Regional REIT: Boost to bottom line as it looks beyond emergency capital raise
Embattled real estate investment trust Regional REIT was given a boost from exchanges on six big leases in the three months to June, helping it achieve a double digit net rental uplift since the start of the year.
The London-listed firm, which in June issued a £110m capital raise to stave off liquidation, saw its rental income grow by 11 per cent against December 2023 thanks to exchanges on the six spaces that totalled nearly 70,000 sq ft and represent £0.7m in annual income.
The real estate investment trust, which owns corporate and office space outside of London, also offloaded three of its properties – and a fourth part sale – in the quarter to June 30, totalling £6.9m; a net yield of 9.6 per cent.
The results are a further sign that the trust’s fundamentals remain steady, even in the immediate aftermath of its last ditch fundraising to pay off £50m it owed in bonds that were set to mature in August.
The capital raise took place at a 50 per cent discount to the firm’s closing share price of 20.2p, triggering a collapse in the trust’s market capitalisation from which it is yet to recover.
Regional REIT, which has properties in Leeds, Birmingham and Welwyn Garden City, confirmed in this latest update that it had paid off its retail bond, and reduced its bank facilities – the equivalent of a corporate overdraft – by £26.3m, leaving it nearly £30m for additional capital expenditure.
Stephen Inglis, the chief executive of London & Scottish Property Investment Management and who manages the investment trust, said: “During the quarter we were pleased to achieve further progress in the Group’s letting activity and disposal programme, with £0.7m of additional notable rental income from new leases and £6.9 million generated from recent disposals.
“As announced on 18 July 2024, the successful capital raise of £110.5m ensures the repayment of the retail bond, facilitate the further reduction of the LTV to 40.6%, and will provide for accretive capital expenditure on assets for the long term.”