Regional Reit Regulatory News (RGL)

6 January 2015

Regional REIT Limited

("Regional REIT" or the "Company")

Property asset management update

Regional REIT (LSE: RGL), the recently listed regional commercial property company, today announces it has completed the acquisition of Rosalind House in Basingstoke at price of £3 million.

The office building, which encompasses 26,448 sq. ft. and is let until 2020, provides a net annual income of £396,000, equating to an initial yield of 12.48%.

This acquisition follows on from the announcement made on December 30th that Regional REIT had exchanged contracts to purchase five regional assets from a retained client of La Salle Investment Management for a total consideration of £37.5 million in an off-market deal.

That portfolio, consisting of four multi-let office buildings in Basingstoke, Leeds, Leicester and Manchester and an industrial business park in Beverley, totals c.703,000 sq. ft., providing a net income of £3.38 million per annum. This equates to a yield of 8.25%, and is to be funded from the Company's existing resources. Completion will take place before the end of January 2016. 

The portfolio offers excellent potential upside through intensive asset management including refurbishment and re-letting of vacant accommodation, letting already refurbished space and potential development upside for residential/hotel/student residential at Leeds and Leicester and mixed use industrial or trade sales at Beverley, subject to planning.

These acquisitions are in line with the investment policy and are earnings enhancing from day one.

Updates on other parts of the portfolio

In other deals, Regional REIT continues to demonstrate its focus on its existing portfolio and has completed several active asset management projects in recent weeks, generating additional income through new lettings and maintaining and improving income through lease renewals and re-gears.

Glasgow

At Tay House, the REIT's large Grade A office building in Glasgow, the Company has completed a deal with Barclays Bank plc, the major tenant of the building, occupying 78,044 sq. ft., to provide guaranteed income until October 2021.

In addition, refurbishment works have commenced on the first and second floors extending to 48,533 sq. ft. The Company is in advanced discussions with an occupier for the entire second floor (30,000 sq. ft.) and expects to be in a position to announce this deal shortly.

Leeds

At Chancellor Court, The Calls in Leeds, Regional REIT has negotiated a five-year extension with current tenants St James Place Wealth Management Limited. The lease consists of 17,896 sq. ft. of office space over two floors, providing a rent of £268,440 per annum.

Bristol

Regional REIT has also completed an agreement to let the ground and second floors of Building A at St James Court, Bristol. The deal will see South West Ambulance Service Trust (NHS) occupying 20,071 sq. ft. for a term of 15 years at £301,065 per annum.

The Company is also in advanced negotiations on three quarters of the 17,641 sq. ft. Building B.

This accommodation only ceased to be income-producing when vacated by EE on 24 December 2015 and demonstrates the active asset management and strength of the Bristol market.

Bath

Regional REIT has agreed with the BBC the surrender of the lease of St James Court, Bath, for the sum of £1.1 million, and has completed refurbishment and partial remodel of the ground and first floors. Agents have been appointed to find new tenants and a rental income of around £20 per sq. ft. is expected for the building. At the same time, the Company announces that it has completed the extension of the letting of the 2nd floor, extending occupation from 2017 to 2022 and underlining the strength of the Bath office market and appeal of the building.

Nottingham

In Sherwood Park, Nottingham, Regional REIT has agreed a new 10-year lease with E.ON UK plc on 2 Newstead Court, comprising 99,142 sq. ft., at a rent of £946,425 per annum. E.ON has occupied the property since 2004 and has also recently expanded into the adjacent Regional REIT asset at 1 Newstead Court, confirming their commitment to the properties.

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

"We have had a very active start to our life as a listed entity, and are pleased we have been able to execute many of the opportunities identified at the time of the listing.

"The £40.5m of acquisitions announced in the past week demonstrates our ability to source and deliver quality income producing investments with good upside potential. Along with the asset management activity announced today, this shows our focus and commitment in actively managing the portfolio to deliver sustainable income and strong capital returns for our investors."

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