Regional Reit Share Discussion Threads

[verymaryhinge] 10/11/2023 13:58

as of now RGL1 is at 92.50 on the sell side - that's 15.75%.

[cc2014] 10/11/2023 13:55

Equity investors love the update but the bond holders hate it.

Make of that what you will.

[cruelladeville] 10/11/2023 12:37

Yes, radio silence at Questor was noticed here too. IF and it's a big IF, the dividend is maintained around 1.2p, I think calling bottom is a fair one.

[lord gnome] 10/11/2023 08:17

Questor has long been a fan of RGL. Still supporting by the looks of it although the column was strangely quiet while the share price was dropping like a stone. Questor would now appear to be trying to call bottom. Time will tell, but I am staying out for now.

[langland] 10/11/2023 08:08

RGL1 looks a better bet with yield to maturity of about 12.5. Any thoughts?

[cruelladeville] 10/11/2023 08:03

Interesting commentary from The Telegraph Questor column today. Behind a paywall, but the article ends with "Yesterday Regional also said it would maintain its next quarterly dividend at 1.2p. At the current share price, that equates to a yield of about 17pc, which is obviously unsustainable. The market is saying that further dividend cuts after the one earlier this year are on the way but brokers have said they believe a divi at or around current levels should be sustainable.If this is case the shares are severely mispriced and a strong recovery will follow sooner or later."

[arbus5000] 09/11/2023 14:37

sounds like a plan.

with hindsight, they should have done that during covid, like everybody else

[nickrl] 09/11/2023 13:24

@arbus yes there will be voids but already at 20% isn't a good starting position. Reckon they will need sell more than 16m to fund bond redemption as also have day to day capex to deal with. Im sitting on sidelines as still reckon the divi will have to be dropped for 12mths to generate cash as refi is going to be double current coupon. After that they do have breathing space

[arbus5000] 09/11/2023 10:56

not too bad.

given the economic climate and need for rent renewals there will be some voids.

just another 14mln to find between now and august to fund the bond redemption, which will knock off 2.2mln from financing costs. They typically sell around ~60mln of properties a year.

[nickrl] 09/11/2023 09:40

They post the office sale because its sold at decent premia to its last valuation but at the bottom they tell us sales ytd are only 2% above valuation which indicates other sales haven't been as positive so is it truly representative.

Now to the trading update first the positive they've retained 73% although the asterisk note indicates it might not be as good as that. Anyhow its a decent level but lets move to vacancy level its down another 1.8% to 80.7%. So thats more void cost coming out of free cash but significantly NRI down another 1.8m over the qtr. They have at least retained Virgin Media, which was the biggest tenant, but at less than half the space they had. Also they've retained Shell Energy 2nd biggest tenant but at a substantially reduced rent was 1.4m now 0.9m and all thats bought them is two years.

The lower divi is still covered but the margin is falling and if they dont stabilise NRI, which seems unlikely given they are making disposals and the evidence that rents are falling, then even that divi is under threat. Of course thats more than in share price currently but until they have dealt with the bond refi cant see share price reacting favourably.

[renewed1] 09/11/2023 08:46

Surely as good as we could have expected. Divi held. Would have been nice to have ben told the current NAV.

[rcturner2] 09/11/2023 08:26

Both statements are positive.

[cruelladeville] 04/11/2023 18:19

Next week's trading update should be interesting.

[18bt] 02/11/2023 13:15

Decent recovery in the last few days along with most other REITS

[mondex] 01/11/2023 15:32

From Citywire:

Regional Reit’s new let provides fresh hope for suffering dividend

Under pressure Regional Reit (RGL) has secured a full letting at Birmingham office block Norfolk House, one of the largest assets in the portfolio.

The £140m real estate investment trust (Reit), which invests in offices outside of the M25 orbital road, has struggled since the Covid pandemic as the emerging trend for working from home saw companies downsize their offices.

The fund is the worst performer in the Association of Investment Companies (AIC) UK Commercial Property sector over the past year, with the shares falling 52.4% in the 12-month period to the end of October, while its peers fell an average of 20%.

In a bid to boost the value of the portfolio, the fund has undertaken extensive asset management projects and refurbished existing properties to make them more attractive to renters.

The now fully-let Norfolk House, a 118,000 square foot office in the centre of Birmingham, was refurbished pre-pandemic to provide ‘quality accommodation’ alongside ‘excellent transport links and amenities’.

The investment has paid off as the Reit confirmed existing tenant, private higher education provider Global Banking School, has increased its occupancy, taking the previously vacant fourth and fifth floors of the building.

The new lease will provide an additional rental income of £558,277 a year, with the lease signed until December 2037 with a break option in 2032. When combined, Global Banking School is now paying an annual rent of £1.4m.

Stephen Inglis, chief executive of London & Scottish Property Investment Management, said the tenant was ‘attracted to the high standard of the recently completed refurbishment and its excellent location in the heart of Birmingham city centre’.

Investors will no doubt be hoping that the increased rent from the fully leased offices will help shore up the dividend, which suffered a 27% cut in September. The fund announced a second-quarter dividend of just 1.2p, down from 1.65p in the previous three months, as higher costs brought on by inflation started to bite. Regional has warned that further cuts may be necessary to counter declines in rental income.

Another glimmer of hope for investors was the appointment of ARA Europe Private Markets as investment adviser in October. ARA Europe, which is part of the ESR Group, is the largest manager of Reits in Asia Pacific – in April it purchased a majority share in the trust’s asset manager London & Scottish, replacing Toscafund Asset Management.

[arbus5000] 01/11/2023 05:37

just as how trump had overstated his aum, allegedly !

[williamcooper104] 31/10/2023 21:46

Offices have always been woeful for long term rental growth Regional offices used to just be flat and the city's rental growth was just cyclical volatility The highest rents ever achieved in the city until quite recently was c£80 psf in Cannon Street in the 1980s - so basically 35-40 years of almost no nominal rental growth Add refreshing the cat A every 5-7 years (something that's never in the yield) and the returns are dreadful - otter than for trading/developing if you catch the cycle

[nickrl] 31/10/2023 18:58

@CDV indeed but if its the best crumb they can find it wont budge the current share price as they need to be telling us they've made disposals which appear to be non existent.

[cruelladeville] 31/10/2023 12:15

Comments duly noted. I am just pleased to see something that's not wholly negative for a change.

[spectoacc] 31/10/2023 08:53

Let's hope no rent-free too then.

But well done to them getting it let and removing an empty rates liability.

Now for the other 19% of the portfolio that's empty ;)

[catabrit] 31/10/2023 08:45

Rents in that location have historically always been lower than the rest of Birmingham. It is not a great building, nor is it a prime location. Rents along there were going as high as late teens a few years’ back (pre covid). But they’re now back to where they were during the post GFC era (2009-2013). This is the problem for U.K. commercial property; on an inflation adjusted basis, it’s a terrible asset to own. Especially in an evergreen structure and especially regional offices. Management are never incentivised to sell and everyone - investors, analysts, management - hangs their hat on the new paradigm which they mistake for secular change when in reality it is cyclical.

[williamcooper104] 31/10/2023 08:42

Supposedly grade A space too Looks a bit too low - suggesting the tenant is getting a cheap rent for funding capex

[dartboard1] 31/10/2023 08:37

It's not great rent though is it. 11 per sq ft in the centre of Birmingham... although some rent is better than nine. Would think they'd get more for that location