Regional REIT — Positive trading and dividend increase

Regional REIT (LSE: RGL)

Last close As at 24/05/2024

GBP0.23

−1.10 (−4.54%)

Market capitalisation

GBP120m

More on this equity

Research: Real Estate

Regional REIT — Positive trading and dividend increase

In a trading update Regional REIT (RGL) says that the regional office and light industrial markets in which it operates remain robust, with strong occupier demand for its assets, and that it is trading in line with management expectations for the year. These expectations include a return to full dividend cover, and the company has declared a Q119 DPS of 1.90p per share, a 3% increase, maintaining its position as one of the highest yielding stocks in the sector.

Martyn King

Written by

Martyn King

Director, Financials

Real Estate

Regional REIT

Positive trading and dividend increase

Trading update

Real estate

3 June 2019

Price

109.2p

Market cap

£407m

Net debt (£m) at 31 March 2018

297.7

Net LTV at 31 March 2018

41.0%

Shares in issue

372.8m

Free float

97%

Code

RGL

Primary exchange

LSE

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

2.3

6.3

9.1

Rel (local)

5.2

4.5

16.6

52-week high/low

109.6p

90.1p

Business description

Regional REIT owns a highly diversified commercial property portfolio of predominantly offices and light industrial units 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.

Next events

Q210 DPS declared

29 August 2019

Interim results

10 September 2019

Analysts

Martyn King

+44 (0)20 3077 5745

Andrew Mitchell

+44 (0)20 3681 2500

Regional REIT is a research client of Edison Investment Research Limited

In a trading update Regional REIT (RGL) says that the regional office and light industrial markets in which it operates remain robust, with strong occupier demand for its assets, and that it is trading in line with management expectations for the year. These expectations include a return to full dividend cover, and the company has declared a Q119 DPS of 1.90p per share, a 3% increase, maintaining its position as one of the highest yielding stocks in the sector.

Year end

Net rental
income (£m)

Adjusted
EPS* (p)

EPRA NAV/
share (p)

DPS
(p)

P/EPRA
NAV (x)

Yield
(%)

12/17

45.8

8.6

105.9

7.85

1.03

7.2%

12/18

54.4

7.5

115.5

8.05

0.95

7.4%

12/19e

55.2

8.5

116.7

8.25

0.94

7.6%

12/20e

55.7

8.6

117.8

8.45

0.93

7.7%

Note: *Adjusted earnings exclude revaluation movements, gains/losses on disposal, and other non-recurring items, and unlike EPRA earnings also exclude performance fees.

Occupational demand remains robust

The trading statement provides reassurance about the continued strength of trading, amid heightened Brexit uncertainty. It also details the progress of asset management initiatives in the year to date, with several significant lettings at rents well above previous levels. In FY18, rents increased by an average 11.8% on lease renewals in the office portfolio and the trend is continuing. We make no changes to our forecasts, published after the full year results (see our update note), which look for the contribution from recently completed acquisitions, like-for-like occupancy improvement and rental growth, and lower funding costs to drive growth, with DPS further increased and fully covered by adjusted earnings. Not included in our estimates are the further earnings accretive acquisitions that RGL targets.

Further growth opportunities

Since listing in November 2015, RGL’s portfolio value has almost doubled, to £741m, including several large portfolio transactions. In the process portfolio positioning has been optimised, diversification increased and scale added, supporting the fully integrated in-house asset management platform and improving access to capital markets. Acquisitions also reflect capital recycling, at the heart of RGL’s strategy to opportunistically acquire attractively priced, income-producing assets that will benefit from active management. These may subsequently be sold to realise the value thereby created, as was the case in FY18. With a cooling in the investment market, RGL now has a large and diverse pipeline of investment opportunities and says it is considering an equity fund raise to enable it to take advantage of these.

Valuation: Strong returns with income focus

RGL shares have performed well over the past year, outperforming the broad UK property sector, the wider market and a narrow group of direct peers. Still, the prospective yield, approaching 8%, remains among the highest in the sector and we expect DPS to be fully covered by adjusted earnings in FY19.

Further details from the statement

RGL’s portfolio is focused on income producing regional UK core and core plus office (76.7%) and industrial assets (15.0%). With a general lack of new development in the regions, both sectors continue to benefit from positive supply/demand dynamics in occupational markets. Meanwhile, as Brexit uncertainty has increased the investment market has shown some signs of cooling, with transaction volumes weaker than last year, and this is opening up potential investment opportunities.

Since end-FY18, has acquired Norfolk House, a c 120 sq ft freehold office property with retail units, well situated in central Birmingham, adjacent to New Street station, the Bullring shopping centre and close to the proposed new HS2 station, providing enhanced rail links to London and Manchester. The property is 98.75% occupied with an annual net income of £1.69m and the £20m consideration reflects a net initial yield of 7.92%. The main tenant for the office accommodation is HMRC, occupying 49% of the property. Despite substantial capital expenditure for refurbishment having been undertaken by the vendor, RGL believes that attractive value-enhancing asset management opportunities remain.

Also in FY19 to date, the group has been active in asset management, and exchanged on 19 new leases, with both existing long-term tenants and new tenants, totalling 116,443 sq ft When fully occupied these will provide c £0.8m of rental income.

Exhibit 1: Portfolio summary

31 March 2019

31 December 2018

Q119

FY18

Valuation (£m)

741.0

718.4

Gross lettable area (million sq ft)

7.43

Number of properties

151

150

Number of property units

1,223

1,192

Number of tenants

884

874

Contracted rents (£m)

60.5

59.7

WAULT to first break (years)

3.4

Estimated rental value, ERV (£m)

70

EPRA occupancy

88.6%

89.4%

Net initial yield

6.5%

Reversionary yield

8.8%

Source: Regional REIT

Further growth opportunities

RGL came to market in November 2015 with an established portfolio of 128 properties valued at £386m. The portfolio has almost doubled in size since with acquisitions, including several large portfolio transactions, making a strong contribution. At the same time, the company has delivered on its aims to reposition towards faster growing regions such as the south-east and south-west of England and away from Scotland. Non-core investments outside of regional offices and light industrial assets have also been materially reduced.

Acquisitions have supported this portfolio repositioning and the further diversification of the portfolio, and have enabled RGL to build scale, to support its fully integrated in-house asset management platform and improve its access to capital, including improved debt financing terms. But acquisitions also reflect the capital recycling that is at the heart of RGL’s strategy whereby it seeks to opportunistically acquire attractively priced, income-producing assets that will benefit from active management and may subsequently be sold to realise the value thereby created. Following significant acquisition activity in 2017, RGL took advantage of good investment demand in the earlier months of FY18 to dispose of properties where its asset management plans were complete and, in some cases, where plans were yet to reach maturity but where it had identified that a better risk-adjusted return was available by selling at prevailing market prices, well above valuations. With the investment market cooling slightly, RGL says that during Q119 it saw no shortage of opportunities for making further earnings accretive acquisitions. It says that the potential deal pipeline is both considerable and diverse and that it is considering an equity fund raise to enable it to take advantage of opportunities.

Financials and valuation

No changes to estimates

We have made no changes to our existing estimates that look for the contribution from recently completed acquisitions, like-for-like occupancy improvement and rental growth, and lower funding costs to drive growth, with DPS further increased and fully covered by adjusted earnings. As noted above, RGL targets further earnings accretive acquisitions that are not included in our estimates. Depending on the mix of funding (equity and debt) applied to any acquisitions, and the price that any equity is issued at, we would expect some modest near-term dilution of EPRA NAV. This would be the case in respect of share issuance below the current NAV per share and any acquisition related costs. However, given RGL’s investment targets we would expect it to be targeting asset management driven post-acquisition improvements in capital values as well as income, such that any dilution of NAV should only be short term.

Active management delivering total return target

RGL targets a medium-term annual total return of more than 10% and the strong 16.6% EPRA NAV total return in FY18 took the total return generated since IPO in November 2015 to 37.5%, or a compound average annual return of 10.6%. The strong income focus is clear, with growing dividends per share contributing 59% of the total return over the period.

Exhibit 2: NAV total return

2015*

2016

2017

2018

Since IPO

Opening EPRA NAV per share (p)

100.0

107.8

106.9

105.9

100.0

Closing EPRA NAV per share (p)

107.8

106.9

105.9

115.5

115.5

Dividends per share paid (p)

0.00

6.25

7.80

8.00

22.05

NAV total return (%)

7.8%

5.0%

6.4%

16.6%

37.5%

Compound return (%)

10.6%

Source: Regional REIT. Note: *55-day period from 6 November 2015.

RGL’s high dividend yield continues to be at the very top end of the broad UK property sector. For FY19 we forecast the DPS to be both higher and fully covered by adjusted earnings, representing a prospective yield approaching 8%.

In Exhibit 3 we show a comparison with a narrow group of peers that are similarly focused on regional commercial property. To ease comparison, this data is based on 12-month trailing DPS declared and last published NAV. Compared with this narrower group, RGL’s yield is also well above the average. Its c 5% share price discount to the end-FY18 EPRA NAV per share is lower than the average for the narrower group of peers and is lower than the average for the broad UK property market (we estimate a c 10% discount). Within the group, those companies with an income focus, like RGL, and covered dividends tend to have the higher P/NAV ratings.

Exhibit 3: Peer comparison

Price
(p)

Market cap
(£m)

P/NAV
(x)

Yield
(%)

Share price performance

One month

Three months

12 months

From 12m high

Circle Property

204

58

0.74

2.9

4%

11%

5%

-20%

Custodian

119

483

1.10

5.5

4%

4%

-1%

-3%

Picton

96

516

1.03

3.7

3%

7%

7%

-4%

Real Est Inv

55

102

0.79

6.5

-2%

7%

1%

-12%

Schroder REIT

57

297

0.83

4.5

-1%

-2%

-6%

-15%

Palace Capital

270

124

0.64

7.0

-4%

-10%

-24%

-26%

UK Commercial Property Trust

91

1188

0.97

4.0

3%

6%

6%

-2%

BMO Commercial Property Trust

120

961

0.87

5.0

0%

-1%

-17%

-22%

BMO Real Estate Investments

94

227

0.89

5.3

0%

5%

-7%

-9%

Average

0.88

4.9

1%

3%

-4%

-13%

Regional REIT

109

407

0.95

7.4

3%

7%

14%

-1%

UK property index

1,664

4.0

-3%

-4%

-10%

-11%

FTSE All-Share Index

3,924

4.7

-3%

0%

-7%

-9%

Source: Regional REIT data, Edison Investment Research. Note: *Last reported EPRA NAV per share and trailing 12-month DPS declared. Prices as at 31 May 2019.

Over the past year RGL shares have performed more strongly than the narrow peer group, the broad UK property sector and the FTSE All-Share Index. We attribute this to its ability to demonstrate strong asset management returns, commitment to a progressive dividend policy and reduced LTV. Given the high prospective yield, the prospect of a return to fully covered dividends in FY19 has the potential to support a further re-rating of the shares.

Exhibit 4: Financial summary

Year end 31 December (£000s)

2015

2016

2017

2018

2019e

2020e

PROFIT & LOSS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

Rental income

5,361

42,994

61,610

74,019

74,034

74,637

Property costs

(754)

(4,866)

(15,763)

(19,644)

(18,822)

(18,976)

Net rental income

 

 

4,608

38,128

45,847

54,375

55,212

55,662

Administrative expenses (excluding performance fees)

(1,353)

(7,968)

(7,819)

(10,540)

(10,309)

(10,385)

Performance fees

0

(249)

(1,610)

(7,046)

(36)

(344)

EBITDA

 

 

3,255

29,911

36,418

36,789

44,867

44,933

EPRA cost ratio

N/A

N/A

29.7%

40.1%

27.7%

28.2%

EPRA cost ratio excluding performance fee

N/A

N/A

26.6%

28.6%

27.7%

27.7%

Gain on disposal of investment properties

87

518

1,234

23,127

0

0

Change in fair value of investment properties

23,784

(6,751)

5,893

23,881

3,356

3,762

Operating profit before financing costs

 

 

27,126

23,678

43,545

83,797

48,224

48,695

Exceptional items

(5,296)

0

0

0

0

0

Net finance expense

(820)

(8,629)

(14,513)

(15,715)

(13,176)

(13,176)

Net movement in the fair value of derivative financial investments and impairment of goodwill

115

(1,654)

(340)

(142)

0

0

Profit Before Tax

 

 

21,124

13,395

28,692

67,940

35,048

35,519

Tax

0

23

(1,632)

(567)

0

0

Profit After Tax (FRS 3)

 

 

21,124

13,418

27,060

67,373

35,048

35,519

Adjusted for the following:

Net gain/(loss) on revaluation/disposal of investment properties

(23,870)

6,233

(7,127)

(47,008)

(3,356)

(3,762)

Net movement in the fair value of derivative financial investments

(180)

865

(407)

(459)

0

0

Other EPRA adjustments including deferred tax adjustment

0

557

4,488

987

0

0

EPRA earnings

 

 

(2,926)

21,073

24,014

20,893

31,691

31,757

Performance fees & exceptional items

5,296

249

1,610

7,046

36

344

Adjusted earnings

 

 

2,371

21,322

25,624

27,939

31,727

32,100

Period end number of shares (m)

274.2

274.2

372.8

372.8

372.8

372.8

Fully diluted average number of shares outstanding (m)

274.2

274.3

297.7

372.8

372.8

372.8

IFRS EPS - fully diluted (p)

 

 

7.7

4.9

9.1

18.1

9.4

9.5

Adjusted EPS, fully diluted (p)

 

 

0.9

7.8

8.6

7.5

8.5

8.6

EPRA EPS, fully diluted (p)

 

 

(1.1)

7.7

8.1

5.6

8.5

8.5

Dividend per share, declared basis (p)

 

 

1.00

7.65

7.85

8.05

8.25

8.45

Dividend cover

N/A

101.6%

109.7%

93.1%

103.2%

101.9%

BALANCE SHEET

Non-current assets

 

 

407,492

506,401

740,928

720,886

752,542

762,305

Investment properties

403,703

502,425

737,330

718,375

750,031

759,794

Other non-current assets

3,790

3,976

3,598

2,511

2,511

2,511

Current Assets

 

 

35,803

27,574

66,587

126,986

59,347

55,098

Other current assets

11,848

11,375

21,947

22,163

22,137

22,482

Cash and equivalents

23,954

16,199

44,640

104,823

37,210

32,616

Current Liabilities

 

 

(21,485)

(23,285)

(42,644)

(83,685)

(42,286)

(43,057)

Bank and loan borrowings - current

(200)

0

(400)

(40,216)

0

0

Other current liabilities

(21,285)

(23,285)

(42,244)

(43,469)

(42,286)

(43,057)

Non-current liabilities

 

 

(126,469)

(218,955)

(371,972)

(334,672)

(335,612)

(336,152)

Bank and loan borrowings - non-current

(126,469)

(217,442)

(371,220)

(334,335)

(335,275)

(335,815)

Other non-current liabilities

0

(1,513)

(752)

(337)

(337)

(337)

Net Assets

 

 

295,341

291,735

392,899

429,515

433,991

438,193

Derivative interest rate swaps & deferred tax liability

416

1,513

2,802

971

971

971

EPRA net assets

 

 

295,757

293,248

395,701

430,486

434,962

439,164

IFRS NAV per share (p)

107.7

106.4

105.4

115.2

116.4

117.5

Fully diluted EPRA NAV per share (p)

107.8

106.9

105.9

115.5

116.7

117.8

CASH FLOW

Cash (used in)/generated from operations

 

 

(2,232)

31,434

40,251

38,817

43,711

45,358

Net finance expense

(424)

(6,626)

(9,167)

(11,923)

(11,636)

(11,636)

Tax paid

0

(1,715)

(236)

(1,467)

0

0

Net cash flow from operations

 

 

(2,656)

23,093

30,848

25,427

32,074

33,722

Net investment in investment properties

1,157

(99,286)

(8,267)

100,601

(28,300)

(6,000)

Acquisition of subsidiaries, net of cash acquired

26,659

(5,573)

(51,866)

(32,629)

0

0

Other investing activity

13

60

25

220

0

0

Net cash flow from investing activities

 

 

27,828

(104,799)

(60,108)

68,192

(28,300)

(6,000)

Equity dividends paid

0

(15,723)

(23,321)

(29,429)

(30,571)

(31,317)

Debt drawn/(repaid) - inc bonds and ZDP

(1,217)

91,417

13,921

(547)

(39,816)

0

Other financing activity

0

(1,744)

67,101

(3,460)

(1,000)

(1,000)

Net cash flow from financing activity

 

 

(1,217)

73,950

57,701

(33,436)

(71,387)

(32,317)

Net Cash Flow

 

 

23,955

(7,756)

28,441

60,183

(67,613)

(4,595)

Opening cash

0

23,955

16,199

44,640

104,823

37,210

Closing cash

 

 

23,955

16,199

44,640

104,823

37,210

32,616

Balance sheet debt

(126,669)

(217,442)

(371,620)

(374,551)

(335,275)

(335,815)

Unamortised debt costs

(1,875)

(2,618)

(4,843)

(5,752)

(5,212)

(4,672)

Closing net debt

 

 

(104,588)

(203,861)

(331,823)

(275,480)

(303,277)

(307,871)

LTV

25.9%

40.6%

45.0%

38.3%

40.4%

40.5%

Source: Regional REIT, Edison Investment Research

General disclaimer and copyright

This report has been commissioned by Regional REIT and prepared and issued by Edison, in consideration of a fee payable by Regional REIT. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2019 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2019. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd who holds an Australian Financial Services Licence (Number: 427484). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Regional REIT and prepared and issued by Edison, in consideration of a fee payable by Regional REIT. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2019 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2019. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd who holds an Australian Financial Services Licence (Number: 427484). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

More on Regional REIT

View All

Latest from the Real Estate sector

View All Real Estate content

Research: Industrials

Renewi — Commercial progress offsets other areas in FY19

FY19 was a mixed year for Renewi with variable portfolio performances and two particular external challenges faced (at ATM and Derby). Despite this, the company still delivered profitability in line with the prior year. Net debt reduction and operational improvements will be key focus areas for FY20 and beyond and these remain key near-term sentiment drivers in our view. The share price has started to recover over the last couple of months although the rating suggests this has further to go.

Continue Reading

Subscribe to Edison

Get access to the very latest content matched to your personal investment style.

Sign up for free