions: Q4 2025 \n   \n Occupational Demand in the UK Regional Office Market \n Avison Young estimates that take-up of office space across nine regional office markets 5 totalled 7.6 million sq. ft. in 2025, 7.2% below the level of take-up recorded in 2024 and 3.6% lower than the 5-year average. The annual fall in take-up can be attributed to decreased demand for city centre offices with take-up 13.8% lower in 2025. Conversely, out-of-town take-up increased by 3.8% year-on-year from 2.8 million sq. ft. to 2.9 million sq. ft., helping to sustain overall activity. Looking at quarterly performance, 2025 began strongly at 2.1 million sq. ft. let during Q1, up 11.7% on the same quarter in 2024, with both city centre and out-of-town offices outperforming. However, demand was subdued in Q2 and Q3 2025 relative to 2024 figures. Encouragingly, momentum strengthened again in Q4 2025, with take-up reaching 2.1 million sq. ft., broadly in line with the 2.2 million sq. ft. recorded in Q4 2024. \n   \n Occupational demand was driven by the professional sector, which accounted for the highest proportion of take-up at 25.6% in 2025. Following the professional sector, the media & telecoms sector and the public services, education & health sector and technology accounted for the second and third largest proportion of take-up in the regional cities, accounting for 15.8% and 14.3% respectively. Research from Savills shows that the professional sector and the media & telecoms sector were also the most active sectors over the last five years 6 . \n   \n According to data from CoStar 7 , there was an increase in availability for all regional office stock with total supply rising by 1.5% in 2025 to 82.2 million sq. ft. However, research from the British Property Federation shows that 81% of commercial buildings in major English cities are rated below EPC B, meaning a large share of the stock is at risk of obsolescence. While commercial building owners are making gradual year-on-year improvements, ongoing policy uncertainty means that around 2.0 billion sq. ft. of commercial real estate in major cities remains below EPC B 8 . This raises questions over how much of the reported availability is genuinely lettable, with substantial sections of regional markets constrained by ageing, non-compliant buildings and limited options for occupiers. \n   \n Supply constraints are becoming increasingly pronounced at the prime end of the market. Although overall Grade A availability remains elevated in historic terms, a clear distinction has emerged between 'conventional' Grade A space and a much more limited pool of new-generation prime buildings. Demand, driven by occupiers' flight to quality and stricter energy performance requirements, is increasingly concentrated on this segment. \n   \n As a result, prime space remains relatively scarce, accounting for just 5% of total availability-down from 9% two years ago-highlighting its limited presence in the market, according to research from LSH 9 . \n   \n The research from CoStar indicates that 2025 recorded the lowest level of construction starts in more than 15 years, totalling just 4.9 million sq. ft. across ten regional markets. In terms of future development, it is estimated that approximately 2.5 million sq. ft. of office space is currently under construction in the Big Nine regional markets. Avison Young expects refurbishment activity to continue to play a key role in offsetting the shortfall caused by subdued newbuild starts. This is reflected in the delivery pipeline, where refurbishments account for 53% of schemes scheduled for completion in 2026, up from 41% in 2025 and 33% in 2024. \n   \n According to monthly data from MSCI, rental value growth held up well for the rest of UK office markets in the 12 months ended December 2025 with growth of 3.2% 10 . Conversely, central London offices experienced slightly more modest growth of 2.9% over the same period. Avison Young expects rental growth to continue across most markets during 2026 11 . Demand for quality office space has put an upward pressure on rents, with growth of 4.8% recorded across the Big Nine regional markets in 2025. According to research from Avison Young, average headline rents are now \n approximately £40.72 per sq. ft. \n   \n The Investment Adviser views current supply-demand dynamics as creating a strong opportunity for repositioning secondary offices. The limited availability of prime space, combined with a persistent shortfall in speculative development, creates scope to upgrade fundamentally sound, modern office buildings to prime specification and capture stronger rental performance. \n   \n Moreover, occupier demand for secondary regional offices may strengthen as businesses face intensifying cost pressures, particularly in the wake of the UK Government's latest Business Rates revaluation, effective from April 2026. The revaluation, undertaken by the Valuation Office Agency, reassesses rateable values based on more recent rental evidence, and in many prime city-centre markets this is expected to translate into higher business rates liabilities. With standard multipliers applying to office properties, and no targeted relief comparable to that available to parts of the retail and hospitality sectors, occupiers of prime space are likely to face a marked increase in overall occupational costs, compounding existing rental and operating expenses. As a result, cost-sensitive businesses may be compelled to re-evaluate their space requirements and increasingly consider more affordable secondary regional locations, where lower rents and comparatively modest rateable values offer better value and greater flexibility within constrained operating budgets. \n   \n 5 Nine regional office markets mentioned by Avison Young include: Birmingham, Bristol, Cardiff, \n Edinburgh, Glasgow, Leeds, Liverpool, Manchester & Newcastle \n 6 Savills: The Regional Office Market Overview, Q4 2025 \n 7 CoStar, Regional Office Outlook, Q1 2026. 10 regional cities include: Birmingham, Bristol, Cardiff, Edinburgh, Glasgow, Leeds, Liverpool, Manchester, Newcastle, Nottingham \n 8 British Property Federation, February 2026 \n 9 LSH, Regional office report, Q3 2025 \n 10 MSCI (February 2025), MSCI Portfolio Analysis Service \n 11 Avison Young, Big Nine Q4 2023, February 2024 \n   \n Regional REIT's Office Assets \n EPRA occupancy of the Group's regional offices of 74.2% as at 31 December 2025 (2024: 76.4%). A like-for-like comparison of the Group's regional offices' EPRA occupancy, as at 31 December 2025 versus 31 December 2024, shows occupancy of 74.4% (2024: 76.1%). WAULT to first break was 2.6 years (2024: 2.7 years); like-for-like WAULT to first break of 2.6 years (2024: 2.6 years). \n   \n Property Portfolio \n As at 31 December 2025, the Group's property portfolio was valued at £555.2 million (2024: £622.5 million), with rent roll of £50.4 million (2024: £60.7 million), and an EPRA occupancy of 75.9% (2024: 77.5%). \n   \n On a like-for-like basis, 31 December 2025 versus 31 December 2024, EPRA occupancy was 76.0% (2024: 77.3%). \n   \n There were 112 properties (2024: 126) in the portfolio, with 1,146 units (2024: 1,271) and 659 tenants (2024: 780). If the portfolio was fully occupied at Cushman & Wakefield's view of market rents, the rental income would be £77.0 million per annum as at 31 December 2025 (2024: £83.2 million). \n   \n As at 31 December 2025, the net initial yield on the portfolio was 5.3% (2024: 5.9%), the equivalent yield was 10.5% (2024: 10.4%) and the reversionary yield was 12.0% (2024: 11.6%). \n \n \n \n Property Portfolio by Sector \n   \n \n \n \n \n Sector \n \n \n Properties \n \n \n Valuation (£m) \n \n \n % by valuation \n \n \n Sq. ft. (m) \n \n \n Occupancy (EPRA) (%) \n \n \n WAULT to first break (yrs) \n \n \n Gross rental income (£m) \n \n \n Average rent (£psf) \n \n \n ERV (£m) \n \n \n Capital rate (£psf) \n \n \n Net Initial Yield (%) \n \n \n Equivalent yield (%) \n \n \n Reversionary yield (%) \n \n \n \n \n Office \n \n \n 98 \n \n \n 501.6 \n \n \n 90.3 \n \n \n 4.6 \n \n \n 74.2 \n \n \n 2.6 \n \n \n 45.5 \n \n \n 15.60 \n \n \n 72 \n \n \n 108.58 \n \n \n 5.1 \n \n \n 10.7 \n \n \n 12.3 \n \n \n \n \n Retail \n \n \n 9 \n \n \n 20.3 \n \n \n 3.7 \n \n \n 0.2 \n \n \n 95.5 \n \n \n 3.5 \n \n \n 1.9 \n \n \n 10.16 \n \n \n 2.1 \n \n \n 97.69 \n \n \n 7.2 \n \n \n 8.8 \n \n \n 9.2 \n \n \n \n \n Industrial \n \n \n 4 \n \n \n 23.8 \n \n \n 4.3 \n \n \n 0.4 \n \n \n 97.1 \n \n \n 2.8 \n \n \n 1.9 \n \n \n 5.45 \n \n \n 2.1 \n \n \n 56.81 \n \n \n 6.3 \n \n \n 7.8 \n \n \n 8.2 \n \n \n \n \n Other \n \n \n 1 \n \n \n 9.6 \n \n \n 1.7 \n \n \n 0.1 \n \n \n 100.0 \n \n \n 10.1 \n \n \n 1.0 \n \n \n 11.97 \n \n \n 0.8 \n \n \n 113.99 \n \n \n 10.6 \n \n \n 9.6 \n \n \n 7.6 \n \n \n \n \n Total \n \n \n 112 \n \n \n 555.2 \n \n \n 100.0 \n \n \n 5.3 \n \n \n 75.9 \n \n \n 2.7 \n \n \n 50.4 \n \n \n 14.20 \n \n \n 77.0 \n \n \n 104.17 \n \n \n 5.3 \n \n \n 10.5 \n \n \n 12.0 \n \n \n \n \n   \n Property Portfolio by Region \n \n \n \n \n Region \n \n \n Properties \n \n \n Valuation (£m) \n \n \n % by valuation \n \n \n Sq. ft. (m) \n \n \n Occupancy (EPRA) (%) \n \n \n WAULT to first break (yrs) \n \n \n Gross rental income (£m) \n \n \n Average rent (£psf) \n \n \n ERV (£m) \n \n \n Capital rate (£psf) \n \n \n Net Initial Yield (%) \n \n \n Equivalent yield (%) \n \n \n Reversionary yield (%) \n \n \n \n \n Scotland \n \n \n 24 \n \n \n 92.2 \n \n \n 16.6 \n \n \n 1.0 \n \n \n 79.8 \n \n \n 3.5 \n \n \n 8.9 \n \n \n 13.82 \n \n \n 15.1 \n \n \n 90.29 \n \n \n 4.1 \n \n \n 11.1 \n \n \n 12.8 \n \n \n \n \n Southeast \n \n \n 18 \n \n \n 88.1 \n \n \n 15.9 \n \n \n 0.7 \n \n \n 71.2 \n \n \n 2.1 \n \n \n 7.9 \n \n \n 17.68 \n \n \n 11.8 \n \n \n 125.44 \n \n \n 6.5 \n \n \n 10.5 \n \n \n 12.0 \n \n \n \n \n Northeast \n \n \n 17 \n \n \n 95.9 \n \n \n 17.3 \n \n \n 0.8 \n \n \n 76.3 \n \n \n 3.2 \n \n \n 7.5 \n \n \n 14.44 \n \n \n 11.9 \n \n \n 117.58 \n \n \n 5.0 \n \n \n 10.0 \n \n \n 11.0 \n \n \n \n \n Midlands \n \n \n 21 \n \n \n 121.2 \n \n \n 21.8 \n \n \n 1.3 \n \n \n 78.8 \n \n \n 3.3 \n \n \n 11.7 \n \n \n 13.31 \n \n \n 16.9 \n \n \n 93.14 \n \n \n 5.4 \n \n \n 10.8 \n \n \n 12.3 \n \n \n \n \n Northwest \n \n \n 14 \n \n \n 63.7 \n \n \n 11.5 \n \n \n 0.7 \n \n \n 61.7 \n \n \n 1.6 \n \n \n 5.9 \n \n \n 14.93 \n \n \n 9.7 \n \n \n 97.17 \n \n \n 4.5 \n \n \n 10.6 \n \n \n 12.3 \n \n \n \n \n Southwest \n \n \n 12 \n \n \n 54.0 \n \n \n 9.7 \n \n \n 0.4 \n \n \n 79.4 \n \n \n 1.6 \n \n \n 4.8 \n \n \n 15.79 \n \n \n 7.3 \n \n \n 134.86 \n \n \n 5.5 \n \n \n 10.9 \n \n \n 12.5 \n \n \n \n \n Wales \n \n \n 6 \n \n \n 40.3 \n \n \n 7.2 \n \n \n 0.4 \n \n \n 91.1 \n \n \n 2.9 \n \n \n 3.6 \n \n \n 10.16 \n \n \n 4.3 \n \n \n 92.54 \n \n \n 7.1 \n \n \n 9.1 \n \n \n 9.7 \n \n \n \n \n Total \n \n \n 112 \n \n \n 555.2 \n \n \n 100.0 \n \n \n 5.3 \n \n \n 75.9 \n \n \n 2.7 \n \n \n 50.4 \n \n \n 14.20 \n \n \n 77.0 \n \n \n 104.17 \n \n \n 5.3 \n \n \n 10.5 \n \n \n 12.0 \n \n \n \n \n \n Tables may not sum due to rounding \n \n \n   \n Top 15 Investments (market value) as at 31 December 2025 \n \n \n \n \n Property \n \n \n Sector \n \n \n Anchor tenants \n \n \n Market value \n (£m) \n \n \n % of portfolio \n \n \n Lettable area \n (sq. ft) \n \n \n EPRA Occupancy \n (%) \n \n \n Annualised gross rent \n (£m) \n \n \n % of gross rental income \n \n \n WAULT to first break (years) \n \n \n \n \n 300 Bath Street, Glasgow \n \n \n Office \n \n \n Glasgow Tay House Centre Ltd, University of Glasgow, Fairhurst Group LLP, ESR Europe LSPIM Ltd \n \n \n 19.0 \n \n \n 3.4 \n \n \n 152,478 \n \n \n 86.0 \n \n \n 1.3 \n \n \n 2.5 \n \n \n 2.8 \n \n \n \n \n Norfolk House, \n Smallbrook \n Queensway, \n Birmingham \n \n \n Office \n \n \n Global Banking School Ltd, Lakbhir Dhillon and Balbier Dhillon, HP Asia Ltd \n \n \n 17.3 \n \n \n 3.1 \n \n \n 118,530 \n \n \n 81.9 \n \n \n 1.6 \n \n \n 3.2 \n \n \n 6.3 \n \n \n \n \n Hampshire Corporate Park, Eastleigh \n \n \n Office \n \n \n Lloyd's Register EMEA, \n Complete Fertility Ltd, \n Silverstream Technologies \n (UK) Ltd, National \n Westminster Bank Plc \n \n \n 16.2 \n \n \n 2.9 \n \n \n 84,043 \n \n \n 53.2 \n \n \n 1.0 \n \n \n 2.1 \n \n \n 3.1 \n \n \n \n \n Beeston Business \n Park, Nottingham \n \n \n Office/ Industrial \n \n \n Metropolitan Housing Trust Ltd, SMS Electronics Ltd, GTT- \n EMEA Ltd \n \n \n 15.6 \n \n \n 2.8 \n \n \n 215,336 \n \n \n 82.7 \n \n \n 1.2 \n \n \n 2.4 \n \n \n 4.1 \n \n \n \n \n 1-4 Llansamlet \n Retail Park, \n Nantyffin Rd, Swansea \n \n \n Retail \n \n \n Wren Kitchens Ltd, Dreams Ltd, NCF Furnishings Ltd \n \n \n 14.5 \n \n \n 2.6 \n \n \n 74,425 \n \n \n 100.0 \n \n \n 1.2 \n \n \n 2.4 \n \n \n 3.7 \n \n \n \n \n Eagle Court, Coventry Road, Birmingham \n \n \n Office \n \n \n Virgin Media Ltd, Rexel UK \n Ltd, Goldbeck Construction Ltd \n \n \n 13.8 \n \n \n 2.5 \n \n \n 132,690 \n \n \n 100.0 \n \n \n 1.2 \n \n \n 2.5 \n \n \n 1.9 \n \n \n \n \n Manchester Green, Manchester \n \n \n Office \n \n \n Chiesi Ltd, Ingredion UK Ltd, Assetz SME Capital Ltd \n \n \n 13.0 \n \n \n 2.3 \n \n \n 107,760 \n \n \n 82.6 \n \n \n 1.5 \n \n \n 3.1 \n \n \n 1.3 \n \n \n \n \n Linford Wood Business Park, Milton Keynes \n \n \n Office \n \n \n IMServ Europe Ltd, Senceive Ltd, Autotech Recruit Ltd \n \n \n 12.2 \n \n \n 2.2 \n \n \n 107,414 \n \n \n 67.9 \n \n \n 1.2 \n \n \n 2.4 \n \n \n 2.4 \n \n \n \n \n Capitol Park, Leeds \n \n \n Office \n \n \n Hermes Parcelnet Ltd, Harron Homes Ltd, BDW Trading Ltd \n \n \n 11.8 \n \n \n 2.1 \n \n \n 86,758 \n \n \n 100.0 \n \n \n 1.1 \n \n \n 2.1 \n \n \n 2.7 \n \n \n \n \n Ashby Park, Ashby \n De La Zouch \n \n \n Office \n \n \n Ceva Logistics Ltd, Ashfield Healthcare Ltd, Brush Electrical Machines Ltd \n \n \n 11.5 \n \n \n 2.1 \n \n \n 87,874 \n \n \n 92.7 \n \n \n 1.2 \n \n \n 2.5 \n \n \n 2.3 \n \n \n \n \n Orbis 1, 2 & 3, Pride Park, Derby \n \n \n Office \n \n \n Firstsource Solutions UK Ltd, DHU Health Care C.I.C., Tentamus Pharma (UK) Ltd \n \n \n 11.4 \n \n \n 2.1 \n \n \n 121,884 \n \n \n 100.0 \n \n \n 1.8 \n \n \n 3.6 \n \n \n 3.8 \n \n \n \n \n Lightyear - Glasgow \n Airport, Paisley \n \n \n Office \n \n \n Rolls-Royce Submarines Ltd, Heathrow Airport Ltd, \n Loganair Ltd \n \n \n 11.2 \n \n \n 2.0 \n \n \n 73,499 \n \n \n 71.1 \n \n \n 1.3 \n \n \n 2.6 \n \n \n 3.8 \n \n \n \n \n The Coach Works, Leeds \n \n \n Office \n \n \n Abstract Tech Ltd, Canal & \n River Trust, Virtual College Ltd \n \n \n 10.0 \n \n \n 1.8 \n \n \n 41,122 \n \n \n 50.9 \n \n \n 0.5 \n \n \n 1.0 \n \n \n 1.7 \n \n \n \n \n Origin 1 & 2, Crawley \n \n \n Office \n \n \n DMH Stallard LLP, Menzies \n LLP, Spirent Communications Plc \n \n \n 9.8 \n \n \n 1.8 \n \n \n 45,856 \n \n \n 68.3 \n \n \n 0.8 \n \n \n 1.6 \n \n \n 2.8 \n \n \n \n \n Buildings 2, Bear Brook Office Park, Aylesbury \n \n \n Office \n \n \n Utmost Life and Pensions Ltd, Musarubra UK Subsidiary 3 Ltd, Agria Pet Insurance Ltd \n \n \n 9.7 \n \n \n 1.7 \n \n \n 61,643 \n \n \n 100.0 \n \n \n 1.1 \n \n \n 2.1 \n \n \n 1.6 \n \n \n \n \n Total \n \n \n   \n \n \n   \n \n \n 196.8 \n \n \n 35.4 \n \n \n 1,511,312 \n \n \n 81.4 \n \n \n 18.2 \n \n \n 36.1 \n \n \n 3.1 \n \n \n \n \n   \n Tables may not sum due to rounding \n \nTop 15 Tenants (share of rental income) as at 31 December 2025 \n \n \n \n \n Tenant \n \n \n Property \n \n \n Sector \n \n \n WAULT to first break (years) \n \n \n Lettable area \n(sq. ft) \n \n \n Annualised gross rent (£m) \n \n \n % of gross rental income \n \n \n \n \n Global Banking School Ltd \n \n \n Norfolk House, Birmingham \n \n \n Education \n \n \n 6.9 \n \n \n 73,628 \n \n \n 1.4 \n \n \n 2.8 \n \n \n \n \n Virgin Media Limited \n \n \n Eagle Court, Coventry Road, Birmingham \n   \n Southgate Park, Peterborough \n \n \n Information and \n communication \n   \n \n \n 3.0 \n \n \n 75,309 \n \n \n 1.4 \n \n \n 2.7 \n \n \n \n \n EDF Energy Ltd \n \n \n 800 Aztec West, Bristol \n Endeavour House, Sunderland \n \n \n Electricity, gas, steam and air conditioning supply \n \n \n 4.8 \n \n \n 118,850 \n \n \n 1.0 \n \n \n 2.0 \n \n \n \n \n First Source Solutions UK Ltd \n \n \n Orbis 1, 2 & 3, Pride Park, Derby \n \n \n Administrative and support service activities \n \n \n 2.8 \n \n \n 62,433 \n \n \n 1.0 \n \n \n 2.0 \n \n \n \n \n The Secretary of \nState for Housing, \nCommunities and Local Government \n \n \n 1 Burgage Square, Wakefield \nBennett House, Stoke On Trent \nWaterside Business Park, Swansea \n \n \n Public sector \n \n \n 3.5 \n \n \n 96,654 \n \n \n 1.0 \n \n \n 1.9 \n \n \n \n \n Odeon Cinemas Ltd \n \n \n Kingscourt Leisure Complex, Dundee \n \n \n Information and \ncommunication \n \n \n 9.8 \n \n \n 41,542 \n \n \n 0.8 \n \n \n 1.5 \n \n \n \n \n True Potential LLP \n \n \n Newburn & Gateway House, Newcastle \n \n \n Not specified \n \n \n 4.5 \n \n \n 54,584 \n \n \n 0.6 \n \n \n 1.3 \n \n \n \n \n SpaMedica Limited \n \n \n 1175 Century Way, Thorpe Park, Leeds \n Albert Edward House, Preston \n Fairfax House, Wolverhampton \n Southgate Park, Peterborough \n Foundation Chester Business Park, Chester \n \n \n Human health and \n social work activities \n   \n \n \n 2.1 \n \n \n 40,529 \n \n \n 0.6 \n \n \n 1.2 \n \n \n \n \n DHU Health Care C.I.C. \n \n \n Orbis 1, 2 & 3, Pride Park, Derby \n \n \n Human health and social work \n \n \n 5.3 \n \n \n 42,301 \n \n \n 0.6 \n \n \n 1.1 \n \n \n \n \n Lloyds Bank Plc \n \n \n Victory House Meeting House Lane, Medway \n \n \n Financial and insurance activities \n \n \n 0.4 \n \n \n 48,372 \n \n \n 0.5 \n \n \n 1.1 \n \n \n \n \n NewFlex Ltd \n \n \n The Genesis Centre, Warrington \n \n \n Real estate activities \n \n \n 1.0 \n \n \n 19,087 \n \n \n 0.5 \n \n \n 1.1 \n \n \n \n \n Lloyds Register EMEA \n \n \n Hampshire House, Hampshire Corporate \nPark, Eastleigh \n \n \n Registered Society \n \n \n 1.4 \n \n \n 21,695 \n \n \n 0.5 \n \n \n 1.0 \n \n \n \n \n Hermes Parcelnet Limited t/a Evri \n \n \n Capitol Park, Leeds \n \n \n Transportation and storage \n \n \n 3.0 \n \n \n 25,790 \n \n \n 0.5 \n \n \n 1.0 \n \n \n \n \n Pearson Education Ltd \n \n \n The Lighthouse, Salford Quays, Manchester \n   \n \n \n Education \n \n \n 1.4 \n \n \n 24,804 \n \n \n 0.5 \n \n \n 1.0 \n \n \n \n \n Homeserve Membership Limited \n \n \n 1175 Century Way, Thorpe Park, Leeds \nAspect House, Bennerley Road, \nNottingham \n \n \n Construction \n \n \n 1.4 \n \n \n 29,468 \n \n \n 0.5 \n \n \n 0.9 \n \n \n \n \n Total \n \n \n \n \n \n \n \n \n 3.8 \n \n \n 775,046 \n \n \n 11.4 \n \n \n 22.7 \n \n \n \n \n   \n Tables may not sum due to rounding. \n \n \n \n Property Portfolio Sector and Region Splits by Valuation and Income as at 31 December 2025 \n   \n By Valuation \n As at 31 December 2025, 90.3% (2024: 90.7%) of the portfolio by market value was offices and 3.7% (2024: 3.6%) was retail. The balance was made up of industrial, 4.3% (2024: 3.7%) and other, 1.7% (2024: 1.7%). By UK region, as at 31 December 2025, Scotland represented 16.6% (2024: 16.6%) of the portfolio and England 76.1% (2024: 77.1%); the balance of 7.2% (2024: 6.3%) was in Wales. In England, the largest regions were the Midlands, the North East and the South East. \n   \n By Income \n As at 31 December 2025, 90.4% (2024: 90.5%) of the portfolio by income was offices and 3.8% (2024: 4.4%) was retail. The balance was made up of industrial, 3.9% (2024: 3.2%), and other, 1.9% (2024: 1.9%). By UK region, as at 31 December 2025, Scotland represented 15.7% (2024: 16.0%) of the portfolio and England 77.1% (2024: 78.0%); the balance of 7.1% was in Wales (2024: 6.0%). 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 4.5 years (2024: 4.6 years); WAULT to first break is 2.7 years (2024: 2.9 years). As at 31 December 2025, 12.8% (2024: 13.8%) of income was from leases which will expire within one year, 12.1% (2024: 10.5%) between one and two years, 37.5% (2024: 39.7%) between two and five years and 37.7% (2024: 36.1%) after five years. \n   \n Tenants by Standard Industrial Classification (SIC) \n As at 31 December 2025, 12.3% of income was from tenants in the information and communication activities sector (2024: 10.5%), 11.5% from the administrative and support service activities sector (2024: 11.2%), 9.8% from the wholesale and retail trade sector (2024: 8.7%), 7.5% from the professional, scientific and technical activities sector (2024: 11.8%) and 6.9% from the education sector (2024: 5.9%). The remaining exposure is broadly spread. \n   \n No tenant represents more than 3.0% of the Group's rent roll as at 31 December 2025, the largest being 2.8% (2024: 2.8%). \n   \n FINANCIAL REVIEW \n   \n Net Asset Value \n Between 1 January 2025 and 31 December 2025, the EPRA NTA* of the Group decreased to £315.2m (IFRS NAV: £319.3m) from £340.8m (IFRS NAV: £351.6m) as at 31 December 2024, equating to a decrease in the diluted EPRA NTA of 15.8pps to 194.4pps (IFRS: 197.0pps). This is after the dividends declared in the period amounting to 9.7pps. (See Note 13). \n   \n The investment property portfolio was valued at £555.2m (2024: £622.5m). The decrease of £67.3m since the December 2024 year-end is a reflection of revaluation movement loss of £28.6m, £48.4m of net property disposals and £3.2m loss on the disposal of investment properties, offset by subsequent expenditure of £11.8m and acquisitions of £1.1m. Overall, on a like-for-like basis, the portfolio value decreased by 5.0% during the period, after adjusting for capital expenditure, acquisitions and disposals 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 Year ended \n \n \n Year ended \n \n \n \n \n \n \n \n \n \n \n 31 December \n 2025 (£m) \n \n \n 31 December \n 2024 (£m) \n \n \n \n \n Acquisitions \n \n \n \n \n \n \n \n \n \n \n \n \n \n Net (after costs) \n \n \n 1.2 \n \n \n 0.0 \n \n \n \n \n \n \n \n Gross (before costs) \n \n \n 1.1 \n \n \n 0.0 \n \n \n \n \n Disposals \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Net (after costs) \n \n \n 48.4 \n \n \n 28.6 \n \n \n \n \n \n \n \n Gross (before costs) \n \n \n 51.6 \n \n \n 30.8 \n \n \n \n \n Capital Expenditure \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Net (after dilapidations) \n \n \n 11.8 \n \n \n 8.2 \n \n \n \n \n \n \n \n Gross (before dilapidations) \n \n \n 11.8 \n \n \n 8.5 \n \n \n \n \n   \n *The Group has determined that EPRA net tangible assets (NTA) is the most relevant measure. \nFurther details of the EPRA performance measures are provided in the full Annual Report. \n   \n The diluted EPRA NTA per Share decreased to 194.4pps (2024: 210.2pps). The EPRA NTA is reconciled in the table below: \n   \n \n \n \n \n   \n \n \n £m \n \n \n Pence per Share \n \n \n \n \n Opening EPRA NTA (31 December 2024) \n \n \n   \n \n \n 340.7 \n \n \n 210.2 \n \n \n \n \n Net rental and property income \n \n \n \n \n \n 40.3 \n \n \n 24.8 \n \n \n \n \n Administration and other expenses \n \n \n \n \n \n (9.9) \n \n \n (6.1) \n \n \n \n \n Loss on the disposal of investment properties \n \n \n \n \n \n (3.2) \n \n \n (2.0) \n \n \n \n \n Change in the fair value of investment properties \n \n \n \n \n \n (26.6) \n \n \n (16.4) \n \n \n \n \n Change in value of right of use assets \n \n \n \n \n \n (0.1) \n \n \n (0.1) \n \n \n \n \n EPRA NTA after operating profit \n \n \n   \n \n \n 341.1 \n \n \n 210.4 \n \n \n \n \n Net finance expense \n \n \n \n \n \n (11.2) \n \n \n (6.9) \n \n \n \n \n Share of loss of associate company \n \n \n \n \n \n 0.0 \n \n \n (0.0) \n \n \n \n \n Realised gain on derivative financial instruments \n \n \n \n \n \n 1.2 \n \n \n 0.8 \n \n \n \n \n EPRA NTA before dividends paid \n \n \n   \n \n \n 331.1 \n \n \n 204.3 \n \n \n \n \n Dividends paid* \n \n \n \n \n \n (15.7) \n \n \n (9.7) \n \n \n \n \n EPRA NTA before capital raise \n \n \n \n \n \n 315.4 \n \n \n 194.6 \n \n \n \n \n Capital raise expenses \n \n \n \n \n \n (0.3) \n \n \n (0.2) \n \n \n \n \n Closing EPRA NTA (31 December 2025) \n \n \n   \n \n \n 315.2 \n \n \n 194.4 \n \n \n \n \n   \n Table may not sum due to rounding \n * As at 31 December 2025, there were 162,088,483 Ordinary Shares in issue. \n   \n Income Statement \n   \n Operating profit before gains and losses on property assets and other investments for the year ended 31 December 2025 amounted to £30.3m (2024: £36.1m). Loss after finance and before taxation was £16.4m (2024: £39.5m). 2025 included a full rent roll for the portfolio of properties held as at 31 December 2024, plus the partial rent roll for properties disposed of during the period. \n   \n Rental and property income amounted to £60.4m, excluding recoverable service charge income and other similar items (2024: £65.2m). The decrease was primarily the result of the decrease in the rent roll being held during the year to 31 December 2025. \n   \n More than 80% of the rental income is collected within 30 days of the due date and the allowance for doubtful debts in the period amounted to £0.3m (2024: £0.5m). \n   \n Non-recoverable property costs, excluding recoverable service charge income and other similar costs, amounted to £20.2m (2024: £19.3m), and the rent roll decreased to £50.4m (2024: £60.7m). \n   \n Realised losses on the disposal of 14 of the investment properties and 4-part sales in the period amounted to £3.2m (2024: 3.2m). The change in the fair value of investment properties amounted to a loss of £28.6m (2024: loss of £54.7m) and an adjustment of £2.0m (2024: £2.0m) from rent smoothing. \n   \n Net capital expenditure amounted to £11.8m (2024: £8.2m). The change in value of right of use asset amounted to a charge of £0.1m (2024: charge £0.1m). \n   \n Interest income amounted to £1.0m (2024: £1.4m). \n   \n Finance expenses amount to £12.2m (2024: £15.2m). The decrease is due to the repayment of the £50m Retail Bond in August 2024 and bank borrowing repayments in 2024 of £54.0m and in 2025 of £50.5m. \n   \n The EPRA cost ratio, including direct vacancy costs, was 49.8% (2024: 44.7%). The EPRA cost ratio, excluding direct vacancy costs was 18.4% (2024: 17.4%). The ongoing charges for the year ending 31 December 2025 were 9.0% (2024: 9.3%) and excluding direct vacancy costs 3.3% (2024: 3.5%). \n   \n The EPRA Total Return from Listing to 31 December 2025 was 4.3% (2024: 5.6%), with an annualised rate of 0.4% pa (2024: 0.6% pa). \n   \n Dividend \n In relation to the year from 1 January 2025 to 31 December 2025, the Company declared dividends totalling 10.00pps (2024: 7.8pps)*. A schedule of dividends can be found in the full Annual Report. \n   \n Going forward, the Company will distribute a minimum 90% of the profit from the property rental business, which is in accordance with regulatory requirements, but will retain earnings where possible to support the business' accretive and essential capital expenditure programme. The Board believes this approach is firmly in shareholders' long-term interests of improving the quality of the portfolio to benefit from rental and capital uplift and remains confident in the Company's strategy and medium-term outlook. \n   \n * During 2024 the Company offered 15 new Ordinary Shares for every 7 existing Ordinary Shares. This resulted in an increase of 1,105,149,821 Ordinary Shares being issued. Subsequently there was a 10 for 1 consolidation with the resulting Ordinary Shares in issue being 162,088,483. \n   \n Debt Financing and Gearing \n Borrowings comprise third-party bank debt. The bank debt is secured over properties owned by the Group and repayable over the next two to four years. The weighted average maturity of the bank debt is 2.6 years (2024: 2.9 years). \n   \n The Group's borrowing facilities are with the Scottish Widows Limited & Aviva Investors Real Estate Finance, Royal Bank of Scotland, Bank of Scotland and Santander UK, Scottish Widows Limited, and Santander UK. The total bank borrowing facilities at 31 December 2025 amounted to £266.2m (2024: £316.7m) (before unamortised debt issuance costs), with £nil available to be drawn. \n   \n At 31 December 2025, the Group's cash and cash equivalent balances amounted to £37.7m (2024: £56.7m), of which £37.7m (2024: £55.9m) was unrestricted cash. \n   \n The Group's net loan to value (\"LTV\") ratio stands at 40.4% (2024: 41.8%) before unamortised costs. \n   \n Debt Profile and LTV Ratios as at 31 December 2025 \n \n \n \n \n   \n \n \n Facility \n \n \n Outstanding debt* \n \n \n Maturity date \n \n \n Gross loan to value** \n \n \n Annual interest rate \n \n \n \n \n Lender \n \n \n £'000 \n \n \n £'000 \n \n \n % \n \n \n % \n \n \n \n \n Scottish Widows Ltd. and Aviva Investors Real Estate Finance \n \n \n 118,339 \n \n \n 118,339 \n \n \n Dec-27 \n \n \n 50.8 \n \n \n 3.28 Fixed \n \n \n \n \n Royal Bank of Scotland, Bank of Scotland & Santander UK \n \n \n 72,449 \n \n \n 72,449 \n \n \n Dec-28 \n \n \n 44.9 \n \n \n 2.40 over 3mth £ SONIA \n \n \n \n \n Scottish Widows Ltd \n \n \n 32,325 \n \n \n 32,325 \n \n \n Dec-28 \n \n \n 45.6 \n \n \n 3.37 Fixed \n \n \n \n \n Santander UK \n \n \n 43,113 \n \n \n 43,113 \n \n \n Jun-29 \n \n \n 48.5 \n \n \n 2.20 over 3 months \n £ SONIA \n \n \n \n \n \n \n \n 266,226 \n \n \n 266,226 \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n Table may not sum due to rounding. \n   \n The Investment Adviser continues to monitor the borrowing requirements of the Group. As at 31 December 2025, the Group had headroom against its borrowing covenants. \n   \n The net gearing ratio (net debt to Ordinary Shareholders' equity (diluted) of the Group was 70.3% as at 31 December 2025 (2024: 73.9%). \n   \n Interest cover, excluding amortised costs, stands at 3.0 times (2024: 2.7 times) and including amortised costs, stands at 2.5 times (2024: 2.4 times). \n   \n * Before unamortised debt issue costs \n ** Based on Colliers International Property Consultants Ltd. \n   \n Hedging \n The Group applies an interest hedging strategy that is aligned to the property management strategy and aims to mitigate interest rate volatility on at least 90% of the debt exposure. \n   \n \n \n \n \n \n \n \n \n \n \n 31 December 2025 \n \n \n 31 December 2024 \n \n \n \n \n \n \n \n \n \n \n % \n \n \n % \n \n \n \n \n Borrowings interest rate hedged \n \n \n \n \n \n 101.0 \n \n \n 100.0 \n \n \n \n \n Thereof: \n \n \n \n \n \n \n \n \n \n \n \n \n \n Fixed \n \n \n \n \n \n 56.6 \n \n \n 52.7 \n \n \n \n \n Swap \n \n \n \n \n \n 32.3 \n \n \n 30.4 \n \n \n \n \n Cap \n \n \n \n \n \n 12.1 \n \n \n 16.9 \n \n \n \n \n WACD 1 \n \n \n \n \n \n 3.3 \n \n \n 3.4 \n \n \n \n \n   \n Table may not sum due to rounding \n 1 WACD - Weighted Average Effective Interest Rate including the cost of hedging \n   \n Tax \n The Group entered the UK REIT regime on 7 November 2015 and all the Group's UK property rental business operations became exempt from UK corporation tax from that date. The exemption remains subject to the Group's continuing compliance with the UK REIT rules. \n   \n On 9 January 2018, the Company registered for VAT purposes in England. \n   \n During 2025, the Group recognised a tax credit of £14,083 (2024: charge of £64,590), in relation to entities that are not included in the REIT tax regime. \n   \n PRINCIPAL RISKS AND UNCERTAINTIES \n   \n Effective risk management is embedded throughout Regional REIT and underpins the execution of the Company's strategy, the positioning of the business for growth and maintaining the regular income over a long-term sustainable horizon. \n   \n Risk Framework and Approach \n The Board acknowledges the importance of embedding a framework to identify, actively monitor, manage and mitigate its risks, which include, but are not limited to: market, major market disruption, funding, tenants, financial and tax changes, operational, cyber security, regulatory, environmental and emerging risks. \n   \n The Board has overall responsibility for the Company's system of risk management and internal controls. It is supported by the Audit Committee in the management of risk. The Audit Committee is responsible for determining the principal risks facing the business and reviewing, at least annually, the effectiveness of the Company's financial control, risk management and internal control processes. \n   \n Over the long term, the business will face other challenges and emerging threats for which it remains vigilant. \n   \n However, the Board also views the risks as opportunities that, when effectively managed, can enhance performance. Thus, having an effective risk management process is key to support the delivery of the Company's strategy. \n   \n Approach to Managing Risk - Identification, Evaluation And Mitigation \n The risk management process emphasis is upon awareness and is structured to identify, evaluate, manage and mitigate, rather than eliminate risks faced. The Company maintains a detailed and formal matrix of current principal risks, which uses risk scoring to evaluate risks consistently. This allows the risks to be monitored and mitigated as part of a risk management process with the Audit Committee undertaking, at a minimum on a six-monthly basis or more frequently if required, a robust evaluation of these risks facing the Company. \n   \n Risks are identified and assessed according to their potential impact on the Company and to their likelihood occurrence. The Audit Committee utilises the risk matrix to prioritise individual risks, allocating scores to each risk for both the likelihood of its occurrence and the severity its impact. Those with the highest gross rating in terms of impact are highlighted as top risks within the matrix and are defined as principal risks. \n   \n Although the Board believes that it has a robust framework of internal controls in place, it recognises it can provide only reasonable, and not absolute, assurance against material financial misstatement or loss and is designed to manage, not eliminate, risk. \n   \n Risk Appetite \n Taking risks is an essential and inherent facet of operating any business. As such the risk management approach is not to eliminate all risk but to ensure that appropriate strategies are in place to identify, actively monitor, manage and mitigate the key risks. \n   \n The Board is responsible for defining the level of risk that the Company assumes and ensuring that it remains in-line with the Company's strategy. Risk appetite is integral to the Board's approach to risk management, business planning and decision making. The level and type of risk that the Company is willing to bear will vary over time. \n   \n The Board, in collaboration with the Investment Adviser, and with the latest information available, regularly reviews the risk appetite of the Company, allowing a prompt response to identified emerging risks. \n   \n Emerging Risks \n The Board is cognisant of emerging risks defined as potential trends, sudden events or changing risks, which are characterised by a high degree of uncertainty in terms of probability of occurrence and possible effects on the Company. Once emerging risks become sufficiently clear, they may be classed as a principal risk and added to the risk matrix. \n   \n To help manage emerging risks and discuss other wider matters affecting property, the Board has an annual strategy meeting. The Board considers having a clear strategy is the key to managing and mitigating emerging risk. \n   \n The Company's principal risks consist of the nine most significant risks which are composed of six strategic and three operational risks. The risks relate to market, major market disruption, funding, tenants, financial and tax changes, operational, cyber security, regulatory, environmental and emerging risks. \n   \n The below list, in no particular order, sets out the current identifiable principal and emerging risks, including their impact and the actions taken by the Company to mitigate them. It does not purport to be an exhaustive list of all the risks faced by the Company. \n   \n Principal Risk Summary \n \n \n \n \n Principal Risk \n \n \n Evolution of the trend during the year \n \n \n \n \n 1.       \n \n \n Market \n \n \n ó \n \n \n \n \n 2.       \n \n \n Major market disruption \n \n \n \n \n \n \n \n 3.       \n \n \n Funding \n \n \n ó \n \n \n \n \n 4.       \n \n \n Tenants \n \n \n ó \n \n \n \n \n 5.       \n \n \n Financial and tax changes      \n \n \n ó \n \n \n \n \n 6.       \n \n \n Operational \n \n \n ó \n \n \n \n \n 7.       \n \n \n Cyber security \n \n \n \n \n \n \n \n 8.       \n \n \n Accounting, legal and regulatory \n \n \n ó \n \n \n \n \n 9.       \n \n \n Environmental and energy efficiency standards \n \n \n ó \n \n \n \n \n \n   \n 1.   Market \n \n \n \n \n \n \n \n \n Potential Impact \n \n \n Mitigation \n \n \n Movement in the period ó \n \n \n \n \n The value of the Company's assets is dependent on the strength of leasing and capital markets. \n \n \n ·    A clearly defined investment strategy, \n which is reviewed annually. \n ·    A defined and rigorous investment \n appraisal process. \n ·    Acquire portfolios, which offer \n shareholders diversification of \n investment risk by investing in a range \n of geographical areas, number of \n properties. \n ·    Supply and demand market information is reviewed continuously to assist in acquisitions and disposals. \n ·    All the above steps are monitored to ensure the strategy is implemented. \n   \n \n \n ·    The property portfolio remains balanced across a range of geographical areas and a large number of investment properties. \n \n \n \n \n \n \n \n ·    Predominately, acquiring office properties in the UK and outside of the M25 motorway. However, the Group may invest in property portfolios in which up to 50% of the properties (by market value) are situated within the M25 motorway. \n   \n \n \n ·    The Company continues to purchase properties in the UK outside the M25 motorway. \n \n \n \n \n \n \n \n ·    No single property, in the ordinary course of business, is expected to exceed 10% of the Company's aggregate Investment Properties valuation. However, the Board may, in exceptional circumstances, consider a property having a value of up to 20% of the Company's investment property value at the time of investment. \n   \n \n \n ·    300 Bath Street (2024: 300 Bath Street) is the highest valued property, which equates to 3.4% (2024: 2.9%) of the Company's investment properties. \n \n \n \n \n \n \n \n ·    No more than 20% of the Company's investment property value shall be exposed to any single tenant or group undertaking of that tenant. \n \n \n ·    The Company's largest single tenant exposure is 2.8% (2024: 2.8%) of gross rental income, being Global Banking School Ltd. (2024: EDF Energy Ltd.). \n   \n \n \n \n \n \n \n \n ·    Speculative development (i.e., properties under construction, but excluding any refurbishment works, which have not been pre-let) is prohibited. \n   \n \n \n ·    No speculative construction was undertaken during the year under review. \n \n \n \n \n \n \n \n ·    The value of the properties is protected as far as possible by an active asset management programme, which is regularly reviewed against the business plan for each property. \n \n \n ·    The Investment Adviser continues to actively manage the investment properties in accordance with market conditions and the individual asset programme. \n \n \n \n \n \n \n \n \n \n   \n 2.   Major market disruption \n \n \n \n \n Potential Impact \n \n \n Mitigation \n \n \n Movement in the period \n \n \n \n \n The economic disruption resulting from major geopolitical events or another pandemic \n could impact rental income; the ability of Valuers to discern valuations; the ability to access funding at competitive rates, adherence to banking covenants, maintain a dividend policy, and adhere to the HMRC REIT regime requirements. \n   \n Significant geopolitical events could impact the health of the UK economy, resulting in borrowing constraints, changes in demand by tenants for suitable properties, the quality of the tenants, and \n ultimately the property portfolio value. \n   \n \n \n ·    The Investment Adviser continues to adapt and, as required, to support tenants. \n ·    The property portfolio has been \n deliberately constituted to ensure a \n diverse range of tenants by standard \n industrial classification, which ensured \n the many tenants, being designated as \n essential services, continued to operate \n throughout the recent pandemic. \n ·    Close relationships with lenders ensuring continued dialogue around covenants and ability to access funding as required at competitive rates. \n ·    Initial vetting of all third-party providers with annual due diligence reviews, including the review of business continuity capabilities to minimise when remote working has been necessitated. \n ·    The Company operates with a sole \n focus on the UK regions, with no foreign \n currency exchange exposure. It remains \n well positioned with a deliberately \n diverse standard industry classification \n of tenants generating 659 (2024: 780) \n income streams which are located in \n areas of expected economic growth \n ·    The Board receives advice on macro-economic risks from the Investment \n Adviser and other advisers and acts accordingly. \n   \n \n \n ·    The Company has continued to scrutinise all current risk mitigation approaches employed and to work closely with all parties. \n ·    There remains a risk that property valuations and the occupancy market may be impacted by change in the political landscape \n   \n \n \n \n \n   \n   \n \n \n \n \n 3.   Funding \n \n \n \n \n Potential Impact \n \n \n Mitigation \n \n \n Movement in the period ó \n \n \n \n \n The Company may not be able to secure \n further debt or on acceptable terms, which may impinge upon investment opportunities, the ability to grow the Company and distribute an attractive dividend. \n   \n \n \n ·    The Investment Adviser has a Corporate Finance team dedicated to optimising the Company's funding requirements. \n ·    Funding options are constantly reviewed with an emphasis on reducing the weighted average cost of capital and lengthening the weighted average debt to maturity. \n ·    Borrowings are currently provided by a range of institutions with targeted staggered maturities. \n ·    Strong relationships with key long-term lenders. \n ·    Continual monitoring of LTV. \n   \n \n \n ·    LTV decreased to 40.4% (2024: 41.8%). \n ·    Weighted average debt term decreased to 2.6 years (2024: 2.9 years). \n ·    Weighted average cost of capital, including hedging costs was 3.3% (2024: 3.4%). \n \n \n \n \n Bank reference interest rates may be set to become more volatile, accompanying volatile inflation \n \n \n ·    Policy of hedging at least 90% of variable interest rate borrowings. Fixed, swapped and capped borrowing amounted to 100.0% (31 December 2023: 100.0%). \n ·    Borrowings are currently provided by a range of institutions with targeted staggered maturities. \n   \n \n \n ·    Continued adherence to the hedging policy. \n \n \n \n \n Breach of covenants within the Company's funding structure could lead to a cancellation of debt funding if the Company is unable to service the debt. \n \n \n ·    The Investment Adviser 's corporate finance team reviews the applicable covenants on a regular basis and these are considered in future operational decisions. \n ·    Compliance certificates and requested reports are prepared as scheduled. \n \n \n ·    The Company continues to have headroom against the applicable borrowing covenants. \n \n \n \n \n   \n 4.   Tenants \n \n \n \n \n Potential Impact \n \n \n Mitigation \n \n \n Movement in the period ó \n \n \n \n \n Lower occupier demand or poor selection of tenants could result in lower income from reduced lettings or defaults. \n \n \n ·    An active asset management programme with a focus on the Investment Adviser working with individual tenants to assess any occupational issues and to manage any potential bad debts. \n ·    Diversified portfolio of properties let, where possible, to a large number of low-risk tenants across a wide range of standard industrial classifications throughout the UK. \n ·    Potential acquisitions are reviewed for tenant overlap and potential disposals are similarly reviewed for tenant standard industrial classification concentration. \n   \n \n \n ·    This risk remains stable in view of the increasing diversification of properties, tenants and geographies in the portfolio. \n ·    The tenant mix and their underlying activity has continued to increasingly diversify, with the number of tenants amounting to 659 at the year-end (2024:780). \n \n \n \n \n A high concentration of lease term maturity and/or break options could result in a more volatile contracted rent roll. \n \n \n ·    The portfolio lease and maturity concentrations are monitored by the experienced Investment Adviser to minimise concentration. \n ·    There is a focus on securing early renewals and increased lease periods. \n ·    The requirement for suitable tenants and the quality of the tenant is managed by the experienced Investment Adviser who maintains close relationships with current tenants and with letting agents. \n \n \n ·    The WAULT to first break as at 31 December 2025 was 2.7 years (2024: 2.9 years). \n ·    The largest tenant is 2.8% (2024: 2.8%) of the gross rental income, being EDF Energy Limited. \n ·    The team remains vigilant to the financial well-being of our current tenants and continues to liaise with tenants and agents. \n \n \n \n \n Increased working from home impacts tenant demand for space. \n \n \n ·    Providing high-quality working environment in portfolio properties. \n \n \n ·    There is continued evidence of a return to working from office space. \n \n \n \n \n \n \n \n \n \n 5.    Financial and Tax Changes \n \n \n \n \n Potential Impact \n \n \n Mitigation \n \n \n Movement in the period ó \n \n \n \n \n Changes to the UK REIT and non-REIT regimes tax and financial legislation. \n \n \n ·    The Board receives advice on these changes where appropriate and will act accordingly. \n \n \n ·    Advice is received from several corporate advisers, including tax adviser KPMG LLP and the Company adapts to changes as required. \n \n \n \n \n   \n 6.     Operational \n \n \n \n \n Potential Impact \n \n \n Mitigation \n \n \n Movement in the period ó \n \n \n \n \n Business disruption could impinge on the normal operations of the Company. \n \n \n ·    The contingency plans in place to ensure there are no disruptions to the core infrastructure, which would impinge on the normal operations of the Company. \n   \n \n \n ·    The Investment Adviser annually reviews the Disaster and Business Continuity Plans. \n   \n \n \n \n \n ·    An annual due diligence exercise is carried out on all principal third-party service providers. \n \n \n ·    The annual due diligence visits were undertaken with the Company's principal third-party service providers. No concerns were identified from the visits. \n   \n \n \n \n \n ·    As an externally managed investment company, there is a continued reliance on the Investment Adviser and other third-party service providers. \n   \n \n \n ·    The Investment Adviser is a viable going concern. \n \n \n \n \n ·    All acquisitions undergo a rigorous due diligence process and all multi-let properties undergo an annual comprehensive fire risk. \n   \n \n \n ·    The Investment Adviser continues to monitor changes in Health and Safety regulations. \n   \n \n \n \n \n ·    The impact of physical damage and destruction to investment properties is mitigated by ensuring all are covered by a comprehensive building, loss of rent and service charge plus terrorism insurance with the exception of a small number of \"self-insure\" arrangements covered under leases. \n   \n \n \n ·    The Investment Adviser reviews the adequacy of insurance cover on an ongoing basis. \n \n \n \n \n   \n 7.  Cyber security \n \n \n \n \n Potential Impact \n \n \n Mitigation \n \n \n Movement in the period \n \n \n \n \n Information security and cyber threat resulting in data loss, or negative regulatory, reputational, operational (including GDPR), or financial impact. \n \n \n ·    The Investment Adviser has a dedicated Information Technology team, which monitors information security, privacy risk and cyber threats ensuring their respective operations are not interrupted. \n ·    As required the building management systems are reviewed for cyber security risk. \n   \n \n \n ·    The Investment Adviser reviews the respective Information Technology polices and the material third party service suppliers on as required basis to ensure they reflect current and possible future threats. \n \n \n \n \n Cyber fraud could result in financial loss to the Group and inability to operate. \n \n \n ·    The Investment Adviser takes all appropriate precautions to ensure cyber deterrents are deployed. \n \n \n ·    This remains an ever evolving threat. \n \n \n \n \n   \n 8.  Accounting, Legal, and Regulatory \n \n \n \n \n Potential Impact \n \n \n Mitigation \n \n \n Movement in the period ó \n \n \n \n \n Changes to accounting, legal and/or regulatory legislation, including sanctions could result in changes to current operating processes. \n \n \n ·    Robust processes are in place to ensure adherence to accounting, legal and regulatory requirements, including sanctions and Listing Rules. \n ·    All contracts are reviewed by the Company's legal advisors. \n ·    The Administrator, Sub-Administrator and the Company Secretary attend relevant Board meetings in order to be aware of all announcements that need to be made. \n ·    All compliance issues are raised with the Company's Financial Adviser. \n \n \n ·    The Company continues to receive advice from its corporate advisers and has incorporated changes where required. \n ·    The Administrator and Company Secretary continue to attend all Board meetings and advise on Listing Rule requirements in conjunction with the Corporate Broker and Financial Adviser. \n   \n \n \n \n \n Loss of REIT status \n \n \n ·    The HMRC REIT regime requirements are monitored by the Investment Adviser and external advisors including the Company's tax adviser KPMG LLP and its Sub-Administrator Waystone Administration Solutions (UK) Limited. \n \n \n ·    The Company continues to receive advice from external advisers on any anticipated future changes to the REIT regime. \n \n \n \n \n   \n 9.   Environmental and Energy Efficiency Standards \n \n \n \n \n Potential Impact \n \n \n Mitigation \n \n \n Movement in the period ó \n \n \n \n \n The Company's cost base could be impacted, and management time diverted, due to climate changes and associated legislation. \n \n \n ·    The Board receives regular updates on environmental, social, governance and potential legislation changes from its advisers. \n ·    The Company has engaged an environmental consultancy, CBRE, to assist with improving the Global Real Industry Sustainability Benchmark (GRESB). \n   \n \n \n ·    Additional attention continues to be devoted to this area to ensure the appropriate approach is applied and embedded in Company activities. \n \n \n \n \n Changes to the environment could impact upon the operations of the Company. \n \n \n ·    Property acquisitions undergo a rigorous due diligence process, including an environmental assessment. \n ·    The Investment Adviser monitors the portfolio for any detrimental environmental impact, by way of frequent inspections of the properties, and the annual insurance review process. \n   \n \n \n ·    The rigour of the environmental assessments process continues to be reviewed with the aim of enhancing it. \n \n \n \n \n An Energy Performance Rating of E and below may impact the Company's ability to sell or lease an asset. \n \n \n ·    The Company continues to review each property to ensure adherence with Energy Performance Rating requirements. \n ·    The energy efficiency of investment acquisitions is fully considered as part of the due diligence process for the acquisition of a property. \n \n \n ·    The Investment Adviser is continually reviewing the feasibility of enhancing Energy Performance Ratings to exceed the minimum requirement. \n \n \n \n \n   \n Changes to the Principal Risks and Uncertainties \n The Board, via the Audit Committee, has reviewed and agreed the movement during the year to each of the identified principal risks and uncertainties following review of these risks, having considered the characteristics of these and the broader economic and geopolitical factors influencing them. \n   \n The risk framework has been refined for 2025 to improve clarity and alignment with the Company's operating environment: the former Strategic Risk has been retitled Market Risk to better reflect its underlying drivers, the separate Valuation Risk has been removed as valuation movements are now captured within Market and Funding risks, and the previous Healthcare and Economic risks have been consolidated into Major Market Risk to reflect their overlapping macroeconomic characteristics and combined impact on the business. \n   \n A potential emerging risk is the adoption of artificial intelligence in office-based roles, which could pose both a risk and opportunity for the demand of office space. The Board, alongside the Investment Adviser, continues to monitor developments in this area. \n   \n The potential impact of these risks on the Company's long-term strategy is considered and evaluated to ensure informed decision-making and proactive management. \n   \n SUSTAINABILITY REPORT \n The Sustainability Report is provided in the full Annual Report. \n   \n GOING CONCERN AND VIABILITY STATEMENT \n   \n Going concern \n The Directors confirm that they have a reasonable expectation that the Group has adequate resources to continue as a going concern. This expectation is underpinned by having made an assessment of the Group's ability to continue in operational existence, giving due consideration to the Group's cashflow forecast, which encompasses cash resources, rental income, acquisitions and disposals of investment properties, elective and committed capital expenditure, dividend distributions and the borrowing facilities interest payments and the respective maturities. \n   \n The group ended the year under review with £37.7m of cash and cash equivalents of which £7k was restricted cash. The Group remained compliant with all loan covenants on borrowing facilities, with a net LTV of c. 40.4%, based upon the value of the Group's investment properties as at 31 December 2025. Rental income collections remained strong with 99.3% of rent invoiced in the year collected as at 13 March 2026. \n   \n Given the amount of unrestricted cash currently held by the Group and, with the next borrowing due to mature being the Scottish Widows Ltd. and Aviva Investors Real Estate Finance £118.3m facility in December 2027, the Directors are satisfied that the Group and Company have adequate resources to continue in operational existence for a period of at least 12 months from the date that these Financial Statements were approved. Based on the above, together with available market information, 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 continue to prepare the Financial Statements on a going concern basis. \n   \n Viability Statement \n In accordance with the Association of Investment Companies Corporate Governance Code (the \"AIC Code\") the Directors have assessed the prospects of the Group and future viability over a three-year period from the year end, being longer than the 12 months required by the going concern provision. The Board conducted a review with regard to the Group's long-term strategy, principal risks and risk appetite, current position asset performance and future plans. Following this review, the Board determined that three years to 31 December 2028 is the maximum timescale over which the performance of the Group can be forecast with any material degree of accuracy and is therefore an appropriate period over which to consider the Group's viability. Achievement of the one-year forecast has a greater level of certainty and is used to set near-term targets across the Group. Achievement of the subsequent forecasted years is less certain than the one-year forecast. However, the Board's forecast provides a longer-term outlook against which strategic decisions can be made. \n   \n Assessment of Review Period \n The Board chose to conduct the review for a three-year period giving consideration to: \n   \n • The Group's WAULT of 2.7 years to first break \n • The Group's detailed forecast covering a rolling three-year period \n • The Group's weighted average debt to maturity was 2.6 years as at 31 December 2025 \n   \n Assessment of Prospects and Viability \n The financial planning process considers the Group's profitability, capital values, LTV, cashflows, dividend cover, banking covenants, funding obligation and other key financial metrics over the coming three-year period. In addition, property companies are now operating in a more favourable lending climate, with the lowered LTV and strengthened balance sheet the Group is in a good position to refinance the next bank loan maturity in December 2027 of £118.3m. \n   \n Furthermore, the Board, in conjunction with the Audit Committee, carried out a robust assessment of the principal risks and uncertainties facing the Group, including those that would threaten its business model, strategy, future performance, solvency or liquidity over the three-year period. The risk review process provided the Board with assurance that the mitigations and management systems are operating as intended. \n   \n The Board believes that the Group is positioned to manage its principal risks and uncertainties successfully, notwithstanding the current economic and political environment. The Board's expectation is further underpinned by the regular briefings provided by the Investment Adviser. These briefings consider market conditions, investment opportunities, the Company's ability to raise third-party funds and deploy these promptly, changes in the regulatory landscape and current political and economic risks and uncertainties. These risks, and other potential risks which may arise, continue to be closely monitored by the Board. \n   \n Confirmation of Viability \n The Board confirms that it has a reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due over the next three years, taking into account the Group's current position and the principal risks and uncertainties. \n   \n The Directors have carefully reviewed areas of potential financial risk. The Directors have satisfied themselves that the Group has adequate financial resources to continue in operational existence for the foreseeable future. \n   \n Extract FROM the Directors' REPORT \n The full Directors' Report, which includes the Corporate Governance Statement, is provided in the full Annual Report. \n   \n Share Capital \n As at 31 December 2025, the Company's total issued share capital was 162,088,483 Ordinary Shares (2024: 162,088,483). \n   \n All of the Company's Ordinary Shares are listed on the Main Market segment of the London Stock Exchange and each Ordinary Share carries one vote. \n   \n There is only one class of Ordinary Shares in issue for the Company, in adherence to the REIT requirements. The only other shares the Company may issue are particular types of non-voting restricted preference shares, of which none (2024: none) are currently in issue. \n   \n At the AGM held on 15 May 2025, the Directors were granted authority to allot Ordinary Shares on a non- pre-emptive basis for cash up to a maximum number of 16,208,848 Shares (representing approximately 10% of the number of Ordinary Shares in issue on 28 March 2025). \n   \n The Directors we...

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