RGL Regional Reit Limited

22 May 2024

REGIONAL REIT Limited

("Regional REIT", the "Group" or the "Company")

Q1 2024 Trading Update, Dividend Declaration

and EPC Update

Regional REIT Limited (LSE: RGL), the regional property specialist, announces the following trading update for the period from 1 January 2024 to 31 March 2024 and a dividend declaration for the first quarter of 2024. Additionally, the Group provides an update on its continued EPC progress.

Portfolio Highlights as at 31 March 2024:

·   135 properties, 1,344 units and 906 tenants, totalling c.£688.2m^* of gross property assets value (31 December 2023: £700.7m)

·    Rent roll of £65.5m (31 December 2023: £67.8m); ERV £84.3m (31 December 2023: £87.0m)

·   Total rent collection for the quarter is currently 97.2% compared with 96.3% for the equivalent period in 2023

·    EPRA Occupancy (by ERV) at 79.9% (31 December 2023: 80.0%); 31 March 2024 like-for-like (versus 31 March 2023) EPRA occupancy was 79.9% (84.6%)

·   Weighted average debt duration 3.2 years, with the earliest borrowing maturity date being August 2024 (31 December 2023: 3.5years); significant work continues to be undertaken in respect of both the debt and equity refinancing options

·    Disposals amounted to £15.0m (before costs), reflecting a net initial yield of 9.2%

·    Net loan-to-value ratio c. 55.2%^* (31 December 2023: 55.1%)

·    Cash and cash equivalent balances £33.5m (31 December 2023: £34.5m)

·  Group cost of debt (incl. hedging) 3.4% pa (31 December 2023: 3.5% pa) - currently 100% fixed and hedged

·    Gross borrowings £413.2m (31 December 2023: £420.8m)

·    Average lot size c. £5.1m (31 December 2023: c. £4.9m)

·  Offices (by value) were 92.8% of the portfolio (31 December 2023: 92.1%), Retail 3.1% (31 December 2023: 3.1%), Industrial 2.4% (31 December 2023: 3.2%) and Other 1.7% (31 December 2023: 1.7%)

·  England & Wales represented 83.5% (31 December 2023: 83.8%) of the portfolio with the remainder in Scotland

* Gross property assets value based upon Colliers valuations as at 31 December 2023, adjusted for subsequent acquisitions, disposals and capital expenditure in the period.

Q1 2024 Dividend Declaration

The Company declares that it will pay a dividend of 1.20 pence per share ("pps") for the period 1 January 2024 to 31 March 2024, (1 January 2023 to 31 March 2023: 1.65pps). The entire dividend will be paid as a REIT property income distribution ("PID").

Shareholders have the option to invest their dividend in a Dividend Reinvestment Plan ("DRIP"), and more details can be found on the Company's website https://www.regionalreit.com/investors/investors-dividend/dividend-reinvestment-plan.

The key dates relating to this dividend are:

The level of future payments of dividends will be determined by the Board having regard to, among other factors, the financial position and performance of the Group at the relevant time, UK REIT requirements, the interest of shareholders and the long term future of the Company.

EPC Update

During the quarter, the Company continued to improve the portfolio's EPC ratings and the Company remains on target to achieve the planned EPC B rating by 2030 in accordance with current guidelines.

Excluding Scotland:

Rental Collection Update

As at 17 May 2024, the Company had collected 97.2 % of the rent due for Q1 2024. This comprised rent received of 96.7%, monthly rents of 0.5%. The rent received of 97.2% compares favourably with the equivalent period in 2023 of 96.3%.

Outlook

Although the inflationary backdrop continues to impact the economy, there are signs that inflation is heading back towards the Bank of England's two percent target, allowing for a more favourable outlook for the Company.

The Board remains focused upon reducing the LTV back to the Company's long-term target of 40% through controlled asset sales, whilst aligning the quarterly dividend with the earnings.

Stephen Inglis, CEO of London & Scottish Property Investment Management, Asset Manager commented:

"During the period under review, rent collection remained strong, positive leasing momentum was maintained, EPC ratings continued to improve, and the disposals programme remains on track for 2024.

"With inflation pressures subsiding we expect this to lead to an easing of pressure on the wider economy and in turn the likely reduction in the borrowing cost environment. The combination of these two factors should see a positive impact on the investment market and transactional activity, assisting the sales programme and the value of our assets.

"We are acutely aware of the need to reduce our LTV back towards the 40% long term target and finding the most appropriate solution for the retail bond, which is due to mature in August. We continuing to progress the work on debt and equity refinancing options available to the Company, whilst executing the controlled disposal programme.

"The Board continues to align the dividend with earnings and has today declared the Q1 2024 dividend of 1.20pps for the period."

Summary of Activity in the Quarter to 31 March 2024

Sales

Total disposals in the three months to 31 March 2024 amounted to £15.0m (before costs), reflecting a net initial yield of 9.2%.

Lettings

Since 1 January 2024, the Group has exchanged on seven notable leases to new tenants totalling 69,067 sq. ft., amounting to £1.2m per annum ("pa") of rental income when fully occupied, and achieving a rental uplift of 9.1% against December 2023 ERVs. In addition, three notable leases have renewed amounting to 80,546 sq. ft. and £1.2m pa of rental income, delivering a rental uplift of 4.4% against December 2023 ERVs.

·    Clearblue Innovation Centre, Bedford - SPD Development Co Ltd. renewed its lease to September 2033, at a rental income of £825,000 pa (£14.18/ sq. ft.) on 58,167 sq. ft. of space.

·    The Foundation Chester Business Park, Chester - GB Group plc renewed its lease to July 2028, with the option to break in 2026, at a rental income of £289,500 pa (£18.21/ sq. ft.) on 15,902 sq. ft. of space.

·    Lightyear, Glasgow Airport, Glasgow - Heathrow Airport Ltd. has let 15,154 sq. ft. of office space to March 2039, with an option to break in 2034, at a rental income of £264,618 pa (£17.46/ sq. ft.).

·    Park House, Bristol - Serco Ltd. has let 10,035 sq. ft. of office space to September 2031, with an option to break in 2029, at a rental income of £230,000 pa (£22.92 sq. ft.).

·    Oakland House, Manchester - Please Hold (UK) Ltd. has let 10,926 sq. ft. of office space to March 2029, with an option to break in 2027, at a rental income of £147,501 pa (£13.50 sq. ft.).

·    Delta 1200, Delta Business Park, Swindon - Improve International Ltd. has let 9,776 sq. ft. of office space to February 2034, with an option to break in 2029, at a rental income of £185,744 pa (£19.00 sq. ft.).

·    Linford Wood Business Park, Milton Keynes - Senceive Ltd. has let 9,055 sq. ft. of office space to March 2030 at a rental income of £156,888 pa (£17.33 sq. ft.).

·    133 Finnieston Street, Glasgow - Kibble Education and Care Centre has let 6,610 sq. ft. of office space to March 2034, with an option to break in 2029, at a rental income of £112,370 pa (£17.00 sq. ft.).

·    Equinox North, Almondsbury, Bristol - Qualcomm Technologies Int Ltd. renewed its lease to March 2029, with the option to break in 2027, at a rental income of £97,155 pa (£15.00/ sq. ft.) on 6,477 sq. ft. of space.

·    Bennett House, Stoke-on-Trent - NHS Property Services Ltd. has let 7,511 sq. ft. of office space to March 2029, with an option to break in 2027, at a rental income of £95,000 pa (£12.65 sq. ft.).

Subsequent Events summary post 31 March 2024

Since the quarter end, the Group has successfully completed the following notable lettings and sales:

Lettings

·    1-6 Silver Court, Welwyn Garden City - Telespazio UK Ltd. has let 3,873 sq. ft. of office space to April 2027, with an option to break in 2025, at a rental income of £67,800 pa (£17.51/ sq. ft.).

·    84 Albion Street, Leeds - Jugo Digital Ltd. has let 1,304 sq. ft. of office space to April 2027, with an option to break in 2025, at a rental income of £66,000 pa (£50.61/ sq. ft.).

·    York House, Felixstowe - Existing tenant Poundland Ltd. has renewed existing lease of 7,593 sq. ft. of space at a rental income of £60,000 (£7.90/ sq. ft.). The lease is to April 2027.

Sales

·    1 disposals and 1 part sales completed totalling £1.1m (before costs), 17.5% above pre-sale valuation.

Following these sales the disposal programme comprises of 59 sales totalling c £111m:

·    3 disposals contracted for c. £2 million

·    8 disposals totalling c. £22 million under offer and in legal due diligence

·    4 further disposals totalling c. £9 million are in negotiation

·    12 further disposals totalling c. £15 million are on the market

·    32 potential disposals totalling c. £63 million are being prepared for the market.

Forthcoming Events

Note: All dates are provisional and subject to change

- ENDS -

Enquiries:

About Regional REIT

Regional REIT Limited ("Regional REIT" or the "Company") and its subsidiaries (the "Group") is a United Kingdom ("UK") based real estate investment trust that launched in November 2015. It is managed by London & Scottish Property Investment Management Limited, the Asset Manager, and ARA Europe Private Markets Limited, the Investment Adviser.

Regional REIT's commercial property portfolio is comprised wholly of income producing UK assets and comprises, predominantly of offices located in the regional centres outside of the M25 motorway. The portfolio is geographically diversified, with 135 properties, 906 tenants as at 31 March 2024, with a valuation of c.£688.2m.

Regional REIT pursues its investment objective by investing in, actively managing and disposing of regional core and core plus property assets. It aims to deliver an attractive total return to its Shareholders, targeting greater than 10% per annum, with a strong focus on income supported by additional capital growth prospects.

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 .

Cautionary Statement

This document has been prepared solely to provide additional information to Shareholders to assess the Group's performance in relation to its operations and growth potential. The document should not be relied upon by any other party or for any other reason. Any forward looking statements made in this document are done so by the Directors in good faith based on the information available to them up to the time of their approval of this document. However, such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such forward-looking information.

ESMA Legal Entity Identifier ("LEI"): 549300D8G4NKLRIKBX73