REG - Regional REIT Ltd - Simplified Management Arrangements

Regional REITAnnouncement

11/12/2025 07:00

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RNS Number : 0889L  Regional REIT Limited  11 December 2025

11 December 2025

REGIONAL REIT Limited

("Regional REIT", the "Group" or the "Company")

Simplified Management Arrangements Delivering Material Cost Savings

 

Regional REIT Limited, the regional commercial property specialist, announces
it has agreed to amend and simplify its management arrangements with effect
from 1 January 2026 delivering material cost savings.

 

Changes to the management arrangements

The Board of the Company has agreed with ESR Europe Investment Management Ltd.
and ESR Europe LSPIM Ltd. (together the "Managers") that:

 

·    from 1 January 2026, the management fee ("Fee"), which is currently
calculated based on 100% of EPRA net tangible assets ("NTA"), will be
calculated based on 75% NTA and 25% market capitalisation;

·    from 1 January 2027 onwards, the Fee calculation will move to 50% NTA
and 50% market capitalisation;

·    all performance fee arrangements will be discontinued;

·    the term of the management arrangement has been reduced to a rolling
two-year period such that the agreement (as defined below) may be terminated
by either party at any time resulting in a 24-month termination period. The
current agreement automatically renews for recurring three-year periods unless
notice is served at least one year prior to the renewal date.

 

There are no further changes to the management fees and the respective
thresholds remain unchanged, as set out below.

 

The Board believes that the new arrangements will better align the interests
of shareholders and the Managers and will deliver material cost savings to the
Company and its shareholders. The new arrangements also align the Managers'
remuneration with the Company's strategy. On the basis of the 30 June 2025 NTA
and the market capitalisation of the Company on the business day prior to the
date of this announcement, the annual cost saving is approximately £0.45m
based upon 2026 Fee arrangements and £0.90m based upon 2027 Fee arrangements.

 

Simplification of Agreements

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 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.

 

Fee arrangements under the IMA with effect from 1 January 2026:

 

 NTA and Market Capitalisation Thresholds
 From £m                To £m                  Rate   From 1 January 2026      From 1 January 2027 onwards
                                                      NTA         Market Cap.  NTA             Market Cap.
 0                      500                    1.10%  0.825%      0.275%       0.55%           0.55%
 500                    1,000                  0.90%  0.675%      0.225%       0.45%           0.45%
 1,000                  1,500                  0.70%  0.525%      0.175%       0.35%           0.35%
 1,500                  -                      0.50%  0.375%      0.125%       0.25%           0.25%

 

 

The property manager, ESR Europe PM Ltd. (previously called L&S PM Ltd.)
remains the appointed property manager under the Property Management
Agreement. The property management fee remains the same, 4% per annum based
upon gross rental yield. The Property Management Agreement is coterminous with
the IMA.

 

David Hunter, Chair of Regional REIT commented:

 

"We are pleased to have worked closely with the Managers to simplify our
arrangements, delivering material cost savings and strengthening alignment
between the Company and its shareholders. By linking 50% of the fees to market
capitalisation, the new structure ensures that shareholders' interests are
closely aligned with those of the Managers as they advance our refreshed
strategy to build a solid portfolio of core, high-quality assets that appeal
to occupiers and underpin sustainable dividends. These enhancements reflect
our commitment to operational efficiency, and long-term growth.

 

The Board also believes that a rolling two-year contract gives a more stable
platform for both the Company and the Managers. We look forward to continuing
our partnership with the Managers as we focus on performance and creating
value for all stakeholders."

 

Notes:

 

The amendments to the management arrangements are considered to be a relevant
related party transaction under UKLR 11.5.4R(1) and (2) and this announcement
is being made in accordance with UKLR 8.2.1R(4). The Board, excluding Stephen
Inglis, which has been so advised by Peel Hunt LLP, considers that the terms
of the proposed amendments are fair and reasonable as far as shareholders of
Regional REIT are concerned. In giving its advice, Peel Hunt LLP has taken
into account the Board's commercial assessment of the amendments to the
management arrangements.

 

For the purposes of Chapter 8 of the UK Listing Rules, the aggregate of total
fees payable to the Managers will be capped at 4.99% of the Company's average
net asset value per annum. This cap is a technical requirement under the UK
Listing Rules and the Board expects the aggregate fees to be substantially
lower than the cap.

 

 

- ENDS -

 ESR Europe Investment Management Ltd  Tel: +44 (0) 203 831 9776
 Investor Relations
 Adam Dickinson

 ESR Europe LSPIM Limited              Tel: +44 (0) 141 248 4155
 Asset Manager to the Group
 Stephen Inglis

 FTI Consulting                            Tel: +44 (0)20 3727 1000
 Financial Communications              RegionalREIT@fticonsulting.com (mailto:RegionalREIT@fticonsulting.com)
 Dido Laurimore, Giles Barrie

 

About Regional REIT

 

Regional REIT Limited ("Regional REIT" or the "Company") and its
subsidiaries (the "Group") is a United Kingdom ("UK") based real estate
investment trust that launched in November 2015. It is managed by ESR Europe
LSPIM Limited, the Asset Manager, and ESR Europe Private Markets Limited, the
Investment Adviser.

 

Regional REIT's commercial property portfolio is comprised wholly of income
producing UK assets, predominantly offices located in the regional centres
outside of the M25 motorway. The portfolio is geographically diversified, with
118 properties, 1,242 units and 690 tenants as at 30 September 2025, with a
valuation of c.£595.9m.

 

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: 549300D8G4NKLRIKBX73

 

 

 

 

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