TIDMRGL
RNS Number : 1921K
Regional REIT Limited
31 August 2021
31 August 2021
REGIONAL REIT Limited
("Regional REIT", the "Group" or the "Company")
GBP236m Regional Office Portfolio Acquisition
31 Assets Acquired at a NIY of 7.8%
Regional REIT Limited (LSE: RGL), the UK regional office
specialist, is pleased to announce
that it is has acquired a major portfolio of 31 high quality,
predominately multi-let office assets, (the "Portfolio") from
Squarestone Growth LLP (the "Vendor"), for a consideration price of
GBP236.0m* (the "Acquisition").
The Board's expectation is for the Acquisition to be earnings
accretive, with significant additional value being achieved over
the coming years from the Company's active management initiatives.
The Acquisition will also add further significant scale and
diversification to the Company's portfolio to the benefit of all
shareholders.
The consideration to be paid to the Vendor will be satisfied by
three components: the issuance of 84,230,000 new ordinary shares in
the Company at 98.6 pence per share (being the EPRA Net Tangible
Asset Value per share as at 31 December 2020) equivalent to
GBP83.1m, GBP76.7m of existing cash resources and additional
borrowings of GBP76.2m.
Portfolio Highlights
-- The GBP236.0m* Portfolio comprises: 27 office assets
providing over 1.6m sq. ft. for 192 tenants; 2 industrial units
(120,020 sq. ft.) with 3 tenants; a residential asset with 12
tenants (10,672 sq. ft.); and a Tim Horton's Drive-Thru restaurant
(2,010 sq. ft.) for a single tenant. (See appendix 1 below for full
details of the Portfolio)
-- Regional offices (by value) constitute 93.3% of the
Portfolio; industrial 4.9%; residential 1.1%; retail 0.7%
-- The Portfolio is located entirely outside of the M25, 78.2%
in England; 17.1% in Scotland; and the remaining 4.7% in Wales
-- Net initial yield of 7.8%, and a reversionary yield of 11.0%
-- Contracted rent roll amounts to GBP21.9m per annum
-- EPRA occupancy (by ERV) of 78.4%
-- The highest valued single asset is Capitol Park, Leeds at GBP22.2m
-- The Portfolio's weighted average unexpired lease term to
expiry is 4.0 years; WAULT to first break is 2.6 years; office
WAULT is 3.9 years and WAULT to first break is 2.4 years
*One property Quantum Court valued at GBP5.4m is awaiting
consent to transfer and is expected to complete at the end of
September 2021.
Strategic Rationale for the Acquisition
-- Builds on Regional REIT's strategy of focusing its investment
activity on properties in the regional office sector
-- The Portfolio is highly complementary to the existing asset
base of the Company and aligns well with the expertise and
experience of the asset manager
o The Company's portfolio was valued at GBP732.4m as at 31
December 2020, of which offices amounted to GBP611.2m (83.5%)
-- Increases diversification of the Group's portfolio by geography, tenant and income streams
-- Benefits include: portfolio scale and increased diversification of risk
-- Extensive active asset management opportunities have been
identified to unlock the reversionary yield potential from the
Portfolio
-- The small number of non-regional office acquisitions that
form part of the Portfolio will then be earmarked for the ongoing
strategic disposals programme to recycle capital into compelling
regional office opportunities
Financing Summary
-- Regional REIT will issue to the Vendor 84,230,000 new
ordinary shares ("Consideration Shares"), at 98.6 pence per share
(being the Group's EPRA NTA per share as at 31 December 2020)
equivalent to GBP83.1m, with the balance of the consideration price
settled from existing cash resources of GBP76.7m and additional
borrowings of GBP76.2m
-- The Consideration Shares will rank pari passu with existing ordinary shares in issue
-- Following admission, the Consideration Shares will represent
16.3% of the ordinary shares in issue and will rank for the
Company's second quarter dividend of 2021, declared on the 26
August 2021
-- 74,603,961 Consideration Shares will be subject to a lock-in
of nine months for the first one-third, 15 months for the
second-third and 21 months for final-third, commencing on the date
of completion of the Acquisition
-- Application has been made for the admission of the new
ordinary shares to the Official List of the UK Financial Conduct
Authority (the "FCA") and to trading on the premium segment of the
London Stock Exchange's main market for listed securities. It is
expected that admission and commencement of dealings in the new
ordinary shares will become effective at 8.00 a.m. on 1 September
2021
-- On completion of the Acquisition, the Group estimates (based
on its own Consolidated Balance Sheet as at 31 December 2020) that
it would have a net LTV-ratio of c. 43.8% (31 December 2020:
40.8%); and weighted average cost of debt of 3.3% (31 December
2020: 3.3%)
Stephen Inglis, CEO of London & Scottish Property Investment
Management, the Asset Manager of Regional REIT commented:
"This large and high-quality acquisition encompasses all the
criteria which our experienced Asset Management platform seeks:
income growth opportunities coupled with asset management potential
for long-term accretive shareholder value.
Our Asset Management platform comprises of 62 professionals
across a number of disciplines from asset and property management,
research, legal, corporate finance to credit control located in
Glasgow, Leeds, Manchester and London. They are looking forward to
integrating the properties into the current portfolio.
This is a major milestone for the Company, the scale and
diversity added to the Company's portfolio through this transaction
will be accretive for all shareholders. The sourcing of this major
portfolio acquisition is a testament to the strength of our network
and central position in the regional office market and further
builds upon our strategic objective of being the regional office
space provider of choice.
We look forward to welcoming and working with the new
shareholders."
Marius Barnett, representative for the Squarestone LLP members
commented:
"We are excited to complete this transaction and to partner with
Regional REIT in this next chapter. This has been a complex and
detailed transaction given the number and geographical spread of
the properties.
Over the period of the transaction we have established a good
working relationship with the Regional REIT team and look forward
to a strong long term alliance going forward."
Call for Sell Side Analysts
There will be a call for sell side analysts at 3pm today to
discuss the transaction and answer any questions. Please contact
regional@buchanan.uk.com for details.
Forthcoming Events
16 September 2021 2021 Interim Results Announcement
11 November 2021 Q3 Trading Update
Note : All dates are provisional and subject to change
Appendix 1 - The Portfolio
Floor Area (sq.
Property Town Sector ft.)
133 Finnieston Street Glasgow Office 60,213
-------------- ------------- ----------------
5 Temple Square Liverpool Office 40,738
-------------- ------------- ----------------
550 Bristol Business Park Bristol Office 16,794
-------------- ------------- ----------------
Admiral House Sunderland Office 37,728
-------------- ------------- ----------------
Aspect House, Bennerley Road Nottingham Office 64,016
-------------- ------------- ----------------
Buchanan Gate Glasgow Office 39,618
-------------- ------------- ----------------
Capitol Park, Leeds Office 98,340
-------------- ------------- ----------------
Central Park, New Lane Leeds Office 57,889
-------------- ------------- ----------------
Centre Park, Firecrest Court Warrington Office 36,457
-------------- ------------- ----------------
Cromwell Place Basingstoke Office 31,633
-------------- ------------- ----------------
Dundas House Rosyth Office 69,373
-------------- ------------- ----------------
Eagle Court, Coventry Road Birmingham Office 132,979
-------------- ------------- ----------------
Endeavor House Sunderland Office 112,575
-------------- ------------- ----------------
Hudson House Derby Office 31,858
-------------- ------------- ----------------
Lightyear, Glasgow Airport Glasgow Office 77,688
-------------- ------------- ----------------
Manchester Green Manchester Office 105,983
-------------- ------------- ----------------
Mere Grange Helens Office 45,113
-------------- ------------- ----------------
Mountbatten House Basingstoke Office 160,475
-------------- ------------- ----------------
Newburn & Gateway House Newcastle Office 54,584
-------------- ------------- ----------------
Newport Retail Park, Seven Stiles
Avenue Newport Industrial 55,771
-------------- ------------- ----------------
Origin Bracknell Office 33,105
-------------- ------------- ----------------
Origin Bracknell Residential 10,672
-------------- ------------- ----------------
Quantum Court* Edinburgh Office 38,328
-------------- ------------- ----------------
Southgate Park Peterborough Office 81,582
-------------- ------------- ----------------
St James Business Centre Paisley Office 22,026
-------------- ------------- ----------------
St James Business Park Paisley Office 30,605
-------------- ------------- ----------------
The Lighthouse, Salford Quays Manchester Office 64,275
-------------- ------------- ----------------
The Royals, Altrincham Road Manchester Office 52,841
-------------- ------------- ----------------
Tim Hortons, St James Business
Park Paisley Retail 2,010
-------------- ------------- ----------------
Trinity Court, 21-27 Newport Road Cardiff Office 37,790
-------------- ------------- ----------------
Victoria Park Leeds Industrial 64,249
-------------- ------------- ----------------
*One property Quantum Court valued at GBP5.4m is awaiting
consent to transfer and is expected to complete at the end of
September 2021.
- ENDS -
Enquiries:
Regional REIT Limited
Toscafund Asset Management Tel: +44 (0) 20 7845
6100
Investment Manager to the Group
Adam Dickinson, Investor Relations, Regional
REIT Limited
London & Scottish Property Investment Management Tel: +44 (0) 141
248 4155
Asset Manager to the Group
Stephen Inglis
Buchanan Communications Tel: +44 (0) 20 7466
5000
Financial PR regional@buchanan.uk.com
Charles Ryland /Henry Wilson / George Beale
About Regional REIT
Regional REIT Limited ("Regional REIT" or the "Company") and its
subsidiaries (the "Group") is a United Kingdom ("UK") based real
estate investment trust that launched in November 2015. It is
managed by London & Scottish Property Investment Management
Limited, the Asset Manager, and Toscafund Asset Management LLP, the
Investment Manager.
Regional REIT's commercial property portfolio is comprised
wholly of income producing UK assets and comprises, predominantly
of offices located in the regional centres outside of the M25
motorway. The portfolio is geographically diversified, with 153
properties, 874 occupiers as at 31 March 2021, with a valuation of
GBP734.7m.
Regional REIT pursues its investment objective by investing in,
actively managing and disposing of regional core and core plus
property assets. It aims to deliver an attractive total return to
its Shareholders, targeting greater than 10% per annum, with a
strong focus on income supported by additional capital growth
prospects.
The Company's shares were admitted to the Official List of the
UK's Financial Conduct Authority and to trading on the London Stock
Exchange on 6 November 2015. For more information, please visit the
Group's website at www.regionalreit.com .
Cautionary Statement
This document has been prepared solely to provide additional
information to Shareholders to assess the Group's performance in
relation to its operations and growth potential. The document
should not be relied upon by any other party or for any other
reason. Any forward looking statements made in this document are
done so by the Directors in good faith based on the information
available to them up to the time of their approval of this
document. However, such statements should be treated with caution
due to the inherent uncertainties, including both economic and
business risk factors, underlying any such forward-looking
information.
This announcement includes inside information as defined in
Article 7 of the Market Abuse Regulation No. 596/2014 and is being
released on behalf of Regional REIT Limited by Adam Dickinson,
Investor Relations.
ESMA Legal Entity Identifier ("LEI"): 549300D8G4NKLRIKBX73
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END
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