Regional REIT’s results for 2016 (its first full year as a REIT) are out. Its EPRA NAV slipped slightly to 106.9p from 107.8p. Fully diluted EPRA earnings per share were 7.7p (IFRS EPS 4.9p) derived from an operating profit before gains and losses of GBP29.9m and Profit Before Tax of GBP13.4m, with rental income of GBP43.0m and an EPRA costs ratio of 30.4%. The dividend totalled 7.65p.
Gross properties value increased to GBP502.4m (31 Dec 2015: GBP403.7m), up 2.25% like-for-like. This was affected by the additional Stamp Duty and Wing/Rainbow acquisitions costs (2.5pence per share) and by capex yet to be reflected in the portfolio valuation.
Acquisitions of GBP133.6m were completed successfully, with an average net initial yield of 8.6%; disposals GBP44.9m net, of mature and non-core assets, at 6.8%. Capital expenditure of GBP9.1m net.
Gross bank borrowings at the end of the period were GBP220.1m (31 Dec 2015: GBP128.6m). These have been increased to fund acquisitions. The total equates to a net LTV of 40.6%. Borrowings and refinancings in H1’16 reduced the average cost of debt (including hedging) to 3.7% (31 Dec 2015: 4.5%) with the new loans maturing in 2021.
At the end 2016, Regional REIT had a diversified portfolio of 123 properties (31 Dec 2015: 123), 941 units (2015: 712) and 717 tenants (2015: 531). Occupancy (by area) was 83.8% (31 Dec 2015: 83.9%). This was a marked increase from the Q1 2016 occupancy rate of 80.9%, following the then recently completed Wing and Rainbow portfolio acquisitions. The portfolio has been rebalanced further towards offices (63.3% by value) and industrial sites (29.4%) across the UK, with an increased share in England & Wales (73.2%).
After the year end Regional REIT made a conditional ‘off-market’ acquisition of a c. GBP129m office, industrial, retail and leisure portfolio from Conygar (announced on 23 February 2017; expected to close by the end of March).
Stephen Inglis, Group Property Director and Chief Investment Officer of London & Scottish Investments Limited, commented: “It has been a very active year for Regional REIT with significant acquisitions, continuing our strategy of non-core disposals, increasing our geographic spread of properties and growing the number and diversity of our tenants. We continue to implement our successful approach to active asset management with our initiatives achieving increased occupancy. We remain optimistic in respect of our strategy and in the strength of our core regional office and light industrial property markets“.
RGL : Regional REIT NAV slips slightly in 2016