REG - Regional REIT Ltd - Q4 2025 Dividend, 2025 Valuation, Trading Update

Regional REITAnnouncement

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RNS Number : 5803T  Regional REIT Limited  19 February 2026

19 February 2026

REGIONAL REIT Limited

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

Q4 2025 Dividend, Year End 2025 Valuation and Trading Update

Delivering in 2025, prudent approach in 2026

 

This announcement contains certain inside information for the purposes of
Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part
of UK domestic law by virtue of the European Union (Withdrawal) Act 2018
("MAR"), and is disclosed in accordance with the Company's obligations under
Article 17 of MAR.

Regional REIT Limited (LSE: RGL), today announces its portfolio valuation as
at 31 December 2025, Q4 2025 dividend, and an update for both EPC ratings and
rent collections.

In 2025, the Company completed £51.6m of disposals - ahead of target and at a
1.3% premium to book value - and reduced LTV to 40.4% by year‑end (39.9%
including post‑period disposals). The gross annualised rent roll of £50.4m
tracked broadly as expected, while the dividend for the year was fully covered
at 10 pence per share. December also saw the successful refinancing of £72.4m
of debt which was due to expire in August 2026 and a new management contract
being put in place bringing significant fee savings and also introducing much
greater shareholder alignment for the Manager.

The portfolio valuation decreased by 2.9% in H2 2025, bringing the full‑year
decline to 5.0%, largely reflecting previous changes in income following the
tenant breaks previously announced.

Looking ahead to 2026, the Company's strategy is to retain cash where possible
to facilitate essential, accretive capital expenditure to accelerate the
repositioning of the portfolio to benefit from occupiers' demand for quality
space. In addition, the successful sales programme from 2025 will be
continued. This will reduce debt and LTV but also temporarily lower earnings.
Given this, the impact of the lease breaks from 2025 and the fact that debt
costs will increase from the refinance at August 2026, going forward the
Company plans to distribute a minimum 90% of the profit from the property
rental business and is targeting* a dividend of 8 pence per share dividend for
2026. The Board remains confident that this approach of improving the quality
of the portfolio is firmly in shareholders' long‑term interests and aligns
with the Company's strategy and medium‑term outlook

Portfolio update

·    Portfolio valuation £555.2m (2024: £622.5m) - reduction largely due
to the successful sales programme

·    The like-for-like value of the portfolio decreased by 5.0% from 1
January 2025 to 31 December 2025, after adjusting for capital expenditure,
acquisitions and disposals during the period (3.0% decline excluding capital
expenditure adjustment, with the benefits yet to be captured in the
valuation); a decline of 2.9% in the period 1 July 2025 to 31 December 2025

·    Net loan-to-value ratio 40.4% (2024: 41.8%); 39.9% after post period
end disposals

·    Q4 2025 dividend declared at 2.5p; full year 2025 10.0p
(2024:7.80p)**

·    Targeting* a dividend of 8p per share in 2026

*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.

** During 2024 the Company offered 15 new ordinary shares for every 7 existing
shares. Subsequently there was a 10 for 1 split with the resulting Ordinary
shares in issue being 162,088,483.

New lettings 3.9% ahead of ERV, demonstrating the attractiveness of Regional REIT's spaces

·    During 2025, 64 new market lettings were completed totalling £3.2m
rent roll, with these lettings being 3.9% above 2024 ERV

·    Gross annualised rent roll declined to £50.4m (2024: £60.7m); ERV
£77.0m (2024: £83.2m), following the disposals during 2025

·    Total rent collection 2025 was 99.1% (2024: 98.1%)

·    EPRA Occupancy (by ERV) at 75.9% (2024: 77.5%)

Disposals ahead of expectations; continuing to reduce gross indebtedness and invest in portfolio

·    Disposals at £51.6m (before costs), 1.3% above book value (2024:
£30.8m); acquisitions £1.1m (before costs)

·    Targeting at least the same quantum of disposals in 2026

·    Gross borrowings £266.2m (2024: £316.7m); cash and cash equivalents
£41.9m (2024: £56.7m), including cash held at solicitors

·    Group cost of debt (incl. hedging) 3.3% pa (2024: 3.4% pa) - as
announced 24 December 2025, the bank facility maturing in 2026 has been
refinanced to 2029

·    Weighted average debt duration 2.6 years (2024: 2.9 years)

·    Capital expenditure £11.8m (2024: £8.2m)

·    EPC ratings: EPC C or better c.84.4% (2024: 82.7%) of the portfolio;
EPC B or better 60.0% (2024: 57.7%)

·    Average lot size c. £5.0m (2024: c. £4.9m)

 

David Hunter, Chair of Regional REIT, commented:

"It is now nearly a year since I took the Chair at Regional REIT. While the
Board is naturally disappointed that market conditions have delayed a recovery
in values and in leasing, suppressing earnings, I think it is worth
emphasising that there has been meaningful progress over the past year and the
Board believes that the Manager performed well.

"Key achievements included a successful sales programme, an early refinancing
of the debt, lowering the LTV post the year end to below 40%, progressing the
capital expenditure programme and the ongoing portfolio repositioning which
all continue to progress in line with the Company's strategy. Based on this
performance the Board and Manager were pleased to announce a complete
restructuring of the management contract to secure £0.9m of annual savings
and much improved alignment between the Manager and Shareholders. At the same
time, we have strengthened the Board, and the Directors are working closely
with the Manager to ensure that the strategy continues to be delivered
effectively.

"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 underperforming assets, with a target of exceeding
the 2025 sales volumes.

"The Company is pleased to confirm it will deliver a fully covered dividend of
10 pence per share for 2025. For 2026, however, the Board has asked the
Manager to adopt a more prudent approach to leasing assumptions and to
accelerate the ongoing sales programme. Linked to this the Company will
distribute a minimum 90% of the profit from the property rental business,
which is in accordance with regulatory requirements, but retaining earnings
where possible to support the accretive and essential capital expenditure
programme. On this basis we are now targeting* a fully covered 8 pence per
share dividend for 2026. 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."

Stephen Inglis, Head of ESR Europe LSPIM Ltd., commented:

"Although the portfolio valuation declined over the six months to 31 December,
yields remained stable, with the reduction driven purely by income, indicating
a stabilisation in underlying property values.

 

"Whilst we are pleased to have achieved our key targets for 2025 in what
remains a challenging market, ongoing macroeconomic and geopolitical
uncertainty continues to affect both market conditions and the company's
performance. The subdued leasing market and the significant breaks previously
reported, impacted 2025 leasing activity and occupancy, the full effects of
which will be witnessed in 2026. Leasing continues to be difficult to predict,
with many tenants not prepared to commit to moves at this time, and void costs
remain a significant drag on net income. We are focused on voids and aim to
reduce these significantly, through a combination of the continuing sales
programme, cost saving measures and leasing up vacant Grade A, EPC A and B
accommodation in the portfolio. We are also driving forward the capital
expenditure programme which will lead to greater leasing activity and drive
net rent and value.

 

"Regional office underlying fundamentals remain: no new supply, diminishing
existing stock through, amongst other things, change of use adding to a
looming shortage in the supply of Grade A accommodation conforming to EPC A
and B, which will ultimately deliver higher occupancy in the Regional REIT
portfolio at higher rents and this will be reflected in improved capital
values."

Portfolio strategy update

·    As previously announced, the portfolio has been segmented into four
strategic categories:

 

 Segment        £m     Portfolio (%)  EPRA Occupancy (%)
 Core           348.1  62.7%          86.5%
 Capex to Core  103.8  18.7%          66.4%
 Value Add      56.4   10.2%          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

Q4 2025 Dividend Declaration

 

As previously indicated, the Company will pay a dividend of 2.50 pence per
share ("pps") for the period 1 October 2025 to 31 December 2025, (2024 Q4:
2.20 pence per share) amounting to 10pps for 2025. The entire dividend will be
paid as a REIT property income distribution ("PID").

 

Shareholders have the option to invest their dividend in a Dividend
Reinvestment Plan ("DRIP"), and more details can be found on the Company's
website
https://www.regionalreit.com/investors/investors-dividend/dividend-reinvestment-plan
(https://url.avanan.click/v2/r02/___https:/www.regionalreit.com/investors/investors-dividend/dividend-reinvestment-plan___.YXAxZTpzaG9yZWNhcDphOm86ZWNkYTBhMDM2MjBlYjM3OTUzZDE5NjJiYmE4MjE3NmI6NzplNjkxOjkyY2I5NmU2Y2M0ZDZjNTdiYzFjOTkzYmEwNjc3ZTBiNWYzODJhMTZlYTkwZmJiYTFkMDIyNTYyYTBhMzU2ODU6cDpGOk4)
.

 

The key dates relating to this dividend are:

 

 Ex-dividend date            26 February 2026
 Record date                 27 February 2026
 Last day for DRIP election  20 March 2026
 Payment date                10 April 2026

 

The level of future payment of dividends will be determined by the Board
having regard to, among other factors, the financial position and performance
of the Group at the relevant time, UK REIT requirements, the interest of
shareholders and the long-term future of the Company.

 

Outlook

 

The supply and demand dynamics for well‑located, high‑quality office space
continues to support rental performance, enabling reversionary income capture
through targeted investment. Although conditions remain challenging, adjusted
pricing and selective disposals demonstrate our ability to drive 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.

 

Further Background Information

 

Lettings Update - Summary of Activity since 30 September 2025

There were 11 notable new lettings and renewals achieved in Q4 2025 for 91,731
sq.ft. amounting to £1.3m, 7.5% above ERV.

 

·    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 per annum ("pa") (£25.58/ sq. ft.). 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.)

·    Origin 1 & 2, Crawley - Menzies LLP has let 7,858 sq. ft. of
office space to November 2035 with an option to break in 2030, at a rental
income of £216,095 pa (£27.50/ sq. ft.).

·    Mochdre Commerce Park, Colwyn Bay - A Nelson & Co Ltd. has let
34,245 sq. ft. of space to October 2035 with an option to break in 2030, at a
rental income of £179,786 pa (£5.25/ sq. ft.).

·    Beeston Business Park, Nottingham - GTT-EMEA Ltd. has let 10,000 sq.
ft. of space to November 2031 with an option to break in 2028, at a rental
income of £153,952 pa (£15.40/ sq. ft.).

·    Manchester Green, Manchester - Bowmer and Kirkland Ltd. has let
6,957 sq. ft. of space to December 2035 with an option to break in 2030, at a
rental income of £139,140 pa (£20.00/ sq. ft.).

·    Garment Works, 30-34 Hounds Gate, Nottingham - Thompsons Solicitors
LLP has let 5,453 sq. ft. of space to October 2030 with an option to break in
2028, at a rental income of £99,902 pa (£18.32/ sq. ft.).

·    Quantum Court, Edinburgh - AI Exploration Ltd. has let 2,901 sq. ft.
of space to December 2030 with an option to break in 2028, at a rental income
of £55,119 pa (£19.00/ sq. ft.).

·    Mandale Business Park, Durham - Bupa Occupational Health Ltd. has
let 1,100 sq. ft. of space to January 2028, at a rental income
of £12,549 pa (£11.41/ sq. ft.).

·    The Royals, Altrincham Road, Manchester - Existing tenant Diagnostic
Healthcare Ltd. has renewed existing lease of 6,336 sq. ft. of space to
October 2035 with a break option in 2030, at a rental income of £101,376
(£16.00/ sq. ft.)

·    Global Reach, Cardiff - Existing tenant Active Quote Ltd. has
renewed existing lease of 4,318 sq. ft. of space to August 2027 with a break
option in 2026, at a rental income of £62,568 (£14.49/ sq. ft.)

 

 

Post period end

 

Subsequent Events summary post 31 December 2025

 

Disposals

Since 31 December 2025, the Company has completed 1 disposal and 1 part
disposal for an aggregate total of £5.1m (before costs), 0.5% above the
December 2025 valuation.

 

Borrowings

Following post period end disposals, Group borrowings have been further
reduced by £4.6m to £261.7m. Based on the 31 December 2025 valuation the LTV
is now 39.9%.

 

Lettings

A further 3 notable new lettings and renewals were achieved post period end
for 14,319 sq.ft. amounting to £0.2m, 5.3% 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.

 

Forthcoming Events

 

 24 March 2026     2025 Preliminary Results
 19 May 2026       Q1 2026 Trading Update
 8 September 2026  2026 Interim Results

 

 

 

- 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
 Investment Adviser 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, 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 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
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: 549300D8G4NKLRIKBX73

 

 

 

 

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