Regional REIT (LSE: RGL)

Currency in GBP

Last close As at 06/02/2023

GBP0.62

2.50 (4.22%)

Market capitalisation

GBP305m

Regional REIT (RGL) 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.

The commercial property market is cyclical, historically exhibiting substantial swings in capital values through cycles. Income returns have been significantly more stable. Across all main sectors, valuations are showing significant negative adjustment to higher bond yields and economic uncertainty, in many cases despite continuing rent growth. Unlike previous downturns, there are few areas of over-supply and gearing is generally lower.

Sector

Real Estate

Equity Analyst

Martyn King

Martyn King

Director, Financials

Key Management

  • Adam Dickinson

    Head of IR

  • Daniel Taylor

    Non Executive Director

  • Kevin McGrath

    Chairman

  • Stephen Inglis

    Non Executive Director

  • Tim Bee

    Non Executive Director

  • William D. Eason

    Non Executive Director

Balance Sheet

Forecast net debt (£m)

395.9

Forecast gearing ratio (%)

84

Share Price Performance

Price Performance
% 1M 3M 12M
Actual 4.6 (7.1) (31.4)
Relative (1.0) (15.6) (32.1)
52 week high/low 90.1p/56.5p

Financials

RGL’s Q422 DPS, along with a trading update, is scheduled for 23 February, ahead of full year results in March. Q322 DPS declared of 1.65p is in line with RGL’s 6.6p target for the year (+3%), supported by continuing operational progress and strong rent collection, despite a deteriorating economic environment. Year-to-date new lettings at end-Q322 were £3.8m, above the 2019 pre-pandemic level and in December RGL announced the significant letting of a previously vacant office property on a 15-year lease (with 10-year break), adding £0.8m pa in rent. End-Q322 rent roll was £72.2m (H122: £72.0m) and EPRA occupancy increased to 84.6% vs 83.8% at June. With an ERV of £93.3m, income potential remains significant, primarily from further letting vacant space. With all debt fixed/hedged for almost five years, RGL’s interest costs are unaffected by rising interest rates.

Y/E Dec Revenue (£m) EBITDA (£m) PBT (£m) EPS (fd) (p) P/E (x) P/CF (x)
2020A 53.3 42.0 (31.2) 6.5 9.5 5.5
2021A 55.8 45.2 28.8 6.6 9.3 5.0
2022E 62.3 50.7 0.7 6.5 9.5 6.0
2023E 64.3 52.0 34.2 6.7 9.2 6.1

Thematics

Consumer

IPO apocalypse

TMT

ESG, moving beyond the box tick

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