Regional REIT on track to reach upper end of disposal target

(Sharecast News) - Regional REIT said in an update on Wednesday that it remained on track to reach the upper end of its £40m to £50m disposal target for 2025, after completing £17.1m of property sales in the third quarter at prices slightly above book value. The London-listed regional commercial property investor said the disposals, achieved at 1% above their 30 June valuation, reflected continued progress in reducing leverage.

Five further sales completed after the quarter-end raised an additional £13.3m, bringing year-to-date disposals to £38.1m, 1.8% above book value.

The company said it expected further transactions before year-end to support portfolio repositioning and balance-sheet strengthening.

"We remain committed to reducing leverage through our sales programme," said Stephen Inglis, head of ESR Europe LSPIM, the group's asset manager.

"During the quarter, we achieved £17.1m of disposals at 1% above 30 June valuation, reflecting good progress and we expect to achieve the upper end of our estimated £40m to £50m disposals for the full year."

He added that leasing activity had been affected by uncertainty surrounding the UK government's forthcoming budget.

"The lack of clarity has led many prospective tenants to pause and adopt a 'wait and see' approach," Inglis said, though he noted that enquiry levels were improving.

"In parallel, good progress continues to be made on the refinancing of the August 2026 banking facility with completion expected well ahead of maturity."

During the quarter, Regional REIT completed 21 lettings and renewals covering 86,779 square feet, generating £1.7m of annualised rent. Renewals achieved an average 5.2% uplift against June estimated rental values, with 87% of leases up for renewal retained by existing tenants.

Post quarter-end, four additional lettings and renewals added £0.4m in annual rent.

As at 30 September, the portfolio comprised 118 properties with a gross asset value of about £596m and 690 tenants.

The rent roll stood at £54.3m, down from £56.7m at the end of June, while EPRA occupancy fell to 76.8% from 78.6%. Rent collection for the period reached 97.7%.

Regional REIT maintained a net loan-to-value ratio of around 41.8%, with gross borrowings of £303.6m, falling to £282.0m after subsequent disposals.

Its debt remained fully fixed and hedged at an average cost of 3.4%.

Cash and equivalents totalled £54.4m.

The company declared a third-quarter dividend of 2.5p per share, to be paid on 9 January to shareholders on the register on 21 November.

Regional REIT said the dividend would be paid entirely as a property income distribution.

The group said the UK investment market remained subdued, with positive leasing momentum held back by extended transaction timelines and ongoing uncertainty.

It added that operational discipline, strategic disposals and maintaining dividend continuity remain key priorities.

At 1255 GMT, shares in Regional REIT were down 0.65% at 105.12p.

Reporting by Josh White for Sharecast.com.