Regional REIT downgrades value of portfolio in one of most challenging years in recent memory
Property firm Regional REIT has further downgraded the value of its UK regional property portfolio by £116m.
The firm, which has offices in Old Trafford overseeing properties throughout the North West, has reported healthy rent collections on its extensive regional office estate, but blamed the macro economic environment for a likely squeeze on rents in the future.
The portfolio valuation stands at £700.7m down from £906.1m in 2021 and £789.5m in 2022.
The like-for-like value of the portfolio decreased by 5.9% from 30 June 2023 to 31 December 2023 after adjusting for capital expenditure, acquisitions and disposals during the period (5.5% excluding capital expenditure adjustment)
However, total rent collection for 2023 is currently 98.6% compared with 97.9% for the equivalent period in 2022.
Stephen Inglis, chief executive of London and Scottish Property Investment Management, the Asset Manager, said: “2023 was one of the most challenging years for REITs in recent memory and Regional REIT was not immune from the macro-economic difficulties faced by the sector. Whilst valuations have been impacted, the Asset Manager’s active asset management initiatives continued to mitigate some of the impact on the portfolio. The leasing market was slower than anticipated largely due to the uncertainty around working patterns and the geopolitical situation impacting inflation and interest rates, but with some stability we are witnessing increasing numbers of enquiries for our assets.
“Notably, the Company continued to achieve a strong level of rent collection thanks to its high-quality tenant base. The ongoing asset disposal programme continues to achieve the latest valuations.
“It is pleasing to note that substantial progress has been achieved in improving the EPC rating of the portfolio. Over the course of 2023 the number of properties rated EPC C and above has improved to in excess of 73% of the portfolio.
“The LTV continues to be a key focus of the Board and the management have a plan to reduce LTV to the long term target of 40% through selective sales and repayment of debt. The senior debt is 100% fixed, swapped or capped and will not exceed 3.5%. The Company is actively exploring a range of refinancing options for the retail bond given its near-term maturity date.”
