Regional REIT (LSE: RGL)

Last close As at 14/11/2026

GBP0.87

▲ −0.20 (−0.23%)

Market capitalisation

GBP141m

Regional REIT (RGL) owns a highly diversified commercial property portfolio located in the regional centres of the UK.

EDISON VIEW

Regional REIT (RGL) delivered a robust performance in H126 and made good strategic progress against a very challenging economic and political background. New lettings, at a premium to ERV, offset lease breaks and maturities, borrowings were further reduced, with asset sales progressing in line with targets, and portfolio quality continued to improve. Off a lower base of rental income, EPRA earnings were lower despite reduced administrative and finance costs. Refinancing is progressing well, but, following market rate movements, we expect the costs to be higher and have reduced forecasts for earnings and the rate of DPS growth.

Q&A

What dividend does Regional REIT pay?

Regional REIT’s management has set a DPS target of 8.0p for FY26, which we expect to be well covered; the target is based on property rental earnings. That compares with 10.0p for FY25. Our 20 February 2026 note explained that FY26 would carry the full impact of a lower rent roll, along with a pick-up in the average cost of borrowing. In H126, EPRA earnings of 4.2p per share fully covered DPS of 4.0p. Following market rate movements, we expect refinancing costs to be higher and have trimmed our forecast DPS growth, allowing the company to keep a good level of DPS cover and retain cash for portfolio reinvestment. We forecast FY27 DPS of 8.20p. The company intends to remain compliant with REIT requirements, including a 90% distribution of earnings from property rental activity.

What are the forecasts for Regional REIT?

Our forecasts for Regional REIT are EPRA earnings of £14.9m and EPRA EPS of 9.2p for FY26, and £15.0m and 9.2p for FY27, compared with reported EPRA earnings of £19.1m, or 11.8p per share, in FY25. We expect EPRA net tangible assets per share of £1.90 at end-FY26 and £1.94 at end-FY27. We reduced our EPRA EPS forecasts by 0.4p for FY26 and 0.7p for FY27. Our operating earnings forecasts are not materially changed; the cut reflects a larger expected increase in net finance expense, driven by higher market interest rates, earlier refinancing than previously assumed and higher non-cash loan amortisation fees. We expect gross rental income and direct property costs to keep declining with disposals and, given the uncertain economic environment, assume no material benefit from core occupancy growth, which is the key area of upside to our forecasts.

What drives the investment case for Regional REIT, and what are the main risks?

In our view, the medium-term investment case for Regional REIT rests on its ability to lease space and grow income from the assets it is retaining. Our 29 September 2026 note flags two pressures: occupier demand has remained robust, but leasing decisions are taking longer; and debt reduction has put the company in a strong position ahead of upcoming maturities, but a rebasing of financing costs towards market rates is inevitable. In the same note, the assets to be retained had an EPRA occupancy rate of 84%, with material scope to increase occupancy towards a realistic, stable c 90% over time. Leasing vacant space also reduces void costs: we estimate that, on average across the portfolio, every £100 of additional gross rent may cut void costs by around £80, with £180 dropping through to net rental income. Property disposals have the most immediate positive effect on earnings, but the upside from core occupancy growth over time is much greater.

What were Regional REIT's latest results?

Regional REIT's latest results are for the half-year to 30 June 2026 (H126), and performance was broadly in line with market expectations and company guidance. EPRA earnings fell to £6.8m, or 4.2p per share, from £8.5m in H125. The decline reflected lower average occupancy, which more than offset the positive impact of disposals on property costs and interest expense. EPRA occupancy fell to 74.3% from 75.9% at end-FY25 as completed refurbishment projects re-entered the calculation, and the company stated that underlying occupancy improved by more than 2%. EPRA NTA per share fell by 3% to 188p. In our view, borrowing is falling, portfolio quality is improving and rents are increasing, although this strategic progress is yet to be reflected in EPRA earnings.

What does Regional REIT do and how does it make money?

Regional REIT (LSE: RGL) is a UK-based real estate investment trust (REIT) focused on office assets in the regional centres of the UK, outside the M25, and it makes money from rent: its annualised gross rent roll ended H126 at £48.3m. It is actively managed with a strong focus on income. The company intends to remain compliant with REIT requirements, including a 90% distribution of earnings from property rental activity. It has significant company-specific opportunities to grow net rental income by letting vacant space and selling underperforming properties. Its strategy is to reposition the portfolio to a core of high-quality income-producing properties with targeted value-added opportunities, while reducing gearing; disposals are funding capex and debt reduction. It listed on the Main Market of the London Stock Exchange in November 2015. It is externally managed by ESR Europe LSPIM, the investment adviser, and ESR Europe Investment Management, the alternative investment fund manager.

How much debt does Regional REIT have?

At 30 June 2026 (H126), Regional REIT had gross borrowings of £244m, net borrowings of £203m and a net loan-to-value (LTV) ratio of 38.5%, down from 40.4% at end-FY25. Debt costs were all hedged at an average rate of 3.4%, with an average duration of 2.1 years. Our 29 September 2026 note expects the LTV ratio to end FY26 at c 35%, ahead of a significant debt refinancing in H127. The company aims to refinance its £104m and £29m facilities maturing in 2027 and 2028 into one new fixed-rate loan; we assume a new £100m facility during H127 at a fixed 6.5% a year. We expect the weighted average cost of debt to rise from 3.4% at end-H126 to 3.9% by end-FY26 and c 6.0% by end-FY27. As capital values increase and disposals repay debt, we expect the LTV to fall steadily to c 30% by end-FY28.

What was Regional REIT's share consolidation?

Regional REIT carried out a one-for-10 share consolidation in FY24, which took effect on 29 July and has no impact on returns to investors. It followed an equity raise that brought in £110.5m before costs, with c 1.1bn new shares issued at 10p on the basis of 15 new shares for every seven existing shares. The 50% discount at which the new shares were issued had a very material impact on earnings, dividends and NAV per share, although shareholders were offered full pre-emption. Following the equity raise and the consolidation, there were c 162.1m shares in issue. On a comparable basis, the Q124 DPS of 1.2p, paid on the pre-consolidation share count, is equivalent to 12.0p on the post-consolidation number of shares.

Equity Proposition

Regional REIT’s commercial property portfolio is located wholly in the UK and comprises predominantly offices located in the regional centres outside of the M25 motorway. The portfolio is highly diversified, with more than 100 properties, containing over 1,000 units and let to well over 600 tenants. The portfolio value at the end of 2025 was £555m.

Responding to significant and challenging structural shifts in the office market, Regional REIT is well-advanced with a major repositioning of its portfolio, while reducing gearing. Meanwhile, there are a number of factors that suggest the performance of the office sector relative to the wider commercial property market may be at a turning point.

There are four main reasons why now may be the right time to look at Regional REIT.

1. Good quality assets are generating premium rental growth.

There is now much greater visibility on the post-pandemic use of office space; most employers have adopted some form of hybrid working, and office attendance has returned to normal levels. However, occupier demand is not spread equally across the sector. There is a flight to quality with many occupiers willing to pay higher rents for good quality, energy-efficient space, while lower quality, hard-to-let assets have continued to leave the sector, often for alternative use. It is estimated that less than a quarter of regional offices meet the energy efficiency standards that are expected to become a legal requirement and which are already being demanded by occupiers. With little new development on the horizon, the outlook for rental growth looks promising.

2. The majority of Regional REIT’s office portfolio already meets these occupier requirements or will soon do so.

At the end of 2025, 85% of Regional REIT’s current portfolio was EPC rated C or better and compliant with the expected 2027 regulatory standards. Core, good quality, long-term income generating properties were 63% of the portfolio, and another 19% were expected to become so through refurbishment and improvement. The balance of the portfolio will be sold, usually outright, but in selected cases after first obtaining part or full planning consent to create additional value. In 2025, Regional REIT completed more than £50m of disposals at a small premium to book value before sales costs, using the proceeds to fund capex and reduce debt.

3. Significant potential to grow net rental income.

The overall leasing market has remained challenging amid economic and political uncertainty, but the potential for Regional REIT to grow its net rental income is significant. There is a wide gap between existing rents and the level of market rents estimated by the external valuers. This is available to be captured by letting vacant space, and, encouragingly, recent lettings have been at rents above the estimated market level. Leasing vacant space does not just increase rental income but also reduces the property costs that must otherwise be paid by the company. The sale of underperforming, low occupancy properties reduces costs more than the income.

4. A significant discount to net assets with a high covered yield.

Regional REIT’s shares trade at around a 50% discount to the NAV and offer one of the highest, fully covered dividend yields in the sector. Within the commercial property market, the office sector has underperformed significantly, particularly since the pandemic, and investor expectations are low. Given these low expectations, improving demand-supply fundamentals and continuing market rental growth, combined with a successful execution of the company’s strategy, could be powerful drivers of dividend-led investment returns.

Published 15 April 2026

Latest Insights

View More
Regional-REIT_resized

Market Data

Share Price GBP0.87
Market Cap GBP141m
52-Week High GBP1.03
52-Week Low GBP0.82
% Change 1M 0.1
% Change 6M 4.7
% Change 12M (9.4)
Ave. Daily Volume 1yr 313,221

Sector

Real Estate

Equity Analyst

Martyn King

Director, Financials. Property and Insurance

Key Management

  • Adam Dickinson

    Investor Relations

  • Daniel Hunter

    Independent non-executive director and chairman

  • Frances Daley

    Independent non-executive director

  • Massy Larizadeh

    Independent non-executive director

  • Stephen Inglis

    Non-executive director

Share Price Chart

Research

Flash

Real Estate

Regional REIT — Positive leasing developments

Flash

Real Estate

Regional REIT — Encouraging progress

Update

Real Estate

Regional REIT — Laying foundations

edison tv

Real Estate

Regional REIT – equity proposition

Flash

Real Estate

Regional REIT — Transitioning

Update

Real Estate

Regional REIT — Leasing market uncertainty

Flash

Real Estate

Regional REIT — An active end to FY25

Cookie Policy Overview
Edison Group

This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping us understand which section of the website you find more interesting and useful. See our Cookie Policy for more information.

Strictly necessary and functional

These cookies are used to deliver our website and content. Strictly necessary cookies relate to our hosting environment, and functional cookies are used to facilitate social logins, social sharing and rich-media content embeds.

Advertising

Advertising Cookies collect information about your browsing habits such as the pages you visit and links you follow. These audience insights are used to make our website more relevant.

Performance

Performance Cookies collect anonymous information designed to help us improve the site and respond to the needs of our audiences. We use this information to make our site faster, more relevant and improve the navigation for all users.