The disposal of non-core assets from Regional REIT’s portfolio dragged values down in the six months ended 30 June, with some £52.8m wiped off the value of its portfolio.
The regional investor’s portfolio was valued at £647.9m, down from £700.7m at 31 December 2023.
The vast majority of the REIT’s portfolio by valuation is in England (77.5%), followed by Scotland (16.7% ) and Wales (5.8%. By income, offices accounted for 90.9% of gross rental income, followed by retail at 4.3% and industrial at 3%.
A recent £110m equity raise has helped reduced the REIT’s LTV to 42.2%. The equity will be used to pay down a £50m retail bond, with £26.3m used to reduce its bank debt. The remaining capital will be used on “accretive capital expenditure projects”.
Despite the challenging market, Regional REIT said rent collection had remained strong over the period at 98%. Rent roll, however, was 3% lower on a like-for-like basis at £63.5m.
Operating profit before gains and losses on property assets and other investments for the six months ending 30 June 2024 amounted to £19.1m, compared with £20.6m a year earlier.
Stephen Inglis, chief executive at London and Scottish Property Investment Management, asset manager of Regional REIT, said: “The period under review was another challenging period for the commercial real estate sector, with valuations reduced by persistently high interest rates and poor investor sentiment towards UK commercial real estate.
“However, the regional office market appears to be reaching an inflection point, with the recent cut to the base rate providing a helpful development.”
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