Regional REIT

LN: RGL

Market Cap£454m

Last Close 88p

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

H121 results reported on 16 September confirmed an impressive rent collection performance with 99% of H1 rents collected at the time (96.8% received, monthly rents 0.4%, and agreed deals 1.8%). This continues to support a high level of distributions with 3.2p of DPS declared in H121 and 6.5p targeted for the year (FY20: 6.5p). EPRA NTA increased from 98.6p at end-FY20 to 91.9p, benefitting from a 0.4% like for like uplift in property valuations, and including DPS paid, the EPRA NTA total return was 3.6%, an annualised 7.3%. The majority of RGL’s industrial assets have now been sold, locking in gains, and the proceeds redeployed into assets where RGL see stronger immediate and future income potential. This includes the significant recent £236m acquisition of a portfolio of regional offices, part funded by equity issuance to the vendor at end-FY20 NAV.

Y/E Dec
Revenue (£m)
EBITDA (£m)
PBT (£m)
EPS (fd) (p)
P/E (x)
P/CF (x)
2019A 55.0 44.1 30.6 7.8 11.3 13.5
2020A 53.3 42.0 27.7 6.5 13.5 7.9
2021E 56.3 45.0 0.0 6.6 13.3 7.1
2022E 64.0 51.7 0.0 6.8 12.9 8.1
Industry outlook

The commercial property market is cyclical, historically exhibiting substantial swings in capital values through cycles while income returns have been more stable. While the pandemic has created significant economic and market uncertainty, the rebound in GDP, continuing low interest rates, and lockdown easing are supporting a broadening of positive commercial property returns, for now still led by the industrial sector.

Last updated on 20/10/2021
Content on Regional REIT
Regional REIT – Positioning for growth
Real Estate | Update | 1 October 2021
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Regional REIT – Advancing strategy and enhancing earnings
Real Estate | Flash note | 1 September 2021
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Share price graph
Balance sheet
Forecast net debt (£m) 390
Forecast gearing ratio (%) 78
Price performance
%
1m
3m
12m
Actual 1.2 (0.2) 37.7
Relative* (2.1) (4.7) 10.9
52-week high/low 92.0p/60.0p
*% 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