Property group weighing up equity fundraise for further acquisitions

Property company Regional REIT is considering another equity fundraise with an eye to further acquisitions, it revealed today.

The company focuses on office and industrial property outside London. It has offices in Manchester and Leeds and owns properties throughout the North West and Midlands.

It said the proceeds of the fundraise will be used to take advantage of its growing near term pipeline of accretive growth opportunities in the investment market.

Occupational take-up in the group’s properties remains robust, which, coupled with an experienced hands-on asset manager delivering successful asset management initiatives, has resulted in the diversified income portfolio continuing to expand.

The asset manager is London & Scottish Property Investment Management, headed by chief executive, Stephen Inglis.

As announced on January 29, the portfolio was valued at £787.9m as at December 31, 2019, an increase of 9.7% during 2019, reflecting acquisitions made in the period.

The like-for-like value of the group’s core office and industrial segment (93.6% by value) also increased in 2019 by 1.4%. Portfolio valuation was broadly unchanged on a like-for-like basis with a 0.1% decrease.

The successful June 2019 equity capital raise targeted £50m and was substantially oversubscribed at £62.5m.

The funds have all been invested ahead of schedule in 11 high quality office assets for a total of £63.9m, producing a combined net initial yield of 8.7%, further diversifying the portfolio.

In August 2019, the group completed the £25.9m acquisition of six offices located Birmingham, Bristol, Cardiff, Chester, Glasgow and Manchester. The assets total circa 172,442 sq ft providing a net income of around £2.36m per annum from 27 tenants, equating to a net initial yield of 8.87% and anticipated reversionary yield of 9.54%.

In October last year, the £27.7m acquisition of four multi-let offices located in Redhill, Harefield, Bristol and High Wycombe was completed. The assets total circa 131,036 sq ft providing a net income of around £2.59m pa from 24 tenants, equating to a net initial yield of 8.7% and anticipated reversionary yield of 9.7%.

And in December 2019, Regional REIT carried out the £10.3m acquisition of a blue chip company headquarters located in Edinburgh. The office asset comprises 43,676 sq ft, with a current contracted rent of £880,000 pa and a net initial yield of 8.0%.

The asset manager continues to see a growing near term pipeline of accretive growth investment opportunities which would further de-risk the portfolio by sector, region, and tenant type, while providing asset management potential.

Regional REIT said the funds would be deployed in line with the group’s investment policy with a view to delivering further value to shareholders.