Last close As at 05/08/2026
GBP0.98
▲ 2.00 (2.08%)
Market capitalisation
GBP159m
Research: Real Estate
Regional REIT (RGL) has issued a Q324 trading update and has declared a quarterly DPS of 2.2p, in line with previous guidance. The retention rate on lease renewals remains high, partly reflecting the benefits of portfolio capex, also reflected in a further improvement in the EPC rating. A more general uptick in leasing is yet to be seen, with budget-related torpor also acting as a drag on the completion of disposals. There is no change to our forecasts.
Regional REIT |
Preparing the ground |
Q324 trading update |
Real estate |
13 November 2024 |
Share price performance
Business description
Analyst
Regional REIT is a research client of Edison Investment Research Limited |
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Regional REIT (RGL) has issued a Q324 trading update and has declared a quarterly DPS of 2.2p, in line with previous guidance. The retention rate on lease renewals remains high, partly reflecting the benefits of portfolio capex, also reflected in a further improvement in the EPC rating. A more general uptick in leasing is yet to be seen, with budget-related torpor also acting as a drag on the completion of disposals. There is no change to our forecasts.
Year end |
Net rental income (£m) |
EPRA earnings* (£m) |
EPRA EPS* |
NAV**/ |
DPS |
P/NAV |
Yield |
12/23*** |
53.7 |
27.0 |
52.3 |
564 |
52.5 |
0.22 |
42.0 |
12/24e |
45.9 |
21.3 |
21.1 |
222 |
18.6 |
0.56 |
14.9 |
12/25e |
45.1 |
23.6 |
14.6 |
224 |
13.0 |
0.56 |
10.4 |
12/26e |
47.2 |
24.5 |
15.1 |
226 |
13.6 |
0.55 |
10.9 |
Note: *EPRA earnings exclude revaluation movements, gains/losses on disposal and other non-recurring items. EPRA EPS is fully diluted. **NAV is EPRA net tangible assets per share. ***FY23 per share numbers reflect the August 2024 share consolidation (one new share for 10 old shares) but are unadjusted for the new shares issued.
By far the most significant event in Q324 was the successful close of RGL’s £110m equity fund-raise. The proceeds funded the repayment at maturity of the £50m retail bond and will reduce secured bank debt by at least £26m. The balance of the proceeds is available to support investment in selected property assets, both as part of its rolling refurbishment programme and to capture a greater share of the upside from disposals for alternative use. Refurbishment enhances the quality, occupier appeal and income potential of core rental assets, as evidenced by the significant advance in portfolio EPC ratings and lettings well above estimated rental value (ERV). For non-core, alternative use assets, where it is profitable to do so, RGL intends to invest (in planning, architect and other professional fees) to bring forward planning consent prior to sale, creating additional value and realised gains. Eight capex projects, with a total investment of £15m, were commenced in Q3, while the recent completion of one £2.7m refurbishment project has seen the previously vacant asset let on new 10-year leases, generating an aggregate £0.5m pa in rental income.
Leasing has remained active but is yet to show a material uplift. Year to date, RGL has exchanged on 55 new leases (11 in Q3), adding £2.6m pa (£0.5m in Q3) of rents but, perhaps more importantly, at a 9.3% uplift to ERV (H1: 8.4%), an indication that RGL can offer the quality of property that tenants are demanding. Also encouraging is the further strengthening of the retention rate, to 77.7% in Q3 (H1: 71.4%). However, with c £8m of H224 rents ‘at risk’ from lease expiries or break clauses, a pick-up in new letting is needed to maintain annualised rental income, which was £62.1m at the end of Q3 (H1: £63.5m).
Total asset disposals in Q3 amounted to £1.75m (before costs), on average 2.9% above the H1 valuation. We expect this to accelerate in the coming months and RGL’s future asset disposal programme comprises 48 assets valued at an aggregate c £72.7m.
The portfolio is not revalued on a quarterly basis but, adjusting the H1 position for capex and disposals, it was little changed at £649m and the loan-to-value ratio was 41.4%.
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Research: TMT
Building on from its agreement to support local payment methods for Amazon Prime Video in South-East Asia, Boku has signed a separate contract with Amazon Japan to support e-commerce sales. The service has gone live and, while we expect minimal impact in FY24, we expect the contract to support our growth forecasts for FY25 and FY26. The contract represents a further strengthening of the relationship with Amazon and highlights Boku’s ability to support a wide range of transaction types over and above digital content.