Regional Reit Regulatory News (RGL)

9 February 2016

Regional REIT Limited

Acquisition of £80 million of commercial property assets and portfolio update

Regional REIT Limited (LSE: RGL) ("Regional REIT" or the "Company"), the recently listed regional commercial property company, today announces that it has exchanged contracts to buy the Rainbow Portfolio for £80m from Northwood Investors.

The portfolio produces a net yield of 8.2% at a capital rate of only £70 per sq.ft., well below replacement cost.

The portfolio comprises 12 assets, five offices and seven industrial sites totalling 1.15m sq.ft. and geographically spread throughout the UK in major regional urban areas including Bristol, Manchester, Cardiff, Sheffield and the West Midlands. Tenants include Clerical Medical, Equitable Life, Invensys, Vanguard Logistics, Schenker, Veolia and FMC Technologies.

Approximately 45% of the income is derived from the industrial assets with offices accounting for the remaining 55%. 86% of the income is from assets in England (North East 17%, South West 14%, South East 49%), 8% in Scotland and 6% in Wales.

This acquisition further bolsters Regional REIT's assets and has good rental income, will be earnings enhancing and offers strong capital growth prospects through the implementation of the Company's intensive asset management initiatives.

The Company also announces a number of sales:

· Churchill Plaza, Basingstoke sold for £12m, the property having been acquired in August 2014 for £7.5m. The sale price represents a 52% increase on the June 2015 value and a 10% increase on the December 2015 valuation.

· Five retail assets sold for a total consideration of £4.8m, marginally ahead of the December 2015 valuation.

· An office building in Kirkcaldy has also been sold for £0.9m, 50% ahead of the June 2015 valuation and in line with the December 2015 valuation, and an office building in Glasgow sold just before the December 2015 valuation for £1.5m, in line with valuation.

These sales are consistent with the Company's policy of selling where real value has been created and reducing Regional REIT's risk, specifically to development and retail properties where good value can be achieved.

Following completion of the transactions announced today the investment portfolio will amount to approximately £511m (31 December 2015: £405.4m), and the Company expects its net loan-to-value ratio to increase to approximately 41%.

Commenting, Stephen Inglis, Chief Investment Officer and Property Director of the Asset Manager, said:

"The acquisition of the Rainbow portfolio is another step in the evolution of Regional REIT taking assets to over £500m. Since listing in November 2015 we have acquired £120.5m of assets, offering a good balance of income and asset management opportunities. We remain acquisitive as we continue to re-balance the portfolio and re-invest proceeds from the sale of non-core holdings in quality income and capital enhancing assets to create further value for our investors."

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About Regional REIT

Regional REIT Limited (LSE: RGL) is a London Stock Exchange Main Market listed specialist real estate investment company focused on office and industrial property interests in the principal regional locations of the United Kingdom outside of the Greater London area.

Regional REIT is managed by London & Scottish Investments and Toscafund Asset Management, and was formed by the merger of two existing funds created by the managers to achieve a differentiated play on recovery in UK regional property to deliver an attractive total return to shareholders, with a strong focus on income.

The Company's investment portfolio, as at 31 December 2015, is spread across more than 130 regional properties consisting of around 720 individual units, with over 500 tenants. As at 31 December 2015, the investment portfolio had a value of £405.4m and an overall income yield of 8.3%. The weighted average unexpired lease term is just under six years.

The Company's shares were admitted to the Main Market of the London Stock Exchange on 6 November 2015. For more information, please visit www.regionalreit.com