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If they sold £150m of offices at NAV that could be used to reduce the debt from £393m to £243m, the assets would also go from £752m to £602mas the assets are sold.

So the new setup would be

Assets Value=£602m

Debt=243m

LTV=40%

There would be a 20% deduction on assets so at a high level the dividend would be reduced to about 4p plus.

Giving a stable position and a 13.5% yield.

The key is to move quickly before office assets deflate further in value and the LTV increases further and you can sell the for £150.

No plan been published at the moment by inglis, if he doesn't agree then he's should make clear his timeline and his option on how his asset initiatives are going to raise rents and reduce LTV.

Further details can be found on pg 4, the dividend looks to be 1.2p going forward.

https://www.regionalreit.com/~/media/Files/R/Regional-Reit-V2/investor-docs/results-and-presentations/rgl-presentation-30-jun-23.pdf

No details on asset refurbishment or sales plan the uncertainty will remain on the share price.

They are happy for it to be an income stock, think they need to have some changes the top.

Thanks johnmw.

That A programme of asset sales "is in progress" is that real or as you say a wolly response?

Would be good if they can specify what they are trying to achieve in terms of sales in the next quarter or H2.

Wish they would have been more proactive before they have now been cornered/pushed.

The 50m bonds not a major issue will knock some profit off the bottom line, as there's £40m plus cash, some of the cash can be used otherwise its a case of paying 8% next year unfortunately will be just before rates start coming down.

Doc83 they have been talking of voids and sales for 18 months+ and not much has happened, sometimes you have to be brave and sell at small discounts.

There's other companies out there who have £££££s and will see value albeit they may try to get a discount.

Better than letting the value drop from near £1 billion to £750million in 2 years, what has that achieved?

Anyway share price back to the bottom of my 38p range so was glad to secure a load under 35p this morning. I'm over committed now but if your undecided still time to get onboard for a potential 10% uplift and future growth depending on Mr Inglisses proactiveness.

The NAV was 97p in Jan 2022 and down to 66p Jan 2023.

If he sold some of the offices at 97p he could have bought them back at 66p.

Mr Ingliss thinks that NAV won't fall so reluctant onto them as he has borrowed cheap at 3.5%, his got to realise its likely to fall further so sell some at the higher price to stabilise the situation, otherwise you have a declining NAV which will increase the LTV further and create a situation.

At 4.8p dividend and a under 35p share price 14% yield there's good money to be had here, bought some more this morning.

Alternatively 180m mcap the current valuation it's looking quite cheap for a takeover, if someone agile wants to make quick money they can pay 35p to 40p and liquidate the assets for 60p at a 10% discount to NAV.

Looking cheap now with a Market Cap of £193million and debt of £393million someone can buy the whole thing for £586 million.

A portfolio generating £69 million rent for £586 million is just under 12% yield. Within that Inglish has 20% void so if he sold that for £150 million that would bring the LTV 32%, wouldn't effect income, and the share price would be significantly higher.

Mr ingliss could pick up the phone to another cash rich REIT/investors and offload some offices or put them to auction.

He needs to do a presentation detailing the dividend approach/expectation, asset sales, asset improvements, Void improvement too high nearly 20%, Bond refinance next year.

He needs to detail a time line as he said previously he was aiming at 40% LTV and there's been little progress.

He really has been holidaying for too long.

If he doesn't want to sell assets at discount to current NAV EG around 66p-discount he could do like EPIC and put the whole thing on sale 60p

I'm surprised this has fallen to the bottom of my expected 38p range in one day.

Value wise a bid would come in at 50p to 60p unless Mr ingliss non actions keep dropping the share price.

There's share price is undervalued but there are a few uncertainties which is causing the weak price.

Don't believe what Edison Reaserch says they are way out on thier estimates, same for Inglis his talked it up and not kept his eye on the ball.

The debt is high, understandably he doesn't want to sell properties as most of it is at 3.5% so he can make money if he could rent out the voids which is seeming difficult.

In a falling office market he should of sold off a chunck 150million of assets and had the cash available as a choice to repay debt or re deploy when prices stabilise later next year.

If we don't hear of asset sales soon the price will keep falling. His got to bite the bullet and as his left it too late accept NAV - upto 5% on a sale as its a soft market.

In summary Mr Inglis to blame his not been managing this closely enough and selling assets, he needs to focus and get a sense of urgency.

It's not clear what the new annual dividend will be.

5.7p? (1.65+1.2+1.65+1.2)

4.8p? (1.2x4)

Or other amount based on asset sales.

Share price will range of 38p to 45p depending on outcomes.

Factor in that these results are upto June, there has been further quarter of decline in the office sector since which isn't on these figures. Looks like he valuer has been generous on the valuation.

If the the LTV is to be reduced from 52% to 40% will need sales in turn reducing the income unless they manage to sell voids.

Factor in a potential further income and dividend cut which is what the market has doing.

Fairly priced not cheap but not expensive.

This is from December 2022, LTV WAS 50% and office values have gone down since, its whether they are priced in now or further declines with the slowdown ahead.

https://www.edisongroup.com/research/covered-dividend-with-a-12-yield/32198/

"The secured debt facilities (£391m) are all well within LTV covenants of 60% and it would require a more than 15% decline in portfolio value for these to be tested."

Not sure where you are getting Office prices rising. See below from UK Commercials report that Offices declines 4.2% in Q2 2023 alone MSCI index, and thier offices actually declined 6.1%.

According to the MSCI Monthly Index, all property capital values fell by 0.4% in Q2 2023, though this hides sector variance. Industrial recorded growth of 1.2% over the quarter followed by Retail growing by 0.3%; Office values remain under pressure and saw capital value declines of -4.1%.

That's just one quarter, RGL need to sell quick, with the impending slowdown, to avoid a breach by the year end.

The share price weakness is due to not much demand for secondary market offices. People want to come to prime offices

Main issues are:

1) Current yields are around 10 to 12% on Secondary assets so the current valuation of £790 million will fall to £650 to £700 million which is at covenant breach. This won't be announced in the upcoming results as they are upto mid year and there have been further declines in value since. LTV was already 50% last December and around 56% by now (September 23)

2) RGL have been to slow to sell off some properties, there's a good amount of void which should have been repurposed/sold off at higher prices rather than hanging on them selling at lower valuation.

3) Energy and other costs especially for empty premises is costing so will reduce the net rental income.

4) There could be a reduction to 5.9p dividend.

5) ESG costs needed for refurbishment, though some accounted for already.

On the positive some demand is returning.

All in all fairly priced good dividend even with a cut, but they need to get thier finger out and sell some properties before the market falls much further to de risk the situation.

Interest rates won't fall before mid to 3rd quarter next year, the bond can be refinanced next year around 8% if the other gearing is not too high.

The reasons for the decline I the SP are that Rusty said in the earnings call that the buyback will be done when the price is right. He also said they are limited to 150k buyback per day so didn't seem too interested. This potentially means that until there's some buyback the price isn't low enough.

His also bieng prudent on doing acquisitions because the sellers are overpricing in the higher interest rate environment and he doesn't want to overpay, this makes sense a bit like the property market. He expects that to change, another signal of a fall in valuation of assets to come.

Overall the dividends look safe, but the share price could fall until there's a buyback to support Rustys statement that the SP is low enough.

Unfortunately bought quite a few today without checking the earnings Q and A.

Ah well 15% dividend is good and we are at a lower price level.