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RGL Regional Reit Limited

0.65 (2.84%)
28 May 2024 - Closed
Delayed by 15 minutes
Share Name Share Symbol Market Type Share ISIN Share Description
Regional Reit Limited LSE:RGL London Ordinary Share GG00BYV2ZQ34 ORD NPV
  Price Change % Change Share Price Shares Traded Last Trade
  0.65 2.84% 23.55 1,260,789 16:35:24
Bid Price Offer Price High Price Low Price Open Price
23.50 23.80 24.55 23.00 24.55
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
Real Estate Investment Trust 93.32M -65.16M -0.1263 -1.88 122.75M
Last Trade Time Trade Type Trade Size Trade Price Currency
16:35:24 UT 26,986 23.55 GBX

Regional Reit (RGL) Latest News

Regional Reit (RGL) Discussions and Chat

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Date Time Title Posts
28/5/202414:00Regional REIT - Targeting High Yields from Regional Property4,368
18/4/202322:45Regional ReiT-
29/9/202213:47August 20241
29/9/202212:02Inglis Interview with Edison3
13/3/202010:24*** Regional Reit ***1

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Regional Reit (RGL) Most Recent Trades

Trade Time Trade Price Trade Size Trade Value Trade Type
2024-05-28 15:35:2423.5526,9866,355.20UT
2024-05-28 15:27:5223.8016839.98O
2024-05-28 15:27:3023.657,0001,655.63O
2024-05-28 15:17:2523.7530.71O
2024-05-28 15:11:1023.755,1571,224.78O

Regional Reit (RGL) Top Chat Posts

Top Posts
Posted at 28/5/2024 09:20 by Regional Reit Daily Update
Regional Reit Limited is listed in the Real Estate Investment Trust sector of the London Stock Exchange with ticker RGL. The last closing price for Regional Reit was 22.90p.
Regional Reit currently has 515,736,583 shares in issue. The market capitalisation of Regional Reit is £122,745,307.
Regional Reit has a price to earnings ratio (PE ratio) of -1.88.
This morning RGL shares opened at 24.55p
Posted at 24/5/2024 07:35 by spectoacc
And yet they can't even make enough net (after debt) sales to cover a £50m bond.

What does that tell you? That there's little to no chance of selling £175m near NAV. And how is that a surprise - RGL were the default buyer for a lot of the cr*p offices, as the 20% vacancy rate shows.

Now they've switched to being sellers..

Or put another way - if RGL was being liquidated, what price would you look to pick up one of their offices at? Similar to what I've been paying for some of HOME's, I'd imagine.

For there to be a decent return, RGL has to survive. To survive, it's got to get past the retail bond in August (I'm sure it will), the Santander LTV limit (likely a waiver, at a cost), and a 2025 refi of the much larger 2026 debt rescheduling (good luck with that).

Nothing's changed.

Just remember that when the rescue rights comes, unless it raises well north of £75m, it's not the end of RGL's troubles.
Posted at 24/5/2024 06:56 by grahamg8
RCT I don't often get called ridiculous. I'm pleased that there seem to be so many optimists here. Keeping up the share price suits me fine, I might even get out with a profit.

You mention disposing at par. Is this a reasonable assumption? Other players in the office property market surely know that RGL are under pressure to sell to meet the bond payment, and as albajack says the LTV test in June. This suggests to me that disposals at a discount are more likely.

Did you allow for disposal costs, or administration costs going forward? In a previous post some weeks ago I did say that there was a reasonable prospect of shareholders ending up with something, but probably less that 10pps. I hope I'm being too cautious.
Posted at 23/5/2024 20:54 by albajack
Actually, the first potential elephant in the room is the Santander '29 loan because the maximum LTV threshold reduces to 50% on the 19th of next month. It was 52.2% as at the year end. One would hope that some of the reduction in loans outstanding reported in the RNS of this week does include this specific loan.

If there is room for a baby elephant, then I propose the lack of announcment of a date for the AGM. Are all of the Board up for re-election this year? ;-)

Part of the point of my previous post was due to the belief that it is an unrealistic hope to think that property disposals will be sufficient to redeem the bond, at least alone. Furthermore, if we are at or close to the bottom of the office-market cycle then selling now is not necessarily the best way of maximising shareholder value.

Don't forget that the 40% LTV is a long term nice-to-have and not an immediate necessity - £175m of disposals is just one result of an exercise in to how the LTV could be brought below 55%, a figure mentioned a few posts ago.

Important to differentiate between what is needed now, and what will be nice later; £175m of disposals is the latter.

Disposals are necessary - or/and, an equity raise is necessary - because RGL has way too much gearing. Get this addressed and there shouldn't be a need for lenders to cut and run when their loans become due. Whilst there are sufficient assets upon which loans can comfortably be secured then they are more likely to be prepared to extend their loans for another term - on the appropriate terms of couse, i.e. interest rate.

If they do not want to extend then I'm sure that there are other institutions prepared to replace them. Unlike with replacing the bond now, those replacement loans would be secured - asset-backed lending is an attractive business for some.

The share price fall after the Edison report might have been due to the manner in which an equity raise was raised (for want of a word). The share price is now higher than just before that report - but the potential for an equity raise has not gone away. RGL's share price has been on a downward trend for over two years, now. The thumb has been pointing downwards since well before the report's release.

Using figures from the 22nd May RNS, a rough calc. of NAV gives 59.8p per share. This is what would be left for shareholders, today, if all debt was paid down by disposals.
Posted at 23/5/2024 17:32 by grahamg8
albajack you have updated the figures I posted on 2/2/24 # 3920. Others have done similar calculations. We all come up with pretty much the same conclusion. There are still two other problems to overcome 1) The disposal program simply isn't big enough. The trading update from yesterday, even if you are adding all the prospective disposals, only comes to £112m way short of the £175m needed. 2) Assuming RGL survive past the bond redemption £50m in August there is still an elephant in the room called the next debt repayment due in August 2026 of £125.7m. If the solution is to keep selling assets there won't be much left for shareholders when the banks have taken their cut and moved on. Alternatively an equity raise as Edison suggested got the thumbs down in the form of a share price collapse.
Posted at 03/5/2024 15:20 by spectoacc
Except, they need £75m, no one in their right mind would underwrite (or rather, at what cost?), and even £75m requires some heroic property sales over the next 18 months.

When Edison start sounding negative, you know you're in trouble ;)

A strongly improving economy that lifts all boats could save RGL - otherwise, it'll be the continued slow demise of the sub-standard office. Yes - RGL have some good ones, but likely those that get sold.

Meanwhile, a 20% vacancy rate.

I still reckon the big holders are inside on the raise, so the price can freely drift up. But saying that, I thought they'd have got it away ages ago.

Edit - a reminder of 12th March, soon to be two months ago:

"...Notes the...speculation equity capital raise of around £75 million.

...The Company is actively exploring a range of refinancing options, including debt and/or equity, in respect of the existing £50 million retail bond...given its maturity date in August 2024.

The Company confirms that significant preparatory work has been undertaken to date in respect of both the debt and equity options, which remain under active consideration.

In the event that the Company proceeds with an equity issue, the Company expects that it would be at a material discount to the Company's current share price...."

I'm leaning towards the view above (@Wc104?) that they've been unable to get it away.
Posted at 03/5/2024 14:40 by meanreverter
The clean and simple way to redeem the £50m retail eligible bond in August is with a deeply discounted rights issue: say one for one at 10p, with an oversubscription option. At that price, it would be “an offer you can't refuse” and would not need to be underwritten.

On the assumption that the present share price of 24p is fair, the theoretical ex-rights price would be 17p. However, the present price is at a 53.7% discount to NAV (conservatively taking the lower of EPRA NTA at 56.4p and IFRS NAV at 59.5p), largely because of the worry about over-gearing with the overhang of the imminent bond redemption. Such a discount would be undeserved after derisking by the new capital injection. The loan-to-value ratio would drop from the present anxiety-inducing 55.1% to a more acceptable 37.4%, which is within the company's target range. A less extreme share-price discount to NAV would thus be on the cards — say 40%. That would correspond to an ex-rights price of 19.9p.

Although not presently adding to my holding of RGL, I'm squirrelling the pennies away in the piggy bank for an anticipated rights issue, and will be an eager subscriber.
Posted at 23/4/2024 17:15 by grahamg8
See saw. RGL on the way up, RGL1 going down. This seems a bit illogical if the share price rises it presumably means the outlook is improving, and if so then the risk of a default/hair cut on the bonds should recede and so their price ought to rise as well. The best explanation I could find was that we have rotation out of bonds into shares ie no new holders, risk appetite of existing holders has increased.
Posted at 12/3/2024 17:16 by grahamg8
I would be interested to know if Edison still stick to their assertion that if there was an equity raise the share price would rise. Fat chance. This does smack of deliberately trashing the share price in order to allow a known investor to takeover on the cheap. A new 5 year bond at 15% coupon would be a lot simpler, but doesn't solve the debt/equity limit. So convertible shares/bond hybrid deal? The coupon should be lower and the equity base would be higher. Combine this with a decent level of asset sales and we might stay in business.
Posted at 12/3/2024 11:45 by williamcooper104
Usually after a distressed rights issue a REITs share price pops But there's still some doubt that they'll get it away (you'd think they would given management must have guided Edison; but then that's the same management that got them into this mess) Post any share price pop on a rights issue being completed in not so sure it's going to be a great investment; with the much higher share count and capex needs they'll struggle to pay much of a divi for quite some time and that'll likely limit any major recovery See HMSO post rights issue
Posted at 02/2/2024 18:45 by grahamg8
RGL seems to be trying to defy gravity.

From the Q3 update "In the near term, the Board remains focused upon a controlled disposal programme, to reduce the LTV back to the Company's long-term target of 40%, whilst maintaining the quarterly dividend.". The 40% target is repeated for the YE RNS today.

Take the figures as gospel:Portfolio £700.7m, LTV 55.1% , so borrowing is £386.09m. To achieve a 40% target by asset sales would mean
(700.7-X)x0.40=386.09-X or X = £176.35m disposals ie 25% of the assets. This assumes everything is sold at book, there are no costs incurred and all the proceeds are allocated to debt reduction.

The latest dividend of 1.20p would cost £24.76mpa with 515.74m shares in issue. So to maintain the dividend over 2024 would mean 'finding' £6.18m. This assumes operating and admin costs fall in direct proportion to the value of each disposal, highly unlikely.

The only way to at least partly square the circle is for only the vacant properties to be sold, so no income would be lost. But there just aren't enough of these, and the chances of vacant properties being sold at book seems pretty remote to me.

There is one more sleight of hand that can be thrust on shareholders, and that is if 'maintaining the quarterly dividend' actually means maintaining a quarterly dividend no matter how miserly. Technically correct a dividend of 4 x 0.001pps is maintaining a quarterly dividend. This would save the requisite amount from the lower rental income surplus available to distribute.

I'm also pretty edgy about the debt itself remaining duration of 3.5y interest rate of 3.5%. Have the board actually noticed that interest rates have gone up and they are only dropping very slowly? Our ultra low interest environment is over; refinancing is going to cost a lot more and 3.5 years is scarily close, starting in August 2024 in just 6 months time. The coupon on RGL1 is 4.5% and that is nowhere high enough to tempt new investors, or encourage a roll-over by existing bond holders. 8% sounds more realistic, and if all coming in the form of a bond would cost an extra £1.75mpa in interest, all to be taken out of the pool of funds available for RGL shareholder dividends.

The fall in the share price today says the market doesn't believe the narrative, and neither do I.
Regional Reit share price data is direct from the London Stock Exchange

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