Regional Reit (RGL) has come a long way since floating in late 2015, building up a commercial property portfolio valued at over £500m. Comparatives are difficult given its short history (see table), but in the year to December 2016 the portfolio generated rental income of £43m. Headline profits were also affected by a £6.8m downward valuation in the portfolio against a £23.8m uplift a year earlier.
Exposure to the office and commercial sectors increased from 84 per cent of the portfolio to 93 per cent comprising 123 properties and 717 tenants. Four properties costing £134m were acquired during the year on an average net initial yield of 8.6 per cent, establishing a useful arbitrage over disposals of £44.9m made at a yield of 6.8 per cent.
In late February, the group reached an agreement to acquire 31 regional office, industrial, retail and leisure properties from Conygar (CIC) with a gross investment value of £129m and a contracted rent roll of £9.7m. The £28m cost will be met by issuing 26.3m shares and Regional Reit will also assume £69.5m of bank debt and around £35.7m for the estimated repayment of Conygar ZDP zero dividend preference shares.
Leaving aside that deal, analysts at Peel Hunt are forecasting adjusted net asset value at end-2017 of 110p, from 107p a year earlier.
| REGIONAL REIT (RGL) | ||||
|---|---|---|---|---|
| ORD PRICE: | 103p | MARKET VALUE: | £282m | |
| TOUCH: | 101.75-103p | 12-MONTH HIGH: | 111p | LOW: 88p |
| DIVIDEND YIELD: | 7.4% | TRADING PROPERTIES: | nil | |
| DISCOUNT TO NAV: | 3% | |||
| INVESTMENT PROPERTIES: | £502m | NET DEBT: | 70% | |
| Year to 31 Dec | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015* | 107.7 | 21.1 | 7.7 | 1 |
| 2016 | 106.4 | 13.4 | 4.9 | 7.65 |
| % change | -1 | -37 | -36 | +665 |
Ex-div: 2 Mar Payment: 13 Apr *Covers the period from 22 Jun 2015 to 31 Dec 2015 | ||||
