Regional REIT on ‘much stronger footing’ after emergency capital raise

Commercial property specialist Regional REIT has reported a relatively robust first half despite an emergency capital raise earlier this year and a still-challenging commercial property market.

The London-listed firm, which in June issued a £110m capital raise to stave off liquidation, said it had paid off in full its £50m retail bond and that the company is now on a “much stronger footing”.

The capital raise has taken place at a 50 per cent discount to the firm’s closing share price of 20.2p, triggering a collapse in the trust’s market capitalisation from which it is yet to recover.

The London-headquartered real estate investment trust, which owns corporate and office space outside of the capital, reported operating profit before gains and losses on property assets and other investments for the six months ending 30 June, 2024, of £19.1m, from £20.6m in 2023.

Regional REIT battling ‘another challenging period’ for sector

Stephen Inglis, CEO of London and Scottish Property Investment Management, the asset manager, said: “The period under review was another challenging period for the commercial real estate sector, with valuations reduced by persistently high interest rates and poor investor sentiment towards UK commercial real estate.

“However, the regional office market appears to be reaching an inflection point, with the recent cut to the base rate providing a helpful development.”

The company said its portfolio was worth £647.9m, down from £700.7m in 2023. On a like-for-like basis, the portfolio value reduced by 5.1 per cent during the period, after adjusting for disposals and capital expenditure.

Rent collection remained strong over the period at 98per cent, while rent roll was £63.5m, down three per cent on a like-for-like basis year on year.

“The [capital raise in June] also provides greater flexibility for capital expenditure to improve the core assets in our portfolio and increase shareholder value going forward,” Inglis said.

“We would again like to thank shareholders for their continued support during this challenging period and we look forward to updating them on our progress in enhancing shareholder value through active portfolio management,” he added.