Shares in Regional REIT (RGL) rose nearly 4 per cent on the morning the office and commercial property landlord delivered a robust first-half performance. Headline profits were boosted by a valuation uplift on the portfolio of £27.9m, up from £7.5m a year earlier, while operating profits were higher still, thanks to a 39 per cent increase in net rental income to £26.9m.
Disposals of £60.4m averaged a net initial yield of 4.9 per cent, which contrasts with a net initial yield on acquisitions of 8.4 per cent. Disposal proceeds also helped to finance £40.1m of acquisitions, while £50m was raised through a retail bond. This will more than cover the preference shares that came with assets acquired from Conygar, and which mature in January 2019.
Gross borrowings rose from £376.5m at the end of 2017 to £391.9m, reflecting acquisition costs and the preference share repayment. However, cash reserves more than doubled to £79.5m, and proceeds from disposals and the valuation uplift saw the loan-to-value ratio fall from 45 per cent to 41.2 per cent, with a target of 40 per cent. Despite an increased proportion of recently acquired assets, occupancy rates by value improved slightly to 85.5 per cent.
Adjusted net asset value is already ahead of house broker Peel Hunt’s previous forecasts for the full year, and is now expected to reach 119p at the year-end, from 106p in 2017.
| REGIONAL REIT (RGL) | ||||
| ORD PRICE: | 99p | MARKET VALUE: | £369m | |
| TOUCH: | 98.3-99p | 12-MONTH HIGH: | 107p | LOW: 94p |
| DIVIDEND YIELD: | 8.0% | DEVELOPMENT PROP: | nil | |
| DISCOUNT TO NAV: | 13% | NET DEBT: | 73% | |
| INVESTMENT PROP: | £759m | |||
| Half-year to 30 Jun | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p)* |
| 2017 | 107 | 16.2 | 5.6 | 3.6 |
| 2018 | 114 | 45.3 | 12.0 | 3.7 |
| % change | +6 | +180 | +114 | +3 |
| Ex-div: | 13 Sep | |||
| Payment: | 15 Oct | |||
| *Dividends paid quarterly. XD and pay dates refer to second-quarterly dividend of 1.85p | ||||
