Investor Presentation Annual Results 2019 Reliable Strong Performance Highly Diversified and Defensive Portfolio regionalreit.com regionalreit.com
Introduction Stephen Inglis Highlights Chief Executive Officer COVID-19: Our Preparedness Derek McDonald Portfolio Managing Director Appendix Simon Marriott Investment Director regionalreit.com 1 Offices held at London and Scottish Property Investment Management Asset Manager to Regional REIT
Regional REIT – Who we are and how we de-risk Experience Hugely experienced senior management team, managing assets over the past 30 years, including previous downturns. 2008-12 increased income across the portfolio Specialised Asset Management Team Multiple touch points with our customers > 55 experienced staff • Proven operational platform • Granular property management Salamander • Managed portfolios through recessionary Quay, Harefield periods Strategy based around Diversification Large number of income streams across the regions • Tenant • Geography Breadth of tenant business • Business Sector Disciplined Borrowing Strategy Robust balance sheet focused on Juniper Place, Basildon cash management • Long duration • Flexibility • Significant covenant headroom Shareholder Commitment Regular high yielding quarterly payment • Ensure REIT compliance • Quarterly dividend Finnieston Business Park, Glasgow regionalreit.com 2
Financial Highlights – Defensive active asset management delivering yield Dividend yield c.11%* +c.2.5% Quarterly dividend Dividend declared for 2019 • FY 2019 : 8.25pps • FY 2018: 8.05pps Total EPRA accounting return • Since IPO** 43% • Annualised 9%, IRR 10% Aztec West, Bristol Portfolio increased 9.7% to £787.9m Reflects acquisitions made in the period and like-for-like increase of 1.4% in core office/industrial segments EPRA NAV: £486.3m (112.7pps) • Retail value down 23% (<5% of portfolio) LTV 38.9% (31 Dec 2018: 38.3%) Below target of c.40% Norfolk House, Birmingham Weighted average cost of debt 100% fixed or hedged • 3.5% (31 Dec 2018: 3.8%) Weighted average debt duration • 7.3 years (31 Dec 2018: 6.4 years) Equity capital raised and deployed Deployed as forecast by the year end • Oversubscribed equity capital raise (July 2019) Lochside Avenue, Edinburgh regionalreit.com 3 *77.1p share price at 06.04.20; **IPO 06.11.2015 – NAV plus dividend
2019 Portfolio Highlights Proactive property asset management achieving outperformance Occupancy UK Property Locations as at 31 December 2019 • EPRA Occupancy (by ERV) was 89.4% (2018: 89.4%) Capital rate per sq. ft. of £105.42 as at 31 Dec 19 (2018: £96.64) • Office: £135.34 per sq. ft (2018: £126.35) - up 7.1% • Industrial: £48.85 per sq. ft. (2018: £45.18) - up 8.1% Average rent per sq. ft. (31 Dec 19 vs 31 Dec 18) • £10.17 in 2019; £9.40 in 2018 - up 8.2% • Office £13.15 (2018: £12.66) - up 3.9% • Industrial £4.17 (2018: £3.63) – up 14.9% Scotland exposure reduced to 18.0% as at 31 Dec 2019 from 22.4% as at 31 Dec 17 • Long-term target of 15% July 2019 targeted £50m equity raise • Successful over subscribed with £62.5m raised • Deployed on schedule by 31 December 2019 regionalreit.com 4
2019 Portfolio Highlights Major lettings and renewals successfully secured across the regions Century Way, Thorpe Park, Leeds Kingscourt Leisure Complex, Dundee New 10-year lease agreed with Marlow A new 10 year tenancy extension Foods Ltd for 10,550 sq. ft. at a rent of agreement has been secured with tenant, £211,600 pa Odeon, at a rent of £737,600 per annum which extends the lease expiry to 2035 9 Portland Street, Manchester Two leases have been renewed with Simard Ltd (5,725 sq. ft.) and Taste Marketing Ltd (4,377 sq. ft.). Both are for 10 years at a revised combined rent of £207,091 pa Mile End Road, Colwick New letting to Hilary’s Blinds on a 10-year lease at £320,000 pa for 82,380 sq. ft. 2800 The Crescent, Birmingham New 10-year lease agreed for 6,858 sq. ft. at a rent of £150,876 pa Juniper Park, Basildon The largest industrial unit has been re-let for 800 Aztec West, Bristol 5 years to Schenker Ltd. Unit 3B (74,189 sq. Remaining available space let ft.) of warehousing space has been secured to Edvance SAS, who now for a rent of £463,681 pa. Ground Floor of occupy 41,285 sq. ft. on a 9 Mayne House and Juniper Place totalling year lease at a rent of 12,851 sq. ft., has been secured for a rent of £902,232 pa £182,265 pa Hampshire Corporate Park, Eastleigh Victory House, Chatham Aviva letting – 10-year lease for 42,612 sq. Lloyds Bank Plc renewed its lease of ft. at a rent of £775,000 pa which is 15.7% entire property for a further five years at ahead of previous passing rent a revised rent of £548,000 pa for 48,372 sq. ft. regionalreit.com 5
COVID-19: Our Preparedness regionalreit.com regionalreit.com
COVID-19 & Our Preparedness Q1 2019 Q1 2020 Change Liquidity Update % of rent invoiced and collected* 83.1% 81.6% (150bps) Switched to monthly rents (Paid and agreed to pay ) 4.8% Agreed to pay in 7 days 2.3% Total 88.7% Cash balance** £42.6m c.£69.1m +£26.5m Gross Borrowings** £340.3m £369.1m +£28.8m Operations • First and foremost the focus is on the health and safety of our staff and our tenants • Operations continue to operate at full capacity*** with business continuity plans in operation • Our focus is on supporting our tenants through this period of disruption and adapting as required • The Asset Manager has one of the highest ratios in its peer group of headcount to tenant, which allows for tenants to be quickly contacted at multiple touch points • Responding to tenant requests on a case by case basis • Strong long-term relationships with all lenders regionalreit.com regionalreit.com 7 * As at 6 April 2020 ** As at 31 March & pre April dividend distributions, respectively *** In accordance with the latest government guidelines
COVID-19 & Our Preparedness Impact • c.41% are multinational or FTSE 350 and above companies • c.51% of tenants classified as essential services as set out in the Government guidelines Outlook & Dividend • Continue to adapt to the rapidly evolving situation, and our asset management experience through previous economic downturns will be invaluable • We continue to work with our tenants on a case by case basis • As in 2008 the current disruption will inevitably provide opportunities • Our market fundamentals to date remain robust, however, we will inevitably be impacted by COVID-19 and though we are committed to paying a regular quarterly dividend to our shareholders this will be subject to market conditions, the Company’s performance, its financial position and business outlook. regionalreit.com regionalreit.com 8
COVID-19 & Our Preparedness Essential Services Breakdown by SIC Tenants as a % of gross rent 2% 1% 3% 2% 1% 3% 2% 1% 5% 2% 17% 2% 5% 5% 7% 7% 17% 7% 8% 8% 14% 8% 10% Manufacturing Public Sector 51% Financial and insurance activities (Other) Banking Electricity, gas, steam and air conditioning supply 12% Transportation and storage Professional, scientific and technical activities Essential Servies Large International Large UK Administrative and support service activities Construction Small UK Medium UK UK Plc Other service activities FTSE 100 UK University/ College Medium International Water supply, sewerage, waste management and remediation activities FTSE 250 Other Information and communication Public administration and defence; compulsory social security Other regionalreit.com regionalreit.com 9 * Classification based upon LSPIM Research department analysis
Summary Managed assets in previous downturns Experience Adapting to the situation (All 904 tenants last filed accounts have been analysed) Diversification Breadth and quantum of tenant income Liquidity Defensive and ample liquidity Outlook Adapting to a rapidly evolving situation regionalreit.com regionalreit.com 10
Portfolio regionalreit.com regionalreit.com
£787.9m Property Portfolio Sector Split (% by value) 31 December 2018 IPO – November 2015 31 December 2019 1.4% 5.0% 5.0% 7.1% 1.4% 11.3% 15.5% 13.7% Office Industrial £386.1m £718.4m £787.9m Retail Other 25.3% 58.4% 76.1% 79.9% Regional Split (% by value) 3.9% 2.5% 2.7% 10.1% 8.2% 12.7% 9.7% 29.6% South East 29.7% 13.3% Scotland 13.8% 10.3% Midlands £386.1m £787.9m £718.4m North West 9.5% 11.7% North East 10.6% South West 35.4% 18.0% Wales 18.0% 17.0% 15.6% 17.8% regionalreit.com 12 Tables may not sum due to rounding.
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