Regional REIT raises £110m, underwritten by Redrow founder, Steve Morgan
Property firm Regional REIT, which has offices in Old Trafford overseeing properties throughout the North West, has raised £110.5m through a Placing, Overseas Placing and Open Offer, fully underwritten by Steve Morgan, founder of North West housebuilder, Redrow.
The fundraise involves 1,105,149,821 New Ordinary Shares at an issue price of 10p per share. The company also announced a one for 10 Share Consolidation.
The issue price represents a discount of 50.4% to the closing price of 20.2p and a discount of 82.3% to the latest published NTA per share prior to the latest practicable date of 56.4p.
The Capital Raising was underwritten by Bridgemere Investments, part of the Bridgemere Group, established by Steve Morgan.
The raising will enable Regional REIT’s £50m Retail Bond to be fully repaid, eliminating this short term liability and further reducing the constraints caused by the requirement to pay coupon distributions on the Retail Bond.
In addition, £26.3m of the Net Capital Raising Proceeds will be used to reduce bank facilities, which will result in the company having greater headroom under the covenants in such facilities, and the remaining £28.4m of the Net Capital Raising Proceeds will provide additional flexibility to fund selective capital expenditure on assets, which will enhance earnings in the near term and value in the mid to long-term, further underpinning quarterly dividends going forward.
This will reduce LTV from 56.8% – based on the valuations as at June 21, 2024 as set out in the Valuation Report – to 40.6% on completion of the Capital Raising.
Kevin McGrath, Chairman of Regional REIT, said: “Following a comprehensive review of a wide range of options to accelerate a reduction in indebtedness and the repayment of the £50m retail bond which matures in August 2024, the board believes this Capital Raising is the best available solution for shareholders.
“The Capital Raising, supported by Bridgemere, will enable the company to strengthen significantly Regional REIT’s financial position, reducing indebtedness and provide the company with greater financial flexibility and liquidity headroom.”
Stephen Inglis, Chief Executive of London & Scottish Property Investment Management, the Asset Manager, said: “Since the Covid-19 pandemic the company has been operating in a challenging environment resulting in the LTV increasing to 56.8% against a target of less than 40%.
“The fully underwritten and fully pre-emptive Capital Raising provides the best long term solution to the upcoming retail bond refinancing, will put the company on a sound footing reducing the LTV to approximately 40% and provide the flexibility to fund capital expenditure on assets to maximise value and income for shareholders over the long term.”
Regional REIT’s investment properties were independently valued on June 21, 2024, at £647.8m (December 31, 2023: £700.7m), representing a decrease of 4.6% in the like-for-like value of the portfolio.
Kevin McGrath and non-executive director, Dan Taylor, having each served nine years and in full accordance with the company`s governance policy and AIC guidelines, intend to resign as directors of the company as soon as reasonably practicable following the company’s next annual general meeting after the completion of the Capital Raising.
Eversheds Sutherland acted for the underwriter Bridgemere Investments with a team led by Daniel Hall and Oscar Coombe. Bridgemere is the family investment vehicle of Steve Morgan.
