Regional REIT

LN: RGL

Market Cap£442m

Last Close 85.7p

Regional REIT owns a highly diversified commercial property portfolio of predominantly offices located in the regional centres of the UK. It is actively managed and targets a total shareholder return of at least 10% with a strong focus on income.

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Investment summary

FY21 results confirmed the 6.5p DPS to be fully covered by EPRA EPS of 6.6p and supported by continuing strong rent collection. RGL aims to continue its progressive dividend policy and this is reflected in our forecasts. The Q122 DPS will be declared in May. EPRA NTA per share was 97.2p and including DPS paid the total return was 5.0%. The increase in portfolio value to c £906m (FY20: c £732m) included like-for-like gains of 1.1% but was predominantly driven by acquisitions (net of disposals), including the £236m acquisition of a complementary portfolio of mostly regional offices, as RGL rotated towards offices (now c 90% value). With the return to work building RGL remains positive about the future for offices, especially good quality regional assets with affordable rents, and expects an acceleration in letting vacant space to drive income and capital growth.

Y/E Dec
Revenue (£m)
EBITDA (£m)
PBT (£m)
EPS (fd) (p)
P/E (x)
P/CF (x)
2020A 53.3 42.0 (31.2) 6.5 13.2 7.7
2021A 55.8 45.2 28.8 6.6 13.0 6.9
2022E 63.1 51.2 43.5 6.7 12.8 7.9
2023E 65.4 53.2 45.8 7.1 12.1 8.2
Industry outlook

The commercial property market is cyclical, historically exhibiting substantial swings in capital values through cycles while income returns have been more stable. The pandemic continues to generate uncertainty but rebounding GDP growth, continuing low interest rates and lockdown easing are supporting strong commercial property returns, still led by the industrials, but broadening across all sectors.

Last updated on 23/05/2022
Content on Regional REIT
Regional REIT – Well positioned for an office recovery
Real Estate | research Update | 4 April 2022
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Regional REIT – FY21 DPS target met, confirming attractive yield
Real Estate | research Update | 24 February 2022
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Share price graph
Balance sheet
Forecast net cash (£m) 390
Forecast gearing ratio (%) N/A
Price performance
%
1m
3m
12m
Actual (0.4) (2.7) (5.0)
Relative* 0.4 (2.3) (8.4)
52-week high/low 94.5p/79.3p
*% relative to local index
Key management
Kevin McGrath Chairman
Adam Dickinson Head of IR
Daniel Taylor Non Executive Director
Stephen Inglis Non Executive Director
Tim Bee Non Executive Director
William D. Eason Non Executive Director