HALF YEAR RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2019

10 SEPTEMBER 2019

  • STRONGLY POSITIONED FOR FURTHER GROWTH

    Regional REIT Limited (LSE: RGL), the regional real estate investment specialist, focused on building a diverse portfolio of income producing regional UK core and core plus office and industrial property assets, today announces its half year results for the six months ended 30 June 2019.

    FINANCIAL HIGHLIGHTS:

    • Total shareholder return of 40.8% since IPO; representing 9.8% annualised returns for shareholders
    • 17.0% increase in Operating profit before changes on property assets to £20.6m (H1 2018: £17.6m)
    • Rental income, excluding recoverable service charge income, largely unchanged at £29.9m (H1 2018: £30.6m) reflecting the lower number of assets held in the portfolio during the period
    • EPRA Earnings, excluding performance fee, increased 1.4% to £14.2m (H1 2018: £14.0m)
    • EPRA adjusted EPS of 3.8p (H1 2018: 3.8p)
    • Net LTV maintained within c.40% target, at 39.9%
    • Group weighted average cost of debt reduced to 3.5% (2018: 3.8%) and the weight average debt to maturity extended to 7.8yrs (2018: 6.4yrs); with £30.2m of undrawn firepower
    • Cash £53.8m (2018: £104.8m) following the £39.9m ZDP repayment Jan 2019
    • 2.7% increase in total H1 dividend to 3.8p (H1 2018: 3.7p); in line with progressive dividend target of 8.25p per share for FY 2019

    OPERATIONAL HIGHLIGHTS ‐ ASSET MANAGEMENT INITIATIVES CONTINUE TO BE EXECUTED DRIVING INCOME AND CAPITAL RETURNS

    • Good level of transactional activity achieved with £20.0m (before costs) invested in acquiring Norfolk House, Birmingham and £19.7m (net costs) received from further strategic disposals
    • Disposal of Aspect Court, Sheffield for £8.8m 24.8% above 31 Dec 2018 valuation, and the sale of Tokenspire Business Park, Beverley for £11.1m reflecting a 30.6% uplift to the acquisition price.
    • Group portfolio totalled 149 properties (H1 2018: 151); comprising 1,178 units (H1 2018: 1,294) and servicing 828 tenants (H1 2018: 950)
    • Regional office and industrial property assets represent 92.5% of the Group portfolio by value; 78.2% in office and 14.3% in industrial
    • The WAULT on the portfolio has increased to 5.5 years (H1 2018: 5.3 years)
    • EPRA Occupancy rate remained stable at 87.5% (2018: 89.4%); on an EPRA like for like basis 87.1% (2018: 89.2%)

    POST PERIOD END

    • Successful equity raise of £62.5m, exceeding £50.0m target, achieved in July 2019; strengthening corporate foundations and long-term prospects
    • Successful letting of c. £1.27m p.a. of space in Nottingham, Chatham, Preston, Lincoln, Leeds, and Manchester
    • Substantial portfolio acquisition made in August 2019. Purchase of six regional office assets for £25.9m with a net initial yield of 8.87%
    • 800 Aztec West, Bristol all 73,292 sq. ft. now fully let, with Edvance SAS agreeing a lease for the entire second floor for a period of nine years at a rent of c.£224,000pa for previously vacant space
    • Kilmarnock, Ayrshire, £2.5m industrial estate acquisition in September, comprising 34,000 sq. ft., 100% occupied, with a NIY 15.2% and 6.7years WAULT

    Stephen Inglis, CEO of London & Scottish Property Investment Management Limited, the Asset Manager of Regional REIT Limited commented:

    "It has been a very active and successful period for the Group as we continue to strengthen our corporate foundations and portfolio composition to take advantage of the considerable and growing opportunities that we are seeing in our markets.

    Our strategic approach to intensive asset management of a deliberately diverse portfolio across the UK regions underpins our confidence of being able to maintain sector leading returns for shareholders."

    A meeting for investors and analysts will be held at 10.00am (London time, BST) on Tuesday, 10 September 2019 at the offices of Buchanan Communications. If you would like to attend the meeting please contact the Buchanan team on +44 (0) 207 466 5000 or regional@buchanan.uk.com.

    The presentation slides for the meeting will shortly be available to download from the Investors section of the Group's website at www.regionalreit.com.

    This announcement contains inside information which is disclosed in accordance with the Market Abuse Regulation that came into effect on 3 July 2016.



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