REG - Regional REIT Ltd - 2024 Full Year Results
25/03/2025 07:00
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RNS Number : 9581B Regional REIT Limited 25 March 2025
25 March 2025
Regional REIT Limited
("Regional REIT", the "Group" or the "Company")
2024 Full Year Results
Strong operational delivery and transformed balance sheet provide pathway to
recovery
Regional REIT (LSE: RGL), the regional office specialist, today announces its
full year results for the 12 months to 31 December 2024.
Stephen Inglis, Head of ESR Europe LSPIM Ltd, the Asset Manager, said:
"While 2024 was another challenging year for both the property market and the
regional office sector in particular, Regional REIT continued to deliver a
strong operational performance, and the successful completion of the £110.5m
equity raise has transformed the Company's balance sheet. With this increased
flexibility, Regional REIT is well placed to take advantage of the significant
opportunities for value creation within the portfolio. We now have the capital
to refurbish assets to drive rental income growth while simultaneously
pursuing accretive initiatives, such as securing planning consents ahead of
sales, and this has the potential to deliver good shareholder value over the
medium term.
"We fully recognise that we remain at the start of the pathway to recovery and
the company remains laser-focused on continuing to further reduce its LTV.
There is a lot of work to do, and this will remain a priority through 2025,
with £18.6m of disposals already in legal due diligence.
"It is clear that we are starting to see an improvement in sentiment in the UK
office market, albeit there will be a lag before we see this reflected in the
Company's financial performance. There continues to be occupational headwinds,
however the diversified nature of Regional REIT's tenant base combined with
the high-quality nature of its occupiers and its competitive rents
significantly mitigates any risk. With supportive fundamentals, extensive
scope for value creation within the portfolio, and increased balance sheet
flexibility, Regional REIT can look to the future with optimism."
Diversified portfolio with slowing valuation decline in H2
· Portfolio valuation £622.5m (2023: £700.7m), down 8.2% on a
like-for-like basis, with a decrease of 3.1% in H2
· EPRA NTA £340.7m (2023: £290.8m)
Resilient operational performance underpinning fully covered
· EPRA EPS 19.2pps (2023: restated 33.1pps) post share issuance and 1
for 10 share consolidation
· Dividend declared of 7.8p* (2023: 5.25p) fully covered
*Q1 '24 dividend 1.2p, post the capital raise and subsequent share
consolidation the Company declared Q2-Q4 dividends of 6.6p
Transformed balance sheet unlocks opportunities to create value across
portfolio
· Gross borrowings reduced to £316.7m (2023: £420.8m); cash and
cash equivalents £56.7m (2023: £34.5m)
· Net LTV 41.8% (2023: 55.1%) following successful £110.5m capital
raise
· Continued momentum in disposals programme; total disposals £28.6m
(net of costs) across 18 assets
· c.£107m of sites identified for sale, of which circa £18.6m either
contracted, under offer, or in negotiation
New lettings 13.5% ahead of ERV supported by targeted Capex programme for
value enhancing asset management
· EPRA occupancy remains robust at 78% (2023: 80%)
· Rent collection remains high at 98.6% (2023: 98.9%); 61 new lettings
during the period totalling £3.2m rent roll, with lettings achieved 13.5%
above 2023 ERV Gross annualised rent roll £60.7m (2023: £67.8m)
· A further 14 notable new lettings and renewals/regears achieved post
period end for 114,888 sq.ft. amounting to £1.6m
Progressing our sustainability strategy to improve the quality of the
portfolio
· c.82.7% of the portfolio EPC C or better (2023: 73.7%)
Portfolio strategy update
Following the successful equity raise completed in the period, the Company
announced that £28.4m of the proceeds would be used to fund accretive capital
expenditure projects, including securing planning consents to reposition
assets ahead of sales. Significant progress has already been made in
identifying priority sites and preparing the pipeline.
Over the next four years, c.20 sites have been identified where planning
applications will be submitted to change the use to alternatives such as
student accommodation, residential or hotel use ahead of a sale, to maximise
value for shareholders. It is anticipated that this programme will deliver
good shareholder value over the medium term. This is in addition to the 43
sites marked for nearer-term disposal.
Along with £371.2m core assets that are well positioned to deliver income on
an ongoing basis, there are a further £126.5m of assets strategically located
in areas of high office demand where capex is required to bring the sites up
to a grade A or B standard.
Currently, there are 7 capital projects underway for £5.4m, 11 projects
scheduled to commence on-site works by the end of H1 '25 for £7.9m and 10
projects that have been identified for £8.9m. This amounts to a total
investment of £22.2m.
Outlook
With the average number of days spent in the office across the portfolio now
up to four days a week, together with a lack of high quality and sustainable
regional office space and no real new supply coming on stream, we believe
Regional REIT is well positioned to deliver future rental growth. However, we
anticipate that the business will not start seeing the benefits of this
increased momentum until 2026.
Following the capital raise in 2024, Regional REIT's transformed balance sheet
allows the company to advance its capex programme and pursue additional
initiatives over the next 12 months. These initiatives include securing higher
value planning consents to drive value. Additionally, proceeds from planned
portfolio sales will be used to further reduce the Company's LTV.
- ENDS -
Enquiries:
Regional REIT Limited
Press enquiries through FTI Consulting
ESR Europe Private Markets Limited Tel: +44 (0) 203 831 9776
Investment Adviser to the Group
Adam Dickinson, Investor Relations, Regional REIT Limited
ESR Europe LSPIM Limited Tel: +44 (0) 141 248 4155
Asset Manager to the Group
Stephen Inglis
Shore Capital Tel: +44 (0) 20 7408 4050
Joint Broker and Financial Adviser
Gillian Martin, Daphne Zhang (Corporate Advisory)
Ben Canning / Henry Willcocks (Corporate Broking)
Peel Hunt Tel: +44 (0)20 7418 8900
Joint Broker and Financial Adviser
Capel Irwin, Henry Nicholls (Corporate Advisory)
FTI Consulting Tel: +44 (0)20 3727 1000
Financial Communications RegionalREIT@fticonsulting.com (mailto:RegionalREIT@fticonsulting.com)
Dido Laurimore, Giles Barrie
About Regional REIT
Regional REIT Limited ("Regional REIT" or the "Company") and its
subsidiaries (the "Group") is a United Kingdom ("UK") based real estate
investment trust that launched in November 2015. It is managed by ESR Europe
LSPIM Limited, the Asset Manager, and ESR Europe Private Markets Limited, the
Investment Adviser.
Regional REIT's commercial property portfolio is comprised wholly of income
producing UK assets, predominantly offices located in the regional centres
outside of the M25 motorway. The portfolio is geographically diversified, with
126 properties, 1,271 units and 780 tenants as at 31 December 2024, with a
valuation of c.£622.5m.
Regional REIT pursues its investment objective by investing in, actively
managing and disposing of regional Core and Core Plus Property assets. It aims
to deliver an attractive total return to its Shareholders, targeting greater
than 10% per annum, with a strong focus on income supported by additional
capital growth prospects.
The Company's shares were admitted to the Official List of
the UK's Financial Conduct Authority and to trading on the London Stock
Exchange on 6 November 2015. For more information, please visit the Group's
website at www.regionalreit.com (http://www.regionalreit.com) .
LEI: 549300D8G4NKLRIKBX73
FINANCIAL KEY POINTS
Year Ended 31 December 2024
Income focused - opportunistic buying and strategic selling, coupled with
intensive asset management, continues to secure long-term income.
Portfolio Valuation £622.5m (2023: £700.7m)
IFRS NAV per Share* 216.9p (2023 restated: 376.2p)
EPRA** NTA per Share* 210.2p (2023 restated: 357.4p)
Dividend per share* 7.8p (2023: 5.25p)
Net Loan to Value Ratio*** 41.8% (2023: 55.1%)
Weighted Average Cost of Debt*** 3.4% (2023: 3.5%)
Weighted Average Debt Duration*** 2.9 yrs (2023: 3.5 yrs)
* During the year the Company offered 15 new ordinary shares for every 7
existing shares. This resulted in an increase of 1,105,149,821 Ordinary Shares
being issued. Subsequently there was a 10 for 1 split with the resulting
Ordinary shares in issue being 162,088,483. See note 28 for details of the
restatement.
** The European Public Real Estate Association ("EPRA"). The EPRA's mission is
to promote, develop and represent the European public real estate sector. As
an EPRA member, we fully support the EPRA Best Practices Recommendations.
Specific EPRA metrics can be found in the Company's financial and operational
highlights, with further disclosures and supporting calculations provided in
the full Annual Report.
*** Alternative Performance Measures. Details are provided in the full Annual
Report.
Operational KEY POINTS
Year Ended 31 December 2024
Income focused with intensive asset management.
Properties 126
Units 1,271
Tenants 780
Rent Roll £60.7m
Portfolio by region and sector (by value)
England & Wales 83.4%
Office 90.7%
Property disposal proceeds (net of costs) £28.6m
Number of properties 18
EPRA Occupancy by ERV* 77.5%
WAULT to expiry 4.6 yrs
WAULT to first break by ERV* 2.9 yrs
* Alternative Performance Measures. Details are provided in the full Annual
Report.
PERFORMANCE KEY POINTS
Year ended 31 December 2024
A key focus on delivering high dividend distributions to shareholders.
Dividends declared per Share Pence per share
2024 7.80
2023 5.25
2022 6.60
2021 6.50
2020 6.40
2019 8.25
2018 8.05
2017 7.85
2016 7.65
2015 1.00
Chairman's Statement
"Letting demand for our portfolio remained robust, with 2024 lettings having
exceeded the prior year's estimated rental values by a significant 13.5%."
David Hunter, Chairman
As I begin my first months in this role, I, together with the rest of the
Board fully acknowledge the unprecedented challenges our Company and
shareholders have faced over recent years. However, the £110.5 million
capital raise in July 2024 enabled the Company to fully repay the £50 million
Retail Bond in August, reduce overall bank borrowings and focus on accretive
capital expenditure projects.
Overview
While it was another difficult year for the property market and the regional
office sector, our active management strategy did enable the Company to
outperform the MSCI Rest of UK Offices Index which declined by 8.9% over the
year with our portfolio value falling by 8.2% on a like-for-like basis after
adjustments for acquisitions, disposals, and capital expenditure. The bulk of
that fall was in the first half of the year with some signs of stabilisation
in values in the second half.
Throughout the year, the Board remained committed to delivering consistent
quarterly dividend distributions to our shareholders, ensuring full compliance
with the HMRC REIT guidelines and maintaining a covered annual dividend. Our
strong operational performance - driven by effective asset management and
robust rent collection - further supported these uninterrupted dividend
payments. The Board recognises the importance of delivering dividend growth on
a fully covered basis going forward, and that will remain an overriding
priority.
Letting demand for our portfolio remained robust despite overall occupancy
falling on a like for like basis, with 2024 lettings having exceeded the prior
year's estimated rental values by a significant 13.5%. This encouraging
element of performance reflects the appeal of our properties and ability to
cater for all tenants' requirements from a single desk to a stand-alone
headquarter office. We do firmly believe that our portfolio is well positioned
to benefit from the continued return-to-office momentum across the United
Kingdom. This will be enhanced in the medium term by a more favourable
macroeconomic environment and easing UK monetary policy, supporting the
quarterly dividends and adding shareholder value.
There is a lot of work to do and the Board remains committed to reducing LTV
while progressing opportunities across the portfolio to generate sustainable,
long-term value for shareholders.
Financial Resources
The Company's EPRA NTA increased to £340.7 million (IFRS NAV: £351.6
million) as at 31 December 2024, representing an increase of £49.9 million
from £290.8 million (IFRS NAV: £306.1 million) as at 31 December 2023. This
increase was driven by the £110.5 million equity capital raise, although it
was partially offset by a challenging commercial real estate market that led
to a decline in the property portfolio revaluation. A strong cash balance of
£56.7 million was retained as of 31 December 2024 (2023: £34.5 million), of
which £55.9 million was unrestricted (2023: £30.2 million).
The Company's debt position, which is comprised entirely of fixed and hedged
interest rate debt, helped the Company mitigate rate volatility. With the
repayment of the 4.5% £50 million Retail Bond, the weighted average cost of
debt was reduced to 3.4% at the end of 2024 (2023: 3.5%), and the Net
Loan-to-Value (LTV) decreased to 41.8% as of 31 December 2024, compared with
55.1% as at 31 December 2023.
The Company continues to execute its controlled disposal programme, consisting
of 18 assets and three-part sales of assets, amounting to circa £28 million,
net of costs.
Sustainability
Once again, I am pleased to report the significant progress achieved by the
ESG Working Party in 2024, which improved the Company's Global Real Estate
Sustainability Benchmark (GRESB) from 66 to 73 and maintained a two Green Star
Status. Additionally, we continued to achieve advancements in our EPC ratings
and EPRA sustainability accreditation. Overall performance remains robust.
82.7% of our portfolio attained EPC ratings C plus or better (compared with
73.7% on 31 December 2023), while EPC B plus and exempt rose steeply to 57.7%
(compared with 31.6% on 31 December 2023). This progress moves us nearer to
meeting the Minimum Energy Efficiency Standard ('MEES') target of EPC B, well
ahead of the stated 2030 target. Importantly, with limited compliant office
supply in the regions, providing high quality, energy efficient space can be a
key differentiator for Regional REIT, driving improved occupancy and rental
growth.
Market Environment
UK office investment reached £1.8 billion in Q4 2024, bringing the annual
total to £7.3 billion, a 27% decline from 2023. London saw the sharpest drop,
with investment falling 34% to £4.7 billion, while regional markets declined
5.5% to £2.34 billion. Q4 2024 transactional yields for central London
offices rose slightly to 6.02% and yields for the rest of the UK increased by
43 basis points to 7.75%.
Looking ahead, Lambert Smith Hampton ("LSH")(1) sees 2024 as an inflection
point for office space sector. LSH forecasts total returns averaging c7.9% per
annum citing improved staff occupancy and tighter supply. Underpinning LSH's
forecast, Centre for Cities(2) notes London office attendance rose from 2.2 to
2.7 days weekly; KPMG(3) reports 76% of financial leaders plan to boost
attendance; and Willis Towers Watson(4) finds 60% of firms enforce office-day
policies, improving engagement (85%), culture (72%), and learning (69%).
Regional REIT's own annual tenant survey found that current active office
occupation is now above pre-pandemic active occupancy, while employee
occupation has stabilised at an average of four days a week.
(1) UK Investment Transactions Bulletin, UKIT Q4 2024 by Lambert Smith Hampton
(LSH), Jan. 2025
(2) The Future of Work, Centre for Cities report (in partnership with Imperial
College London), Sep. 2024
(3) Financial Services employee survey, KPMG, Oct. 2024
(4) Flexible Work Models Pulse survey by WillisTowersWatson, Dec. 2024
Dividends
The dividend remains a significant component of total shareholder returns.
During the period under review, prior to the capital raise and share
consolidation, the Company declared a Q1 2024 dividend of 1.2pps. Following
the capital raise and subsequent share consolidation, the Company declared a
Q2 2024 dividend of 2.2pps on 10 September 2024, a Q3 2024 dividend of 2.2pps
on 13 November 2024, and has now declared a Q4 2024 dividend of 2.2pps. These
dividend distributions ensure compliance with the HMRC REIT regime. Notably,
the Company has paid a fully covered dividend for 2024, having also paid a
covered dividend for 2023. Since inception, the Company has declared dividends
amounting to 65.35pps noting the aforementioned one for ten share
consolidation on 29 July 2024 and has distributed approximately £251.4
million in dividends to shareholders.
Performance
The period under review was impacted by the announced equity capital raise on
the 27 June 2024. The Company's total shareholder return was -40.5%, versus
the return of -11.7% for the FTSE EPRA NAREIT UK Total return Index over the
same period. The annualised EPRA Total Return was 0.6% p.a. (2023: 1.5% p.a.).
Board Changes
As announced on 18 December 2024, following a thorough search process and in
line with the Company's policy, I was appointed as an Independent
Non-Executive Director and Chair designate. I have since been appointed to the
Audit, Nomination, and Management Engagement & Remuneration Committees
and, following a handover period, assumed the role of Chair of the Board on 18
March 2025, succeeding Kevin McGrath, who stepped down after completing his
nine-year tenure.
On behalf of the Board and our shareholders I extend our thanks to Kevin for
his leadership and unwavering commitment over the years. His guidance and
dedication have been instrumental in the governance of the Company,
particularly with regard to our successful £110.5 million equity capital
raise in 2024.
As announced on 11 October 2024, Daniel Taylor stepped down as Senior
Independent Director and Non-Executive Director ("NED") of the Company, having
completed his nine-year tenure in accordance with the Company's policy. Again,
I record our appreciation of Daniel's significant contribution during his
tenure.
Also on 11 October, Massy Larizadeh was appointed as Senior Independent
Director. An independent NED since June 2022, she chairs the Management
Engagement & Remuneration and Nomination Committees.
Finally, as announced on 21 October 2024, Nicole Burstow was appointed as a
Non-Executive Director, representing our new significant shareholder
Bridgemere Investments Limited. Nicole, a chartered accountant with over 20
years of financial services experience, is currently CFO of Bridgemere Group
and was previously Deputy CEO of DSW Capital.
Annual General Meeting
The notice for the 2025 AGM will be published on our website and circulated to
Shareholders in line with the Company's Articles of Incorporation. In
accordance with the Company's Articles of Incorporation and the AIC Code, all
Directors will stand for re-election at the AGM, except for Ms Burstow and
myself, as we were appointed as Directors since the last AGM and will
therefore stand for election. Directors maintain their professional
development through regular briefings from the Company Secretary and the
Company's other advisers. As well as being committed to orderly succession
planning, the Board will enhance its skills base as necessary. The Board looks
forward to engaging with Shareholders at the AGM.
Shareholder and Stakeholder Engagement
We welcomed Bridgemere Investments Limited as a new significant shareholder
following the successful completion of the capital raise and thank them and
our existing shareholders for their support. We look forward to working with
Bridgemere and all our stakeholders as we look to return to growth.
Tenant and stakeholder satisfaction is key to our success. We aim to provide
high-quality workspaces that accommodate diverse business needs, from small
flexible units to corporate headquarters. Engaging actively with tenants is
central to our asset management strategy, helping us understand their needs,
address challenges, and enhance our workspaces. We promote open and
transparent communication, ensuring a collaborative approach that benefits all
stakeholders and improves operational efficiency. The Company welcomes
shareholder engagement, with further details available at www.regionalreit.com
(http://www.regionalreit.com) and in the full Annual Report.
Outlook
The property market continues to adjust to the evolving economic conditions
and cautious investor sentiment. While the management team is doing all it can
to increase returns including through capex, leasing and sales, performance is
to some extent inevitably dependent on recovery in the sector. However, demand
for well-located, high-quality office space remains resilient, supported by
the continued return to the office, and there are significant opportunities to
create value within the portfolio by progressing accretive initiatives such as
securing planning consents ahead of sales. The Company remains focused on
active asset management to drive occupancy, enhance tenant retention, and
optimise rental growth, underpinning sustainable dividend distributions. As
businesses prioritise dynamic and engaging workspaces, the Company is well
placed for recovery, which will support long-term value creation and benefit
shareholders as confidence gradually returns to the commercial property
market.
David Hunter
Chairman
24 March 2025
ASSET MANAGER AND INVESTMENT ADVISERS' REPORT
"We are beginning to see an improvement in sentiment in the UK office market,
with the average number of days in the office having stabilised at four days a
week. There is also a growing recognition of the vital role the office plays
in driving productivity and strengthening a company's culture."
Stephen Inglis
Head of ESR Europe LSPIM Ltd.
Asset Manager
While 2024 has undoubtedly been another challenging year for the property
market and the regional office market in particular, with the successful
equity raise in July Regional REIT enters 2025 with cautious optimism. We are
beginning to see an improvement in sentiment in the UK office market, with the
average number of days in the office having stabilised at four days a week
across our portfolio. There is also a growing recognition of the vital role
the office plays in driving productivity a strengthening a company's culture.
We anticipate a slow and steady improvement to the occupational market in
2025, however, it will take time for the impact of these changes to flow
through to our financial performance. On a like-for-like basis the valuation
of the portfolio fell by 8.2% in the year to £622.5m, although the pace of
this reduction slowed to 3.1% in the second half. If, as is widely forecast,
interest rates continue to fall then this will bring stability and confidence
and ultimately be beneficial to real estate values.
Our operational performance continues to be robust. At an operational level,
the business delivered 61 new lettings last year at 13.5% above 2023 ERV,
totalling £3.2m rent roll. Rent collection remained high at 98.6%, and
occupancy amounted to 77.5% compared to 80.0% in 2023. This slight reduction
was in part due to the business holding some buildings vacant while it
progresses planning applications to add value.
Importantly, the combination of our ongoing controlled disposals programme and
the successful £110.5m equity raise have transformed Regional REIT's balance
sheet, taking LTV to 41.8% at the end of the year from 55.1% in 2023. This
ensures that we have the resources and flexibility to take advantage of the
opportunities we see to create value across our portfolio. Further reducing
LTV via selected disposals remains a priority, and a total of 43 sites
totalling c. £106.7m have been earmarked for sale, with nine sales totalling
£18.6m either contracted, under offer, or in negotiation.
Looking ahead, along with a targeted capex programme to bring selected assets
up to the necessary standard to optimise rents, a key objective will be
maximising the opportunities we see in the portfolio to add value by securing
planning consents ahead of sales. Over the medium term, based on current
property values we estimate that there is the potential to add substantial
value through these initiatives.
There is a lot of work to do. However, the team is laser focused on delivering
against our restated strategy and with a transformed balance sheet there are
extensive opportunities across the portfolio. Regional REIT is well placed to
deliver against its objective of being a high dividend paying REIT, while also
pursuing added capital value.
KEY POINTS FROM 2024
· High Level of Rent Collection
Achieved a high level of rent collection. As at 14 March 2025, rent collection
remains robust, with FY 2024 at 98.6%, adjusting for monthly rent and agreed
collections plans, which is similar to the equivalent date in 2024 when 98.9%
had been collected.
· Increase in Average Rent
Average rent by let sq. ft. increased by 1.1% from £13.82 per sq. ft. in
December 2023 to £13.92 per sq. ft. in December 2024.
· New Lettings - Greater than ERV
Completed 61 new lettings in 2024, totalling 191,541 sq. ft and 13.5% above
ERV, which when fully occupied will provide a gross rental income of c. £3.2
million.
· Increase in GRESB Score
The Company submitted its Fourth Global Real Estate Sustainability Benchmark
("GRESB") assessment resulting in an increased score of 73 from 66.
· Disposals Programme
Disposals during 2024 totalled £28.6 million (net of costs), reflecting a net
initial yield of 8.3% (10.6% excluding vacant assets).
· Outperform the MSCI Monthly Data
The like-for-like value of the portfolio decreased by 8.2% from 31 December
2023 to 31 December 2024 after adjusting for capital expenditure, acquisitions
and disposals during the period (7.1% excluding capital expenditure
adjustment). Noting that some assets are being held for repurposing potential,
MSCI monthly data shows a capital value decline of 8.9% for the rest of the UK
offices over the same period.
UK Office Investment Activity
Investment in UK offices reached £1.8 billion in Q4 2024, bringing the total
for the year to £7.3 billion, 27% lower than 2023(1). The decline in overall
office investment was primarily driven by a significant drop in London, where
investment fell by 34% to £4.7 billion in 2024 down from £7.2 billion in
2023. The regional office markets also experienced decline in investment in
2024 when compared to 2023 of 5.5%, an annual total of £2.34 billion from
£2.48 billion.
Transactional yields(2) for central London offices we marginally up for Q4
2024 at 6.02% against the same period in Q4 2023. In contrast the
transactional yields for the rest of the UK were 7.75% for Q4 2024, an
increase of 0.5% on the Q4 2023.
Looking ahead, Lambert Smith Hampton ("LSH"), see 2024 as an inflection point
for the office sector. LSH forecast to returns averaging c7.9% per annum
citing improved staff occupancy and tighter supply.
Underpinning LSH's forecast, the Office for Nation Statistics ("ONS") data(3)
shows that in 2024, 42% of workers in the UK on average travelled exclusively
to work, while only 13% worked from home full-time, a drop from 25% in 2021.
Additionally, approximately 26% of the UK workforce were hybrid working in
2024.
Recent surveys underscore a growing trend toward increased office attendance
across the UK, driven by new policies, improved team engagement, and
recognised in-office benefits.
· Centre for Cities Survey(4): In London, workers increased their
office attendance from 2.2 days per week in 2023 2.7 days in 2024, signalling
a gradual return.
· KPMG Survey(5): A survey of financial services leaders shows that 76%
plan to increase attendance, with 37% expecting employees to be in the office
at least four days weekly.
· Willis Towers Watson Survey(6): 'Flexible Work Models Pulse' reports
that 60% of UK companies now enforce a minimum office-days policy, boosting
engagement (85% culture (72%), and learning (69%).
These findings continue to highlight the benefits and productivity companies
observe from in person collaboration.
(1) UK Investment Transactions Bulletin, UKIT Q4 2024 by Lambert Smith Hampton
(LSH), Jan. 2025
(2) Transactional Yield focuses on the yield at the point of purchase, based
on the current property income
(3) ONS, Public opinions and social trends, Great Britain: social mobility,
Jan. 2025
(4) The Future of Work, Centre for Cities report (in partnership with Imperial
College London), Sep. 2024
(5) Financial Services employee survey, KPMG, Oct. 2024
(6) Flexible Work Models Pulse survey by WillisTowersWatson, Dec. 2024
Occupational Demand in the UK Regional Office Market
Avison Young announced that the take-up of office space across the nine(7)
regional markets reached 2.2 million square feet (sq.ft.) in Q4 2024, on par
with the previous quarter and the highest since Q4 2022, 33.9% above the
previous quarter and 18.2% above the five year quarterly average take-up. The
annual total was 10% higher than 2023, at 7.9m sq.ft. with positive occupier
sentiment, particularly from larger corporates.
The high demand and short supply across the nine regional markets continue to
keep rental growth high, with an average of 6.6% prime rental growth.
Occupational demand in the regional office markets continued to be driven by
the financial and professional services sector, with both accounting for 18.0%
share each in Q4 2024. However, the sector with the most growth was Education
and training with 39% annual increase.
In terms of the development pipeline, in 2025 it is estimated that
approximately 2.0 million sq.ft. of office space is currently under
construction in the Big Nine(8) regional markets, with 36% already pre-let.
The estimated pipeline total is the lowest since 2017 and therefore likely to
produce supply shortages. 2024 saw refurbishments take a 38% share, up from
24% in 2023 and this trend is expected to continue into 2025. The data
supports LSH's comment (See UK Office Activity) on tighter supply of office
space in the forthcoming years.
(7) Nine regional office markets mentioned by Avison Young include:
Birmingham, Bristol, Cardiff, Edinburgh, Glasgow, Leeds, Liverpool,
Manchester, Newcastle
(8) The Big Nine, Quarterly update of regional office activity, Q4 2024 by
Avison Young, Feb. 2025
Rental Growth in the UK Regional Office Market
According to monthly data from MSCI, rental value growth finished the year on
a high for 'Rest of UK Office' markets with growth of 2.4%. Conversely,
central London offices experienced modest growth of 1.2% over the same period.
Avison Young report that seven of the Big Nine's cities saw an increase in
their prime rents this quarter; with the top three being an increase of:
• 14.1% to Bristol with £48.50 per square foot (psf)
• 13.7% to Liverpool at £29.00 psf
• 12% to Cardiff at £28.00 psf
This brought the Big Nine's average annual prime rental growth to 6.6% in Q4.
Regional REIT's Office Assets
EPRA occupancy of the Group's regional offices of 76.4% as at 31 December 2024
(2023: 79.2%). A like-for-like comparison of the Group's regional offices'
EPRA occupancy, as at 31 December 2024 versus 31 December 2023, shows
occupancy of 76.4% (2023: 80.5%). WAULT to first break was 2.7 years (2023:
2.6 years); like-for-like WAULT to first break of 2.7 years (2023: 2.6 years).
Property Portfolio
As at 31 December 2024, the Group's property portfolio was valued at £622.5
million (2023: £700.7 million), with rent roll of £60.7 million (2023:
£67.8 million), and an EPRA occupancy of 77.5% (2023: 80.0%). On a
like-for-like basis, 31 December 2024 versus 31 December 2023, EPRA occupancy
was 77.5% (2023: 81.3%).
There were 126 properties (2023: 144) in the portfolio, with 1,271 units
(2023: 1,483) and 780 tenants (2023: 978). If the portfolio was fully occupied
at Colliers International Property Consultants view of market rents, the
rental income would be £83.2 million per annum as at 31 December 2024 (2023:
£87.0 million).
As at 31 December 2024, the net initial yield on the portfolio was 5.9% (2023:
6.2%), the equivalent yield was 10.4% (2023: 9.9%) and the reversionary yield
was 11.6% (2023: 10.8%).
Property Portfolio by Sector
Sector Properties Valuation (£m) % by valuation Sq. ft. (m) Occupancy (EPRA) (%) WAULT to first break (yrs) Gross rental income (£m) Average rent (£psf) ERV (£m) Capital rate (£psf) Net Initial Yield (%) Equivalent yield (%) Reversionary yield (%)
Office 107 564.7 90.7 5.1 76.4 2.7 54.9 14.97 77.6 110.99 5.8 10.5 11.9
Retail 13 22.6 3.6 0.3 91.7 3.4 2.7 11.14 2.6 85.10 7.2 9.6 10.3
Industrial 4 23.1 3.7 0.4 90.8 4.1 1.9 5.38 2.1 55.02 6.5 7.7 8.0
Other 2 12.2 2.0 0.1 98.5 9.5 1.1 12.48 0.9 128.64 8.5 8.3 7.0
Total 126 622.5 100.0 5.9 77.5 2.9 60.7 13.92 83.2 106.10 5.9 10.4 11.6
Property Portfolio by Region
Region Properties Valuation (£m) % by valuation Sq. ft. (m) Occupancy (EPRA) (%) WAULT to first break (yrs) Gross rental income (£m) Average rent (£psf) ERV (£m) Capital rate (£psf) Net Initial Yield (%) Equivalent yield (%) Reversionary yield (%)
Scotland 28 103.5 16.6 1.1 68.7 4.0 9.7 13.93 16.3 93.64 5.0 11.2 12.6
Southeast 23 109.8 17.6 0.9 78.0 2.6 10.9 16.39 14.6 126.25 6.1 10.3 11.7
Northeast 18 98.2 15.8 0.8 71.0 3.1 8.1 13.40 11.8 117.47 5.4 9.7 10.8
Midlands 22 125.1 20.1 1.3 89.3 3.0 13.9 12.83 16.9 93.89 6.4 10.6 11.9
Northwest 17 87.4 14.0 0.9 69.7 1.8 8.5 13.79 12.2 98.35 5.2 10.4 11.9
Southwest 12 59.3 9.5 0.4 85.0 2.0 5.9 17.59 7.1 148.17 7.6 10.3 11.1
Wales 6 39.3 6.3 0.4 88.8 3.7 3.6 10.2 4.3 90.24 6.9 9.3 9.9
Total 126 622.5 100.0 5.9 77.5 2.9 60.7 13.92 83.2 106.10 5.9 10.4 11.6
Tables may not sum due to rounding
Top 15 Investments (market value) as at 31 December 2024
Property Sector Anchor tenants Market value % of portfolio Lettable area EPRA Occupancy Annualised gross rent % of gross rental income WAULT to first break (years)
(£m) (sq. ft) (%) (£m)
300 Bath Street, Glasgow Office Glasgow Tay House Centre 17.9 2.9 156,853 82.7 0.8 1.4 2.6
Ltd, University of Glasgow,
Fairhurst Group LLP, ESR
Europe LSPIM Ltd
Hampshire Corporate Park, Eastleigh Office Aviva Central Services UK Ltd, Lloyd's Register EMEA, Complete Fertility Ltd 17.5 2.8 84,043 100.0 1.8 3.0 2.7
Norfolk House, Office Global Banking School Ltd, Accenture (UK) Ltd 17.3 2.8 118,530 98.9 1.9 3.2 6.1
Smallbrook
Queensway,
Birmingham
800 Aztec West, Office NNB Generation Company 15.8 2.5 73,292 100.0 1.5 2.5 1.8
Bristol (HPC) Ltd, EDF Energy Ltd
Eagle Court, Office Virgin Media Ltd, Rexel UK Ltd, Goldbeck Construction Ltd 15.2 2.4 132,690 75.8 1.3 2.2 2.7
Coventry Road,
Birmingham
Manchester Green, Office Chiesi Ltd, Ingredion UK Ltd, Assetz SME Capital Ltd 14.9 2.4 107,760 78.9 1.5 2.4 1.7
Manchester
Beeston Business Office/ Metropolitan Housing Trust Ltd, SMS Electronics Ltd, SMS Product Services Ltd 14.6 2.3 215,330 72.4 1.1 1.7 5.0
Park, Nottingham Industrial
1-4 Llansamlet Retail Wren Kitchens Ltd, Dreams Ltd, NCF Furnishings Ltd, ScS 13.3 2.1 74,425 100.0 1.2 2.0 3.5
Retail Park, Upholstery
Nantyffin Rd,
Oakland House, Office Please Hold (UK) Ltd, 12.9 2.1 161,502 80.8 1.1 1.9 1.3
Manchester A.M.London Fashion Ltd,
CVS (Commercial Valuers & Surveyors) Ltd
Orbis 1, 2 & 3, Pride Office Firstsource Solutions UK 12.1 1.9 121,883 100.0 1.8 3.0 2.4
Park, Derby Ltd, DHU Health Care C.I.C., Tentamus Pharma (UK) Ltd
Ashby Park, Ashby Office Ceva Logistics Ltd, Ashfield Healthcare Ltd, Brush Electrical Machines Ltd 11.6 1.9 87,872 92.8 1.2 2.1 3.3
De La Zouch
Lightyear - Glasgow Office Loganair Ltd, Rolls-Royce 11.5 1.8 73,499 94.4 1.5 2.4 4.3
Airport, Paisley Submarines Ltd, Heathrow
Airport Ltd
Linford Wood Office IMServ Europe Ltd, Senceive Ltd, Aztech IT Solutions Ltd 11.3 1.8 107,352 78.8 1.2 2.0 2.0
Business Park,
Milton Keynes
Capitol Park, Leeds Office Hermes Parcelnet Ltd, BDW Trading Ltd 11.0 1.8 86,758 55.3 0.7 1.2 3.1
The Coach Works, Office St James's Place Wealth 10.5 1.7 41,121 68.9 0.7 1.2 1.4
Leeds Management Group Ltd,
Abstract Tech Ltd, Canal & River Trust
Total 207.0 33.3 1,642,910 86.4 19.6 32.3 3.0
Tables may not sum due to rounding
Top 15 Tenants (share of rental income) as at 31 December 2024
Tenant Property Sector WAULT to first break (years) Lettable area Annualised gross rent (£m) % of gross rental income
(sq. ft)
EDF Energy Ltd 800 Aztec West, Bristol Electricity, gas, steam and air conditioning supply 4.5 109,114 1.7 2.8
Endeavour House, Sunderland
Global Banking School Ltd Norfolk House, Smallbrook Queensway, Birmingham Education 7.9 73,628 1.4 2.3
Virgin Media Ltd Eagle Court, Coventry Road, Birmingham Information and communication 2.7 75,309 1.3 2.2
Southgate Park, Peterborough
The Secretary of 1 Burgage Square, Merchant Square, Wakefield Public sector 4.1 116,238 1.2 2.0
State for Housing,
Albert Edward House, Preston
Communities and Local
Bennett House, Stoke-On-Trent
Government
Oakland House, Manchester
Origin (Office), Bracknell
Waterside Business Park, Swansea
First Source Solutions UK Ltd Orbis 1, 2 & 3, Pride Park, Derby Administrative and support service activities 2.3 62,433 1.0 1.7
E.ON UK Plc Two Newstead Court, Nottingham Electricity, gas, steam and air conditioning supply 0.3 99,142 0.9 1.6
Shell Energy Retail Ltd Columbus House, Coventry Electricity, gas, steam and air conditioning supply 0.0 53,253 0.9 1.5
NNB Generation Company (HPC) Ltd 800 Aztec West, Bristol Electricity, gas, steam and air conditioning supply 1.1 41,743 0.9 1.4
SPD Development Co Ltd Clearblue Innovation Centre, Bedford Professional, scientific and technical activities 9.0 58,167 0.8 1.4
Aviva Central Services UK Ltd Hampshire Corporate Park, Eastleigh Other service activities 0.9 42,612 0.8 1.3
Odeon Cinemas Ltd Kingscourt Leisure Complex, Dundee Information and communication 10.8 41,542 0.8 1.2
Care Inspectorate Compass House, Dundee Public Sector 3.3 51,852 0.7 1.1
Quadrant House, Dundee
Please Hold (UK) Ltd Oakland House, Manchester Professional, scientific 0.9 60,362 0.6 1.0
and technical activities
SpaMedica Limited 1175 Century Way, Thorpe Park, Leeds, Human health and social work activities 3.1 40,529 0.6 1.0
Albert Edward House, Preston
Fairfax House, Wolverhampton,
Southgate Park, Peterborough,
The Foundation Chester Business Park, Chester
DHU Health Care C.I.C. Orbis 1, 2 & 3, Pride Park, Derby Human health and 1.3 42,301 0.6 0.9
social work activities
Total 3.7 968,225 14.3 23.5
Tables may not sum due to rounding.
Property Portfolio Sector and Region Splits by Valuation and Income as at 31
December 2024
By Valuation
As at 31 December 2024, 90.7% (2023: 92.1%) of the portfolio by market value
was offices and 3.6% (2023: 3.1%) was retail. The balance was made up of
industrial, 3.7% (2023: 3.2%) and other, 2.0% (2023: 1.7%). By UK region, as
at 31 December 2024, Scotland represented 16.6% (2023: 16.2%) of the portfolio
and England 77.1% (2023: 78.4%); the balance of 6.3% (2023: 5.4%) was in
Wales. In England, the largest regions were the Midlands, the South-East and
the North-East.
By Income
As at 31 December 2024, 90.5% (2023: 91.3%) of the portfolio by income was
offices and 4.4% (2023: 4.2%) was retail. The balance was made up of
industrial, 3.2% (2023: 2.8%), and other, 1.9% (2023: 1.7%). By UK region, as
at 31 December 2024, Scotland represented 16.0% (2023:15.8%) of the portfolio
and England 78.0% (2023: 78.6%); the balance of 6.0% was in Wales (2023:
5.6%). In England, the largest regions were the Midlands, the South-East and
the North-West.
Lease Expiry Profile
The WAULT on the portfolio is 4.6 years (2023: 4.7 years); WAULT to first
break is 2.9 years (2023: 2.8 years). As at 31 December 2024, 13.8% (2023:
15.9%) of income was from leases, which will expire within one year, 10.5%
(2023: 10.7%) between one and two years, 39.7% (2023: 33.3%) between two and
five years and 36.1% (2023: 40.1%) after five years.
Tenants by Standard Industrial Classification (SIC)
As at 31 December 2024, 11.8% of income was from tenants in the professional,
scientific and technical activities sector (2023: 11.5%), 11.2% from the
administrative and support service activities sector (2023: 10.4%), 10.5% from
the information and communication activities sector (2023: 12.2%), 8.7% from
the wholesale and retail trade sector (2023: 8.0%) and 6.4% from
the electricity, gas, steam and air conditioning supply sector (2023: 6.5%).
The remaining exposure is broadly spread.
No tenant represents more than 3.0% of the Group's rent roll as at 31 December
2024, the largest being 2.8% (2023: 2.5%).
Financial Review
Net Asset Value
In the year ended 31 December 2024, the EPRA NTA* of the Group increased to
£340.7 million (IFRS NAV: £351.6 million) from £290.8 million (IFRS NAV:
£306.1 million) as at 31 December 2023, with an EPRA NTA of 210.2pps (IFRS:
216.9pps).
The EPRA NTA increase of £50.0 million since 31 December 2023 was
predominately due to the equity capital raise proceeds of £110.5 million,
offset by a £54.7 million reduction in the revaluation of the property
portfolio held as at 31 December 2024, £2.0 million from lease incentives and
£3.2 million realised loss on the disposal of properties.
The investment property portfolio valuation as at 31 December 2024 amounted to
£622.5 million (2023: £700.7 million). The property valuation decrease since
the December 2023 year end is a reflection of £54.7 million in property
revaluation, £28.6 million of net property disposals and loss on the
disposals of £3.2 million, offset by subsequent expenditure of £8.2 million.
Overall, on a like-for-like basis, the portfolio value decreased by 8.2%
during the year.
The table below sets out the acquisitions, disposals and capital expenditure
for the respective periods:
Year ended Year ended
31 December 31 December
2024 2023
(£m) (£m)
Acquisitions
Net (after costs) 0.0 0.1
Gross (before costs) 0.0 0.0
Disposals
Net (after costs) 28.6 25.0
Gross (before costs) 30.8 26.1
Capital Expenditure
Net (after dilapidations) 8.2 10.2
Gross (before dilapidations) 8.5 11.0
*Further details of the new EPRA performance measures are provided in the full
Annual Report.
The EPRA NTA is reconciled in the table below:
Year ended
31 December 2024
(£m)
Opening EPRA NTA (31 December 2023) 290.8
Net rental and property income 46.0
Administration and other expenses (9.9)
Gain/(Loss) on the disposal of investment properties (3.2)
Change in the fair value of investment properties (56.7)
Change in value of right of use (0.1)
EPRA NTA after operating profit 266.8
Net finance expense (13.8)
Realised gain on derivative financial instruments 2.7
Taxation (0.0)
EPRA NTA before dividends paid 255.7
Dividends declared (19.4)
EPRA NTA before capital raise 236.3
Capital raise 110.5
Capital raise expenses (6.0)
Closing EPRA NTA (31 December 2024) 340.7
Table may not sum due to rounding
Income Statement
Operating profit before gains and losses on property assets and other
investments for the year ended 31 December 2024 amounted to £36.1 million
(2023: £43.1 million). Loss after finance and before taxation of £39.5
million (2023: loss £67.5 million). 2024 included the rent roll for
properties held from 31 December 2023, plus the partial rent roll for
properties disposed of during the year. Rental and property income amounted
to £65.2 million, excluding recoverable service charge income and other
similar items (2023: £70.1 million), the decrease is due to a reduction in
the rent roll being held during the year to 31 December 2024.
More than 80% of the rental income was collected within 30 days of the due
date and the allowance for doubtful debts in the year amounted to £0.5
million (2023: £0.5 million).
Non-recoverable property costs, excluding recoverable service charge income
and other similar costs, amounted to £19.3 million (2023: £16.3 million),
and the rent roll amounted to £60.7 million (2023: £67.8 million).
Realised losses on the disposal of investment properties amounted to £3.2
million (2023: loss £0.7 million). The loss on the disposals were from the
aggregate disposal of 18 properties and three-part sales in the period, on
which individual asset management plans had been completed and/or were of
sub-optimal asset size. The change in the fair value of investment properties
amounted to a loss of £54.7 million (2023: loss of £73.3 million), and an
adjustment of £2.0 million (2023: £13.0 million) from rent smoothing.
Net capital expenditure amounted to £8.2 million (2023: £10.2 million). The
change in value of right of use assets amounted to a charge of £0.1 million
(2023: charge £0.1 million).
Interest income amounted to £1.4 million (2023: £0.1 million).
Finance expenses amount to £15.2 million (2023: £16.2 million). The decrease
is due to the 4.5% £50 million of Retail Bonds being repaid in August 2024
and net borrowings being repaid during the year, amounting to £54.0m in the
year.
The EPRA* cost ratio, including direct vacancy costs, was 44.7% (2023: 38.5%).
The increase in the cost ratio is ostensibly a reflection of the increase in
Other property expenses and irrecoverable costs. The EPRA cost ratio,
excluding direct vacancy costs was 17.4% (2023: 16.4%). The ongoing charges
for the year ending 31 December 2024 were 9.3% (2023: 7.5%) and 3.5% excluding
void costs (2023: 3.2%).
The EPRA Total Return from Listing to 31 December 2024 was 5.6% (2023: 12.7%),
with an annualised rate of 0.6% pa (2023: 1.5% pa).
*Further details of the new EPRA performance measures are provided in the full
Annual Report.
Dividend
In relation to the year from 1 January 2024 to 31 December 2024, the Company
declared dividends totalling 7.80pps (2023: 5.25pps). Prior to the capital
raise and share consolidation, the Company declared a Q1 2024 dividend of
1.2pps. Following the capital raise and subsequent share consolidation, the
Company declared a Q2 2024 dividend of 2.2pps on 10 September 2024, a Q3 2024
dividend of 2.2pps on 13 November 2024, and a Q4 2024 dividend of 2.2pps on 20
February 2024. A schedule of dividends can be found in the full Annual Report.
Debt Financing and Gearing
Borrowings comprise of third-party bank debt. The bank debt is secured over
properties owned by the Group and repayable over the coming five years. The
weighted average maturity of the bank debt 2.9 years (2023: 3.5 years).
The Group's borrowing facilities are with: the Royal Bank of Scotland, Bank of
Scotland and Barclays; Scottish Widows Ltd. & Aviva Investors Real Estate
Finance; Scottish Widows Ltd. and Santander UK. The total bank borrowing
facilities at 31 December 2024 amounted to £316.7 million (2023: £370.8
million) before unamortised debt issuance costs.
At 31 December 2024, the Group's cash and cash equivalent balances amounted to
£56.7 million (2023: £34.5 million), of which £55.9 million (2023: £30.7
million) was unrestricted cash.
The Group's net loan to value ("LTV") ratio stands at 41.8% (2023: 55.1%)
before unamortised costs.
Debt Profile and LTV Ratios as at 31 December 2024
Facility Outstanding debt* Maturity date Gross loan to value** Annual interest rate
Lender £'000 £'000 % %
Royal Bank of Scotland, Bank of Scotland & Barclays 99,789 99,789 Aug-26 51.3 2.40 over 3 months
£ SONIA
Scottish Widows Ltd. and Aviva Investors Real Estate Finance 132,630 132,630 Dec-27 51.3 3.28 Fixed
Scottish Widows Ltd. 34,467 34,467 Dec-28 47.5 3.37 Fixed
Santander UK 49,848 49,848 Jun-29 51.0 2.20 over 3 months
£ SONIA
316,734 316,734
Table may not sum due to rounding.
As at 31 December 2024, the Group had headroom against its borrowing
covenants.
The net gearing ratio (net debt to Ordinary Shareholders' equity (diluted)) of
the Group was 73.9% as at 31 December 2024 (2023: 126.2%).
Interest cover, excluding amortised costs, stands at 2.7 times (2023: 2.9
times) and including amortised costs, stands at 2.4 times (2023: 2.7 times).
* Before unamortised debt issue costs
** Based on Colliers International Property Consultants Ltd.
Hedging
The Group applies an interest hedging strategy that is aligned to the property
management strategy and aims to mitigate interest rate volatility on at least
90% of the debt exposure.
31 December 2024 31 December 2023
% %
Borrowings interest rate hedged 100.0 100.0
Thereof:
Fixed 52.7 56.7
Swap 30.4 28.6
Cap 16.9 14.7
WACD(1) 3.4 3.5
Table may not sum due to rounding
(1)WACD - Weighted Average Effective Interest Rate including the cost of
hedging
There is no over-hedged position as at 31 December 2024.
Tax
The Group entered the UK REIT regime on 7 November 2015 and all of the Group's
UK property rental operations became exempt from UK corporation tax from that
date. The exemption remains subject to the Group's continuing compliance with
the UK REIT rules.
On 9 January 2018, the Company registered for VAT purposes in England.
During 2024, the Group recognised a deferred tax charge of £64,590 (2023:
£8,431).
PRINCIPAL RISKS AND UNCERTAINTIES
Effective risk management is embedded throughout Regional REIT and underpins
the execution of the Company's strategy, the positioning of the business for
growth and maintaining the regular income over a long-term sustainable
horizon.
Risk Framework and Approach
The Board acknowledges the importance of embedding a framework to identify,
actively monitor, managing and mitigating its risks, which include, but are
not limited to: strategic, valuation, healthcare, economic and political,
funding, tenant, financial and tax charges, operational, regulatory,
environmental risks and emerging risks.
The Board has overall responsibility for the Company's system of risk
management and internal controls. It is supported by the Audit Committee in
the management of risk. The Audit Committee is responsible for determining the
principal risks facing the business and reviewing, at least annually, the
effectiveness of the Company's financial control, risk management and internal
control processes.
Over the long term, the business will face other challenges and emerging
threats for which it remains vigilant.
However, the Board also views the risks as opportunities that, when
effectively managed, can enhance performance. Thus, having an effective risk
management process is key to support the delivery of the Company's strategy.
Approach to Managing Risk - Identification, Evaluation And Mitigation
The risk management process emphasis is upon awareness and is structured to
identify, evaluate, manage and mitigate, rather than eliminate, risks faced.
The Company maintains a detailed and formal matrix of current principal risks,
which uses risk scoring to evaluate risks consistently. This allows the risks
to be monitored and mitigated as part of a risk management process with the
Audit Committee undertaking, at a minimum on a six-monthly basis or more
frequently if required, a robust evaluation of these risks facing the Company.
Risks are identified and assessed according to their potential impact on the
Company and to their likelihood occurrence. The Audit Committee utilises the
risk matrix to prioritise individual risks, allocating scores to each risk for
both the likelihood of its occurrence and the severity its impact. Those with
the highest gross rating in terms of impact are highlighted as top risks
within the matrix and are defined as principal risks.
Although the Board believes that it has a robust framework of internal
controls in place, it recognises it can provide only reasonable, and not
absolute, assurance against material financial misstatement or loss and is
designed to manage, not eliminate, risk.
Risk Appetite
Taking risks is an essential and inherent facet of operating any business. As
such the risk management approach is not to eliminate all risk but to ensure
that appropriate strategies are in place to identify, actively monitor, manage
and mitigate the key risks.
The Board is responsible for defining the level of risk that the Company
assumes and ensuring that it remains in-line with the Company's strategy. Risk
appetite is integral to the Board's approach to risk management, business
planning and decision making. The level and type of risk that the Company is
willing to bear will vary over time.
The Board, in collaboration with the Asset Manager and Investment Manager, and
with the latest information available, regularly reviews the risk appetite of
the Company allowing a prompt response to identified emerging risks.
Emerging Risks
The Board is cognisant of emerging risks defined as potential trends, sudden
events or changing risks, which are characterised by a high degree of
uncertainty in terms of probability of occurrence and possible effects on the
Company. Once emerging risks become sufficiently clear, they may be classed as
a principal risk and added to the risk matrix.
To help manage emerging risks and discuss other wider matters affecting
property, the Board has an annual strategy meeting. The Board considers having
a clear strategy is the key to managing and mitigating emerging risk.
The Company's principal risks consist of the ten most significant risks which
are composed of eight strategic and two operational risks. The strategic risks
relate to investment strategy, valuation, healthcare, economics and political,
funding, tenant, financial and tax changes, and environmental and energy
efficiency standards; operational risk encompasses business disruption, and
accounting, legal and regulatory.
The below list, in no particular order, sets out the current identifiable
principal and emerging risks, including their impact and the actions taken by
the Company to mitigate them. It does not purport to be an exhaustive list of
all the risks faced by the Company.
Principal Risk Summary
Principal Risk Evolution of the trend during the year
1. Strategic ó
2. Valuation ö
3. Healthcare ó
4. Economic and political ó
5. Funding ⇩
6. Tenant ó
7. Financial and tax changes ó
8. Operational ó
9. Accounting, legal and regulatory ó
10. Environmental and energy efficiency standards ó
1. Strategic
Potential Impact Mitigation Movement in the period ó
An inappropriate investment strategy, and/or failure to implement the strategy · A clearly defined investment strategy, which is reviewed annually. · The property portfolio remains balanced across a range of
could result in lower income and capital returns to Shareholders.
geographical areas and a large number of investment properties.
· A defined and rigorous investment appraisal process.
· Acquire portfolios, which offer Shareholders diversification of
investment risk by investing in a range of geographical areas, number of
properties.
· Supply and demand market information is reviewed continuously to
assist in acquisitions and disposals.
· All the above steps are monitored to ensure the strategy is
implemented.
· Predominately, acquiring office properties in the UK and outside of · The Company continues to purchase properties in the UK outside the
the M25 motorway. However, the Group may invest in property portfolios in M25 motorway.
which up to 50% of the properties (by market value) are situated within the
M25 motorway.
· No single property, in the ordinary course of business, is expected · 300 Bath Street (2023: 300 Bath Street) is the highest valued
to exceed 10% of the Company's aggregate Investment Properties valuation. property, which equates to 2.9% (2023: 2.8%) of the Company's investment
However, the Board may, in exceptional circumstances, consider a property properties.
having a value of up to 20% of the Company's investment property value at the
time of investment.
· No more than 20% of the Company's investment property value shall be · The Company's largest single tenant exposure is 2.8% (2023: 2.5%) of
exposed to any single tenant or group undertaking of that tenant. gross rental income, being EDF Energy Ltd. (2023: EDF Energy Ltd.).
· Speculative development (i.e., properties under construction, but · No speculative construction was undertaken during the year under
excluding any refurbishment works, which have not been pre-let) is prohibited. review.
· The value of the properties is protected as far as possible by an · The Asset Manager continues to actively manage the investment
active asset management programme, which is regularly reviewed against the properties in accordance with market conditions and the individual asset
business plan for each property. programme.
2. Valuation
Potential Impact Mitigation Movement in the period ö
The valuation of the Company's portfolio affects its profitability and net · The Company's external valuer, Colliers International Property · Colliers International Property Consultants Ltd. independently
assets. Consultants Ltd, provide independent valuations for all properties on a provides the valuation for the entire portfolio, valuing each individual
six-monthly basis in accordance with the RICS Red Book. asset.
· The Audit Committee has the opportunity to discuss the basis of the
valuations with the external valuer. The Audit Committee membership includes
an experienced chartered surveyor.
· The Asset Manager's experience and extensive knowledge of the
property market. The Asset Manager is able to challenge the external valuers'
findings.
· The Company's Auditor engages an independent third party to evaluate
the Colliers International Property Consultants Ltd valuations.
3. Healthcare
Potential Impact Mitigation Movement in the period ó
The economic disruption resulting from social health issues could impact · The Asset Manager continues to adapt and, as required, to support · The Company has continued to scrutinise all current risk mitigation
rental income; the ability of Valuers to discern valuations; the ability to tenants. approaches employed and to work closely with all parties.
access funding at competitive rates, adherence to banking
· The property portfolio has been deliberately constituted to ensure a
covenants, maintain a progressive dividend policy, and adhere to the HMRC REIT diverse range of tenants by standard industrial classification; which ensured
regime requirements. the many tenants, being designated as essential services, continued to operate
throughout the recent pandemic.
· Close relationships with lenders ensuring continued dialogue around
covenants and ability to access funding as required at competitive rates.
· Initial vetting of all third-party providers with annual due
diligence reviews, including the review of business continuity capabilities to
minimise when remote working has been necessitated.
4. Economic and Political
Potential Impact Mitigation Movement in the periodó
Significant political events could impact the health of the UK economy, · The Company operates with a sole focus on the UK regions, with no · There remains a risk that property valuations and the occupancy
resulting in borrowing constraints, changes in demand by tenants for suitable foreign currency exchange exposure. It remains well positioned with a market may be impacted by change in the political landscape.
properties, the quality of the tenants, and ultimately the property portfolio deliberately diverse standard industry classification of tenants generating
value. 780 (2023: 978) income streams which are located in areas of expected economic
growth.
· The Board receives advice on macro-economic risks from the Asset and
Investment Manager and other advisers and acts accordingly.
2. Valuation
Potential Impact Mitigation Movement in the period ö
The valuation of the Company's portfolio affects its profitability and net · The Company's external valuer, Colliers International Property · Colliers International Property Consultants Ltd. independently
assets. Consultants Ltd, provide independent valuations for all properties on a provides the valuation for the entire portfolio, valuing each individual
six-monthly basis in accordance with the RICS Red Book. asset.
· The Audit Committee has the opportunity to discuss the basis of the
valuations with the external valuer. The Audit Committee membership includes
an experienced chartered surveyor.
· The Asset Manager's experience and extensive knowledge of the
property market. The Asset Manager is able to challenge the external valuers'
findings.
· The Company's Auditor engages an independent third party to evaluate
the Colliers International Property Consultants Ltd valuations.
3. Healthcare
Potential Impact Mitigation Movement in the period ó
The economic disruption resulting from social health issues could impact · The Asset Manager continues to adapt and, as required, to support · The Company has continued to scrutinise all current risk mitigation
rental income; the ability of Valuers to discern valuations; the ability to tenants. approaches employed and to work closely with all parties.
access funding at competitive rates, adherence to banking
· The property portfolio has been deliberately constituted to ensure a
covenants, maintain a progressive dividend policy, and adhere to the HMRC REIT diverse range of tenants by standard industrial classification; which ensured
regime requirements. the many tenants, being designated as essential services, continued to operate
throughout the recent pandemic.
· Close relationships with lenders ensuring continued dialogue around
covenants and ability to access funding as required at competitive rates.
· Initial vetting of all third-party providers with annual due
diligence reviews, including the review of business continuity capabilities to
minimise when remote working has been necessitated.
4. Economic and Political
Potential Impact Mitigation Movement in the periodó
Significant political events could impact the health of the UK economy, · The Company operates with a sole focus on the UK regions, with no · There remains a risk that property valuations and the occupancy
resulting in borrowing constraints, changes in demand by tenants for suitable foreign currency exchange exposure. It remains well positioned with a market may be impacted by change in the political landscape.
properties, the quality of the tenants, and ultimately the property portfolio deliberately diverse standard industry classification of tenants generating
value. 780 (2023: 978) income streams which are located in areas of expected economic
growth.
· The Board receives advice on macro-economic risks from the Asset and
Investment Manager and other advisers and acts accordingly.
5. Funding
Potential Impact Mitigation Movement in the period ⇩
The Company may not be able to secure · The Asset Manager has a Corporate Finance team dedicated to · LTV decreased to 41.8% (2023: 55.1%)
optimising the Company's funding requirements.
further debt or on acceptable terms, which may impinge upon investment
· Weighted average debt term decreased to 2.9 years (2023: 3.5 years).
opportunities, the ability to grow the Company and distribute an attractive · Funding options are constantly reviewed with an emphasis on reducing
dividend. the weighted average cost of capital and lengthening the weighted average debt · Weighted average cost of capital, including hedging costs was 3.4%
to maturity. (2023: 3.5%).
· Borrowings are currently provided by a range of institutions with
targeted staggered maturities.
· Strong relationships with key long-term lenders.
· Continual monitoring of LTV.
Bank reference interest rates may be set to become more volatile, accompanying · Policy of hedging at least 90% of variable interest rate borrowings. · Continued adherence to the hedging policy.
volatile inflation Fixed, swapped and capped borrowing amounted to 100.0% (31 December 2023:
100.0%)
· Borrowings are currently provided by a range of institutions with
targeted staggered maturities.
Breach of covenants within the Company's funding structure could lead to a · The Asset Manager's corporate finance team reviews the applicable · The Company continues to have headroom against the applicable
cancellation of debt funding if the Company is unable to service the debt. covenants on a regular basis and these are considered in future operational borrowing covenants.
decisions.
· Compliance certificates and requested reports are prepared as
scheduled.
6. Tenant
Potential Impact Mitigation Movement in the period ó
Type of tenant and concentration of tenant could result in lower income from · An active asset management programme with a focus on the Asset · This risk remains stable in view of the increasing diversification of
reduced lettings or defaults. Manager working with individual tenants to assess any occupational issues and properties, tenants and geographies in the portfolio.
to manage any potential bad debts.
· The tenant mix and their underlying activity has continued to
· Diversified portfolio of properties let, where possible, to a large increasingly diversify, with the number of tenants amounting to 780 at the
number of low-risk tenants across a wide range of standard industrial year-end (2023:978).
classifications throughout the UK.
· Potential acquisitions are reviewed for tenant overlap and potential
disposals are similarly reviewed for tenant standard industrial classification
concentration.
A high concentration of lease term maturity and/or break options could result · The portfolio lease and maturity concentrations are monitored by the · The WAULT to first break as at 31 December 2024 was 2.9 years (2023:
in a more volatile contracted rent roll. experienced Asset Manager to minimise concentration. 2.8 years)
· There is a focus on securing early renewals and increased lease · The largest tenant is 2.8% (2023: 2.5%) of the gross rental income,
periods. being EDF Energy Limited.
· The requirement for suitable tenants and the quality of the tenant is · The Asset Management team remains vigilant to the financial
managed by the experienced Asset Manager who maintains close relationships well-being of our current tenants and continues to liaise with tenants and
with current tenants and with letting agents. agents.
6. Tenant
Potential Impact
Mitigation
Movement in the period ó
Type of tenant and concentration of tenant could result in lower income from
reduced lettings or defaults.
· An active asset management programme with a focus on the Asset
Manager working with individual tenants to assess any occupational issues and
to manage any potential bad debts.
· Diversified portfolio of properties let, where possible, to a large
number of low-risk tenants across a wide range of standard industrial
classifications throughout the UK.
· Potential acquisitions are reviewed for tenant overlap and potential
disposals are similarly reviewed for tenant standard industrial classification
concentration.
· This risk remains stable in view of the increasing diversification of
properties, tenants and geographies in the portfolio.
· The tenant mix and their underlying activity has continued to
increasingly diversify, with the number of tenants amounting to 780 at the
year-end (2023:978).
A high concentration of lease term maturity and/or break options could result
in a more volatile contracted rent roll.
· The portfolio lease and maturity concentrations are monitored by the
experienced Asset Manager to minimise concentration.
· There is a focus on securing early renewals and increased lease
periods.
· The requirement for suitable tenants and the quality of the tenant is
managed by the experienced Asset Manager who maintains close relationships
with current tenants and with letting agents.
· The WAULT to first break as at 31 December 2024 was 2.9 years (2023:
2.8 years)
· The largest tenant is 2.8% (2023: 2.5%) of the gross rental income,
being EDF Energy Limited.
· The Asset Management team remains vigilant to the financial
well-being of our current tenants and continues to liaise with tenants and
agents.
7. Financial and Tax Changes
Potential Impact Mitigation Movement in the period ó
Changes to the UK REIT and non-REIT regimes tax and financial legislation. · The Board receives advice on these changes where appropriate and will · Advice is received from several corporate advisers, including tax
act accordingly. adviser KPMG LLP and the Company adapts to changes as required.
8. Operational
Potential Impact Mitigation Movement in the period ó
Business disruption could impinge on the normal operations of the Company. · The Asset Manager and Investment Adviser each have contingency plans · Both the Asset Manager and Investment Adviser annually review their
in place to ensure there are no disruptions to the core infrastructure which Disaster and Business Continuity Plans.
would impinge on the normal operations of the Company.
· An annual due diligence exercise is carried out on all principal · The annual due diligence visits were undertaken with the Company's
third-party service providers. principal third-party service providers. No concerns were identified from the
visits.
· As an externally managed investment company, there is a continued · Both the Asset and Investment Adviser are viable going concerns.
reliance on the Asset Manager and Investment Adviser and other third-party
service providers.
· All acquisitions undergo a rigorous due diligence process and all · The Asset Manager continues to monitor changes in Health and Safety
multi-let properties undergo an annual comprehensive fire risk. regulations.
· The impact of physical damage and destruction to investment · The Asset Manager reviews the adequacy of insurance cover on an
properties is mitigated by ensuring all are covered by a comprehensive ongoing basis.
building, loss of rent and service charge plus terrorism insurance with the
exception of a small number of "self-insure" arrangements covered under
leases.
Information security and cyber threat resulting in data loss, or negative · The Asset Manager and Investment Adviser each has a dedicated · The Managers review the respective Information Technology policies
regulatory, reputational, operational (including GDPR), or financial impact. Information Technology team which monitors information security, privacy risk and the material third-party service suppliers as required to ensure they
and cyber threats ensuring their respective operations are not interrupted. reflect current and possible future threats.
· As required the building management systems are reviewed for cyber
security risk.
9. Accounting, Legal, and Regulatory
Potential Impact Mitigation Movement in the period ó
Changes to accounting, legal and/or regulatory legislation, including · Robust processes are in place to ensure adherence to accounting, · The Company continues to receive advice from its corporate advisers
sanctions could result in changes to current operating processes. legal and regulatory requirements, including sanctions and Listing Rules. and has incorporated changes where required.
· All contracts are reviewed by the Company's legal advisors. · The Administrator and Company Secretary continue to attend all Board
meetings and advise on Listing Rule requirements in conjunction with the
· The Administrator, Sub-Administrator and the Company Secretary attend Corporate Broker and Financial Adviser.
relevant Board meetings in order to be aware of all announcements that need to
be made.
· All compliance issues are raised with the Company's Financial
Adviser.
Loss of REIT status · The HMRC REIT regime requirements are monitored by the Asset and · The Company continues to receive advice from external advisers on any
Investment Manager, and external advisors including the Company's tax adviser anticipated future changes to the REIT regime.
KPMG LLP and its Sub-Administrator Waystone Administration Solutions (UK)
Limited.
10. Environmental and Energy Efficiency Standards
Potential Impact Mitigation Movement in the period ó
The Company's cost base could be impacted, and management time diverted, due · The Board receives regular updates on environmental, social, · Additional attention continues to be devoted to this area to ensure
to climate changes and associated legislation. governance and potential legislation changes from its advisers. the appropriate approach is applied and embedded in Company activities.
· The Company has engaged an environmental consultancy, CBRE, to assist
with improving the Global Real Industry Sustainability Benchmark (GRESB).
Changes to the environment could impact upon the operations of the Company. · Property acquisitions undergo a rigorous due diligence process, · The rigour of the environmental assessments process continues to be
including an environmental assessment. reviewed with the aim of enhancing it.
· The Asset Manager monitors the portfolio for any detrimental
environmental impact, by way of frequent inspections of the properties, and
the annual insurance review process.
An Energy Performance Rating of E and below may impact the Company's ability · The Company continues to review each property to ensure adherence · The Asset Manager is continually reviewing the feasibility of
to sell or lease an asset. with Energy Performance Rating requirements. enhancing Energy Performance Ratings to exceed the minimum requirement.
· The energy efficiency of investment acquisitions is fully considered
as part of the due diligence process for the acquisition of a property.
Changes to the Principal Risks and Uncertainties
The Board, via the Audit Committee, has reviewed and agreed the movement
during the year to each of the identified principal risks and uncertainties
following review of these risks, having considered the characteristics of
these and the broader economic and geopolitical factors influencing them.
A potential emerging risk is the adoption of artificial intelligence in
office-based roles, which could pose both a risk and opportunity for the
demand of office space. The Board, alongside the Asset and Investment Manager,
continues to monitor developments in this area.
The potential impact of these risks on the Company's long-term strategy is
considered evaluated to ensure informed decision-making and proactive
management.
SUSTAINABILITY REPORT
The Sustainability Report is provided in the full Annual Report.
Extract FROM the Directors' REPORT
The full Directors' Report, which includes the Corporate Governance Statement,
is provided in the full Annual Report.
Share Capital
As at 31 December 2024, the Company's total issued share capital was
162,088,483* Ordinary Shares (2023: 515,736,583).
On 18 July 2024, shareholders approved a Capital Raising and Share
Consolidation and the Company raised approximately £110.5 million of gross
proceeds, in aggregate, by way of a fully underwritten Placing, Overseas
Placing and Open Offer of 1,105,149,821 New Ordinary Shares. Following
completion of the Capital Raising, the Ordinary Shares were consolidated at
the Consolidation Ratio of one Consolidated Share for every 10 Ordinary
Shares.
All of the Company's Ordinary Shares are listed on the Main Market segment of
the London Stock Exchange and each Ordinary Share carries one vote.
There is only one class of Ordinary Shares in issue for the Company, in
adherence to the REIT requirements. The only other shares the Company may
issue are particular types of non-voting restricted preference shares, of
which none (2023: none) are currently in issue.
At the AGM held on 5 August 2024, the Directors were granted authority to
allot Ordinary Shares on a non- pre-emptive basis for cash up to a maximum
number of 16,208,864 Shares (being 10% of the issued share capital on 19 July
2024). The Directors were also granted the authority to disapply pre-emption
rights in respect of the allotment of Ordinary Shares up to a maximum number
of 16,208,864 Shares (being 10% of the issued share capital on 19 July 2024)
where the allotment of such Shares is for the sole purpose of financing an
acquisition or other capital investment as defined by the Pre-Emption Group's
Statement of Principles.
No shares were issued under these authorities during the year under review,
and the authorities will expire at the Company's 2025 AGM where resolutions
for their renewal will be sought, or, if sooner, on 5 November 2025.
At the AGM held on 5 August 2024, the Company was authorised to purchase up to
a maximum of 16,208,864 of its own Ordinary Shares (being 10% of the Company's
issued share capital on 19 July 2024).
No shares have been purchased under this authority during the year under
review, which will expire at the Company's 2025 AGM where a resolution for its
renewal will be sought, or, if sooner, on 5 November 2025.
* During the year the Company offered 15 new ordinary shares for every 7
existing shares. This resulted in an increase of 1,105,149,821 Ordinary Shares
being issued. Subsequently there was a 10 for 1 split with the resulting
Ordinary shares in issue being 162,088,483.
Restrictions on the Transfer of Shares
Subject to the Articles, as well as applicable foreign securities laws, a
shareholder may transfer all or any of their Ordinary Shares in any manner
which is permitted by Guernsey law or in any other manner which is from time
to time approved by the Board.
If any Ordinary Shares are owned directly, indirectly or beneficially by a
person believed by the Board to be a "Non-Qualified Holder" (see below), the
Board may give notice to such person requiring them either: (i) to provide the
Board within 30 days of receipt of such notice with sufficient satisfactory
documentary evidence to satisfy the Board that such person is not a
Non-Qualified Holder, or (ii) to sell or transfer their Ordinary Shares to a
person who is not a Non-Qualified Holder within 30 days and within such 30
days to provide the Board with satisfactory evidence of such sale or transfer
and pending such sale or transfer, the Board may suspend the exercise of any
voting or consent rights and rights to receive notice of or attend any meeting
of the Company and any rights to receive dividends or other distributions with
respect to such Ordinary Shares.
Where condition (i) or (ii) is not satisfied within 30 days after the serving
of the notice, (i) the person will be deemed, upon the expiration of such 30
days, to have forfeited their Ordinary Shares or (ii) if the Board in its
absolute discretion so determines, the Company may dispose of the Ordinary
Shares at the best price reasonably obtainable and pay the net proceeds of
such a disposal to the former holder.
A Non-Qualifying Holder is defined as any person whose ownership of Ordinary
Shares, or the transfer of Ordinary Shares to such person, may:
• cause the Company's assets to be deemed "plan assets" for the purposes of
the US Internal Revenue Code of 1986 (as amended), or US Employee Retirement
Income Security Act of 1974 (as amended);
• cause the Company to be required to register as an "investment company"
under the US Investment Company Act 1940;
• cause the Company or any of its securities to be required under the US
Exchange Act, the US Securities Act or any similar legislation;
• cause the Company not being considered a "Foreign Private Issuer", as such
term is defined in rule 3b-4(c) under the US Exchange Act;
• cause the Investment Adviser to be required to register as a municipal
Adviser under the US Exchange Act;
• result in the Company being disqualified from issuing securities pursuant
to Rule 506 of Regulation D under the US Securities Act;
• cause a loss of partnership status for US federal income tax purposes or a
termination of the US partnership under US Internal Revenue Code of 1986 (as
amended), Section 708;
• result in a person holding Ordinary Shares in violation of the transfer
restrictions put forth in any prospectus published by the Company from time to
time; or
• cause the Company to be a "controlled foreign corporation" for the
purposes of Section 957 of the US Internal Revenue Code of 1986, (as amended),
or may cause the Company to suffer any pecuniary or tax disadvantage or any
person who is deemed to be a Non-Qualified Holder by virtue of their refusal
to provide the Company with information that it requires in order to comply
with its obligations under exchange of information agreements.
Restrictions on Voting Rights
Other than those discussed above, the Company does not have any restrictions
on shareholder voting rights.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Annual Report and the Group
Financial Statements in accordance with applicable laws and regulations.
Guernsey company law requires the Directors to prepare financial statements
for each financial year. The Directors are required under the UK Listing Rules
of the Financial Conduct Authority to prepare the group financial statements
in accordance with UK-adopted International Accounting Standards.
The financial statements of the Group are required by law to give a true and
fair view of the state of the Group's affairs at the end of the financial
period and of the profit or loss of the Group for that period and are required
by UK-adopted International Accounting Standards to present fairly the
financial position and performance of the Group.
In preparing each of the Group financial statements, the Directors are
required to:
· select suitable accounting policies and then apply them consistently;
· present a true and fair view of the financial position, financial
performance and cash flows of the Company;
· present information, including accounting policies, in a manner that
provides relevant, reliable, comparable and understandable information;
· make judgements and accounting estimates that are reasonable and
prudent;
· state whether they have been prepared in accordance with UK-adopted
International Accounting Standards; and
· prepare the financial statements on the going concern basis unless it
is inappropriate to presume that the Group will continue in business.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Group's transactions; disclose with
reasonable accuracy at any time the financial position of the Group; enable
them to ensure that the financial statements comply with the requirements of
The Companies (Guernsey) Law 2008 and, as regards the Group financial
statements, the UK-adopted International Accounting Standards. They are also
responsible for safeguarding the assets of the Group and hence for taking
reasonable steps for the prevention and detection of fraud and other
irregularities.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on Regional REIT's website.
Legislation in Guernsey governing the preparation and dissemination of
financial statements may differ from legislation in other jurisdictions.
RESPONSIBILITY STATEMENT OF THE DIRECTORS IN RESPECT OF THE CONSOLIDATED
ANNUAL REPORT
Each of the Directors, whose names and functions are found within the full
Annual Report, confirms that to the best of each person's knowledge:
• the financial statements, prepared in accordance with UK-adopted
International Accounting Standards, give a true and fair view of the assets,
liabilities, financial position and profit of the Group and the undertakings
included in the consolidation taken as a whole;
• the Strategic Report, including the Asset and Investment Managers' Report,
includes a fair review of the development and performance of the business and
the position of the Group and the undertakings included in the consolidation
taken as a whole, together with a description of the principal risks and
uncertainties they face; and
• the Annual Report and financial statements for the year ended 31 December
2024, taken as a whole, are fair, balanced and understandable and provide the
information necessary for Shareholders to assess the Group's position,
performance, business model and strategy.
This responsibility statement was approved by the Board of Directors and
signed on its behalf by:
David Hunter
Chairman
24 March 2025
FINANCIAL STATEMENTS
Consolidated Statement of Comprehensive Income for the Year Ended 31 December
2024
Year ended Year ended
31 December 31 December 2023
2024 £'000
Notes £'000
Continuing Operations
Revenue
Rental and property income 5 90,981 91,880
Property costs 6 (45,021) (38,161)
Net rental and property income 45,960 53,719
Administrative and other expenses 7 (9,851) (10,626)
Operating profit before gains and losses on property assets and other 36,109 43,093
investments
Loss on disposal of investment properties 14 (3,180) (726)
Change in fair value of investment properties 14 (56,732) (86,350)
Change in fair value of right of use assets 26 (138) (139)
Operating loss (23,941) (44,122)
Finance income 9 1,394 79
Finance expenses 10 (15,224) (16,210)
Net movement in fair value of derivative financial instruments (1,703)
25 (7,194)
Loss before tax (39,474) (67,447)
Taxation 11 (65) (9)
Total comprehensive losses for the year (39,539)
(attributable to owners of the parent company) (67,456)
Loss per Share - basic and diluted (2023 restated) 12 (33.5)p (82.9)p
The notes below are an integral part of these consolidated financial
statements.
Total comprehensive losses all arise from continuing operations.
Consolidated Statement of Financial Position as at 31 December 2024
31 December 31 December
2024 2023
Notes £'000 £'000
Assets
Non-current assets
Investment properties 14 607,458 687,695
Right of use assets 26 10,849 10,987
Investments in associates 16 276 -
Non-current receivables on tenant loan 17 144 385
Derivative financial instruments 25 11,608 16,009
630,335 715,076
Current assets
Trade and other receivables 18 35,079 32,837
Cash and cash equivalents 19 56,719 34,505
91,798 67,342
Total assets 722,133 782,418
Liabilities
Current liabilities
Trade and other payables 20 (31,647) (33,039)
Deferred income 21 (14,364) (15,597)
Retail eligible bonds 24 - (49,907)
Deferred tax liabilities 22 (741) (708)
(46,752) (99,251)
Non-current liabilities
Bank and loan borrowings 23 (312,323) (365,603)
Lease liabilities 26 (11,444) (11,475)
(323,767) (377,078)
(370,5 (476,329(476(
Total liabilities (370,519) (476,329)
Net assets 351,614 306,089
Equity
Stated capital 27 618,266 513,762
Accumulated losses (266,652) (207,673)
Total equity attributable to owners of the parent company 351,614 306,089
Net asset value per Share - basic and diluted (2023 restated) 28 216.9p 376.2p
The notes below are an integral part of these consolidated financial
statements.
These consolidated group financial statements were approved by the Board of
Directors and authorised for issue on 24 March 2025 and signed on its behalf
by:
David Hunter
Chairman
24 March 2025
Consolidated Statement of Changes in Equity for the Year Ended 31 December
2024
Attributable to owners of the parent company
Stated Accumulated losses
capital £'000 Total
Notes £'000 £'000
Balance at 1 January 2024 513,762 (207,673) 306,089
Total comprehensive losses - (39,539) (39,539)
Dividends paid 13 - (19,440) (19,440)
Shares issued 27 110,515 - 110,515
Cost of shares issued 27 (6,011) - (6,011)
Balance at 31 December 2024 618,266 (266,652) 351,614
For the year ended 31 December 2023
Attributable to owners of the parent company
Stated Accumulated losses
capital £'000 Total
Notes £'000 £'000
Balance at 1 January 2023 513,762 (110,820) 402,942
Total comprehensive losses - (67,456) (67,456)
Dividends paid 13 - (29,397) (29,397)
Balance at 31 December 2023 513,762 (207,673) 306,089
The notes below are an integral part of these consolidated financial
statements.
Consolidated Statement of Cash Flows for the Year Ended 31 December 2024
Year ended Year ended
31 December 31 December
2024 2023
£'000 £'000
Cash flows from operating activities
Loss for the year before taxation (39,474) (67,447)
- Change in fair value of investment properties 56,732 86,350
- Change in fair value of financial derivative instruments 1,703 7,194
- Loss on disposal of investment properties 3,180 726
- Change in fair value of right of use assets 138 139
Finance income (1,394) (79)
Finance expense 15,224 16,210
Increase in trade and other receivables (2,027) (2,380)
Increase/ (decrease) in trade and other payables 295 (3,611)
Decrease in deferred income (1,233) (1,064)
Cash generated from operations 33,144 36,038
Interest paid (13,229) (14,775)
Taxation paid (4) -
Net cash flow generated from operating activities 19,911 21,263
Investing activities
Investments in associates (276) -
Investment property acquisitions and subsequent expenditure (8,249) (10,260)
Sale of investment properties 28,574 24,969
Interest received 1,391 89
Net cash flow generated from investing activities 21,440 14,798
Financing activities
Proceeds received on derivative financial instruments 2,698 1,246
Dividends paid (22,301) (31,978)
Proceeds from share issue 110,515 -
Share issue costs (4,837) -
Bank borrowings advanced - 3,729
Bank borrowings repaid (54,016) (23,771)
Bank borrowing costs paid (761) (495)
Repayment of retail eligible bonds (50,000) -
Lease repayments (435) (435)
Net cash flow used in financing activities (19,137) (51,704)
Net increase/(decrease) in cash & cash equivalents 22,214 (15,643)
Cash and cash equivalents at the start of the year 34,505 50,148
Cash and cash equivalents at the end of the year 56,719 34,505
The notes below are an integral part of these consolidated financial
statements.
Notes to the Consolidated Financial Statements
For the Year Ended 31 December 2024
1. Corporate information
The Group's consolidated financial statements for the year ended 31 December
2024 comprise the results of the Company and its subsidiaries (together
constituting the "Group") and were approved by the Board and authorised for
issue on 24 March 2025.
The Company is a company limited by Shares incorporated in Guernsey under The
Companies (Guernsey) Law, 2008, as amended (the "Law"). The Company's Ordinary
Shares are admitted to the Official List of the Financial Conduct Authority
("FCA") and traded on the London Stock
Exchange ("LSE").
The Company was incorporated on 22 June 2015 and is registered with the
Guernsey Financial Services Commission as a Registered Closed-Ended Collective
Investment Scheme pursuant to The Protection of Investors (Bailiwick of
Guernsey) Law, 2020, as amended, and the Registered Collective Investment
Scheme Rules & Guidance 2021.
The Company did not begin trading until 6 November 2015 when the Shares were
admitted to trading on the LSE.
The nature of the Group's operations and its principal activities are set out
in the Strategic Report.
The address of the registered office is Mont Crevelt House, Bulwer Avenue, St.
Sampson, Guernsey GY2 4LH.
2. Basis of preparation
In accordance with Section 244 of The Companies (Guernsey) Law 2008, the Group
confirms that the financial information for the year ended 31 December 2024
are derived from the Group's audited financial statements and that these are
not statutory accounts and, as such, do not contain all information required
to be disclosed in the financial statements prepared in accordance with
UK-adopted International Accounting Standards.
The statutory accounts for the year ended 31 December 2024 have been audited
and approved, but have not yet been filed.
The Group's audited financial statements for the year ended 31 December 2024
received an unqualified audit opinion and the auditor's report contained no
statement under section 263(2) or 263(3) of The Companies (Guernsey) Law 2008.
The financial information contained within this preliminary statement was
approved and authorised for issue by the Board on 24 March 2025.
2.1 Functional and presentation currency
The financial information is presented in Pounds Sterling, which is also the
functional currency of all Group companies, and all values are rounded to the
nearest thousand (£'000) pounds, except where otherwise indicated.
2.2 Going concern
The Directors confirm that they have a reasonable expectation that the Group
has adequate resources
to continue as a going concern. This expectation is underpinned by having made
an assessment of the Group's ability to continue in operational existence,
giving due consideration to the Group's cashflow forecast, which encompasses
cash resources, rental income, acquisition and disposals of investment
properties, elective and committed capital expenditure, dividend distributions
and the borrowing facilities and the respective maturities.
Following the successful completion of the £110.5 million equity capital
raise in July 2024, the Group ended the year under review with £56.7 million
of cash and cash equivalents, of which £55.9 million was unrestricted cash.
The borrowing facilities remained compliant with all loan covenants, with a
net LTV of c. 41.8%, based upon the value of the Group's investment properties
as at 31 December 2024. Rental income collections remained robust with 98.6%
of rent invoiced in the year collected as at 14 March 2025.
Given the substantial amount of unrestricted cash currently held by the Group
and, with the next borrowing due to mature being the Royal Bank of Scotland,
Bank of Scotland and Barclays £99.8 million facility in August 2026, the
Directors are satisfied that the Group and Company have adequate resources to
continue in operational existence for a period of at least 12 months from the
date that these Financial Statements were approved. Based on the above,
together with available market information, the Directors are not aware of any
material uncertainties that may cast significant doubt upon the Group's
ability to continue as a going concern. Accordingly, the Directors consider
that it is appropriate to continue to prepare the Financial Statements on a
going concern basis.
2.3 Business combinations
At the time of acquisition, the Group considers whether each acquisition
represents the acquisition of a business or the acquisition of an asset. For
an acquisition of a business where an integrated set of activities are
acquired in addition to the property, the Group accounts for the acquisition
as a business combination under IFRS 3 Business Combinations ("IFRS 3").
Where such acquisitions are not judged to be the acquisition of a business,
they are not treated as business combinations. Rather, the cost to acquire the
corporate entity is allocated between the identifiable assets and liabilities
of the entity based upon their relative fair values at the acquisition date.
Accordingly, no goodwill or additional deferred tax arises.
2.4 New standards, amendments and interpretations
New standards, amendments to standards and interpretations which came into
effect for accounting
periods starting on or after 1 January 2024 are as follows:
Amendments to IAS 1 'Presentation of Financial Statements' (effective for
periods beginning on or after 1 January 2024) clarify that liabilities are
classified as either current or non-current, depending on the rights that
exist at the end of the reporting period and not expectations of or actual
events after the reporting date. The amendments also give clarification to the
definition of settlement of a liability.
Amendments to IAS 1 'Presentation of Financial Statements' (effective for
periods beginning on or after 1 January 2024) give clarification with respect
to covenants when assessing whether liabilities are classified as either
current or non-current.
Amendments to IFRS 16 'Leases' (effective for periods beginning on or after 1
January 2024) include requirements to explain how an entity accounts for a
sale and leaseback after the date of transaction.
Amendments to IAS 7 'Cash Flow Statements' and IFRS 7 'Financial Instruments:
Disclosure' (effective for periods beginning on or after 1 January 2024)
require disclosures to enhance the transparency of supplier finance
arrangements and their effects on an entity's liabilities, cash flows and
exposure to liquidity risk.
During the year ended 31 December 2024, none of the above had a material
impact on the financial statements.
2.5 New standards, amendments and interpretations effective for future
accounting periods
A number of new standards, amendments to standards and interpretations are
effective for periods beginning on or after 1 January 2025 and have not been
applied in preparing these financial statements. These are:
IFRS S1 General Requirements for Disclosure of Sustainability-related
Financial Information (effective for periods beginning on or after 1 January
2024 but not yet endorsed for use in the UK).
IFRS S2 Climate-related Disclosures (effective for periods beginning on or
after 1 January 2024 but not yet endorsed for use in the UK).
Amendments to IAS 21 'The Effects of Changes in Foreign Exchange Rates'
(effective for periods beginning on or after 1 January 2025) provides
clarification upon treatment for transactions in a foreign currency that is
not exchangeable into another currency at the measurement date.
IFRS 18 'Presentation and Disclosure in Financial Statements' (effective for
periods beginning on or after 1 January 2027 but not yet endorsed for use in
the UK) replaces IAS 1 'Presentation of Financial Statements'.
IFRS 19 'Subsidiaries without Public Accountability: Disclosures' (effective
for periods beginning on or after 1 January 2027 but not yet endorsed for use
in the UK)) specifies reduced disclosure requirements that an eligible entity
is permitted to apply instead of the disclosure requirements in other IFRS
Accounting Standards.
The Directors are assessing the impact these new amendments and standards will
have on the preparation of the financial statements.
3. Significant accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make
judgements, estimates and assumptions that affect the reported amounts of
revenues, expenses, assets and liabilities at the reporting date. However,
uncertainty about these assumptions and estimates could result in outcomes
that require a material adjustment to the carrying amount of the asset or
liability affected in future periods.
3.1. Critical accounting estimates and assumptions
The principal estimates that may be material to the carrying amount of assets
and liabilities are as follows:
3.1.1 Valuation of investment property
The value of investment property, is determined by independent property
valuation experts to be the estimated amount for which a property should
exchange on the date of the valuation in an arm's length transaction less the
value of assets arising from rent smoothing. Properties have been valued on an
individual basis. The valuation experts use recognised valuation techniques
applying the principles of both IAS 40 and IFRS 13.
The value of the properties has been assessed in accordance with the relevant
parts of the current RICS Red Book. In particular, we have assessed the fair
value as referred to in VPS4 item 7 of the RICS Red Book. Under these
provisions, the term "Fair Value" means the definition adopted by the
International Accounting Standards Board ("IASB") in IFRS 13, namely "The
price that would be received to sell an asset, or paid to transfer a liability
in an orderly transaction between market participants at the measurement
date". Factors reflected include current market conditions, annual rentals,
lease lengths and location. The significant methods and assumptions used by
the valuers in estimating the fair value of investment property are set out in
note 14.
The fair value of investment property is equal to the independent property
valuer's valuation of £622.5m (2023: £700.7m) less the prepayment for rent
smoothing of £15.0m (2023: £13.0m).
3.2. Critical judgements in applying the Group's accounting policies
In the process of applying the Group's accounting policies, management has
made the following judgements, which have the most significant effect on the
amounts recognised in the financial statements:
3.2.1 Operating lease contracts - the Group as lessor
The Group has acquired investment properties that are subject to commercial
property leases with tenants. The Group has determined, based on an evaluation
of the terms and conditions of the arrangements, particularly the duration of
the lease terms and minimum lease payments, that it retains all of the
significant risks and rewards of ownership of these properties and so accounts
for the leases as operating leases.
3.2.2 Consolidation of entities in which the Group holds less than 50% but has
power to control
Management considered that up until 9 November 2018, the Group had de facto
control of View Castle Limited and its 27 subsidiaries (the "View Castle Sub
Group") by virtue of the amended and restated Call Option Agreement dated 3
November 2015. Following a restructure of the View Castle Sub Group, the
majority of properties held within the View Castle Sub Group now reside in a
new special purpose vehicle ("SPV"). A new call option was entered into dated
9 November 2018 with View Castle Limited and five of its subsidiaries (the
"View Castle Group"). As per the previous amended and restated Call Option
Agreement, under this new option the Group may acquire any of the properties
held by the View Castle Group for a fixed nominal consideration. Despite
having no equity holding, the Group is deemed to have control over the View
Castle Group as the Option Agreement means that the Group is exposed to, and
has rights to, variable returns from its involvement with the View Castle
Group, through its power to control.
3.2.3 Recognition of income
Service charges and other similar receipts are included in net rental and
property income gross of the related costs as the Directors consider the Group
acts as principal in this respect.
4. Summary of significant accounting policies
The accounting policies adopted in this report are consistent with those
applied in the financial statements for the year ended 31 December 2023 and
have been consistently applied for the year ended 31 December 2024. A new
asset class has arisen in the year addressed in the accounting policy 4.3.
4.1 Basis of consolidation
The consolidated financial statements comprise the financial statements of the
Company and its subsidiaries as at the date of the Statement of Financial
Position.
4.2 Subsidiaries
Subsidiaries are all entities (including structured entities) over which the
Group has control. The Group controls an entity when the Group is exposed to,
or has rights to, variable returns from its involvement with the entity and
has the ability to affect those returns through its power over the entity.
Subsidiaries are fully consolidated from the date on which control is
transferred to the Group. They are deconsolidated from the date that control
ceases.
The Group applies the acquisition method to account for business combinations.
The consideration transferred for the acquisition of a subsidiary is the fair
value of the assets transferred, the liabilities incurred to the former owners
of the acquiree and the equity interests issued by the Group. Identifiable
assets and liabilities acquired, and contingent liabilities assumed, in a
business combination are measured initially at their fair values at the
acquisition date. The Group recognises any non-controlling interest in the
acquiree on an acquisition-by-acquisition basis, either at fair value or at
the non-controlling interest's proportionate share of the recognised amounts
of the acquiree's identifiable net assets. Acquisition-related costs are
expensed as incurred.
Any contingent consideration to be transferred by the Group is recognised at
fair value at the acquisition date. Subsequent changes to the fair value of
the contingent consideration are recognised in profit or loss. Contingent
consideration that is classified as equity is not re-measured, and its
subsequent settlement is accounted for within equity.
For acquisitions of subsidiaries not meeting the definition of a business, the
Group allocates the cost between the individual identifiable assets and
liabilities in the Group based on their relative fair values at the date of
acquisition. Such transactions or events do not give rise to goodwill.
Inter-company transactions, balances and unrealised gains and losses on
transactions between Group companies are eliminated in full. When necessary,
amounts reported by subsidiaries have been adjusted to conform to the Group's
accounting policies.
The excess of the consideration transferred, and the amount of any
non-controlling interest in the acquiree over the fair value of the
identifiable net assets acquired, is recognised as goodwill.
4.2.1 Disposal of subsidiaries
When the Group ceases to have control over an entity, any retained interest in
the entity is re-measured to its fair value at the date when control is lost,
with the change in the carrying amount recognised in profit or loss. The fair
value is the initial carrying amount for the purposes of subsequently
accounting for the retained interest as an associate, joint venture or
financial asset. In addition, any amounts previously recognised in other
comprehensive income in respect of that entity are accounted for as if the
Group had directly disposed of the related assets or liabilities. This may
mean that amounts previously recognised in other comprehensive income are
reclassified to profit or loss.
4.3 Associates
Associates are entities over which the investor has significant influence,
being the power to participate in the financial and operating policy decisions
of the investee but is not control or joint control of those policies. and
holds 20% or more of the voting power.
The Group adopts the equity method of accounting on such assets. On initial
recognition, the investment in an associate is recognised at cost, and the
carrying amount is increased or decreased to recognise the investor's share of
the profit or loss of the associate after the date of acquisition less
distributions received.
The Group's share of the Associates' profit or loss is recorded in the
Consolidated Income Statement.
4.4 Segmental information
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision-maker. The chief operating
decision-maker is the person or group that allocates resources to and assesses
the performance of the operating segments of an entity. The Group has
determined that its chief operating decision-maker is the Board of Directors.
After a review of the information provided for management purposes, it was
determined that the Group has one operating segment and therefore segmental
information is not disclosed in these consolidated financial statements. No
single customer comprises in excess of 10% of the Group's revenue in either
2024 or 2023.
4.5 Investment property
Investment property comprises freehold or leasehold properties that are held
to earn rentals or for capital appreciation, or both, rather than for sale in
the ordinary course of business or for use in production or administrative
functions.
Investment property is recognised, usually, on legal completion, when the
risks and rewards of ownership have been transferred, and is measured
initially at cost including transaction costs. Transaction costs include
transfer taxes, professional fees for legal services and other costs incurred
in order to bring the property to the condition necessary for it to be capable
of being utilised in the manner intended. Subsequent to initial recognition,
investment property is stated at fair value. The Group now recognise the fair
value of investment property to be the value calculated by the independent
property valuer less the value of assets arising from rent smoothing. Gains or
losses arising from changes in the fair value are included in the Group's
Consolidated Statement of Comprehensive Income in the period in which they
arise under IAS 40, 'Investment Property'.
Additions to investment property include costs of a capital nature only.
Expenditure is classified as capital when it results in identifiable future
economic benefits, which are expected to accrue to the Group. All other
property expenditure is charged in the Group's Consolidated Statement of
Comprehensive Income as incurred.
Investment properties cease to be recognised when they have been disposed of
or withdrawn permanently from use and no future economic benefit is expected.
The difference between the net disposal proceeds and the carrying amount of
the asset (being the fair value at the start of the financial year) would
result in either gains or losses at the retirement or disposal of investment
property. Any gains or losses are recognised in the Group's Consolidated
Statement of Comprehensive Income in the period of retirement or disposal.
4.6 Derivative financial instruments
Derivative financial instruments, comprising interest rate caps and swaps for
hedging purposes, are initially recognised at fair value and are subsequently
measured at fair value, being the estimated amount that the Group would
receive or pay to sell or transfer the agreement at the period end date,
taking into account current interest rate expectations and the current credit
rating of the lender and its counterparties. The gain or loss at each fair
value remeasurement date is recognised in the Group's Consolidated Statement
of Comprehensive Income.
The Group uses valuation techniques that are appropriate in the circumstances
and for which sufficient data is available to measure fair value, maximising
the use of relevant observable inputs and minimising the use of unobservable
inputs significant to the fair value measurement as a whole.
4.7 Financial assets
The Group classifies its financial assets as at fair value through profit or
loss or at amortised cost, depending on the purpose for which the asset was
acquired. Currently the only assets classified at fair value through profit or
loss are derivative financial instruments.
Assets held at amortised cost arise principally from the provision of goods
and services (e.g. trade and other receivables), but also incorporate other
financial assets where the objective is to hold these assets in order to
collect contractual cash flows which comprise the payment of principal and
interest. They are initially recognised at fair value plus transaction costs
that are directly attributable to their acquisition or issue and are
subsequently carried at amortised cost being the effective interest rate
method, less provision for impairment.
The Group's financial assets comprise, equity investments, 'trade and other
receivables', 'tenant loan' and 'cash and cash equivalents'.
The tenant loan relates to a loan made to a tenant which is subject to
interest. The amount receivable has been recognised at amortised cost using
the effective interest method. Impairment provisions are recognised based on
the expected credit loss model detailed within IFRS 9.
4.8 Trade and other receivables
Trade and other receivables are recognised initially at fair value and
subsequently carried at amortised cost less provision for impairment. Where
the time value of money is material, receivables are carried at amortised cost
using the effective interest method. Impairment provisions are recognised
based on the expected credit loss model detailed within IFRS 9.
The Group recognises a loss allowance for expected credit losses on trade
receivables. The loss allowance is based on lifetime expected credit losses.
Trade receivables are grouped based on shared credit risk characteristics and
the days past due. The amount of expected credit losses is updated at each
reporting date to reflect changes in credit risk since initial recognition.
The expected credit losses on these financial assets are estimated based on
the Group's historical credit loss experience, adjusted for factors that are
specific to the debtors, general economic conditions and an assessment of both
the current as well as the forecast direction of conditions at the reporting
date. Impaired balances are reported net, however, impairment provisions are
recorded within a separate provision account with the loss being recognised
within administration costs within the Consolidated Statement of Comprehensive
Income. On confirmation that the trade receivable will not be collectable, the
gross carrying value of the asset is written off against the associated
provision.
Lease premiums and other lease incentives provided to tenants are recognised
as an asset and amortised over the period from date of lease commencement to
termination date.
4.9 Cash and cash equivalents
Cash and cash equivalents include cash in hand and deposits held at banks with
original maturities of three months or less. Cash also includes amounts held
in restricted accounts that are unavailable for everyday use.
4.10 Trade and other payables
Trade and other payables are initially recognised at their fair value being at
their invoiced value inclusive of any VAT that may be applicable. Payables are
subsequently measured at amortised cost using the effective interest method.
4.11 Bank and other borrowings
All bank and other borrowings (comprising bank loans and retail eligible
bonds) are initially recognised at cost net of attributable transaction costs.
Any attributable transaction costs relating to the issue of the bank
borrowings are amortised through the Group's Statement of Comprehensive Income
over the life of the debt instrument on a straight-line basis. After initial
recognition, all bank and other borrowings are measured at amortised cost,
using the effective interest method.
Bank and other borrowings are derecognised when the obligation under the
liability is discharged or cancelled or expires. When an existing financial
liability is replaced by another from the same lender on substantially
different terms, or the terms of an existing liability are substantially
modified, such an exchange or modification is treated as the derecognition of
the original liability and the recognition of a new liability. The difference
in the respective carrying amounts is recognised in Group's Consolidated
Statement of Comprehensive Income.
4.12 Dividends payable to Shareholders
Equity dividends are recognised and accrued from the date declared and when
they are no longer at the discretion of the Company.
4.13 Rental and property income
Rental income arising from operating leases on investment property is
accounted for on a straight-line basis over the lease terms and is included in
gross rental and property income in the Group's Consolidated Statement of
Comprehensive Income. Initial direct costs incurred in negotiating and
arranging an operating lease are added to the carrying amount of the lease
asset and are recognised as an expense over the lease term on the same basis
as the lease income.
For leases which contain fixed or minimum uplifts, the rental income arising
from such uplifts is recognised on a straight-line basis over the lease term.
Tenant lease incentives are recognised as a reduction of rental revenue on a
straight-line basis over the term of the lease. The lease term is the
non-cancellable period of the lease together with any further term for which
the tenant has the option to continue the lease where, at the inception of the
lease, the Directors are reasonably certain that the tenant will exercise that
option.
Surrender premiums received from tenants to terminate leases or surrender
premises are recognised in the Group's Statement of Comprehensive Income when
the right to receive them arises.
Dilapidation income is recognised in the Group's Statement of Comprehensive
Income when the right to receive it arises.
When the Group is acting as an agent, the commission, rather than gross
income, is recorded as revenue.
Income arising from expenses recharged to tenants is recognised in the year in
which the compensation becomes receivable. Service charges and other similar
receipts are included in net rental and property income gross of the related
costs as the Directors consider the Group acts as principal in this respect.
4.14 Property costs
Non-recoverable property costs contain service and management charges related
to empty properties.
Service and management charges are recognised in the accounting period in
which the services are rendered.
Recoverable property costs contain service charges and other similar costs
which are recognised in the accounting period in which the services are
rendered.
4.15 Interest income
Interest income is recognised as interest accrued on cash balances held by the
Group. Interest charged to a tenant on any overdue rental income is also
recognised within interest income.
4.16 Finance costs
Interest costs are expensed in the period in which they occur. Arrangement
fees that a Group entity incurs in connection with bank and other borrowings
are amortised over the term of the loan.
4.17 Taxation
As the Company is managed and controlled in the UK, it is considered to be tax
resident in the UK.
The tax currently payable is based on the taxable profit/(loss) for the
period. Taxable profit/(loss) differs from net profit/(loss) as reported in
the Consolidated Statement of Comprehensive Income because it excludes items
of income or expense that are taxable or deductible in other years and it
further excludes items that are never taxable or deductible. The Group's
liability for current and deferred tax is calculated using tax rates that have
been enacted or substantively enacted at the date of the Statement of
Financial Position.
The Group elected to be treated as a UK REIT with effect from 7 November 2015.
The UK REIT rules exempt the profits of the Group's UK property rental
business from UK Corporation Tax. Gains on UK properties are also exempt from
tax, provided that they are not held for trading or sold in the three years
after completion of development. The Group is otherwise subject to UK
Corporation Tax.
There are a small number of entities within the Group which fall outside the
REIT rules and are subject to UK taxes on profits and property gains.
4.18 Deferred tax
Deferred tax is provided in full using the liability method on temporary
differences between the carrying amounts of assets and liabilities in the
financial statements and the corresponding tax bases used in the computation
of taxable profit/(loss). The amount of deferred tax provided is based on the
expected manner of realisation or settlement of the carrying amount of assets
and liabilities, using tax rates that are expected to apply in the period when
the liability is settled or the asset is realised based on tax rates (and tax
laws) enacted or substantively enacted at the date of the Statement of
Financial Position. A deferred tax asset is recognised only to the extent that
it is probable that future profits will be available for offset.
The deferred tax liability in relation to investment properties that are
measured at fair value is determined assuming that the property will be
recovered entirely through sale.
Deferred tax has been recognised on the unrealised property valuation
gains/(losses) of properties owned by Group entities which fall outside of the
REIT tax rules.
The current rate of UK Corporation Tax is 25%.
4.19 Stated capital
Stated capital represents the consideration received by the Company for the
issue of Ordinary Shares. Ordinary Shares are classed as equity.
4.20 Share-based payments
The Group has entered into performance fee arrangements with the Asset Manager
and Investment Adviser which depend on the growth in the net asset value of
the Group exceeding a hurdle rate of return over a performance period. The fee
will be partly settled in cash and partly in equity and the equity portion is
therefore a Share-based payment arrangement. The fair value of the obligation
is measured at each reporting period, and the cost recognised as an expense.
The part of the obligation to be settled in Shares is credited to equity
reserves. If circumstances change and the fee is no longer settled by the
issue of Shares, then the amounts previously credited to equity reserves are
reversed. In the current and prior year, no cash or equity rewards have been
made.
4.21 Leased assets
The Group has a number of leases concerning the long-term lease of land
associated with its long leasehold investment properties. These leased assets
are capitalised as "right of use assets" by recognising the present value of
the lease payments as an asset and a financial liability representing the
obligation to make future lease payments.
Right of use assets are valued at fair value and the change in fair value is
recognised in the Consolidated Statement of Comprehensive Income.
The associated financial liability is valued at the present value of future
lease payments using an applicable incremental borrowing rate. The value of
the financial liability is revalued at each reporting date. Lease payments
reduce the financial liability and interest on the financial liability is
recognised in finance costs.
5. Rental and property income
Year ended Year ended
31 December 31 December
2024 2023
£'000 £'000
Rental income - freehold property 53,406 57,845
Rental income - long leasehold property 11,833 12,210
Recoverable service charge income and other similar items 25,742 21,825
Total 90,981 91,880
6. Property costs
Year ended Year ended
31 December 2024 31 December
£'000 2023
£'000
Other property expenses and irrecoverable costs 19,279 16,336
Recoverable service charge expenditure and other similar costs 25,742 21,825
Total 45,021 38,161
7. Administrative and other expenses
Year ended Year ended
31 December 31 December
2024 2023
£'000 £'000
Investment management fees 1,362 1,944
Property management fees 2,541 2,677
Asset management fees 1,360 1,944
Directors' remuneration (see note 8) 265 293
Administration fees 679 727
Legal and professional fees 2,509 2,203
Marketing and promotion 71 87
Other administrative costs 186 194
Allowance/(credit) for doubtful debts 454 542
Abortive refinancing costs 412 -
Bank charges 12 15
9,851 1
Total 9,851 10,626
Services provided by the Company's Auditor and its associates
The Group has obtained the following services from the Company's Auditor and
its associates:
Year ended Year ended
31 December 31 December
2024 2023
£'000 £'000
Fees payable to the Company's Auditor for the audit of the Company's annual 110
accounts
105
Fees payable to the Group's Auditor and its associates for the audit of the 147
Company's subsidiaries
134
Total fees payable for audit services 257 239
Fees payable to the Group's Auditor and its associates for other services:
Audit-related services 33 31
Corporate finance work for the share issue 150 -
Total fees payable to the Group's Auditor and its associates 440 270
8. Directors' remuneration
Key management comprises the Directors of the Company. A summary of the
Directors' emoluments is set out in the Directors' Remuneration Report in the
full Annual Report.
Year ended Year ended
31 December 31 December
2024 2023
£'000 £'000
Directors' fees 243 267
Employer's National Insurance contributions 22 26
Total 265 293
9. Finance income
Year ended Year ended
31 December 31 December
2024 2023
£'000 £'000
Interest income 1,394 79
Total 1,394 79
10. Finance expense
Year ended Year ended
31 December 31 December
2024 2023
£'000 £'000
Interest payable on bank borrowings 11,881 12,517
Amortisation of loan arrangement fees 1,497 875
Bond interest 1,344 2,250
Bond issue costs amortised 93 155
Bond expenses 5 8
Lease interest 404 405
Total 15,224 16,210
11. Taxation
Year ended Year ended
31 December 31 December
2024 2023
£'000 £'000
Corporation tax charge 32 -
Increase in deferred tax liability 33 9
Total 65 9
The current tax charge is reduced by the UK REIT tax exemptions. The tax
charge for the year can be reconciled to the loss in the Consolidated
Statement of Comprehensive Income as follows:
Year ended Year ended
31 December 31 December
2024 2023
£'000 £'000
Loss before taxation (39,474) (67,447)
UK Corporation Tax rate 25.00% 23.52%
Theoretical tax at UK Corporation Tax rate (9,868) (15,864)
Effects of:
Revaluation of investment property 14,183 20,310
Permanent differences (169) (387)
Profits from the tax-exempt business (4,114) (4,059)
Deferred tax movement 33 9
Total 65 9
Permanent differences are the differences between an entity's taxable profits
and its results as stated in the financial statements. These arise because
certain types of income and expenditure are non-taxable or disallowable, or
because certain tax charges or allowances have no corresponding amounts in the
financial statements.
The Group elected to be treated as a UK REIT with effect from 7 November 2015.
The UK REIT rules exempt the profits of the Group's UK property rental
business from corporation tax. Gains on UK properties are also exempt from
tax, provided they are not held for trading purposes or sold in the three
years after completion of development. The Group is otherwise subject to UK
corporation tax.
As a REIT, Regional REIT Ltd is required to pay PID's equal to at least 90% of
the Group's exempted net income. To retain UK REIT status, there are a number
of conditions to be met in respect of the principal company of the Group, the
Group's qualifying activity and its balance of business. The Group continues
to meet these conditions.
UK Corporation Tax arises on entities which form part of the Group
consolidated accounts but do not form part of the REIT group.
Due to the Group's REIT status and its intention to continue meeting the
conditions required to maintain this status for the foreseeable future, no
provision has been made for deferred tax on any capital gains or losses
arising on the revaluation or disposal of investments held by entities within
the REIT group.
No deferred tax asset has been recognised in respect of losses carried
forward.
12. Earnings per Share
Earnings per Share amounts are calculated by dividing (losses)/profits for the
year attributable to ordinary equity holders of the Company by the weighted
average number of Ordinary Shares in issue during the year.
The calculation of basic and diluted earnings per Share is based on the
following:
In accordance with IAS 33 "Earnings per Share", the weighted average number of
shares have been recalculated as though the bonus issue and share
consolidation were in place from 1 January 2024. Consequently, the EPS
calculations for the year ended 31 December 2024 have been restated.
The weighted average number of Ordinary shares in issue for the year ended
December 2023 was previously stated at 515,736,583. This figure has been
multiplied by a bonus factor of 1.5777 representing the bonus issue and 0.1
representing the share consolidation.
Year ended Year ended
31 December 31 December
2024 2023
£'000 £'000
Calculation of earnings per Share
Net loss attributable to Ordinary Shareholders (39,539) (67,456)
Adjustments to remove:
Changes in value of investment properties 56,732 86,350
Changes in value of right of use assets 138 139
Loss on disposal of investment properties 3,180 726
Changes in fair value of interest rate derivatives and financial assets 1,703 7,194
Abortive costs 412 -
Deferred tax charge 33 9
EPRA net profit attributable to Ordinary Shareholders 22,659 26,962
Weighted average number of Ordinary Shares (2023 restated) 118,199,045 81,367,206
Loss per Share - basic and diluted (2023 Restated) (33.5)p (82.9)p
EPRA earnings per Share - basic and diluted (2023 Restated) 19.2p 33.1p
13. Dividends
All dividend rates stated in this note represent the dividend rates announced
to the London Stock Exchange. Following a share issue and 1 for 10 share
consolidation on 29 July 2024, the number of Ordinary Shares in issue
decreased from 515,736,583 Ordinary Shares to 162,088,483 Ordinary Shares.
Year ended Year ended
31 December 31 December
2024 2023
£'000 £'000
Dividend of 1.20 (2023: 1.65) pence per Ordinary Share
for the period 1 October - 31 December 6,188 8,509
Dividend of 1.20 (2023: 1.65) pence per Ordinary Share
for the period 1 January - 31 March 6,189 8,510
Dividend of 2.20 (2023: 1.20) pence per Ordinary Share
for the period 1 April - 30 June 3,566 6,189
Dividend of 2.20 (2023: 1.20) pence per Ordinary Share 3,567
for the period 1 July - 30 September 6,189
Unpaid dividends held by the Registrar (70) -
Total 19,440 29,397
On 22 February 2024, the Company announced a dividend of 1.20 pence per Share
in respect of the period 1 October 2023 to 31 December 2023. The dividend
payment was made on 5 April 2024 to Shareholders on the register as at 1 March
2024.
On 22 May 2024, the Company announced a dividend of 1.20 pence per Share in
respect of the period 1 January 2024 to 31 March 2021. The dividend payment
was made on 2 July 2024 to Shareholders on the register as at 31 May 2024.
On 10 September 2024, the Company announced a dividend of 2.20 pence per Share
in respect of the period 1 April 2024 to 30 June 2024. The dividend payment
was made on 18 October 2024 to Shareholders on the register as at 20 September
2024.
On 13 November 2024, the Company announced a dividend of 2.20 pence per Share
in respect of the period 1 July 2024 to 30 September 2024. The dividend
payment was made on 10 January 2025 to Shareholders on the register as at 22
November 2024.
On 20 February 2025, the Company announced a dividend of 2.20 pence per Share
in respect of the period 1 October 2024 to 31 December 2024. The dividend will
be paid on 4 April 2025 to Shareholders on the register as at 28 February
2025. The financial statements do not reflect this
dividend.
The Board intends to pursue a dividend policy with quarterly dividend
distributions. The level of future payment of dividends will be determined by
the Board having regard to, amongst other things, the financial position and
performance of the Group at the relevant time, UK REIT requirements, and the
interest of Shareholders.
14. Investment properties
In accordance with International Accounting Standard, IAS 40, 'Investment
Property', investment property has been independently valued at fair value by
Colliers International Property Consultants Limited, an accredited independent
valuer with recognised and relevant professional qualifications and with
recent experience in the locations and categories of the investment properties
being valued.
The valuations have been prepared in accordance with the RICS Red Book and
incorporate the recommendations of the International Valuation Standards
Committee which are consistent with the principles set out in IFRS 13.
The valuations are the ultimate responsibility of the Directors. Accordingly,
the critical assumptions used in establishing the independent valuation are
reviewed by the Board.
Group Movement in investment properties for the year ended 31 December 2024 Long Leasehold Property
Freehold Property £'000
£'000 Total
£'000
Valuation at 1 January 2024 562,395 138,325 700,720
Property additions - acquisitions - - -
Property additions - subsequent expenditure 7,286 963 8,249
Property disposals (28,574) - (28,574)
Loss on the disposal of investment properties (3,180) - (3,180)
Change in valuation during the period (45,031) (9,704) (54,735)
Valuation at 31 December 2024 492,896 129,584 622,480
Value advised by the property valuers 492,896 129,584 622,480
Less adjustments for rent smoothing assets (note 18) (13,371) (1,651) (15,022)
Fair Value at 31 December 2024 479,525 127,933 607,458
Group Movement in investment properties for the year ended 31 December 2023
Valuation at 1 January 2023 643,630 145,850 789,480
Property additions - acquisitions 5 85 90
Property additions - subsequent expenditure 7,921 2,249 10,170
Property disposals (25,004) 35 (24,969)
Loss on disposal of investment properties (691) (35) (726)
Change in fair value during the year (63,466) (9,859) (73,325)
Valuation at 31 December 2023 562,395 138,325 700,720
562,395 138,325 700,720
Value advised by the property valuers
Less adjustment for rent smoothing assets (note 18) (9,532) (3,493) (13,025)
Fair Value at 31 December 2023 552,863 134,832 687,695
The net book value of properties disposed of during the year amounted to
£31,754,000 (2023: £25,695,000). The historic cost of the properties is
£850,152,000 (2023:£899,236,000).
Bank borrowings are secured by charges over investment properties held by
certain asset-holding subsidiaries.
The banks also hold charges over the shares of certain subsidiaries and any
intermediary holding companies of those subsidiaries. The independent valuer's
assessment of the value of investment properties secured at 31 December 2024
was £622,480,000 (2023: £700,720,000).
The table below shows the total change in fair value during the year.
31 December 31 December
2024 2023
£'000 £'000
Change in valuation during the period (54,735) (73,325)
Change in rent smoothing assets adjustment (1,997) (13,025)
Total (56,732) (86,350)
The following table provides the fair value measurement hierarchy for
investment property:
Date of valuation: Total Quoted active prices Significant observable inputs Significant unobservable inputs
£'000 (level 1) (level 2) (level 3)
£'000 £'000 £'000
31 December 2024 607,458 - - 607,458
31 December 2023 687,695 - - 687,695
The hierarchy levels are defined in note 30.
It has been determined that the entire investment properties portfolio should
be classified under the level 3 category. The table below shows the movement
in the year on the level 3 category:
Year ended Year ended
31 December 31 December
2024 2023
£'000 £'000
Balance at the start of the year 687,695 789,480
Additions 8,249 10,260
Disposals (28,574) (24,969)
Loss on the disposal of investment properties (3,180) (726)
Change in fair value during the year (56,732) (86,350)
Balance at the end of the year 607,458 687,695
The determination of the fair value of the investment properties held by each
consolidated subsidiary requires the use of estimates such as future cash
flows from investment properties, which take into consideration lettings,
tenants' profiles, future revenue streams, any environmental matters and the
overall repair and condition of the property, and discount rates applicable to
those assets. Future revenue streams comprise contracted rent (passing rent)
and Estimated Rental Value (ERV) after the contract period. In calculating
ERV, the potential impact of future lease incentives to be granted to secure
new contracts is taken into consideration. All these estimates are based on
local market conditions existing at the reporting date.
As at 31 December 2024, the estimated fair value of each property has been
primarily derived using comparable recent market transactions on arm's length
terms and assessed in accordance with the relevant parts of the RICS Red Book.
The impact of climate change on the portfolio and the principal risk around
environmental and energy efficiency standards are disclosed in the Strategic
Report.
Techniques used for valuing investment properties
The following descriptions and definitions relate to valuation techniques and
key significant inputs made in determining the fair values:
· Valuation technique: market comparable method
Under the market comparable method (or market approach), a property's fair
value is estimated based on comparable transactions in the market.
· Significant input: market rental
The rent at which space could be let in the market conditions prevailing at
the date of valuation range: £14,200 - £3,715,000 per annum (2023: £16,200
- £3,237,000 per annum)
· Significant input: rental growth
The decrease in rent is based on contractual agreements: 8.64 % (2023:
decrease 6.49%). There is a gross contracted rent reduction, as per normal
operations it is a combination of property disposals, space under
refurbishments and lease expiries.
· Significant input: equivalent yield
The time-weighted average return that a property will produce including
purchase costs. The equivalent yield generally sits between the net initial
yield and reversionary yield. See below table.
· Unobservable inputs:
The significant unobservable inputs (level 3) are sensitive to changes in the
estimated future cash flows from investment properties such as increases and
decreases in contracted rents, operating expenses and capital expenses, plus
transactional activity in the real estate market.
Geographical and sector specific market evidence reviewed in the course of
preparing the December 2024 valuation had an initial yield range of 6.00% to
25.19% (2023: 5.78% to 15.0%).
As set out within the significant accounting estimates and judgements, the
Group's property portfolio valuation is open to judgement and is inherently
subjective by nature, and actual values can only be determined in a sales
transaction.
Equivalent yield range by sector:
Fair Value ERV Range Significant Unobservable
Inputs
Sector £'000 (per sq ft per annum) Equivalent Yield Range
Industrial £23,075.00 £3.50 - £9.49 6.51% - 24.94%
Retail £22,570.00 £4.50 - £45.02 6.00% - 30.97%
Alternative £12,150.00 £5.00 - £13.50 4.75% - 9.68%
Office by Region
Office South East £106,100.00 £5.00 - £29.01 8.27% - 13.28%
Office South West £59,275.00 £12.28 - £22.90 9.33%- 13.45%
Office Midlands £116,650.00 £3.01 - £35.04 9.05% - 12.13%
Office North West £86,625.00 £6.61 - £29.59 8.57% - 13.14%
Office North East £92,265.00 £5.63 - £30.05 8.18% - 12.90%
Office Wales £18,350.00 £10.00 - £13.50 8.89% - 10.85%
Office Scotland £85,420.00 £4.50 - £24.02 9.09% - 52.34%
Total £622,480.00
The impact of changes to the significant unobservable inputs:
2024 2024 2023 2023
Impact on Impact on Impact on Impact on
statement of statement of statement of statement of
comprehensive financial comprehensive financial
income position income position
£'000 £'000 £'000 £'000
Improvement in ERV by 5% 27,490 27,490 31,464 31,464
Worsening in ERV by 5% (27,009) (27,009) (30,966) (30,966)
Improvement in yield by 0.125% 9,064 9,064 10,361 10,361
Worsening in yield by 0.125% (8,792) (8,792) (10,101) (10,101)
15. Investment in subsidiaries
List of subsidiaries which are 100% owned and controlled by the Group:
Country of incorporation Ownership
%
Beaufort Office Park Management Company Limited United Kingdom 100%
Glasgow Airport Business Park Management Company Limited United Kingdom 100%
Origin Apartments Management Company Limited United Kingdom 100%
Regional Commercial MIDCO Ltd Jersey 100%
RR Aspect Court Ltd Jersey 100%
RR Bennett House Ltd Jersey 100%
RR Bishopgate Street Ltd Jersey 100%
RR Brand Street Ltd Jersey 100%
RR Bristol Ltd Jersey 100%
RR Chancellor Court Ltd Jersey 100%
RR Crompton Way Ltd Jersey 100%
RR Falcon Ltd Jersey 100%
RR Glasgow Ltd Jersey 100%
RR Glasgow II Ltd United Kingdom 100%
RR Harvest Ltd Jersey 100%
RR Hounds Gate Ltd Jersey 100%
RR Milburn House Ltd Jersey 100%
RR Minton Place Ltd Jersey 100%
RR Newstead Court Ltd Jersey 100%
RR Portland Street Ltd Jersey 100%
RR Rainbow (Aylesbury) Ltd Jersey 100%
RR Rainbow (North) Ltd Jersey 100%
RR Rainbow (South) Ltd Jersey 100%
RR Range Ltd Jersey 100%
RR Sea Dundee Ltd United Kingdom 100%
RR Sea Hanover Street Ltd United Kingdom 100%
RR Sea Lamont I Ltd Jersey 100%
RR Sea Lamont II Ltd Jersey 100%
RR Sea Lamont III Ltd Jersey 100%
RR Sea St. Helens Ltd United Kingdom 100%
RR Sea Stafford Ltd United Kingdom 100%
RR Sea Strand Ltd United Kingdom 100%
RR Sea TAPP Ltd Guernsey 100%
RR Sea TOPP Bletchley Ltd Guernsey 100%
RR Sea TOPP I Ltd Guernsey 100%
RR Sheldon Court Ltd Jersey 100%
RR Star Ltd Jersey 100%
RR St Georges House Ltd Jersey 100%
RR St James Court Ltd Jersey 100%
RR Strathclyde BP Ltd Jersey 100%
RR UK (Central) Ltd Jersey 100%
RR UK (Cheshunt) Ltd Jersey 100%
RR UK (Port Solent) Ltd Jersey 100%
RR UK (South) Ltd Jersey 100%
RR Wallington Ltd Jersey 100%
RR Westminster House Ltd Jersey 100%
RR Wing Portfolio Ltd Jersey 100%
Tay Properties Ltd Jersey 100%
TCP Arbos Ltd Jersey 100%
TCP Channel Ltd Jersey 100%
All of the above entities have been included in the Group's consolidated
financial statements.
By virtue of an Amended and Restated Call Option Agreement dated 3 November
2018, the Directors consider that the Group has control of View Castle Limited
and its subsidiaries (the "View Castle Group").
Under this option, the Group has the ability to acquire any of the properties
held by the View Castle Group by issuing an option notice for a nominal
consideration of £1. The recipient of the option notice will be obliged to
convey its title within one month after receipt of the option notice.
Despite having no equity holding, the Group controls the View Castle Group as
the option agreement has the effect that the Group is exposed to, and has
rights to, variable returns from its involvement with the View Castle Group
through its power to control.
The companies which make up the View Castle Group are as follows:
List of subsidiaries that are controlled by the Group: Country of incorporation Control
%
Credential (Wardpark North) Ltd United Kingdom 100%
Credential Estates Ltd United Kingdom 100%
Rocket Unit Trust Jersey 100%
Squeeze Newco 2 Ltd United Kingdom 100%
View Castle Ltd United Kingdom 100%
View Castle (Milton Keynes) Ltd United Kingdom 100%
View Castle (Properties) Ltd United Kingdom 100%
All of the above entities have been included in the Group's consolidated
financial statements up to 31 December 2024.
16. Investment in associates
During the year, the Company invested £276,000 in a new joint venture,
Sugarbird Solar (UK) Limited ("SolarCo"), which represents 40% of the issued
share capital. Sunbird Solar International (Cyprus) Limited contributed
£408,000 (60% of the share capital).
The investment represents a minority interest with significant influence but
not control over SolarCo. SolarCo is operated and managed by Sunbird Solar
International (Cyrpus) Limited.
In addition, the Company has holdings in two property management companies
acquired for nil value.
The table below shows the movement in the investment during the year:
31 December 31 December
2024 2023
£'000 £'000
At start of year - -
Amounts paid for investment 276 -
Share of profits - -
At end of year 276 -
Country of incorporation Holding %
List of companies not wholly owned by the Group:
HCP (Estate Management) Limited United Kingdom 49%
BHSE Chilterns Stokenchurch Management Company Limited United Kingdom 38%
Sugarbird Solarco (UK) Limited United Kingdom 40%
17. Non-current receivables on tenant loans
31 December 31 December
2024 2023
£'000 £'000
At start of year 578 770
Amounts repaid in the year (241) (192)
At end of year 337 578
Asset due within 1 year (note 18) 193 193
Asset due after 1 year 144 385
337 578
During 2016, the Group entered into a loan agreement with a tenant for
£1,926,000. The loan is subject to interest of 4% above the base rate of the
Bank of Scotland on late payments and is repayable in instalments over ten
years. No impairment has been recognised against the non current receivable
as at 31 December 2024 or 31 December 2023.
18. Trade and other receivables
31 December 31 December
2024 2023
£'000 £'000
Gross amount receivable from tenants 9,696 8,704
Less provision for impairment (1,451) (915)
Net amount receivable from tenants 8,245 7,789
Current receivables - tenant loans (note 16) 193 193
Income tax 24 52
Other receivables 1,495 760
Prepayment for rent smoothing (note 14) 15,022 13,025
Prepayments 10,100 11,018
35,079 32,837
The maximum exposure to credit risk is £10,077,000 as disclosed in the
financial instruments table in note 30.1. The Group does not hold any
collateral as security.
The aged analysis of trade receivables that are past due but not impaired was
as follows:
31 December 31 December
2024 2023
£'000 £'000
< 30 days 3,928 3,604
30-60 days 722 650
> 60 days 5,046 4,450
Net amount receivable from tenants 9,696 8,704
Less provision for impairment (1,451) (915)
Net Amount receivable from tenants 8,245 7,789
The Directors consider the fair value of receivables equals their carrying
amount.
The table above shows the aged analysis of trade receivables included in the
table which are past due but not impaired. These relate to tenants for whom
there is no recent history of default.
Provision for impairment of trade receivables movement as follows:
31 December 31 December
2024 2023
£'000 £'000
At start of year 915 902
Provision for impairment in the year 1,739 903
Receivables written off as uncollectable (195) (670)
Unused provision reversed (1,008) (220)
At end of year 1,451 915
Other categories within trade and other receivables do not include impaired
assets. Receivables are written off as uncollectable where there is no
reasonable expectation of recovery.
19. Cash and cash equivalents
31 December 31 December
2024 2023
£'000 £'000
Group
Cash held at bank 55,869 30,679
Restricted cash held at bank 850 3,826
At end of year 56,719 34,035
Comparatives have been re-analysed between restricted and non-restricted
balances.
Restricted cash balances of the Group comprise:
• £850,000 (2023: £3,826,000) of funds held in blocked bank accounts which
are controlled by the Group's lenders and are released once certain loan
conditions are met. The restricted funds arose on net proceeds from investment
property disposals.
The following amounts are not analysed as restricted balances:
• £9,847,000 (2023: £7,863,000) of cash funds represent service charge
income received from tenants for settlement of future service charge
expenditure.
• £2,698,000 (2023: £2,846,000) of cash funds represent tenants' rental
deposits.
The restricted cash balances are all accessible within 90 days so meet the
definition of cash and cash equivalents.
20. Trade and other payables
31 December 31 December
2024 2023
£'000 £'000
Withholding tax due on dividends paid 429 668
Dividends announced but not paid 3,567 6,189
Trade payables 2,377 2,862
Other payables 19,182 15,350
Value added tax 1,974 1,387
Accruals 4,118 6,583
At end of year 31,647 33,039
Other payables principally include rent deposits held and service charge
costs.
The Directors consider the fair value of trade and other payables to equal
their carrying amounts.
21. Deferred income
Deferred rental income of £14,364,000 (31 December 2023: £15,597,000)
represents rent received in advance from tenants.
22. Deferred tax liabilities
31 December 31 December
2024 2023
£'000 £'000
Deferred tax 741 708
At end of year 741 708
The movement on deferred tax liability is shown below:
At start of year 708 699
Deferred tax on the valuation of investment properties 33 9
At end of year 741 708
The deferred tax liability relates to the potential tax liability that may
crystalise when investment properties are sold. It is calculated on the
revaluation gains of investment properties held by the Group which fall
outside of the REIT regime.
23. Bank and loan borrowings
Bank borrowings are secured by charges over investment properties held by
certain asset-holding subsidiaries. The banks also hold charges over the
Shares of certain subsidiaries and any intermediary holding companies of those
subsidiaries. Any associated fees in arranging the bank borrowings unamortised
as at the year-end are offset against amounts drawn on the facilities as shown
in the table below:
31 December 31 December
2024 2023
£'000 £'000
Bank borrowings drawn at start of year 370,750 390,792
Bank borrowings drawn - 3,729
Bank borrowings repaid (54,016) (23,771)
Bank borrowings drawn at end of year 316,734 370,750
Less: unamortised costs at start of year (5,147) (5,527)
Less: loan issue costs incurred in the year (761) (495)
Add: loan issue costs amortised in the year 1,497 875
At end of year 312,323 365,603
Maturity of bank borrowings
Repayable within 1 year - -
Repayable between 1 to 2 years 99,789 -
Repayable between 2 to 5 years 216,945 310,721
Repayable after more than 5 years - 60,029
Unamortised loan issue costs (4,411) (5,147)
312,323 365,603
As detailed in note 24, the Group has no (31 December 2023: £50,000,000)
retail eligible bonds in issue.
The table below lists the Group's borrowings.
Facility Outstanding debt* Maturity Gross Annual interest rate Amortisation
Lender £'000 £'000 date loan to value**
Royal Bank of Scotland, Bank of Scotland and Barclays 99,789 99,789 Aug-26 51.3% 2.40% over 3 months Mandatory prepayment
£ SONIA
Scottish Widows Ltd & Aviva Investors Real Estate Finance 132,630 132,630 Dec-27 51.3% 3.28% Fixed None
Scottish Widows Ltd 34,467 34,467 Dec-28 47.5% 3.37% Fixed None
Santander UK 49,848 49,848 Jun-29 51.0% 2.20% over 3 months Mandatory prepayment
£ SONIA
Total bank borrowings 316,734 316,734
SONIA = Sterling Over Night Indexed Average
* Before unamortised debt issue costs
** Based upon Colliers International Property Consultants limited property
valuations
The percentage of borrowings at variable rates of interest was 47.2% (2023:
43.3%).
The weighted average term to maturity of the Group's debt at the year-end was
2.9 years (2023: 3.5 years).
The weighted average interest rate payable by the Group on its total bank
borrowings, excluding hedging costs, as at the year-end was 5.2% (2023: 5.4%).
The Group weighted average interest rate, including and hedging activity at
the year end, amounted to 3.4% per annum (2023: 3.5% per annum).
The Group has been in compliance with all of the financial covenants relating
to the above facilities as applicable throughout the year covered by these
consolidated financial statements. Each facility has distinct covenants which
generally include: historic interest cover, projected interest cover, LTV
cover and debt service cover. A breach of agreed covenant levels would
typically result in an event of default of the respective facility, giving
the lender the right, but not the obligation, to declare the loan immediately
due and payable. Where a loan is repaid in these circumstances, early
repayment fees will apply, which are generally based on a percentage of the
loan repaid or calculated with reference to the interest income foregone by
the lenders as a result of the repayment.
As shown in note 25, the Group uses a combination of interest rate swaps and
fixed rate bearing loans to hedge against cash flow interest rate risks. The
Group's exposure to interest rate volatility is minimal.
24. Retail Eligible Bonds
The table below shows the movement on the Company's £50,000,000 4.5% Retail
Eligible Bonds that matured on 6 August 2024. These unsecured bonds were
listed on the London Stock Exchange ORB platform until their maturity in the
year.
31 December 31 December
2024 2023
£'000 £'000
Bond principal at start of year 50,000 50,000
Unamortised issue costs at start of year (93) (248)
Amortisation of issue costs 93 155
Maturity (50,000) -
At end of year - 49,907
25. Derivative financial instruments
Interest rate caps and swaps are in place to mitigate the interest rate risk
that arises as a result of entering into variable rate borrowings.
31 December 31 December
2024 2023
£'000 £'000
Fair value at start of period 16,009 24,449
Proceeds received from a reduction in notional amounts (2,698) (1,246)
Revaluation in period (1,703) (7,194)
Fair Value at end of year 11,608 16,009
The calculation of fair value of interest rate caps and swaps is based on the
following calculation: the notional amount multiplied by the difference
between the swap rate and the current market rate and then multiplied by the
number of years remaining on the contract and discounted. Further details can
be found in note 30.1.
During the year the notional amount on derivative instruments was reduced with
a cash amount realised of £2,698,000 (2023: £1,246,000).
The table below lists the hedging and swap notional amounts and rates against
the details of the Group's loan facilities.
Lender Facility Outstanding debt* Maturity Annual interest rate Notional amount Swap/cap rate
£'000 £'000 date £'000
Royal Bank of Scotland, Bank of Scotland and Barclays 99,789 99,789 Aug-26 2.40% over 0.97%
3 mth £ SONIA 54,827 0.97%
44,961
Scottish Widows Ltd & Aviva Investors Real Estate Finance 132,630 132,630
Dec-27 3.28% Fixed n/a n/a
Scottish Widows Ltd 34,467 34,467
Dec-28 3.37% Fixed n/a n/a
Santander UK 49,848 49,848 2.20% over 41,319 1.39%
3 mth £ 8,529 1.39%
Jun-29 SONIA
Total bank borrowings 316,734 316,734
*Before unamortised debt issue costs
SONIA = Sterling Over Night Indexed Average
As at 31 December 2024, the swap notional arrangements were £96.1 million
(2023: £120.4 million) and the cap notional arrangements amounted to £53.5
million (2023: £61.8 million).
The Group weighted average effective interest rate was 3.4% (2023: 3.5%)
inclusive of hedging costs and the Retail Eligible Bond.
The maximum exposure to credit risk at the reporting date is the fair value of
the derivative liabilities.
It is the Group's target to hedge at least 90% of the total debt portfolio
using interest rate derivatives and fixed-rate facilities. As at the year end,
the total proportion of hedged debt equated to 100.0% (2023: 100.0%), as shown
below.
31 December 31 December
2024 2023
£'000 £'000
Total bank borrowings 316,734 370,750
Notional value of interest rate caps and swaps 149,637 182,250
Fixed rate borrowings 167,097 188,500
316,734 370,750
Proportion of hedged debt 100.0% 100.0%
Table may not sum due to rounding
26. Leases
Right of use asset 31 December 31 December
2024 2023
£'000 £'000
At start of year 10,987 11,126
Fair value movement (138) (139)
At end of year 10,849 10,987
Lease liability 31 December 31 December
2024 2023
£'000 £'000
At start of year 11,475 11,505
Lease payments (435) (435)
Interest charges 404 405
At end of year 11,444 11,475
The Group's lease commitments which are now represented by the right of use
asset and lease liability are spread across 10 separate leases with the two
largest leases at Northern Cross Basingstoke and Quantum Court Edinburgh
making up 48% of the balance. Total commitments on leases in respect of land
and buildings are as follows:
Group 31 December 31 December
2024 2023
£'000 £'000
Payable within 1 year 435 435
Payable between 1 and 2 years 435 435
Payable between 2 and 5 years 1,305 1,305
Payable after 5 years 33,563 33,999
At end of year 35,738 36,174
27. Stated capital
Stated capital represents the consideration received by the Company for the
issue of Ordinary Shares.
During the year the Company offered 15 new ordinary shares for every 7
existing shares. This resulted in an increase of 1,105,157,821 Ordinary Shares
being issued. Subsequently, there was a 10 for 1 split with the resulting
Ordinary shares in issue being 162,088,483.
31 December 31 December
2024 2023
£'000 £'000
Group
Issued and fully paid Shares of no par value
At start of the year 513,762 513,762
Shares issued in year 110,515 -
Share issue costs (6,011) -
At end of the year 618,266 513,762
Number of Shares in issue
At start of the year 515,736,583 515,736,583
Shares issued in year 1,105,149,821 -
Reduction in shares (see note above) (1,458,797,921) -
At end of the year 162,088,483 515,736,583
28. Net asset value (NAV) per Share
Basic NAV per Share is calculated by dividing the net assets in the Statement
of Financial Position attributable to ordinary equity holders of the parent by
the number of Ordinary Shares outstanding at the end of the year. See Note 27
for further explanation.
Further detail of the EPRA performance measures can be found in the full
Annual Report.
The number of shares have been recalculated as though the bonus issue and
share consolidation were in place at 31 December 2023.
The number of Ordinary shares in issue at 31 December 2023 was previously
stated at 515,736,583. This figure has been multiplied by a bonus factor of
1.5777 representing the bonus issue and 0.1 representing the share
consolidation.
Prior to this restatement the NAV and EPRA NTA were previously stated at 59.3p
and 56.4p respectively.
31 December 31 December
2024 2023
£'000 £'000
Group
Net asset value per Consolidated Statement of Financial Position 351,614 306,089
Adjustment for calculating EPRA net tangible assets:
Derivative financial instruments (11,608) (16,009)
Deferred tax liability 741 708
EPRA Net Tangible Assets 340,747 290,788
Number of Ordinary Shares in issue (2023 restated) 162,088,483 81,367,206
Net asset value per Share - basic and diluted (2023 restated) 216.9p 376.2p
EPRA Net Tangible Assets per Share - basic and diluted (2023 restated) 210.2p 357.4p
29. Notes to the Statement of Cash Flows
29.1 Reconciliation of changes in liabilities to cash flows arising from
financing activities
Bank loans and borrowings Retail Eligible Bonds
£'000 £'000 Lease liabilities £'000
Total
£'000
Balance at 1 January 2024 365,603 49,907 11,475 426,985
Changes from financing cash flows:
Bank borrowings repaid (54,016) - - (54,016)
Bank and bond borrowing costs paid (761) - - (761)
Repayment of bond - (50,000) - (50,000)
Lease payments - - (435) (435)
Total changes from financing cash flows (54,777) (50,000) (435) (105,212)
Amortisation of issue costs 1,497 93 - 1,590
Unwinding of discount - - 404 404
Total other changes 1,497 93 404 1,994
Balance at 31 December 2024 312,323 - 11,444 323,767
Retail Eligible Bonds
Bank loans and borrowings £'000 Lease liabilities £'000
£'000 Total
£'000
Balance at 1 January 2023 385,265 49,752 11,505 446,522
Changes from financing cash flows:
Bank and bond borrowings advanced 3,729 - - 3,729
Bank borrowings repaid (23,771) - - (23,771)
Bank and bond borrowing costs paid (495) - - (495)
Lease payments - - (435) (435)
Total changes from financing cash flows (20,537) - (435) (20,972)
Amortisation of issue costs 875 155 - 1,030
Unwinding of discount - - 405 405
Total other changes 875 155 405 1,435
Balance at 1 January 2023 365,603 49,907 11,475 426,985
30. Financial risk management
30.1 Financial instruments
The Group's principal financial assets and liabilities are those that arise
directly from its operations: trade and other receivables, trade and other
payables and cash and cash equivalents. The Group's other principal financial
assets and liabilities are bank and other loan borrowings,
amounts due to interest rate derivatives and lease liabilities, the main
purpose of which is to finance the acquisition and development of the Group's
investment property portfolio.
Set out below is a comparison by class of the carrying amounts of the Group's
financial instruments that are carried in the financial statements and their
fair value:
31 December 2024 31 December 2023
Carrying value Fair Carrying value Fair
£'000 value £'000 value
Group £'000 £'000
Financial assets - measured at amortised cost
Trade and other receivables 10,077 10,077 9,127 9,127
Cash and short-term deposits 56,719 56,719 34,505 34,505
Financial assets - measured at fair value through profit or loss
Interest rate derivatives 11,608 11,608 16,009 16,009
Financial liabilities - measured at amortised cost
Trade and other payables (29,244) (29,244) (30,984) (30,984)
Bank and loan borrowings (312,323) (312,323) (365,603) (354,124)
Retail eligible bonds - - (49,907) (46,700)
Lease liability (11,444) (11,444) (11,475) (11,475)
The following financial assets and liabilities are recorded in the
Consolidated Statement of Financial Position at amortised cost but their fair
value is different as disclosed above. Their fair values are determined as
follows:
· The fair value of bank and loan borrowings is determined by reference
to mark-to-market valuations provided by the lenders.
· The fair value of Retail Eligible Bonds is determined by their
published market value.
· The fair value of the lease liability has been determined as the
present value of future cash flows discounted using the Group's incremental
borrowing rate.
The following financial assets and liabilities are recorded in the
Consolidated Statement of Financial Position at fair value which is determined
as follows:
· The fair value of interest rate derivatives is recorded in the
Consolidated Statement of Financial Position and is determined by forming an
expectation that interest rates will exceed strike rates and discounting these
future cash flows at the prevailing market rates as at the year end.
Fair value hierarchy
The following table provides the fair value measurement hierarchy for
financial assets and liabilities measured at fair value through profit or
loss.
Total Quoted active prices Significant observable inputs Significant unobservable inputs
£'000 (level 1) (level 2) (level 3)
£'000 £'000 £'000
Balance at 31 December 2024
Interest rate derivatives 11,608 - 11,608 -
31 December 2023
Interest rate derivatives 16,009 - 16,009 -
The different levels are defined as follows.
Level 1: Quoted (unadjusted) market prices in active markets for identical
assets or liabilities.
Level 2: Valuation techniques for which the lowest level input that is
significant to the fair value measurement is directly or indirectly
observable.
Level 3: Valuation techniques for which the lowest level input that is
significant to the fair value measurement is unobservable.
For assets and liabilities that are recognised in the consolidated financial
statements on a recurring basis, the Group determines whether transfers have
occurred between levels in the hierarchy by reassessing categorisation at the
end of each reporting period.
There have been no transfers between levels during the year.
30.2 Risk management
The Group is exposed to market risk (including interest rate risk), credit
risk and liquidity risk. The Board of Directors oversees the management of
these risks. The Board of Directors reviews and agrees policies for managing
each of these risks that are summarised below.
30.3 Market risk
Market risk is the risk that the fair values of financial instruments will
fluctuate because of changes in market prices. The financial instruments held
by the Group that are affected by market risk are principally the Group's bank
balances along with a number of interest rate swaps entered into to mitigate
interest rate risk.
The Group's interest rate risk arises from long-term borrowings issued at
variable rates, which expose the Group to cash flow interest rate risk.
Borrowings issued at variable rates expose the Group to fair value interest
rate risk. The Group manages its cash flow interest rate risk by using
floating to fixed interest rate swaps, interest rate caps and interest rate
swaps. Interest rate swaps have the economic effect of converting borrowings
from floating rates to fixed rates. Interest rate caps limit the exposure to a
known level.
30.4 Credit risk
Credit risk is the risk that a counterparty will not meet its obligations
under a financial instrument or customer contract, leading to a financial
loss. The Group is exposed to credit risk from both its leasing activities and
financing activities, including deposits with banks and financial
institutions. Credit risk is mitigated by tenants being required to pay
rentals in advance under their lease obligations. The credit quality of the
tenant is assessed based on an extensive credit rating scorecard at the time
of entering into a lease agreement.
Outstanding trade receivables are regularly monitored. The maximum exposure to
credit risk at the reporting date is the carrying value of each class of
financial asset.
30.5 Credit risk related to trade receivables
Trade receivables, primarily tenant rentals, are presented in the Group's
Statement of Financial Position net of provisions for impairment. Credit risk
is primarily managed by requiring tenants to pay rentals in advance and
performing tests around strength of covenant prior to acquisition.
30.6 Credit risk related to financial instruments and cash deposits
One of the principal credit risks of the Group arises with the banks and
financial institutions. The Board of Directors believes that the credit risk
on short-term deposits and current account cash balances is limited because
the counterparties are banks, who are committed lenders to the Group, with
high credit ratings assigned by international credit-rating agencies.
The list of bankers for the Group, with their latest Fitch credit ratings, was
as follows:
Bankers Fitch Ratings
Barclays Bank Plc A Stable
Royal Bank of Scotland A+ Positive
Bank of Scotland plc AA-Stable
Santander UK A+ Stable
Aviva A+ Stable
Scottish Widows Limited A+ Stable
30.7 Liquidity risk
Liquidity risk arises from the Group's management of working capital and,
going forward, the finance charges and principal repayments on its borrowings.
It is the risk that the Group will encounter difficulty in meeting its
financial obligations as they fall due, as the majority of the Group's assets
are investment properties and are therefore not readily realisable. The
Group's objective is to ensure that it has sufficient available funds for its
operations and to fund its capital expenditure. This is achieved by continuous
monitoring of forecast and actual cash flows by management.
The table below summarises the maturity profile of the Group's financial
liabilities based on contractual undiscounted payments:
While the bank borrowings aged liability interest rate derivative aged
liability within the below table are presented separately, the payment
obligation of the bank borrowings is the net of the two balances.
Group at 31 December 2024 Within Between Between After
1 year 1 and 2 years 2 and 5 years 5 years Total
£'000 £'000 £'000 £'000 £'000
Trade and other payables (29,244) - - - (29,244)
Bank borrowings (16,875) (114,129) (233,016) - (364,020)
Interest rate derivatives 6,554 5,025 4,919 - 16,498
Retail eligible bonds - - - - -
Lease liability (435) (435) (1,305) (33,563) (35,738)
(40,000) (109,539) (229,402) (33,563) (412,504)
Group at 31 December 2023 Within Between Between After
1 year 1 and 2 years 2 and 5 years 5 years Total
£'000 £'000 £'000 £'000 £'000
Trade and other payables (30,984) - - - (30,984)
Bank borrowings (20,104) (20,104) (344,139) (62,282) (446,629)
Interest rate derivatives 7,810 7,810 10,735 1,185 27,540
Retail eligible bonds (51,125) - - - (51,125)
Lease liability (435) (435) (1,305) (33,999) (36,175)
(94,838) (12,729) (334,709) (95,096) (537,373)
31. Capital management
The primary objective of the Group's capital management is to ensure that it
remains a going concern and continues to qualify for UK REIT status.
The Group's capital is represented by reserves and bank borrowings. The Board,
with the assistance of the Asset Manager and Investment Adviser, monitors and
reviews the Group's capital so as to promote the long-term success of the
business, facilitate expansion, deliver a quarterly dividend distribution and
to maintain sustainable returns for shareholders.
The Group's policy on borrowings is as follows: the level of borrowing will be
on a prudent basis for the asset class and will seek to achieve a low cost of
funds, while maintaining flexibility in the underlying security requirements
and the structure of both the portfolio and of Regional REIT.
Based on current market conditions, the Board will target Group net borrowings
of 40% of Investment Property Values at any time. However, the Board may
modify the Group's borrowing policy (including the level of gearing) from time
to time in light of then-current economic conditions, relative costs of debt
and equity capital, fair value of the Company's assets, growth and acquisition
opportunities or other factors the Board deems appropriate.
The optimal debt financing structure for the Group will have consideration for
key metrics including: fixed or floating interest rate charged, debt type,
maturity profile, substitution rights, covenant and security requirements,
lender type, diversity and the lender's knowledge and relationship with the
property sector.
32. Operating leases
The future minimum lease payments receivable under non-cancellable operating
leases in respect of the Group's property portfolio are as follows:
Group 31 December 31 December
2024 2023
£'000 £'000
Receivable within 1 year 47,096 51,207
Receivable between 1-2 years 42,215 45,008
Receivable between 2-5 years 85,709 96,923
Receivable after 5 years 66,075 67,798
241,095 260,936
The Group has in excess of 940 operating leases.
The number of years remaining on these operating leases varies between 1 and
997 years. The amounts disclosed above represent total rental income
receivable up to the next lease break point on each lease. If a tenant wishes
to end a lease prior to the break point, a surrender premium will be charged
to cover the shortfall in rental income received.
33. Segmental information
After a review of the information provided for management purposes, it was
determined that the Group has one operating segment and therefore segmental
information is not disclosed in these consolidated financial statements.
34. Transactions with related parties
Transactions with the Directors
The following persons and entities are related parties because they have
significant influence over the reporting entity or are key management
personnel or the reporting entity.
Directors' remuneration is disclosed within the Remuneration Report in the
full Annual Report and note 8 to the financial statements. Directors'
beneficial interests in the Ordinary Shares of the Company are disclosed
within the Directors' Report.
The Asset Manager and Investment Adviser do not meet the definition of a
related party transaction. Full details of the management arrangements are in
the full Annual Report.
35. Subsequent Events
On 20 February 2025, the Company declared the Q4 2024 dividend of 2.20pps,
which will be paid to shareholders on 4 April 2025.
Company Information
Directors
David Hunter (Chairman and Independent Non-Executive Director)
Massy Larizadeh (Senior Independent Non-Executive Director, Chair of the
Nomination
Committee and Management Engagement and Remuneration Committee)
Nicole Burstow (Non-Executive Director)
Frances Daley (Independent Non-Executive Director, Chair of the Audit
Committee)
Stephen Inglis (Non-Executive Director)
Registered office
Regional REIT Limited
Mont Crevelt House
Bulwer Avenue
St. Sampson
Guernsey
GY2 4LH
Regional REIT Limited
ISIN: GG00BSY2LD72
SEDOL: BSY2LD72
Legal Entity Identifier: 549300D8G4NKLRIKBX73
Company website
www.regionalreit.com (http://www.regionalreit.com)
FURTHER INFORMATION
The Company's annual report and accounts for the year ended 31 December 2024
will be available shortly on www.regionalreit.com.
It will also be submitted shortly in full unedited text to the Financial
Conduct Authority's National Storage Mechanism and will be available for
inspection at data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) in accordance
with DTR 6.3.5(1A) of the Financial Conduct Authority's Disclosure Guidance
and Transparency Rules.
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