“Edison’s accessible and high-quality research gives us the opportunity to communicate an independent perspective of Tyman to a wide variety of potential stakeholders.”
Currency in GBP
Last close As at 08/06/2023
GBP0.51
— 0.00 (0.00%)
Market capitalisation
GBP261m
Research: Real Estate
Regional REIT (RGL) has declared a Q123 DPS of 1.65p, unchanged on Q122 and in line with our forecasts on a fully covered basis. Rent collection continues to be strong and leasing progress has maintained occupancy. Consistent with the trend of more employees returning to office working for longer periods, RGL says the level of enquiries from prospective customers remains encouraging.
Regional REIT |
Maintaining high dividend distribution |
Property acquisitions |
Real estate |
25 May 2023 |
Share price performance
Business description
Analyst
Regional REIT is a research client of Edison Investment Research Limited |
|||||||||||||||||||||||||||||||||||||
Regional REIT (RGL) has declared a Q123 DPS of 1.65p, unchanged on Q122 and in line with our forecasts on a fully covered basis. Rent collection continues to be strong and leasing progress has maintained occupancy. Consistent with the trend of more employees returning to office working for longer periods, RGL says the level of enquiries from prospective customers remains encouraging.
Year end |
Net rental |
EPRA |
EPRA |
NAV**/ |
DPS |
P/NAV |
Yield |
12/21 |
55.8 |
30.4 |
6.6 |
97.2 |
6.50 |
0.54 |
12.5 |
12/22 |
62.6 |
34.1 |
6.6 |
73.5 |
6.60 |
0.71 |
12.6 |
12/23e |
62.8 |
33.9 |
6.6 |
73.5 |
6.60 |
0.71 |
12.6 |
12/24e |
64.7 |
34.4 |
6.7 |
73.5 |
6.60 |
0.71 |
12.6 |
Note: *EPRA earnings exclude revaluation movements, gains/losses on disposal and other non-recurring items. **NAV is EPRA net tangible assets (NTA) per share.
During the quarter to March 2023 (Q123), new lettings and renewals were both at rents above the Q422 estimated rental values (ERV), an encouraging indication that tenant demand remains robust despite a challenging economic environment. And activity has continued into Q2. EPRA occupancy of 83.3% was unchanged during the quarter, with a gross annualised rent-roll of £71.0m (Q422: £71.8m).
The diversity of RGL’s portfolio by property (154 properties/1,567 units), by tenant (1,080) and by tenant industrial exposure provides security to income. Meanwhile, the current level of occupancy provides a significant opportunity to grow income (c £20m upside to ERV) but exposes RGL to the current inflationary impacts on vacant property costs. While uncertainties remain about future office use, effectively all RGL office tenants have returned to occupation in some form, with increasing numbers of employees returning (‘physical occupation’) across all regions. Regional office demand-supply remains reasonably tight, particularly for Grade A space. Meanwhile, as secondary office supply continues to reduce, often for repurposing, RGL’s leasing performance demonstrates robust demand for the middle ground of good-quality accommodation on which it focuses.
Gearing is relatively high, with an end-Q123 loan-to-value ratio of 50.5% (Q422: 49.5%), but the balance sheet is liquid (cash of £33m). While RGL continues to invest in refurbishing and enhancing its portfolio (£4.0m capex in Q123), we also expect continuing non-core disposals (£8.6m since end-Q1), particularly for alternative uses, for which low capital values provide additional scope. Meanwhile, with all debt fixed or hedged with swaps/caps at a maximum 3.5%, RGL has no direct exposure to rising interest rates. The trailing yield of 12.6% remains one of the highest in the sector and, combined with the c 29% discount to Q422 NAV, there is significant revaluation potential from an improving office market.
|
|
Research: Metals & Mining
Pan American Silver (PAAS) completed the Yamana transaction at the end of March, continuing its track record of timely and value-accretive acquisitions that add scale and improve profitability. With the full annualised contribution from the Yamana assets, we estimate PAAS will produce c 25Moz of silver and 1.1Moz of gold in FY24. The anticipated launch of Escobal (FY25e) could further increase silver production to above 40Moz, bringing PAAS closer to the industry leader, Fresnillo. In this note we reinstate our estimates and update our valuation to reflect the Yamana acquisition. Our sum-of-the-parts valuation is now US$22.5/share.
Get access to the very latest content matched to your personal investment style.
