20 February 2020
Potential equity fundraise for accretive growth opportunities
Regional REIT (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 that it is considering an equity fundraise. The proceeds will be used to take advantage of its growing near term pipeline of accretive growth opportunities in the investment market.
Occupational take-up in the Group’s properties remains robust, which coupled with an experienced hands-on asset manager delivering successful asset management initiatives, has resulted in the diversified income portfolio continuing to expand. As announced on 29 January 2020, the portfolio was valued at £787.9m as at 31 December 2019, an increase of 9.7% during 2019, reflecting acquisitions made in the period. The like-for-like value of the Group’s core office and industrial segment (93.6% by value) also increased in 2019 by 1.4%. Portfolio valuation was broadly unchanged on a like for like basis with a 0.1% decrease.
The successful June 2019 equity capital raise targeted £50.0m and was substantially oversubscribed at £62.5m. The funds have all been invested ahead of schedule in 11 high quality office assets for a total of £63.9 million producing a combined net initial yield of 8.7%, further diversifying the portfolio:
- August 2019, £25.9m acquisition of six offices located Birmingham, Bristol, Cardiff, Chester, Glasgow and Manchester. The assets total circa 172,442 sq. ft. providing a net income of c. £2.36 million p.a. from 27 tenants; equating to a net initial yield of 8.87% and anticipated reversionary yield of 9.54%.
- October 2019, £27.7m acquisition of four multi-let offices located in Redhill, Harefield, Bristol and High Wycombe. The assets total circa 131,036 sq. ft. providing a net income of c. £2.59 million p.a. from 24 tenants; equating to a net initial yield of 8.7% and anticipated reversionary yield of 9.7%.
- December 2019, £10.3m acquisition of a blue chip company headquarters located in Edinburgh. The office asset comprises 43,676 sq. ft., with a current contracted rent of £880,000 p.a. and a net initial yield of 8.0%.
The asset manager continues to see a growing near term pipeline of accretive growth investment opportunities which would further de-risk the portfolio by sector, region, and tenant type, whilst providing asset management potential.
The funds would be deployed in line with the Group’s investment policy with a view to delivering further value to shareholders.
Any such equity fundraise is expected to follow the publication of a prospectus, with further announcements to follow in due course.
As previously announced, forthcoming events:
- 27 February 2020 – Q4 2019 Dividend Declaration
- 26 March 2020 – Full Year 2019 Preliminary Results Announcement
There will be a briefing for analysts at 9:30am on 26 March 2020 at the Buchanan offices, 107 Cheapside, EC2V 6DN. To request attendance please contact regional@buchanan.uk.com