REG - Regional REIT Ltd - Annual Financial Report 2025 Full Year Results
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RNS Number : 7727X Regional REIT Limited 24 March 2026
24 March 2026
Regional REIT Limited
("Regional REIT", the "Group" or the "Company")
2025 Full Year Results
Resilient operational performance in challenging market in 2025
Positioning the business for the future in 2026
Regional REIT (LSE: RGL), the regional commercial property specialist, today
announces its full year results for the 12 months to 31 December 2025.
Stephen Inglis, Head of ESR Europe LSPIM, Investment Adviser, said:
"Regional REIT delivered good progress last year against its main targets
despite continued challenging market conditions. We strengthened the balance
sheet with a successful multi-bank refinancing of £72.4m of debt, completed
£51.6m of disposals at 1.3% above book value and reduced the LTV to 40.4% at
the end of the year. In addition, in a testing letting market the company
secured 64 new market lettings at 3.9% above 2024 ERV. We are focussed on
continuing this progress in 2026.
However, against a prolonged downturn in the property cycle and with the war
in the Middle East adding to geopolitical and economic uncertainty, the
leasing market remains subdued, with some tenants taking longer to make
decisions, and often choosing not to move at all. While this backdrop
continues to temper near‑term activity, emerging supply constraints for
quality, energy‑efficient space across key UK regional markets provide a
supportive medium‑term outlook.
In this context, the Board feels it is right to act with increased prudence,
targeting* an 8p dividend per share for 2026; distributing a minimum 90% of
the profit from the property rental business going forward in alignment to the
REIT regulation. This will give the Company additional flexibility as we
continue our accretive and essential capital expenditure programme to improve
our assets and benefit from increasing occupier demand for quality space.
Along with our key objectives to maximise leasing activity and reduce void
costs, we remain focused on strengthening the balance sheet further. We are
aiming to achieve disposals at a similar level in 2026 as they were in 2025,
while progressing targeted asset repositioning to drive long‑term value.
The investment case for regional offices remains clear. There is an increasing
supply and demand imbalance for quality office space in the regions, and a
looming shortage of Grade A accommodation conforming to EPC A and B. These
structural trends, supported by limited new construction in recent years, will
ultimately drive higher occupancy in the Regional REIT portfolio and at higher
rents, which will underpin improved valuations over the medium term."
*The dividend target stated in this announcement is a target only and not a
profit forecast. There can be no assurance that this target will be met, or
that the Company will make any distributions at all and it should not be taken
as an indication of the Company's expected future results.
Portfolio valuation
· Portfolio valuation £555.2m (2024: £622.5m) - driven in part by the
sales programme
· Like-for-like portfolio valuation decreased by 5.0% year-on-year,
(3.0% decline excluding capital expenditure adjustment, with the benefits yet
to be captured in the valuation); reflecting a decline of 2.9% in the second
half
· EPRA NTA £315.2m (2024: £340.8m)
Resilient operational performance supporting fully covered dividend
· EPRA EPS 11.8p (2024: 19.2p)
· Dividend declared of 10p (2024:7.8p); fully covered
· Plan to distribute a minimum 90% of the profit from the property
rental business going forward; targeting a dividend of 8 pence per share
dividend for 2026
Continued focus on strengthening the balance sheet
· Disposals at £51.6m (before costs) (2024: £30.8m)
· 2026 targeting a similar quantum of disposals to 2025, with c. £41m
either completed, contracted, under offer, or in negotiation to date
· Net LTV 40.4% (2024: 41.8%)
· Gross borrowings down to £266.2m (2024: 316.7m)
· Cash and cash equivalents £37.7m (2024: £56.7m)
· Successfully refinanced £72.4m debt facility on competitive terms
Strong leasing performance
· Completed 64 new market lettings totalling £3.2m of rent at 3.9%
above 2024 ERV
· EPRA occupancy 75.9% by ERV (2024:77.5%)
· Net rental income £40.3m (2024: £46.0m)
· Rent collection strong at 99.3% (2024: 98.6%)
Executing capital expenditure programme to improve EPC ratings and drive value
84.5% of our portfolio has now attained EPC ratings C plus or better (2024:
82.7%), while EPC B plus and exempt continued to rise to 60.0% (2024: 57.7%).
Portfolio strategy update
Regional REIT continued to make progress in executing its portfolio strategy
in 2025, advancing sales while investing capex to build the core category and
selectively maximising opportunities to enhance the value of non-core sites
ahead of disposal. As this strategy develops, and as the remaining portfolio
strengthens, these disposals will improve the business's overall occupancy
figures.
The Group completed 18 capital expenditure projects in 2025 at a total cost of
£10.1m. These projects span commencement dates in 2024 and 2025. A further 10
projects are currently on site with an estimated cost of £3.9m, and 13
additional projects have been identified for the next stage at a projected
cost of c. £9.4m.
Portfolio segmentation as at 31 December 2025:
Segment £m Portfolio (%) EPRA Occupancy (%)
Core 349.0 62.9% 86.5%
Capex to Core 103.4 18.6% 66.4%
Value Add 55.8 10.0% 46.1%
Sales 47.0 8.5% 54.8%
Core - well positioned to deliver sustainable long-term income
Capex to Core - targeted investment to upgrade assets to secure lettings
Value Add - assets with potential for repositioning and planning gains
Sales - assets targeted for disposal programme
Outlook
There remains a structural supply and demand imbalance in the regional office
market. This is driven by prohibitively high construction costs with the
lowest new UK office construction starts for at least 15 years** and the clear
need for high quality, well located, and energy efficient space outside of
London.
However, market conditions are expected to remain challenging in the near
term, with the broader macroeconomic uncertainty leading to a more cautious
letting market, and the business is likely to face increased costs as a result
of the conflict in the Middle East, the long-term impact of which remains
unclear. In addition, as announced last year, we experienced some significant
tenant breaks in 2025, the full effects of which will be reflected in our
financial metrics in 2026.
Even so, Regional REIT's leasing activity in 2025 combined with the successful
execution of our ongoing disposal programme demonstrates our ability to
deliver upon the strategy for shareholders. With occupiers prioritising high
quality, well located and energy efficient workspace, on the back of the
business's capital expenditure programme, it is well positioned to benefit
when market conditions stabilise.
We hope for a swift end to hostilities in the Middle East and a normalisation
of oil prices, allowing interest rates to resume their downward trend and
economic confidence to resume.
**CoStar, 2026 Regional Office Outlook, Q1 2026
Post period end
Disposals
Since 31 December 2025, the Company has completed 5 disposals and three part
sales for an aggregate total of £12.3m (before costs).
Borrowings
Following the post period end disposals, Group borrowings have been further
reduced by £7.8m to £258.4m.
Lettings
A further 7 notable new lettings and renewals achieved post period end for
44,693 sq.ft. amounting to £0.7m, reflecting 17.0% above ERV.
· The Royals, Altrincham Road, Manchester - Existing tenant Threesixty
Services LLP has renewed existing lease of 8,117 sq. ft. of space at a rental
income of £125,850 (£15.50/ sq. ft.). The lease is to June 2030.
· Woodlands Court, Bristol - Hill Partnerships Ltd. has let 3,584 sq.
ft. of office space to January 2036, with an option to break in 2031, at a
rental income of £73,930 pa (£20.63/ sq. ft.).
· Century Park, Altrincham - Existing tenant Odema Ltd. has renewed
existing lease of 2,618 sq. ft. of space at a rental income of £37,500
(£14.33/ sq. ft.). The lease is to September 2030.
· 300 Bath Street, Glasgow - Securigroup Ltd. has let 9,618 sq. ft. of
space to November 2035 with a break option in 2031, at a rental income of
£246,023 (£25.58/ sq. ft.).
o Additionally, the tenant let a further 2,945 sq. ft. of space to December
2030 with a break option in 2028, at a rental income of £42,702 (£14.50/ sq.
ft.).
· Mochdre Commerce Park, Colwyn Bay - A Nelson & Co Ltd. has
renewed existing lease of 12,971 sq. ft. of space to November 2026 with an
option to break in April 2026, at a rental income of £58,370 pa (£4.50/ sq.
ft.).
· 1 Burgage Square, Merchant Square, Wakefield - Ikaro Group Ltd. has
renewed existing lease of 4,840 sq. ft. of space to October 2032 at a rental
income of £72,600 pa (£15.00/ sq. ft.).
Forthcoming Events
19 May 2026 Q1 2026 Trading update
Q1 2026 Dividend declaration
AGM
8 September 2026 2026 Interim Results
- ENDS -
Enquiries:
Regional REIT Limited
Press enquiries through FTI Consulting
ESR Europe Europe LSPIM Ltd.
Investment Adviser to the Group
Adam Dickinson, Investor Relations, Regional REIT Ltd. Tel: +44 (0) 203 831 9776
Stephen Inglis, Head of ESR Europe LSPIM Ltd. Tel: +44 (0) 141 248 4155
FTI Consulting Tel: +44 (0)20 3727 1000
Financial Communications RegionalREIT@fticonsulting.com (mailto:RegionalREIT@fticonsulting.com)
Dido Laurimore, Giles Barrie, Bryn Woodward
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 Investment Adviser, and ESR Europe Investment Management
Limited, the AIFM.
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
112 properties, 1,146 units and 659 tenants as at 31 December 2025, with a
valuation of c.£555.2m.
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, 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
(https://url.avanan.click/v2/r02/___http:/www.regionalreit.com/___.YXAxZTpzaG9yZWNhcDphOm86NjNiYTA4MjhkYWFjMWMxYzA3ZmYyZTMxYmVlMGJjOTI6Nzo5ZGI4OjZiNGQzODEwNTY5NGE3NzhhZDYyOThlMmQ4ODdmNTY4YThmYjVmNWU4NGRjM2MxMGJjNmUzZmFkOWU2ZjY1Yjk6cDpGOk4)
.
LEI: 549300D8G4NKLRIKBX
FINANCIAL KEY POINTS
Year Ended 31 December 2025
Income focused - opportunistic buying and strategic selling, coupled with
intensive asset management, continues to secure long-term income.
Portfolio Valuation £555.2m (2024: £622.5m)
IFRS NAV per Share 197.0p (2024: 216.9p)
EPRA** NTA per Share 194.4p (2024: 210.2p)
Dividend per share 10.0p (2024: 7.8p)*
Net Loan to Value Ratio*** 40.4% (2024: 41.8%)
Weighted Average Cost of Debt*** 3.3% (2024: 3.4%)
Weighted Average Debt Duration*** 2.6 yrs (2024: 2.9 yrs)
* During 2024 the Company offered 15 new Ordinary Shares for every 7 existing
Ordinary 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 Glossary of
Terms and the EPRA Performance Measures in the full Annual Report.
Operational KEY POINTS
Year Ended 31 December 2025
Income focused with intensive asset management.
Properties 112 (2024: 126)
Units 1,146 (2024: 1,271)
Tenants 659 (2024:780)
Rent Roll £50.4m (2024: £60.7m)
Portfolio by region and sector (by value)
England & Wales 83.4% (2024: 83.4%)
Office 90.3% (2024: 90.7%)
Property disposal proceeds (net of costs) £48.4m (2024: £28.6m)
Number of properties 14 assets and 4 part sales
EPRA Occupancy by ERV* 75.9% (2024: 77.5%)
WAULT to expiry 4.5 yrs (2024: 4.6 yrs)
WAULT to first break by ERV* 2.7 yrs (2024: 2.9yrs)
Net rental & Property income £40.3m (2024: £46.0m)
Average rent* (per sq ft) £14.20 (2024: £13.92)
Average property value £5.0m (2024: £4.9m)
Reversionary yield 12% (2024: 11.6%)
* Alternative Performance Measures. Details are provided in the Glossary of
Terms and the EPRA Performance Measures in the full Annual Report.
PERFORMANCE KEY POINTS
Year ended 31 December 2025
A key focus on delivering high dividend distributions to shareholders.
Dividends declared per Share Pence per share
2025* 10.0
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
* During 2024 the Company offered 15 new Ordinary Shares for every 7 existing
Ordinary Shares. This resulted in an increase of 1,105,149,821 Ordinary Shares
being issued with effect from 19 July 2024. Subsequently there was a 10 for 1
consolidation which took effect on the 29 July 2024, with the resulting
Ordinary Shares in issue being 162,088,483.
Member of FTSE All-Share Index since March 2016.
Member of FTSE EPRA NAREIT UK Index since June 2016.
Chairman's Statement
"Key achievements include delivering significant disposals to reduce debt,
securing refinancing on attractive terms, further aligning the Investment
Adviser's remuneration with shareholder returns, and continuing to improve the
portfolio's EPC ratings."
David Hunter, Chairman
In my first year as Chairman of Regional REIT the Company has made meaningful
progress against its strategy. Key achievements include delivering significant
disposals to reduce debt, securing refinancing on attractive terms, further
aligning the Investment Adviser's remuneration with shareholder returns, and
continuing to improve the portfolio's EPC ratings. However, market conditions
have delayed a recovery in values and in leasing, suppressing earnings, and we
have also had to contend with several significant tenant lease breaks, which
have created income shortfalls and unwelcome void costs. It was, however,
encouraging to see yields stabilise during the year.
Overview
2025 marked a year of meaningful strategic delivery for the Company, albeit
there remains much work to do. We completed £51.6m (before costs) of
disposals, ahead of target, which supported a reduction in LTV to 40.4% by
year end. The year also saw the early refinancing of a £72.4m debt facility
previously due to mature in August 2026, and the restructuring of the
management contract. The latter takes effect from 1 January 2026 and when in
full force will generate c.£0.9m of annual fee savings and strengthen
shareholder alignment. Alongside this, the continued focus on improving the
sustainability profile of the portfolio resulted in 84.5% of assets achieving
EPC C or better, with 60.0% now rated EPC B or above.
The repositioning of the portfolio across the four segments - Core, Capex to
Core, Value Add, and Sales - progressed well during the year. While the
leasing market remained subdued and void costs weighed on income, there was
sustained focus on accelerating the ongoing sales programme. Enquiry levels
for our high quality, energy efficient space demonstrated the continued appeal
of well
located regional offices. Disciplined capital expenditure continued to
underpin improved letting prospects and supported the long-term performance of
Core assets, while disposals continued to streamline the portfolio.
The focus for 2026 is to continue to invest capital to improve the quality and
letting prospects of key properties, reducing void costs and at the same time
to continue to sell under performing and non-core assets. However, we
naturally watch with concern the war in the Middle East and its impact on
interest rates, inflation and growth, all of which inevitably affect real
estate markets.
Financial Resources
The Company's EPRA NTA decreased to £315.2m (IFRS NAV: £319.3m) as at 31
December 2025, representing a decrease of £25.6m from £340.8m (IFRS NAV:
£351.6m) as at 31 December 2024. This decrease was largely a reflection of
previous changes in income following tenant breaks. A strong cash balance of
£37.7m was retained as of 31 December 2025 (2024: £56.7m), of which £37.7m
was
unrestricted (2024: £55.9m).
The Company's debt position, which is comprised entirely of fixed and hedged
interest rate debt, helped the Company mitigate rate volatility. Though the
weighted average cost of debt reduced to 3.3% at the end of 2025 (2024: 3.4%),
the refinancing announced on the 24 December will increase it. The Net
Loan-to-Value (LTV) decreased to 40.4% as of 31 December 2025 (2024: 41.8%).
The Company continues to execute its controlled disposal programme, which
during the period consisted of 14 assets and 4-part sales of assets, amounting
to £51.6m, before costs. The Company will be targeting at least the same
quantum of disposals in 2026.
Sustainability
I am again pleased to report the significant progress achieved by the ESG
Working Party in 2025, with the Company's Global Real Estate Sustainability
Benchmark (GRESB) improving to 76 from 73, with a two Green Star status.
Additionally, we continued to achieve advancements in our EPC ratings and EPRA
sustainability accreditation.
84.5% of our portfolio has now attained EPC ratings C plus or better (compared
with 82.7% on 31 December 2024), while EPC B plus and exempt continued to rise
to 60.0% (compared with 57.7% on 31 December 2024). 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 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
In 2025, although the UK regional office market began to stabilise after three
years of decline, with total investment rising 1.2% year-on-year to £3.1
billion, according to Lambert Smith Hampton (LSH)(1), the year was marked by a
slow start. The first three quarters were below the five-year quarterly
average, but ended strongly in Q4 when investment surged to £1.5
billion-nearly three times Q3 levels and 65% higher than Q4 2024. Growth was
driven primarily by non-London South East offices, which jumped from £0.1
billion in Q3 to £1.2 billion in Q4, while the rest of the UK contributed
steadily at £0.3 billion. Smaller office parks also showed a moderate rebound
in the mid-year quarters. Although total investment remains below the
five-year average, these trends indicate growing investor confidence in the
long-term prospects of regional offices. Cautious optimism is supported by
strong demand for modern, flexible office space, limited prime stock in key
regional cities, and supportive local economic conditions. Workforce trends
continue to influence demand, with 44% of UK employees commuting exclusively
to work, 28% working on a hybrid basis, 13% working fully from home, and the
remaining 15% operating with no fixed place of work or other arrangements in
2025(2).Regional office values are adjusting, with genuine yield compression
expected, particularly for prime assets completing through 2026. Secondary
yields appear to have bottomed at around 13%, reflecting opportunities at
cyclical lows amid constrained supply(3). Transaction volumes are projected to
continue to recover in 2026, driven by quality and sustainability-focused
deals, while the Royal Institution of Chartered Surveyors suggests the market
may be at its cyclical low or entering the early stages of a recovery(4).
(1) Lambert Smith Hampton (January 2026) UK Investment Transactions: Q4 2025
(2) ONS: Opinions and Lifestyle Survey from the Office for National
Statistics, 2025
(3) Lambert Smith Hampton (January 2026) UK Investment Transactions: Q4 2025
(4) RICS (March 2025) RICS survey calls the bottom of the UK commercial real
estate market as yields
harden across all sectors, Royal Institution of Chartered Surveyors.
Dividends
The dividend remains a significant component of total shareholder returns.
During the period under review, the Company declared total dividends of
10.0pps (2024: 7.80pps*). In line with our policy, the Company has paid a
fully covered dividend for 2025, having also paid a covered dividend for 2024.
Since inception, the Company has declared dividends amounting to 75.35pps and
has distributed approximately £267.6m in dividends to shareholders.
Going forward, the Company will distribute a minimum 90% of the profit from
the property rental business, which is in accordance with regulatory
requirements, targeting** a fully covered 8 pence per share dividend for 2026
but will retain earnings where possible to support the Company's accretive and
essential capital expenditure programme. The Board believes this approach is
firmly in shareholders' long‑term interests of improving the quality of the
portfolio to benefit from rental and capital uplift and remains confident in
the Company's strategy and medium‑term outlook.
* During 2024 the Company offered 15 new Ordinary Shares for every 7 existing
Ordinary Shares. This resulted in an increase of 1,105,149,821 Ordinary Shares
being issued. Subsequently there was a 10 for 1 consolidation with the
resulting Ordinary Shares in issue being 162,088,483.
** The dividend target stated in this announcement is a target only and not a
profit forecast. There can be no assurance that this target will be met, or
that the Company will make any distributions at all and it should not be taken
as an indication of the Company's expected future results.
Performance
The Company's total shareholder return for 2025 was +1.1%, versus the return
of +11.1% for the FTSE EPRA NAREIT UK Total return Index over the same period.
The annualised EPRA Total Return was +0.4% p.a. (2024: +0.6% p.a.).
Board Changes
As noted in last year's annual report, I was appointed to the Board with
effect from 2 January 2025, replacing Kevin McGrath as the chairman in March
2025 after the completion of a handover period.
As announced on 21 July 2025, Sarah Whitney was appointed as an Independent
Non-Executive Director to the Board on 4 August 2025, and has subsequently
been appointed to the Audit, Nomination and Management Engagement and
Remuneration Committees. Sarah brings a breadth of relevant experience as a
Chartered Accountant following over 35 years advising companies on strategy,
corporate finance, real estate and economic development matters.
Annual General Meeting
The notice for the 2026 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 and Sarah Whitney will 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
The satisfaction of tenants is fundamental to our ongoing success. We are
committed to providing high-quality workspaces that accommodate diverse
business needs, from small, flexible offices to expansive corporate
headquarters. Proactive engagement with tenants forms an integral component of
our asset management approach, enabling us to better understand their
requirements, address challenges, and enhance their working environments,
particularly in an era where hybrid working has created a need for more
generous working spaces with ancillary facilities.
We are also committed to open and transparent communication with Shareholders
to ensure that the Company's strategy is understood. The Company also supports
shareholder participation; additional information can be accessed at
www.regionalreit.com and within this Annual Report.
Outlook
The supply and demand dynamics for well-located, high-quality office space
continue to support rental performance, enabling reversionary income capture
through targeted investment. Although office conditions remain challenging,
adjusted pricing and selective disposals demonstrate our ability to
crystallise value, alongside initiatives to raise occupancy and reduce vacancy
related costs. With occupiers prioritising efficient, sustainable and engaging
workplaces, the Company is positioned to benefit from stabilising market
conditions using prudent leverage as confidence strengthens across the
commercial property sector.
We hope for a swift end to hostilities in the Middle East and a normalisation
of oil prices, allowing interest rates to resume their downward trend and
economic confidence to resume.
David Hunter
Chairman
23 March 2026
INVESTMENT ADVISER'S REPORT
Stephen Inglis
Head of ESR Europe LSPIM Ltd
Investment Adviser
Overview
The UK commercial property market remained challenging through 2025,
particularly across regional office markets, where subdued leasing activity
and broader economic uncertainty continued to influence sentiment.
Nevertheless, stabilising yields, a tightening supply of high-quality regional
workspace and increased occupier focus on efficient, sustainable buildings
provided early signs of improving fundamentals. In this environment, Regional
REIT's portfolio valuation concluded the year at £555.2m, representing a
like-for-like decline of 5.0%, primarily reflecting income changes from a
small number of tenant lease breaks. Encouragingly, yields remained stable
throughout the second half of the year.
A disciplined and proactive disposals programme underpinned much of the
strategic progress delivered during 2025. Total disposals reached £51.6m
(before costs), ahead of the targeted disposal amount of £50.0m for 2025.
These sales contributed directly to strengthening the balance sheet, reducing
loan-to-value to 40.4% by year-end. In December, the Company also completed
the refinancing of £72.4m of debt originally due to mature in August 2026,
thereby mitigating near-term refinancing risk and improving funding clarity.
Operational performance remained resilient despite market headwinds. During
the year, the business completed 64 new market lettings totalling £3.2m of
rent at 3.9% above 2024 ERV, demonstrating continued demand for well-presented
and well-located space. Rent collection remained extremely strong at 99.3%,
supporting income stability. EPRA occupancy stood at 75.9%, a modest
year-on-year reduction in line with expectations following lease breaks and
disposal activity. Capital expenditure increased to £11.8m, reinforcing the
Company's commitment to improving sustainability, energy performance and
overall tenant appeal. This programme contributed to further improvement in
EPC ratings across the portfolio.
As the business looks ahead to 2026, the priority will be disciplined capital
allocation and continued portfolio repositioning to enhance letting prospects
and reduce void costs. Retaining earnings where appropriate will allow the
Company to fund essential investment in the assets most capable of delivering
long-term value. This approach reflects the impact of previous lease breaks,
the subdued
leasing environment and the need to maintain financial flexibility in the face
of evolving debt costs. Supported by a strengthened balance sheet, stabilising
market conditions and a clear strategic focus, Regional REIT enters the new
year with determination and confidence in its ability to deliver sustained
operational progress and long-term value creation for shareholders.
KEY POINTS FROM 2025
High Level of Rent Collection
Achieved a high level of rent collection. As at 13 March 2026, rent collection
remains robust, with FY 2025 at 99.3%, adjusting for monthly rent and agreed
collections plans, which is similar to the equivalent date in 2025 when 98.6%
had been collected.
Increase in Average Rent
Average rent by let sq. ft. increased by 2.0% from £13.92 per sq. ft. in
December 2024 to £14.20 per
sq. ft. in December 2025.
New Lettings - Greater than ERV
During 2025, 64 new market lettings were completed totalling £3.2m rent roll,
with these lettings being 3.9% above 2024 ERV.
Increase in GRESB Score
The Company submitted its Fourth Global Real Estate Sustainability Benchmark
("GRESB") assessment resulting in an increased score of 76 from 73.
Disposals Programme
Disposals at £51.6m (before costs), (2024: £30.8m).
Debt Refinance and Cost Savings
Early refinancing of a £72.4m debt facility previously due to mature in
August 2026, and the restructuring of the management contract. The latter
takes effect from 1 January 2026 and when in full force will generate c.£0.9m
of annual fee savings and strengthen shareholder alignment.
Investment Activity in the UK Commercial Property Market
In 2025, the UK economy exhibited modest growth but the macro-economic
backdrop was mixed. Real GDP expanded by around 1.3% over the year, up from
1.1% in 2024. Inflation remained above the Bank of England's 2.0% target,
averaging around 3.4%, driven in part by rising energy and core services
prices. Labour market conditions softened, with unemployment rising to 5.2%,
while job vacancies remained subdued, indicating increased slack. Overall,
2025 was characterised by subdued GDP expansion, persistent inflation above
target, and a softening labour market, creating a difficult backdrop for
policymakers and markets.
In 2025, the UK regional office market showed signs of stabilisation with data
from Lambert Smith Hampton (LSH) indicating that total investment edged up 1.2
% year-on-year to £3.1 billion, ending a three-year period of decline.
Investment volumes highlight an improving year-end performance, with Q4
driving a strong and positive finish reaching £1.5 billion, nearly three
times the Q3 2025 level and 65.1% higher than the same quarter in 2024. The
rest of South East Offices led this increase, rising sharply from £0.5
billion in Q3 to £1.2 billion in the final quarter of the year. Investment
volumes in the rest of the UK were more modest, at £0.5 billion in Q4 2025,
but remained consistent with previous quarters, providing a stable
contribution to the total performance. Office parks, while smaller in scale,
contributed steadily throughout the year and showed a moderate rebound in the
middle quarters, adding positively to Q4 2025 results. The first three
quarters of 2025 remained below the five-year quarterly average, reflecting a
slow start. Overall, 2025 reflects a slow start followed by a strong, yet
concentrated, year-end finish(1). Although investment remains below the
five-year average, recent trends suggest growing confidence among investors in
the long-term prospects of regional office.
There are several reasons for cautious optimism: strong demand for modern,
flexible office space, limited prime stock in key regional cities, and
supportive local economic drivers. While macroeconomic risks persist, these
factors indicate the market may be positioned for a gradual upturn. The
broader UK office market is evolving, and although each subsector faces its
own headwinds, businesses continue to require quality office space.
Furthermore, the Office for National Statistics ("ONS") data(2) shows that in
2025, 44% of workers in the UK on average travelled exclusively to work, while
only 13% worked from home fulltime, a drop from 25% in 2021. Additionally,
approximately 28% of the UK workforce were hybrid working in 2025. A recent
survey by Savills highlights that more than 90% of HR professionals believe
that real estate is an important driver in attracting and retaining talent(3).
Regional office values are adjusting, and genuine yield compression is
expected, particularly for prime transactions completing through 2026.
Following significant price corrections, investors can now access
opportunities at cyclical lows amid constrained supply. Transaction volumes
are projected to recover through 2026, driven by deals that prioritise quality
and sustainability. Meanwhile, after a sustained period of outward yield
shift, notional secondary regional yields appear to have bottomed out in Q4 at
around 13%, according to Lambert Smith Hampton(4).
(1) JLL (December 2025): The shifting landscape of UK offices
(2) ONS: Opinions and Lifestyle Survey from the Office for National
Statistics, 2025
(3) Savills & Personnel Today, 2025
(4) Lambert Smith Hampton (January 2026) UK Investment Transactions: Q4 2025
Occupational Demand in the UK Regional Office Market
Avison Young estimates that take-up of office space across nine regional
office markets(5) totalled 7.6 million sq. ft. in 2025, 7.2% below the level
of take-up recorded in 2024 and 3.6% lower than the 5-year average. The annual
fall in take-up can be attributed to decreased demand for city centre offices
with take-up 13.8% lower in 2025. Conversely, out-of-town take-up increased by
3.8% year-on-year from 2.8 million sq. ft. to 2.9 million sq. ft., helping to
sustain overall activity. Looking at quarterly performance, 2025 began
strongly at 2.1 million sq. ft. let during Q1, up 11.7% on the same quarter in
2024, with both city centre and out-of-town offices outperforming. However,
demand was subdued in Q2 and Q3 2025 relative to 2024 figures. Encouragingly,
momentum strengthened again in Q4 2025, with take-up reaching 2.1 million sq.
ft., broadly in line with the 2.2 million sq. ft. recorded in Q4 2024.
Occupational demand was driven by the professional sector, which accounted for
the highest proportion of take-up at 25.6% in 2025. Following the professional
sector, the media & telecoms sector and the public services, education
& health sector and technology accounted for the second and third largest
proportion of take-up in the regional cities, accounting for 15.8% and 14.3%
respectively. Research from Savills shows that the professional sector and the
media & telecoms sector were also the most active sectors over the last
five years(6).
According to data from CoStar(7), there was an increase in availability for
all regional office stock with total supply rising by 1.5% in 2025 to 82.2
million sq. ft. However, research from the British Property Federation shows
that 81% of commercial buildings in major English cities are rated below EPC
B, meaning a large share of the stock is at risk of obsolescence. While
commercial building owners are making gradual year-on-year improvements,
ongoing policy uncertainty means that around 2.0 billion sq. ft. of commercial
real estate in major cities remains below EPC B(8). This raises questions over
how much of the reported availability is genuinely lettable, with substantial
sections of regional markets constrained by ageing, non-compliant buildings
and limited options for occupiers.
Supply constraints are becoming increasingly pronounced at the prime end of
the market. Although overall Grade A availability remains elevated in historic
terms, a clear distinction has emerged between 'conventional' Grade A space
and a much more limited pool of new-generation prime buildings. Demand, driven
by occupiers' flight to quality and stricter energy performance requirements,
is increasingly concentrated on this segment.
As a result, prime space remains relatively scarce, accounting for just 5% of
total availability-down from 9% two years ago-highlighting its limited
presence in the market, according to research from LSH(9).
The research from CoStar indicates that 2025 recorded the lowest level of
construction starts in more than 15 years, totalling just 4.9 million sq. ft.
across ten regional markets. In terms of future development, it is estimated
that approximately 2.5 million sq. ft. of office space is currently under
construction in the Big Nine regional markets. Avison Young expects
refurbishment activity to continue to play a key role in offsetting the
shortfall caused by subdued newbuild starts. This is reflected in the delivery
pipeline, where refurbishments account for 53% of schemes scheduled for
completion in 2026, up from 41% in 2025 and 33% in 2024.
According to monthly data from MSCI, rental value growth held up well for the
rest of UK office markets in the 12 months ended December 2025 with growth of
3.2%(10). Conversely, central London offices experienced slightly more modest
growth of 2.9% over the same period. Avison Young expects rental growth to
continue across most markets during 2026(11). Demand for quality office space
has put an upward pressure on rents, with growth of 4.8% recorded across the
Big Nine regional markets in 2025. According to research from Avison Young,
average headline rents are now
approximately £40.72 per sq. ft.
The Investment Adviser views current supply-demand dynamics as creating a
strong opportunity for repositioning secondary offices. The limited
availability of prime space, combined with a persistent shortfall in
speculative development, creates scope to upgrade fundamentally sound, modern
office buildings to prime specification and capture stronger rental
performance.
Moreover, occupier demand for secondary regional offices may strengthen as
businesses face intensifying cost pressures, particularly in the wake of the
UK Government's latest Business Rates revaluation, effective from April 2026.
The revaluation, undertaken by the Valuation Office Agency, reassesses
rateable values based on more recent rental evidence, and in many prime
city-centre markets this is expected to translate into higher business rates
liabilities. With standard multipliers applying to office properties, and no
targeted relief comparable to that available to parts of the retail and
hospitality sectors, occupiers of prime space are likely to face a marked
increase in overall occupational costs, compounding existing rental and
operating expenses. As a result, cost-sensitive businesses may be compelled to
re-evaluate their space requirements and increasingly consider more affordable
secondary regional locations, where lower rents and comparatively modest
rateable values offer better value and greater flexibility within constrained
operating budgets.
(5) Nine regional office markets mentioned by Avison Young include:
Birmingham, Bristol, Cardiff,
Edinburgh, Glasgow, Leeds, Liverpool, Manchester & Newcastle
(6) Savills: The Regional Office Market Overview, Q4 2025
(7) CoStar, Regional Office Outlook, Q1 2026. 10 regional cities include:
Birmingham, Bristol, Cardiff, Edinburgh, Glasgow, Leeds, Liverpool,
Manchester, Newcastle, Nottingham
(8) British Property Federation, February 2026
(9)LSH, Regional office report, Q3 2025
(10)MSCI (February 2025), MSCI Portfolio Analysis Service
(11)Avison Young, Big Nine Q4 2023, February 2024
Regional REIT's Office Assets
EPRA occupancy of the Group's regional offices of 74.2% as at 31 December 2025
(2024: 76.4%). A like-for-like comparison of the Group's regional offices'
EPRA occupancy, as at 31 December 2025 versus 31 December 2024, shows
occupancy of 74.4% (2024: 76.1%). WAULT to first break was 2.6 years (2024:
2.7 years); like-for-like WAULT to first break of 2.6 years (2024: 2.6 years).
Property Portfolio
As at 31 December 2025, the Group's property portfolio was valued at £555.2
million (2024: £622.5 million), with rent roll of £50.4 million (2024:
£60.7 million), and an EPRA occupancy of 75.9% (2024: 77.5%).
On a like-for-like basis, 31 December 2025 versus 31 December 2024, EPRA
occupancy was 76.0% (2024: 77.3%).
There were 112 properties (2024: 126) in the portfolio, with 1,146 units
(2024: 1,271) and 659 tenants (2024: 780). If the portfolio was fully occupied
at Cushman & Wakefield's view of market rents, the rental income would be
£77.0 million per annum as at 31 December 2025 (2024: £83.2 million).
As at 31 December 2025, the net initial yield on the portfolio was 5.3% (2024:
5.9%), the equivalent yield was 10.5% (2024: 10.4%) and the reversionary yield
was 12.0% (2024: 11.6%).
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 98 501.6 90.3 4.6 74.2 2.6 45.5 15.60 72 108.58 5.1 10.7 12.3
Retail 9 20.3 3.7 0.2 95.5 3.5 1.9 10.16 2.1 97.69 7.2 8.8 9.2
Industrial 4 23.8 4.3 0.4 97.1 2.8 1.9 5.45 2.1 56.81 6.3 7.8 8.2
Other 1 9.6 1.7 0.1 100.0 10.1 1.0 11.97 0.8 113.99 10.6 9.6 7.6
Total 112 555.2 100.0 5.3 75.9 2.7 50.4 14.20 77.0 104.17 5.3 10.5 12.0
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 24 92.2 16.6 1.0 79.8 3.5 8.9 13.82 15.1 90.29 4.1 11.1 12.8
Southeast 18 88.1 15.9 0.7 71.2 2.1 7.9 17.68 11.8 125.44 6.5 10.5 12.0
Northeast 17 95.9 17.3 0.8 76.3 3.2 7.5 14.44 11.9 117.58 5.0 10.0 11.0
Midlands 21 121.2 21.8 1.3 78.8 3.3 11.7 13.31 16.9 93.14 5.4 10.8 12.3
Northwest 14 63.7 11.5 0.7 61.7 1.6 5.9 14.93 9.7 97.17 4.5 10.6 12.3
Southwest 12 54.0 9.7 0.4 79.4 1.6 4.8 15.79 7.3 134.86 5.5 10.9 12.5
Wales 6 40.3 7.2 0.4 91.1 2.9 3.6 10.16 4.3 92.54 7.1 9.1 9.7
Total 112 555.2 100.0 5.3 75.9 2.7 50.4 14.20 77.0 104.17 5.3 10.5 12.0
Tables may not sum due to rounding
Top 15 Investments (market value) as at 31 December 2025
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 Ltd, University of Glasgow, Fairhurst Group LLP, ESR 19.0 3.4 152,478 86.0 1.3 2.5 2.8
Europe LSPIM Ltd
Norfolk House, Office Global Banking School Ltd, Lakbhir Dhillon and Balbier Dhillon, HP Asia Ltd 17.3 3.1 118,530 81.9 1.6 3.2 6.3
Smallbrook
Queensway,
Birmingham
Hampshire Corporate Park, Eastleigh Office Lloyd's Register EMEA, 16.2 2.9 84,043 53.2 1.0 2.1 3.1
Complete Fertility Ltd,
Silverstream Technologies
(UK) Ltd, National
Westminster Bank Plc
Beeston Business Office/ Industrial Metropolitan Housing Trust Ltd, SMS Electronics Ltd, GTT- 15.6 2.8 215,336 82.7 1.2 2.4 4.1
Park, Nottingham EMEA Ltd
1-4 Llansamlet Retail Wren Kitchens Ltd, Dreams Ltd, NCF Furnishings Ltd 14.5 2.6 74,425 100.0 1.2 2.4 3.7
Retail Park,
Nantyffin Rd, Swansea
Eagle Court, Coventry Road, Birmingham Office Virgin Media Ltd, Rexel UK 13.8 2.5 132,690 100.0 1.2 2.5 1.9
Ltd, Goldbeck Construction Ltd
Manchester Green, Manchester Office Chiesi Ltd, Ingredion UK Ltd, Assetz SME Capital Ltd 13.0 2.3 107,760 82.6 1.5 3.1 1.3
Linford Wood Business Park, Milton Keynes Office IMServ Europe Ltd, Senceive Ltd, Autotech Recruit Ltd 12.2 2.2 107,414 67.9 1.2 2.4 2.4
Capitol Park, Leeds Office Hermes Parcelnet Ltd, Harron Homes Ltd, BDW Trading Ltd 11.8 2.1 86,758 100.0 1.1 2.1 2.7
Ashby Park, Ashby Office Ceva Logistics Ltd, Ashfield Healthcare Ltd, Brush Electrical Machines Ltd 11.5 2.1 87,874 92.7 1.2 2.5 2.3
De La Zouch
Orbis 1, 2 & 3, Pride Park, Derby Office Firstsource Solutions UK Ltd, DHU Health Care C.I.C., Tentamus Pharma (UK) Ltd 11.4 2.1 121,884 100.0 1.8 3.6 3.8
Lightyear - Glasgow Office Rolls-Royce Submarines Ltd, Heathrow Airport Ltd, 11.2 2.0 73,499 71.1 1.3 2.6 3.8
Airport, Paisley Loganair Ltd
The Coach Works, Leeds Office Abstract Tech Ltd, Canal & 10.0 1.8 41,122 50.9 0.5 1.0 1.7
River Trust, Virtual College Ltd
Origin 1 & 2, Crawley Office DMH Stallard LLP, Menzies 9.8 1.8 45,856 68.3 0.8 1.6 2.8
LLP, Spirent Communications Plc
Buildings 2, Bear Brook Office Park, Aylesbury Office Utmost Life and Pensions Ltd, Musarubra UK Subsidiary 3 Ltd, Agria Pet 9.7 1.7 61,643 100.0 1.1 2.1 1.6
Insurance Ltd
Total 196.8 35.4 1,511,312 81.4 18.2 36.1 3.1
Tables may not sum due to rounding
Top 15 Tenants (share of rental income) as at 31 December 2025
Tenant Property Sector WAULT to first break (years) Lettable area Annualised gross rent (£m) % of gross rental income
(sq. ft)
Global Banking School Ltd Norfolk House, Birmingham Education 6.9 73,628 1.4 2.8
Virgin Media Limited Eagle Court, Coventry Road, Birmingham Information and 3.0 75,309 1.4 2.7
communication
Southgate Park, Peterborough
EDF Energy Ltd 800 Aztec West, Bristol Electricity, gas, steam and air conditioning supply 4.8 118,850 1.0 2.0
Endeavour House, Sunderland
First Source Solutions UK Ltd Orbis 1, 2 & 3, Pride Park, Derby Administrative and support service activities 2.8 62,433 1.0 2.0
The Secretary of 1 Burgage Square, Wakefield Public sector 3.5 96,654 1.0 1.9
State for Housing,
Bennett House, Stoke On Trent
Communities and Local Government
Waterside Business Park, Swansea
Odeon Cinemas Ltd Kingscourt Leisure Complex, Dundee Information and 9.8 41,542 0.8 1.5
communication
True Potential LLP Newburn & Gateway House, Newcastle Not specified 4.5 54,584 0.6 1.3
SpaMedica Limited 1175 Century Way, Thorpe Park, Leeds Human health and 2.1 40,529 0.6 1.2
Albert Edward House, Preston social work activities
Fairfax House, Wolverhampton
Southgate Park, Peterborough
Foundation Chester Business Park, Chester
DHU Health Care C.I.C. Orbis 1, 2 & 3, Pride Park, Derby Human health and social work 5.3 42,301 0.6 1.1
Lloyds Bank Plc Victory House Meeting House Lane, Medway Financial and insurance activities 0.4 48,372 0.5 1.1
NewFlex Ltd The Genesis Centre, Warrington Real estate activities 1.0 19,087 0.5 1.1
Lloyds Register EMEA Hampshire House, Hampshire Corporate Registered Society 1.4 21,695 0.5 1.0
Park, Eastleigh
Hermes Parcelnet Limited t/a Evri Capitol Park, Leeds Transportation and storage 3.0 25,790 0.5 1.0
Pearson Education Ltd The Lighthouse, Salford Quays, Manchester Education 1.4 24,804 0.5 1.0
Homeserve Membership Limited 1175 Century Way, Thorpe Park, Leeds Construction 1.4 29,468 0.5 0.9
Aspect House, Bennerley Road,
Nottingham
Total 3.8 775,046 11.4 22.7
Tables may not sum due to rounding.
Property Portfolio Sector and Region Splits by Valuation and Income as at 31
December 2025
By Valuation
As at 31 December 2025, 90.3% (2024: 90.7%) of the portfolio by market value
was offices and 3.7% (2024: 3.6%) was retail. The balance was made up of
industrial, 4.3% (2024: 3.7%) and other, 1.7% (2024: 1.7%). By UK region, as
at 31 December 2025, Scotland represented 16.6% (2024: 16.6%) of the portfolio
and England 76.1% (2024: 77.1%); the balance of 7.2% (2024: 6.3%) was in
Wales. In England, the largest regions were the Midlands, the North East and
the South East.
By Income
As at 31 December 2025, 90.4% (2024: 90.5%) of the portfolio by income was
offices and 3.8% (2024: 4.4%) was retail. The balance was made up of
industrial, 3.9% (2024: 3.2%), and other, 1.9% (2024: 1.9%). By UK region, as
at 31 December 2025, Scotland represented 15.7% (2024: 16.0%) of the portfolio
and England 77.1% (2024: 78.0%); the balance of 7.1% was in Wales (2024:
6.0%). In England, the largest regions were the Midlands, the South East and
the North East.
Lease Expiry Profile
The WAULT on the portfolio is 4.5 years (2024: 4.6 years); WAULT to first
break is 2.7 years (2024: 2.9 years). As at 31 December 2025, 12.8% (2024:
13.8%) of income was from leases which will expire within one year, 12.1%
(2024: 10.5%) between one and two years, 37.5% (2024: 39.7%) between two and
five years and 37.7% (2024: 36.1%) after five years.
Tenants by Standard Industrial Classification (SIC)
As at 31 December 2025, 12.3% of income was from tenants in the information
and communication activities sector (2024: 10.5%), 11.5% from the
administrative and support service activities sector (2024: 11.2%), 9.8% from
the wholesale and retail trade sector (2024: 8.7%), 7.5% from the
professional, scientific and technical activities sector (2024: 11.8%) and
6.9% from the education sector (2024: 5.9%). The remaining exposure is broadly
spread.
No tenant represents more than 3.0% of the Group's rent roll as at 31 December
2025, the largest being 2.8% (2024: 2.8%).
FINANCIAL REVIEW
Net Asset Value
Between 1 January 2025 and 31 December 2025, the EPRA NTA* of the Group
decreased to £315.2m (IFRS NAV: £319.3m) from £340.8m (IFRS NAV: £351.6m)
as at 31 December 2024, equating to a decrease in the diluted EPRA NTA of
15.8pps to 194.4pps (IFRS: 197.0pps). This is after the dividends declared in
the period amounting to 9.7pps. (See Note 13).
The investment property portfolio was valued at £555.2m (2024: £622.5m). The
decrease of £67.3m since the December 2024 year-end is a reflection of
revaluation movement loss of £28.6m, £48.4m of net property disposals and
£3.2m loss on the disposal of investment properties, offset by subsequent
expenditure of £11.8m and acquisitions of £1.1m. Overall, on a like-for-like
basis, the portfolio value decreased by 5.0% during the period, after
adjusting for capital expenditure, acquisitions and disposals during the
period.
The table below sets out the acquisitions, disposals and capital expenditure
for the respective periods:
Year ended Year ended
31 December 31 December
2025 (£m) 2024 (£m)
Acquisitions
Net (after costs) 1.2 0.0
Gross (before costs) 1.1 0.0
Disposals
Net (after costs) 48.4 28.6
Gross (before costs) 51.6 30.8
Capital Expenditure
Net (after dilapidations) 11.8 8.2
Gross (before dilapidations) 11.8 8.5
*The Group has determined that EPRA net tangible assets (NTA) is the most
relevant measure.
Further details of the EPRA performance measures are provided in the full
Annual Report.
The diluted EPRA NTA per Share decreased to 194.4pps (2024: 210.2pps). The
EPRA NTA is reconciled in the table below:
£m Pence per Share
Opening EPRA NTA (31 December 2024) 340.7 210.2
Net rental and property income 40.3 24.8
Administration and other expenses (9.9) (6.1)
Loss on the disposal of investment properties (3.2) (2.0)
Change in the fair value of investment properties (26.6) (16.4)
Change in value of right of use assets (0.1) (0.1)
EPRA NTA after operating profit 341.1 210.4
Net finance expense (11.2) (6.9)
Share of loss of associate company 0.0 (0.0)
Realised gain on derivative financial instruments 1.2 0.8
EPRA NTA before dividends paid 331.1 204.3
Dividends paid* (15.7) (9.7)
EPRA NTA before capital raise 315.4 194.6
Capital raise expenses (0.3) (0.2)
Closing EPRA NTA (31 December 2025) 315.2 194.4
Table may not sum due to rounding
* As at 31 December 2025, there were 162,088,483 Ordinary Shares in issue.
Income Statement
Operating profit before gains and losses on property assets and other
investments for the year ended 31 December 2025 amounted to £30.3m (2024:
£36.1m). Loss after finance and before taxation was £16.4m (2024: £39.5m).
2025 included a full rent roll for the portfolio of properties held as at 31
December 2024, plus the partial rent roll for properties disposed of during
the period.
Rental and property income amounted to £60.4m, excluding recoverable service
charge income and other similar items (2024: £65.2m). The decrease was
primarily the result of the decrease in the rent roll being held during the
year to 31 December 2025.
More than 80% of the rental income is collected within 30 days of the due date
and the allowance for doubtful debts in the period amounted to £0.3m (2024:
£0.5m).
Non-recoverable property costs, excluding recoverable service charge income
and other similar costs, amounted to £20.2m (2024: £19.3m), and the rent
roll decreased to £50.4m (2024: £60.7m).
Realised losses on the disposal of 14 of the investment properties and 4-part
sales in the period amounted to £3.2m (2024: 3.2m). The change in the fair
value of investment properties amounted to a loss of £28.6m (2024: loss of
£54.7m) and an adjustment of £2.0m (2024: £2.0m) from rent smoothing.
Net capital expenditure amounted to £11.8m (2024: £8.2m). The change in
value of right of use asset amounted to a charge of £0.1m (2024: charge
£0.1m).
Interest income amounted to £1.0m (2024: £1.4m).
Finance expenses amount to £12.2m (2024: £15.2m). The decrease is due to the
repayment of the £50m Retail Bond in August 2024 and bank borrowing
repayments in 2024 of £54.0m and in 2025 of £50.5m.
The EPRA cost ratio, including direct vacancy costs, was 49.8% (2024: 44.7%).
The EPRA cost ratio, excluding direct vacancy costs was 18.4% (2024: 17.4%).
The ongoing charges for the year ending 31 December 2025 were 9.0% (2024:
9.3%) and excluding direct vacancy costs 3.3% (2024: 3.5%).
The EPRA Total Return from Listing to 31 December 2025 was 4.3% (2024: 5.6%),
with an annualised rate of 0.4% pa (2024: 0.6% pa).
Dividend
In relation to the year from 1 January 2025 to 31 December 2025, the Company
declared dividends totalling 10.00pps (2024: 7.8pps)*. A schedule of dividends
can be found in the full Annual Report.
Going forward, the Company will distribute a minimum 90% of the profit from
the property rental business, which is in accordance with regulatory
requirements, but will retain earnings where possible to support the business'
accretive and essential capital expenditure programme. The Board believes this
approach is firmly in shareholders' long-term interests of improving the
quality of the portfolio to benefit from rental and capital uplift and remains
confident in the Company's strategy and medium-term outlook.
* During 2024 the Company offered 15 new Ordinary Shares for every 7 existing
Ordinary Shares. This resulted in an increase of 1,105,149,821 Ordinary Shares
being issued. Subsequently there was a 10 for 1 consolidation with the
resulting Ordinary Shares in issue being 162,088,483.
Debt Financing and Gearing
Borrowings comprise third-party bank debt. The bank debt is secured over
properties owned by the Group and repayable over the next two to four years.
The weighted average maturity of the bank debt is 2.6 years (2024: 2.9 years).
The Group's borrowing facilities are with the Scottish Widows Limited &
Aviva Investors Real Estate Finance, Royal Bank of Scotland, Bank of Scotland
and Santander UK, Scottish Widows Limited, and Santander UK. The total bank
borrowing facilities at 31 December 2025 amounted to £266.2m (2024: £316.7m)
(before unamortised debt issuance costs), with £nil available to be drawn.
At 31 December 2025, the Group's cash and cash equivalent balances amounted to
£37.7m (2024: £56.7m), of which £37.7m (2024: £55.9m) was unrestricted
cash.
The Group's net loan to value ("LTV") ratio stands at 40.4% (2024: 41.8%)
before unamortised costs.
Debt Profile and LTV Ratios as at 31 December 2025
Facility Outstanding debt* Maturity date Gross loan to value** Annual interest rate
Lender £'000 £'000 % %
Scottish Widows Ltd. and Aviva Investors Real Estate Finance 118,339 118,339 Dec-27 50.8 3.28 Fixed
Royal Bank of Scotland, Bank of Scotland & Santander UK 72,449 72,449 Dec-28 44.9 2.40 over 3mth £ SONIA
Scottish Widows Ltd 32,325 32,325 Dec-28 45.6 3.37 Fixed
Santander UK 43,113 43,113 Jun-29 48.5 2.20 over 3 months
£ SONIA
266,226 266,226
Table may not sum due to rounding.
The Investment Adviser continues to monitor the borrowing requirements of the
Group. As at 31 December 2025, the Group had headroom against its borrowing
covenants.
The net gearing ratio (net debt to Ordinary Shareholders' equity (diluted) of
the Group was 70.3% as at 31 December 2025 (2024: 73.9%).
Interest cover, excluding amortised costs, stands at 3.0 times (2024: 2.7
times) and including amortised costs, stands at 2.5 times (2024: 2.4 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 2025 31 December 2024
% %
Borrowings interest rate hedged 101.0 100.0
Thereof:
Fixed 56.6 52.7
Swap 32.3 30.4
Cap 12.1 16.9
WACD(1) 3.3 3.4
Table may not sum due to rounding
(1)WACD - Weighted Average Effective Interest Rate including the cost of
hedging
Tax
The Group entered the UK REIT regime on 7 November 2015 and all the Group's UK
property rental business 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 2025, the Group recognised a tax credit of £14,083 (2024: charge of
£64,590), in relation to entities that are not included in the REIT tax
regime.
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, manage and mitigate its risks, which include, but are not
limited to: market, major market disruption, funding, tenants, financial and
tax changes, operational, cyber security, regulatory, environmental 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 Investment Adviser, 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 nine most significant risks which
are composed of six strategic and three operational risks. The risks relate to
market, major market disruption, funding, tenants, financial and tax changes,
operational, cyber security, regulatory, environmental and emerging risks.
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. Market ó
2. Major market disruption
3. Funding ó
4. Tenants ó
5. Financial and tax changes ó
6. Operational ó
7. Cyber security
8. Accounting, legal and regulatory ó
9. Environmental and energy efficiency standards ó
1. Market
Potential Impact Mitigation Movement in the period ó
The value of the Company's assets is dependent on the strength of leasing and · A clearly defined investment strategy, · The property portfolio remains balanced across a range of
capital markets.
geographical areas and a large number of investment properties.
which is reviewed annually.
· 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 (2024: 300 Bath Street) is the highest valued
to exceed 10% of the Company's aggregate Investment Properties valuation. property, which equates to 3.4% (2024: 2.9%) 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% (2024: 2.8%) of
exposed to any single tenant or group undertaking of that tenant. gross rental income, being Global Banking School Ltd. (2024: 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 Investment Adviser 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. Major market disruption
Potential Impact Mitigation Movement in the period
The economic disruption resulting from major geopolitical events or another · The Investment Adviser continues to adapt and, as required, to · The Company has continued to scrutinise all current risk mitigation
pandemic support tenants. approaches employed and to work closely with all parties.
could impact rental income; the ability of Valuers to discern valuations; the · The property portfolio has been · There remains a risk that property valuations and the occupancy
ability to access funding at competitive rates, adherence to banking
market may be impacted by change in the political landscape
covenants, maintain a dividend policy, and adhere to the HMRC REIT regime deliberately constituted to ensure a
requirements.
diverse range of tenants by standard
industrial classification, which ensured
Significant geopolitical events could impact the health of the UK economy,
resulting in borrowing constraints, changes in demand by tenants for suitable the many tenants, being designated as
properties, the quality of the tenants, and
essential services, continued to operate
ultimately the property portfolio value.
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.
· The Company operates with a sole
focus on the UK regions, with no foreign
currency exchange exposure. It remains
well positioned with a deliberately
diverse standard industry classification
of tenants generating 659 (2024: 780)
income streams which are located in
areas of expected economic growth
· The Board receives advice on macro-economic risks from the Investment
Adviser and other advisers and acts accordingly.
3. Funding
Potential Impact Mitigation Movement in the period ó
The Company may not be able to secure · The Investment Adviser has a Corporate Finance team dedicated to · LTV decreased to 40.4% (2024: 41.8%).
optimising the Company's funding requirements.
further debt or on acceptable terms, which may impinge upon investment
· Weighted average debt term decreased to 2.6 years (2024: 2.9 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 3.3%
to maturity. (2024: 3.4%).
· 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 Investment Adviser 's corporate finance team reviews the · The Company continues to have headroom against the applicable
cancellation of debt funding if the Company is unable to service the debt. applicable covenants on a regular basis and these are considered in future borrowing covenants.
operational decisions.
· Compliance certificates and requested reports are prepared as
scheduled.
4. Tenants
Potential Impact Mitigation Movement in the period ó
Lower occupier demand or poor selection of tenants could result in lower · An active asset management programme with a focus on the Investment · This risk remains stable in view of the increasing diversification of
income from reduced lettings or defaults. Adviser 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 659 at the
number of low-risk tenants across a wide range of standard industrial year-end (2024:780).
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 2025 was 2.7 years (2024:
in a more volatile contracted rent roll. experienced Investment Adviser to minimise concentration. 2.9 years).
· There is a focus on securing early renewals and increased lease · The largest tenant is 2.8% (2024: 2.8%) of the gross rental income,
periods. being EDF Energy Limited.
· The requirement for suitable tenants and the quality of the tenant is · The team remains vigilant to the financial well-being of our current
managed by the experienced Investment Adviser who maintains close tenants and continues to liaise with tenants and agents.
relationships with current tenants and with letting agents.
Increased working from home impacts tenant demand for space. · Providing high-quality working environment in portfolio properties. · There is continued evidence of a return to working from office space.
2. Major market disruption
Potential Impact Mitigation Movement in the period
The economic disruption resulting from major geopolitical events or another · The Investment Adviser continues to adapt and, as required, to · The Company has continued to scrutinise all current risk mitigation
pandemic support tenants. approaches employed and to work closely with all parties.
could impact rental income; the ability of Valuers to discern valuations; the · The property portfolio has been · There remains a risk that property valuations and the occupancy
ability to access funding at competitive rates, adherence to banking
market may be impacted by change in the political landscape
covenants, maintain a dividend policy, and adhere to the HMRC REIT regime deliberately constituted to ensure a
requirements.
diverse range of tenants by standard
industrial classification, which ensured
Significant geopolitical events could impact the health of the UK economy,
resulting in borrowing constraints, changes in demand by tenants for suitable the many tenants, being designated as
properties, the quality of the tenants, and
essential services, continued to operate
ultimately the property portfolio value.
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.
· The Company operates with a sole
focus on the UK regions, with no foreign
currency exchange exposure. It remains
well positioned with a deliberately
diverse standard industry classification
of tenants generating 659 (2024: 780)
income streams which are located in
areas of expected economic growth
· The Board receives advice on macro-economic risks from the Investment
Adviser and other advisers and acts accordingly.
3. Funding
Potential Impact Mitigation Movement in the period ó
The Company may not be able to secure · The Investment Adviser has a Corporate Finance team dedicated to · LTV decreased to 40.4% (2024: 41.8%).
optimising the Company's funding requirements.
further debt or on acceptable terms, which may impinge upon investment
· Weighted average debt term decreased to 2.6 years (2024: 2.9 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 3.3%
to maturity. (2024: 3.4%).
· 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 Investment Adviser 's corporate finance team reviews the · The Company continues to have headroom against the applicable
cancellation of debt funding if the Company is unable to service the debt. applicable covenants on a regular basis and these are considered in future borrowing covenants.
operational decisions.
· Compliance certificates and requested reports are prepared as
scheduled.
4. Tenants
Potential Impact
Mitigation
Movement in the period ó
Lower occupier demand or poor selection of tenants could result in lower
income from reduced lettings or defaults.
· An active asset management programme with a focus on the Investment
Adviser 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 659 at the
year-end (2024:780).
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 Investment Adviser 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 Investment Adviser who maintains close
relationships with current tenants and with letting agents.
· The WAULT to first break as at 31 December 2025 was 2.7 years (2024:
2.9 years).
· The largest tenant is 2.8% (2024: 2.8%) of the gross rental income,
being EDF Energy Limited.
· The team remains vigilant to the financial well-being of our current
tenants and continues to liaise with tenants and agents.
Increased working from home impacts tenant demand for space.
· Providing high-quality working environment in portfolio properties.
· There is continued evidence of a return to working from office space.
5. 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.
6. Operational
Potential Impact Mitigation Movement in the period ó
Business disruption could impinge on the normal operations of the Company. · The contingency plans in place to ensure there are no disruptions to · The Investment Adviser annually reviews the Disaster and Business
the core infrastructure, which would impinge on the normal operations of the Continuity Plans.
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 · The Investment Adviser is a viable going concern.
reliance on the Investment Adviser and other third-party service providers.
· All acquisitions undergo a rigorous due diligence process and all · The Investment Adviser continues to monitor changes in Health and
multi-let properties undergo an annual comprehensive fire risk. Safety regulations.
· The impact of physical damage and destruction to investment · The Investment Adviser 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.
7. Cyber security
Potential Impact Mitigation Movement in the period
Information security and cyber threat resulting in data loss, or negative · The Investment Adviser has a dedicated Information Technology team, · The Investment Adviser reviews the respective Information Technology
regulatory, reputational, operational (including GDPR), or financial impact. which monitors information security, privacy risk and cyber threats ensuring polices and the material third party service suppliers on as required basis to
their respective operations are not interrupted. ensure they reflect current and possible future threats.
· As required the building management systems are reviewed for cyber
security risk.
Cyber fraud could result in financial loss to the Group and inability to · The Investment Adviser takes all appropriate precautions to ensure · This remains an ever evolving threat.
operate. cyber deterrents are deployed.
8. 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 Investment · The Company continues to receive advice from external advisers on any
Adviser and external advisors including the Company's tax adviser KPMG LLP and anticipated future changes to the REIT regime.
its Sub-Administrator Waystone Administration Solutions (UK) Limited.
9. 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 Investment Adviser 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 Investment Adviser 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.
The risk framework has been refined for 2025 to improve clarity and alignment
with the Company's operating environment: the former Strategic Risk has been
retitled Market Risk to better reflect its underlying drivers, the separate
Valuation Risk has been removed as valuation movements are now captured within
Market and Funding risks, and the previous Healthcare and Economic risks have
been consolidated into Major Market Risk to reflect their overlapping
macroeconomic characteristics and combined impact on the business.
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 Investment Adviser, continues
to monitor developments in this area.
The potential impact of these risks on the Company's long-term strategy is
considered and evaluated to ensure informed decision-making and proactive
management.
SUSTAINABILITY REPORT
The Sustainability Report is provided in the full Annual Report.
GOING CONCERN AND VIABILITY STATEMENT
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, acquisitions and
disposals of investment properties, elective and committed capital
expenditure, dividend distributions and the borrowing facilities interest
payments and the respective maturities.
The group ended the year under review with £37.7m of cash and cash
equivalents of which £7k was restricted cash. The Group remained compliant
with all loan covenants on borrowing facilities, with a net LTV of c. 40.4%,
based upon the value of the Group's investment properties as at 31 December
2025. Rental income collections remained strong with 99.3% of rent invoiced in
the year collected as at 13 March 2026.
Given the amount of unrestricted cash currently held by the Group and, with
the next borrowing due to mature being the Scottish Widows Ltd. and Aviva
Investors Real Estate Finance £118.3m facility in December 2027, 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.
Viability Statement
In accordance with the Association of Investment Companies Corporate
Governance Code (the "AIC Code") the Directors have assessed the prospects of
the Group and future viability over a three-year period from the year end,
being longer than the 12 months required by the going concern provision. The
Board conducted a review with regard to the Group's long-term strategy,
principal risks and risk appetite, current position asset performance and
future plans. Following this review, the Board determined that three years to
31 December 2028 is the maximum timescale over which the performance of the
Group can be forecast with any material degree of accuracy and is therefore an
appropriate period over which to consider the Group's viability. Achievement
of the one-year forecast has a greater level of certainty and is used to set
near-term targets across the Group. Achievement of the subsequent forecasted
years is less certain than the one-year forecast. However, the Board's
forecast provides a longer-term outlook against which strategic decisions can
be made.
Assessment of Review Period
The Board chose to conduct the review for a three-year period giving
consideration to:
• The Group's WAULT of 2.7 years to first break
• The Group's detailed forecast covering a rolling three-year period
• The Group's weighted average debt to maturity was 2.6 years as at 31
December 2025
Assessment of Prospects and Viability
The financial planning process considers the Group's profitability, capital
values, LTV, cashflows, dividend cover, banking covenants, funding obligation
and other key financial metrics over the coming three-year period. In
addition, property companies are now operating in a more favourable lending
climate, with the lowered LTV and strengthened balance sheet the Group is in a
good position to refinance the next bank loan maturity in December 2027 of
£118.3m.
Furthermore, the Board, in conjunction with the Audit Committee, carried out a
robust assessment of the principal risks and uncertainties facing the Group,
including those that would threaten its business model, strategy, future
performance, solvency or liquidity over the three-year period. The risk review
process provided the Board with assurance that the mitigations and management
systems are operating as intended.
The Board believes that the Group is positioned to manage its principal risks
and uncertainties successfully, notwithstanding the current economic and
political environment. The Board's expectation is further underpinned by the
regular briefings provided by the Investment Adviser. These briefings consider
market conditions, investment opportunities, the Company's ability to raise
third-party funds and deploy these promptly, changes in the regulatory
landscape and current political and economic risks and uncertainties. These
risks, and other potential risks which may arise, continue to be closely
monitored by the Board.
Confirmation of Viability
The Board confirms that it has a reasonable expectation that the Group will be
able to continue in operation and meet its liabilities as they fall due over
the next three years, taking into account the Group's current position and the
principal risks and uncertainties.
The Directors have carefully reviewed areas of potential financial risk. The
Directors have satisfied themselves that the Group has adequate financial
resources to continue in operational existence for the foreseeable future.
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 2025, the Company's total issued share capital was
162,088,483 Ordinary Shares (2024: 162,088,483).
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 (2024: none) are currently in issue.
At the AGM held on 15 May 2025, the Directors were granted authority to allot
Ordinary Shares on a non- pre-emptive basis for cash up to a maximum number of
16,208,848 Shares (representing approximately 10% of the number of Ordinary
Shares in issue on 28 March 2025).
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
16,208,848 Shares (being 10% of the issued Share capital on 28 March 2025)
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 2026 AGM where resolutions
for their renewal will be sought, or, if sooner, on 15 August 2026.
At the AGM held on 15 May 2025, the Company was authorised to purchase up to a
maximum of 16,208,848 of its own Ordinary Shares (being 10% of the Company's
issued Share capital on 28 March 2025). No Shares have been purchased under
this authority during the year under review, which will expire at the
Company's 2026 AGM, where a resolution for the renewal of this authority will
be sought, or, if sooner, on 15 August 2026.
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 the Company'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 Investment Adviser's 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 2025, 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, 23 March 2026
FINANCIAL STATEMENTS
Consolidated Statement of Comprehensive Income for the Year Ended 31 December
2025
Year ended Year ended
31 December 31 December 2024
2025 £'000
Notes £'000
Continuing Operations
Revenue
Rental and property income 5 78,628 90,981
Property costs 6 (38,373) (45,021)
Net rental and property income 40,255 45,960
Administrative and other expenses 7 (9,944) (9,851)
Operating profit before gains and losses on property assets and other 30,311 36,109
investments
Loss on disposal of investment properties 14 (3,172) (3,180)
Change in fair value of investment properties 14 (26,612) (56,732)
Change in fair value of right of use assets 26 (139) (138)
Operating profit/(loss) 388 (23,941)
Finance income 9 991 1,394
Finance expenses 10 (12,215) (15,224)
Share of loss of associate company 16 (24) -
Net movement in fair value of derivative financial instruments 25 (5,506) (1,703)
Loss before tax (16,366) (39,474)
Taxation 11 14 (65)
Total comprehensive losses for the year (16,352) (39,539)
(attributable to owners of the parent company)
Loss per Share - basic and diluted 12 (10.1)p (33.5)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 2025
31 December 31 December
2025 2024
Notes £'000 £'000
Assets
Non-current assets
Investment properties 14 542,191 607,458
Right of use assets 26 10,710 10,849
Investments in associates 16 348 276
Non-current receivables on tenant loan 17 - 144
Derivative financial instruments 25 3,145 11,608
556,394 630,335
Current assets
Derivative financial instruments 25 1,739 -
Trade and other receivables 18 40,717 35,079
Cash and cash equivalents 19 37,726 56,719
80,182 91,798
Total assets 636,576 722,133
Liabilities
Current liabilities
Trade and other payables 20 (29,265) (31,647)
Deferred income 21 (13,540) (14,364)
Lease liabilities 26 (435) -
Deferred tax liabilities 22 - (741)
(43,240) (46,752)
Non-current liabilities
Deferred tax liabilities 22 (754) -
Bank and loan borrowings 23 (262,319) (312,323)
Lease liabilities 26 (10,977) (11,444)
(274,050) (323,767)
Total liabilities (317,290) (370,519)
Net assets 319,286 351,614
Equity
Stated capital 27 618,010 618,266
Accumulated losses (298,724) (266,652)
Total equity attributable to owners of the parent company 319,286 351,614
Net asset value per Share - basic and diluted 28 197.0p 216.9p
The notes below are an integral part of these consolidated financial
statements.
Consolidated Statement of Changes in Equity for the Year Ended 31 December
2025
Attributable to owners of the parent company
Stated Accumulated losses
capital £'000 Total
Notes £'000 £'000
Balance at 1 January 2025 618,266 (266,652) 351,614
Total comprehensive losses - (16,352) (16,352)
Dividends paid 13 - (15,720) (15,720)
Cost of shares issued in 2024 27 (256) - (256)
Balance at 31 December 2025 618,010 (298,724) 319,286
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 loss - (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
The notes below are an integral part of these consolidated financial
statements.
Consolidated Statement of Cash Flows for the Year Ended 31 December 2025
Year ended Year ended
31 December 31 December
2025 2024
£'000 £'000
Cash flows from operating activities
Loss before tax (16,366) (39,474)
Change in fair value of investment properties 26,612 56,732
Share of loss of associate company 24 -
Change in fair value of financial derivative instruments 5,506 1,703
Loss on disposal of investment properties 3,172 3,180
Change in fair value of right of use assets 139 138
Finance income (991) (1,394)
Finance expense 12,215 15,224
Increase in trade and other receivables (5,509) (2,027)
(Decrease)/increase in trade and other payables (1,772) 295
Decrease in deferred income (824) (1,233)
Cash generated from operations 22,206 33,144
Interest paid (10,251) (13,229)
Taxation received/(paid) 51 (4)
Net cash flow generated from operating activities 12,006 19,911
Investing activities
Investments in associates (96) (276)
Investment property acquisitions and subsequent expenditure (12,942) (8,249)
Sale of investment properties 48,425 28,574
Interest received 978 1,391
Net cash flow generated from investing activities 36,365 21,440
Financing activities
Proceeds received on derivative financial instruments 1,218 2,698
Dividends paid (15,152) (22,301)
Proceeds from share issue - 110,515
Share issue costs (1,430) (4,837)
Bank borrowings repaid (50,508) (54,016)
Bank borrowing costs paid (1,057) (761)
Repayment of retail eligible bonds - (50,000)
Lease repayments (435) (435)
Net cash flow used in financing activities (67,364) (19,137)
Net increase/(decrease) in cash & cash equivalents (18,993) 22,214
Cash and cash equivalents at the start of the year 56,719 34,505
Cash and cash equivalents at the end of the year 37,726 56,719
The notes below are an integral part of these consolidated financial
statements.
Notes to the Consolidated Financial Statements for the Year Ended 31 December
2025
1. Corporate information
The Group's consolidated financial statements for the year ended 31 December
2025 comprise the results of the Company and its subsidiaries (together
constituting the "Group") and were approved by the Board and authorised for
issue on 23 March 2026.
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 in the Full Annual 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 2025
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 2025 have been audited
and approved, but have not yet been filed.
The Group's audited financial statements for the year ended 31 December 2025
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 23 March 2026.
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.
No material uncertainties have been detected which would influence the Group's
ability to continue as a going concern for a period of at least 12 months from
the approval of these financial statements. The Directors have satisfied
themselves that the Group has adequate financial resources to continue in
operational existence for this period. Accordingly, the Board of Directors
continue to adopt the going concern basis in preparing the financial
statements.
Further details are provided in the Going Concern and Viability Statement in
the Full Annual Report.
2.3 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 2025 are as
follows:
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.
During the year ended 31 December 2025, none of the above had a material
impact on the financial statements.
2.4 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 2026 and have not been
applied in preparing these financial statements. These are:
Amendments to IFRS 9 "Financial Instruments" and IFRS 7 "Financial
Instruments: Disclosures" (effective for periods beginning on or after 1
January 2026) refine the classification of financial assets and liabilities
and introduce enhanced disclosure requirements.
Annual Improvements to IFRS Accounting Standards Volume 11 (effective for
periods beginning on or after 1 January 2026) contains amendments to five
standards, IFRS1, IFRS 7, IFRS 9, IFRS 10 and IAS 7 as a result of the IASB's
annual improvements project. The aim of which is to improve consistency across
the standards.
IFRS 18 'Presentation and Disclosure in Financial Statements (effective for
periods beginning on or after 1 January 2027) replaces IAS 1 'Presentation of
Financial Statements'.
IFRS 19 'Subsidiaries without Public Accountability:
Disclosures (effective for periods beginning on or after 1 January 2027)
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 reviewing these amendments and new standards. IFRS 18 will
have some presentational impacts on the financial statements which are
currently being assessed.
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 £555.2m (2024: £622.5m) less the value of the assets
arising from rent smoothing of £13.0m (2024: £15.0m).
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 (valued at 31 December 2025 at £14,160,000),
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 material accounting policies
The accounting policies adopted in this report are consistent with those
applied in the financial statements for the year ended 31 December 2024 and
have been consistently applied for the year ended 31 December 2025.
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.
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.
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
2025 or 2024.
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. As disclosed in note 4.13, rental income arising from
operating leases on investment property is accounted for on a straight-line
basis over the lease terms, this practice is known as rent smoothing. As a
result, income is often recognised ahead of rent invoices, so an asset arises
on rent smoothing which is included in the trade and other receivables note
18. This amount is not considered to be a financial instrument.
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.
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 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
2025 2024
£'000 £'000
Rental income - freehold property 50,235 53,406
Rental income - long leasehold property 10,197 11,833
Recoverable service charge income and other similar items 18,196 25,742
Total 78,628 90,981
6. Property costs
Year ended Year ended
31 December 2025 31 December
£'000 2024
£'000
Direct Vacancy Irrecoverable costs 19,011 17,791
Other property expenses 1,166 1,488
Recoverable service charge expenditure and other similar costs 18,196 25,742
Total 38,373 45,021
Direct vacancy costs include service charges, utility costs, rates, insurance,
repairs and maintenance.
7. Administrative and other expenses
Year ended Year ended
31 December 31 December
2025 2024
£'000 £'000
Investment management fees 1,947 1,362
Property management fees 2,257 2,541
Asset management fees 1,949 1,360
Directors' remuneration (see note 8) 309 265
Administration fees 662 679
Legal and professional fees 2,205 2,509
Marketing and promotion 83 71
Other administrative costs 220 186
Allowance for doubtful debts 299 454
Abortive costs - 412
Bank charges 13 12
9,851 1
Total 9,944 9,851
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
2025 2024
£'000 £'000
Fees payable to the Company's Auditor for the audit of the Company's annual 114 110
accounts
Fees payable to the Group's Auditor and its associates for the audit of the 147 147
Company's subsidiaries
Total fees payable for audit services 261 257
Fees payable to the Group's Auditor and its associates for other services:
Audit-related services 34 33
Corporate finance work for the share issue - 150
Total fees payable to the Group's Auditor and its associates 295 440
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
2025 2024
£'000 £'000
Directors' fees 289 243
Employer's National Insurance contributions 20 22
Total 309 265
9. Finance income
Year ended Year ended
31 December 31 December
2025 2024
£'000 £'000
Interest income 991 1,394
Total 991 1,394
10. Finance expense
Year ended Year ended
31 December 31 December
2025 £'000 2024
£'000
Interest payable on bank borrowings 10,251 11,881
Amortisation of loan arrangement fees 1,561 1,497
Bond interest - 1,344
Bond issue costs amortised - 93
Bond expenses - 5
Lease interest 403 404
Total 12,215 15,224
11. Taxation
Year ended Year ended
31 December 31 December
2025 2024
£'000 £'000
Corporation tax (credit)/ charge (27) 32
Increase in deferred tax liability 13 33
Total (14) 65
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
2025 2024
£'000 £'000
Loss before taxation (16,366) (39,474)
UK Corporation Tax rate 25.00% 25.00%
Theoretical tax at UK Corporation Tax rate (4,092) (9,868)
Effects of:
Revaluation of investment property 6,653 14,183
Permanent differences (87) (169)
Profits from the tax-exempt business (2,501) (4,114)
Deferred tax movement 13 33
Total (14) 65
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.
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.
The calculation of basic and diluted earnings per Share is based on the
following:
Year ended Year ended
31 December 31 December
2025 2024
£'000 £'000
Calculation of earnings per Share
Net loss attributable to Ordinary Shareholders (16,352) (39,539)
Adjustments to remove:
Changes in value of investment properties 26,612 56,732
Changes in value of right of use assets 139 138
Loss on disposal of investment properties 3,172 3,180
Changes in fair value of interest rate derivatives and financial assets 5,506 1,703
Abortive costs - 412
Deferred tax charge 13 33
EPRA earnings 19,090 22,659
Weighted average number of Ordinary Shares 162,088,483 118,199,045
Loss per Share - basic and diluted (10.1)p (33.5)p
EPRA earnings per Share - basic and diluted 11.8p 19.2p
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
2025 2024
£'000 £'000
Dividend of 2.20 (2024: 1.20) pence per Ordinary Share for the period 1 3,565 6,188
October - 31 December
Dividend of 2.50 (2024: 1.20) pence per Ordinary Share for the period 1 4,052 6,189
January - 31 March
Dividend of 2.50 (2024: 2.20) pence per Ordinary Share for the period 1 April 4,052 3,566
- 30 June
Dividend of 2.50 (2024: 2.20) pence per Ordinary Share for the period 1 July - 4,052 3,567
30 September
Unpaid dividends held by Registrar (1) (70)
Total 15,720 19,440
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
payment was made on 4 April 2025 to shareholders on the register as at 28
February 2025.
On 15 May 2025, the Company announced a dividend of 2.50 pence per Share in
respect of the period 1 January 2025 to 31 March 2025. The dividend payment
was made on 11 July 2025 to shareholders on the register as at 23 May 2025.
On 9 September 2025, the Company announced a dividend of 2.50 pence per Share
in respect of the period 1 April 2025 to 30 June 2025. The dividend payment
was made on 17 October 2025 to shareholders on the register as at 19 September
2025.
On 12 November 2025, the Company announced a dividend of 2.50 pence per Share
in respect of the period 1 July 2025 to 30 September 2025. The dividend
payment was made on 9 January 2026 to shareholders on the register as at 21
November 2025.
On 19 February 2026, the Company announced a dividend of 2.50 pence per Share
in respect of the period 1 October 2025 to 31 December 2025. The dividend will
be paid on 10 April 2026 to shareholders on the register as at 27 February
2026. 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 2025 Long Leasehold Property
Freehold Property £'000
£'000 Total
£'000
Valuation at 1 January 2025 492,896 129,584 622,480
Property additions - acquisitions 1,160 - 1,160
Property additions - subsequent expenditure 8,143 3,639 11,782
Disposal proceeds, net of costs (48,193) (232) (48,425)
Loss on disposal of investment properties (3,094) (78) (3,172)
Change in fair value during the period (20,976) (7,619) (28,595)
Valuation advised by the property valuers at 31 December 2025 429,936 125,294 555,230
Less adjustments for rent smoothing assets (note 18) (9,780) (3,259) (13,039)
Fair Value at 31 December 2025 420,156 122,035 542,191
Group Movement in investment properties for the year ended 31 December 2024
Valuation at 1 January 2024 562,395 138,325 700,720
Property additions - acquisitions - - -
Property additions - subsequent expenditure 7,286 963 8,249
Disposal proceeds, net of costs (28,574) - (28,574)
Loss on disposal of investment properties (3,180) - (3,180)
Change in valuation during the period (45,031) (9,704) (54,735)
Valuation advised by the property valuers at 31 December 2024 492,896 129,584 622,480
Less adjustment for rent smoothing assets (note 18)* (10,795) (4,227) (15,022)
Fair Value at 31 December 2024 482,101 125,357 607,458
* The analysis of the comparative rent smoothing adjustment between leasehold
and freehold property has been updated.
The net book value of properties disposed of during the year amounted to
£51,597,000 (2024: £31,754,000).
The historic cost of the properties is £773,287,000 (2024: £850,152,000).
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 2025
was £555,230,000 (2024: £622,480,000).
The table below shows the total change in fair value during the year.
31 December 31 December
2025 2024
£'000 £'000
Change in valuation during the period (28,595) (54,735)
Change in rent smoothing assets adjustment 1,983 (1,997)
Total (26,612) (56,732)
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 2025 542,191 - - 542,191
31 December 2024 607,458 - - 607,458
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
2025 2024
£'000 £'000
Balance at the start of the year 607,458 687,695
Additions 12,942 8,249
Disposals (48,425) (28,574)
Loss on the disposal of investment properties (3,172) (3,180)
Change in fair value during the year (26,612) (56,732)
Balance at the end of the year 542,191 607,458
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 2025, 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 section of the Full Annual 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: £16,200 - £3,512,000 per annum (2024: £14,200
- £3,237,000 per annum)
Significant input: rental growth
Rental Growth: decrease in contracted income of -13.79% (2024: 8.64% decrease)
from December 2024 (£53,840,436) to December 2025 (£46,413,666). 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 2025 valuation had an initial yield range of 6.0% to
20.9% (2024: 6.00% to 25.19%).
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.
ERV and equivalent yield range by sector:
Significant Unobservable Inputs
Sector Valuation £'000 ERV Weighted average Equivalent Equivalent
ERV Range (£ per sq ft) Yield Yield Weighted
(£ per Range % Average %
sq ft p.a.)
As at December 2025
Industrial £23,825.00 £4.00 - £9.49 7.07 6.40% - 21.38% 8.51
Retail £20,290.00 £2.07 - £40.00 15.94 8.20% - 13.41% 8.82
Alternatives £9,550.00 £5.00 - £13.50 9.28 9.67% 9.67
Office by Region
Office South East £88,075.00 £5.00 - £29.01 18.65 8.24% - 32.55% 10.28
Office South West £53,950.00 £12.28 - £22.90 18.54 9.93%- 14.34% 11.33
Office Midlands £112,590.00 £3.01 - £35.04 15.37 9.52% - 12.10% 10.97
Office North West £62,725.00 £6.61 - £21.99 16.95 8.53% - 16.59% 10.89
Office North East £89,950.00 £8.29 - £37.13 18.13 8.36% - 12.00% 10.21
Office Wales £17,650.00 £10.01 - £13.50 12.01 8.89% - 11.01% 10.48
Office Scotland £76,625.00 £4.50 - £90.21 17.77 9.39% - 14.16% 10.41
Total £555,230.0
The impact of changes to the significant unobservable inputs:
2025 2025 2024 2024
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% 25,062 25,062 27,490 27,490
Worsening in ERV by 5% (24,787) (24,787) (27,009) (27,009)
Improvement in yield by 0.125% 8,061 8,061 9,064 9,064
Worsening in yield by 0.125% (7,837) (7,837) (8,792) (8,792)
The 0.125% yield movement applied is considered reasonable, as it reflects a
shift commonly observed in normal market conditions and is consistent with
independent valuer guidance for diversified UK commercial real estate
portfolios. This margin therefore represents a reasonably possible change in
key unobservable inputs at the reporting date.
15. Investment in subsidiaries
List of subsidiaries which are 100% owned and controlled by the Group:
Country of incorporation Ownership
%
(1) Beaufort Office Park Management Company Limited United Kingdom 100%
(1) Glasgow Airport Business Park Management Company Limited United Kingdom 100%
(1) Origin Apartments Management Company Limited United Kingdom 100%
(2) Regional Commercial MIDCO Ltd Jersey 100%
(2) RR Bennett House Ltd Jersey 100%
(2) RR Brand Street Ltd Jersey 100%
(2) RR Bristol Ltd Jersey 100%
(2) RR Chancellor Court Ltd Jersey 100%
(2) RR Falcon Ltd Jersey 100%
(2) RR Glasgow Ltd Jersey 100%
(6) RR Glasgow II Ltd United Kingdom 100%
(2) RR Harvest Ltd Jersey 100%
(2) RR Hounds Gate Ltd Jersey 100%
(2) RR Milburn House Ltd Jersey 100%
(2) RR Minton Place Ltd Jersey 100%
(2) RR Newstead Court Ltd Jersey 100%
(2) RR Portland Street Ltd Jersey 100%
(2) RR Rainbow (Aylesbury) Ltd Jersey 100%
(2) RR Rainbow (North) Ltd Jersey 100%
(2) RR Rainbow (South) Ltd Jersey 100%
(2) RR Range Ltd Jersey 100%
(5) RR Reflex Limited United Kingdom 100%
(3) RR Sea Dundee Ltd United Kingdom 100%
(3) RR Sea Hanover Street Ltd United Kingdom 100%
(2) RR Sea Lamont I Ltd Jersey 100%
(2) RR Sea Lamont II Ltd Jersey 100%
(3) RR Sea St. Helens Ltd United Kingdom 100%
(3) RR Sea Stafford Ltd United Kingdom 100%
(3) RR Sea Strand Ltd United Kingdom 100%
(4) RR Sea TAPP Ltd Guernsey 100%
(4) RR Sea TOPP Bletchley Ltd Guernsey 100%
(4) RR Sea TOPP I Ltd Guernsey 100%
(2) RR Sheldon Court Ltd Jersey 100%
(2) RR Star Ltd Jersey 100%
(2) RR St James Court Ltd Jersey 100%
(2) RR Strathclyde BP Ltd Jersey 100%
(2) RR UK (Central) Ltd Jersey 100%
(2) RR UK (Cheshunt) Ltd Jersey 100%
(2) RR UK (Port Solent) Ltd Jersey 100%
(2) RR UK (South) Ltd Jersey 100%
(2) RR Wallington Ltd Jersey 100%
(2) RR Westminster House Ltd Jersey 100%
(2) RR Wing Portfolio Ltd Jersey 100%
(2) Tay Properties Ltd Jersey 100%
(2) TCP Arbos Ltd Jersey 100%
(2) TCP Channel Ltd Jersey 100%
Registered Office Address
(1) Leeds House, Central Park, Leeds LS11 5DZ
(2) Second Floor, No.4 The Forum, Grenville Street, St Helier, Jersey JE2 4UF
(3) 19th Floor, 51 Lime Street, London EC3M 7DQ
(4) 2nd Floor, Lefebvre Place, Lefebvre Street, St Peter Port, Guernsey GY1
2JP
(5) 300 Bath Street, First Floor West, Glasgow G2 4JR
(6) Ferguson House, 15 Marylebone, London, NW1 5JD
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
%
(1) Credential (Wardpark North) Ltd United Kingdom 100%
(1) Credential Estates Ltd United Kingdom 100%
(2) Rocket Unit Trust Jersey 100%
(1) Squeeze Newco 2 Ltd United Kingdom 100%
(1) View Castle Ltd United Kingdom 100%
(1) View Castle (Milton Keynes) Ltd United Kingdom 100%
(1) View Castle (Properties) Ltd United Kingdom 100%
Registered Office Address
(1) 300 Bath Street, First Floor West, Glasgow G2 4JR
(2) Gaspé House, 66-72 Esplanade, St Helier, Jersey JE2 3QT
All of the above entities have been included in the Group's consolidated
financial statements up to 31 December 2025.
16. Investment in associates
The Company has an investment in an associate, Sugarbird Solar (UK) Limited
("SolarCo"), which represents 40% of the issued share capital. Sunbird Solar
International (Cyprus) Limited contributed 60% of the issued 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
2025 2024
£'000 £'000
At start of year 276 -
Amounts paid for investment 96 276
Share of losses (24) -
At end of year 348 276
Country of incorporation Holding %
List of companies not wholly owned by the Group:
HCP (Estate Management) Limited United Kingdom 49%
Sugarbird Solarco (UK) Limited United Kingdom 40%
17. Non-current receivables on tenant loans
31 December 31 December
2025 2024
£'000 £'000
At start of year 337 578
Amounts repaid in the year (193) (241)
At end of year 144 337
Asset due within 1 year (note 18) 144 193
Asset due after 1 year - 144
114 337
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 2025 or 31 December 2024.
18. Trade and other receivables
31 December 31 December
2025 2024
£'000 £'000
Gross amount receivable from tenants 11,291 9,696
Less provision for impairment (252) (1,451)
Net amount receivable from tenants 11,039 8,245
Current receivables - tenant loans (note 17) 144 193
Income tax - 24
Other receivables 2,169 1,495
Assets arising from rent smoothing (note 14) 13,039 15,022
Prepayments and accrued income 14,326 10,100
40,717 35,079
The maximum exposure to credit risk at the reporting date is the carrying
value of the amounts disclosed above 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
2025 2024
£'000 £'000
< 30 days 7,211 3,928
30-60 days 475 722
> 60 days 3,605 5,046
Net amount receivable from tenants 11,291 9,696
Less provision for impairment (252) (1,451)
Net Amount receivable from tenants 11,039 8,245
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
2025 2024
£'000 £'000
At start of year 1,451 915
Provision for impairment in the year 901 1,739
Receivables written off as uncollectable (1,346) (195)
Unused provision reversed (754) (1,008)
At end of year 252 1,451
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
2025 2024
£'000 £'000
Group
Cash held at bank 37,719 55,869
Restricted cash held at bank 7 850
At end of year 37,726 56,719
Comparatives have been re-analysed between restricted and non-restricted
balances.
Restricted cash balances of the Group comprise:
• £7,000 (2024: £850,000) 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:
• £8,604,000 (2024: £9,847,000) of cash funds represent service charge
income received from tenants for settlement of future service charge
expenditure.
• £2,710,000 (2024: £2,698,000) 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
2025 2024
£'000 £'000
Withholding tax due on dividends paid 512 429
Dividends announced but not paid 4,052 3,567
Trade payables 3,147 2,377
Other payables 15,521 19,182
Value added tax 2,066 1,974
Accruals 3,967 4,118
At end of year 29,265 31,647
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 £13,540,000 (31 December 2024: £14,364,000)
represents rent received in advance from tenants.
22. Deferred tax liabilities
31 December 31 December
2025 2024
£'000 £'000
Deferred tax 754 741
At end of year 754 741
The movement on deferred tax liability is shown below:
At start of year 741 708
Deferred tax on the valuation of investment properties 13 33
At end of year 754 741
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 2025 31 December 2024
£'000 £'000
Bank borrowings drawn at start of year 316,734 370,750
Bank borrowings repaid (50,508) (54,016)
Bank borrowings drawn at end of year 266,226 316,734
Less: unamortised costs at start of year (4,411) (5,147)
Less: loan issue costs incurred in the year (1,057) (761)
Add: loan issue costs amortised in the year 1,561 1,497
At end of year 262,319 312,323
Maturity of bank borrowings
Repayable within 1 year - -
Repayable between 1 to 2 years 118,339 99,789
Repayable between 2 to 5 years 147,887 216,945
Repayable after more than 5 years - -
Unamortised loan issue costs (3,907) (4,411)
262,319 312,323
The table below lists the Group's borrowings.
Facility Outstanding debt* Maturity Gross Annual interest rate Amortisation
Lender £'000 £'000 date loan to value**
Scottish Widows Ltd & Aviva Investors Real Estate Finance 118,339 118,339 Dec-27 50.8% 3.28% None
Fixed
Scottish Widows Ltd 32,325 32,325 Dec-28 45.6% 3.37% Fixed None
Royal Bank of Scotland, Bank of 72,449 72,449 Dec-28 44.9% 2.40% over Mandatory prepayment
Scotland and Santander 3mth £
SONIA
Santander UK 43,113 43,113 Jun-29 48.5% 2.20% over 3 months Mandatory prepayment
£ SONIA
Total bank borrowings 266,226 266,226
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 43.4% (2024:
47.2%).
The weighted average term to maturity of the Group's debt at the year-end was
2.6 years (2024: 2.9 years).
The weighted average interest rate payable by the Group on its total bank
borrowings, excluding hedging costs, as at the year-end was 4.6% (2024: 5.2%).
The Group weighted average interest rate, including and hedging activity at
the year end, amounted to 3.3% per annum (2024: 3.4% 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
2025 2024
£'000 £'000
Bond principal at start of year - 50,000
Unamortised issue costs at start of year - (93)
Amortisation of issue costs - 93
Maturity - (50,000)
At end of year - -
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
2025 2024
£'000 £'000
Fair value at start of period 11,608 16,009
Early break costs received (1,218) (2,698)
Revaluation in period (5,506) (1,703)
Fair Value at end of year 4,884 11,608
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 £1,218,000 (2024: £2,698,000).
The value of derivatives maturing in less than 1 year £1,739,000 (2024:
£nil)
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* Loan maturity Annual interest rate Notional amount Swap/cap rate
£'000 £'000 date £'000
Scottish Widows Ltd & Aviva Investors Real Estate Finance 118,339 118,339 Dec-27 3.28% n/a n/a
Fixed
Scottish Widows Ltd 32,325 32,325
Dec-28 3.37% n/a n/a
Fixed
Royal Bank of Scotland, Bank of Scotland and Santander UK 72,449 72,449 0.99%(3)
Dec-28** 2.40% over 51,420(1) 0.97%(3)
3mth £ 23,780(2)
SONIA
Santander UK 43,113 43,113 2.20% over 34,585(1) 1.39%
3mth £ 8,529(2) 1.39%
Jun-29 SONIA
Total bank borrowings 266,226 266,226
(1) Interest rate swap
(2) Interest rate cap
(3) Average rate of the three derivative providers
* Before unamortised debt issue costs
** Derivative maturity date is 27 August 2026. As detailed in note 35,
Subsequent Events,
the Group has executed new derivatives maturing in December 2028.
SONIA = Sterling Over Night Indexed Average
As at 31 December 2025, the swap notional arrangements were £86.0 million
(2024: £96.1 million) and the cap notional arrangements amounted to £32.3
million (2024: £53.5 million).
The Group weighted average effective interest rate was 3.3% (2024: 3.4%)
inclusive of hedging costs and the Retail Eligible Bond, which matured in
August 2024.
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 101.0% (2024: 100.0%), as
shown below.
31 December 31 December
2025 2024
£'000 £'000
Total bank borrowings 266,226 316,734
Notional value of interest rate caps and swaps 118,314 149,637
Fixed rate borrowings 150,664 167,097
268,978 316,734
Proportion of hedged debt 101.0% 100.0%
Table may not sum due to rounding
26. Leases
Right of use asset 31 December 31 December
2025 2024
£'000 £'000
At start of year 10,849 10,987
Fair value movement (139) (138)
At end of year 10,710 10,849
Lease liability 31 December 31 December
2025 2024
£'000 £'000
At start of year 11,444 11,475
Lease payments (435) (435)
Interest charges 403 404
At end of year 11,412 11,444
The Group's lease commitments which are now represented by the right of use
asset and lease liability are spread across 10 (2024: 10) separate leases with
the two largest leases at Northern Cross Basingstoke and Quantum Court
Edinburgh making up 48% (2024: 48%) of the balance. Total commitments on
leases in respect of land and buildings are as follows:
Group 31 December 31 December
2025 2024
£'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 33,308 33,563
At end of year 35,483 35,738
27. Stated capital
Stated capital represents the consideration received by the Company for the
issue of Ordinary Shares.
During the previous 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 consolidation with the
resulting Ordinary Shares in issue being 162,088,483.
31 December 31 December
2025 2024
£'000 £'000
Group
Issued and fully paid Shares of no par value
At start of the year 618,266 513,762
Shares issued in year - 110,515
Cost of shares issued in 2024 (256) (6,011)
At end of the year 618,010 618,266
Number of Shares in issue
At start of the year 162,088,483 515,736,583
Shares issued in year - 1,105,149,821
Reduction in shares (see note above) - (1,458,797,921)
At end of the year 162,088,483 162,088,483
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.
31 December 31 December
2025 2024
£'000
£'000
Group
Net asset value per Consolidated Statement of Financial Position 319,286 351,614
Adjustment for calculating EPRA net tangible assets:
Derivative financial instruments (4,884) (11,608)
Deferred tax liability 754 741
EPRA Net Tangible Assets 315,156 340,747
Number of Ordinary Shares in issue 162,088,483 162,088,483
Net asset value per Share - basic and diluted 197.0p 216.9p
EPRA Net Tangible Assets per Share - basic and diluted 194.4p 210.2p
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 Lease liabilities £'000 Total
£'000 £'000 £'000
Balance at 1 January 2025 312,323 - 11,444 323,767
Changes from financing cash flows:
Bank borrowings repaid (50,508) - - (50,508)
Bank and bond borrowing costs paid (1,057) - - (1,057)
Lease payments - - (435) (435)
Total changes from financing cash flows (51,565) - (435) (52,000)
Amortisation of issue costs 1,561 - - 1,561
Unwinding of discount - - 403 403
Total other changes 1,561 - 403 1,964
Balance at 31 December 2025 262,319 - 11,412 273,731
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
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 2025 31 December 2024
Carrying value Fair Carrying value Fair
£'000 value £'000 value
Group £'000 £'000
Financial assets - measured at amortised cost
Trade and other receivables 13,352 13,352 10,077 10,077
Cash and short-term deposits 37,726 37,726 56,719 56,719
Financial assets - measured at fair value through profit or loss
Interest rate derivatives 4,884 4,884 11,608 11,608
Financial liabilities - measured at amortised cost
Trade and other payables (26,687) (26,687) (29,244) (29,244)
Bank and loan borrowings (262,319) (259,060) (312,323) (301,293)
Lease liability (11,412) (11,412) (11,444) (11,444)
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 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 2025
Interest rate derivatives 4,884 - 4,884 -
31 December 2024
Interest rate derivatives 11,608 - 11,608 -
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. No quantitative analysis relating to market risk is disclosed as
this is not deemed to be material.
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
Aviva A- Stable
Bank of Scotland plc AA- Stable
Royal Bank of Scotland AA- stable
Santander UK 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 2025 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 (26,687) - - - (26,687)
Bank borrowings and interest payments (13,028) (131,368) (160,416) - (304,812)
Interest rate derivatives 4,167 4,167 5,988 - 14,322
Lease liability (435) (435) (1,305) 33,308) (35,483)
(35,983) (127,636) (155,733) (33,308) (352,660)
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 and interest payments (16,875) (114,129) (233,016) - (364,020)
Interest rate derivatives 6,554 5,025 4,919 - 16,498
Lease liability (435) (435) (1,305) (33,563) (35,738)
(40,000) (109,539) (229,402) (33,563) (412,504)
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 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
2025 2024
£'000 £'000
Receivable within 1 year 38,284 47,096
Receivable between 1-2 years 35,360 42,215
Receivable between 2-5 years 68,465 85,709
Receivable after 5 years 50,095 66,075
192,204 241,095
The Group has in excess of 650 operating leases.
The number of years remaining on these operating leases varies between 1 and
991 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 Directors' 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.
Bridgemere Investments Limited ("BIL") is deemed a related party of the
Company by virtue of its significant shareholding, holding 22.10% of the
issued share capital as disclosed in the TR-1 announcement dated 10 July 2025.
In addition, Ms. Nicole Burstow serves as a Non-Executive Director of the
Company and is employed by BIL, with her directorship fees being payable to
BIL; further detail regarding these fees is provided in the Full Annual Report
and note 8 to the financial statements. BIL is therefore considered a related
party, and all transactions and arrangements with BIL during the year were
conducted on an arm's-length basis and in accordance with the Company's
governance procedures.
The Investment Adviser does not meet the definition of a related party
transaction. Full details of the management arrangements are available in the
Full Annual Report.
The Group identifies Sugarbird Solar (UK) Ltd. as a related party under IAS 24
on the basis of its 40% investment and resulting significant influence. During
the year, the Group made equity contributions of £96,000 and advanced
shareholder loan funding of £64,000, all on normal commercial terms. The
Group's share of results has been recognised in accordance with IAS 28.
Sugarbird Solar (UK) Ltd. has transacted with the Group during 2025. The
transactions during the year and the balances at the year-end being de
minimis.
35. Subsequent Events
On 19 February 2026, the Company declared the Q4 2025 dividend of 2.50pps,
which will be paid to shareholders on 10 April 2026.
On 11 December 2025, the Company declared the Company's investment management
and asset management agreements will be merged into a single Amended and
Restated Master Investment Management and Services Agreement ("IMA"),
streamlining the management structure and enhancing operational efficiency.
This new agreement, comes into effect 1 January 2026, has been entered into
with ESR Europe Investment Management Ltd ("AIF Manager") who continues in its
role and ESR Europe LSPIM Ltd ("Investment Adviser"), who continues in its
role as asset manager and has also taken over the role of investment adviser
from ESR Europe (Private Markets) Ltd. Further information regarding these
changes can be found in the Full Annual Report.
Following the 24 December 2025 announcement of the Group's £72.4m
refinancing, the Group entered into new interest rate hedging arrangements
after the reporting date. On 27 February 2026, the Group executed new
derivatives comprising GBP 40.6 million of swaps and GBP 17.4 million of caps,
effective from August 2026 and maturing on December 2028, matching the
maturity profile of the new refinancing.
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)
Sarah Whitney (Independent 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 2025
will be available to view shortly on www.regionalreit.com.
The annual report 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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Copyright 2019 Regulatory News Service, all rights reservedRecent news on Regional REIT
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