Property investment trust, Regional REIT, has seen a decline in annual net rental and property income, but has managed to reduce pre-tax losses, in the year to December 31, 2024.
The property firm with offices in Old Trafford overseeing properties throughout the North West, achieved annual income of £45.960m, down from £53.719m. Its pre-tax loss of £39.474 is compared with £67.447m the previous year.
At the end of the year the group had gross borrowings of £316.7m, a reduction from £420.8m in 2023, and cash and cash equivalents of £56.7m, against £34.5m last year.
There was continued momentum in the disposals programme, with total disposals of £28.6m, net of costs, across 18 assets, while around £107m of sites have been identified for sale, of which circa £18.6m are either contracted, under offer, or in negotiation.
Rent collection remains high at 98.6% (2023: 98.9%), with 61 new lettings during the period totalling £3.2m rent roll, with lettings achieved 13.5% above 2023 ERV. Gross annualised rent roll was £60.7m (2023: £67.8m).
A further 14 notable new lettings and renewals/regears were achieved post-period end for 114,888 sq ft amounting to £1.6m.
The group believes it is well placed to deliver future potential growth, with the average number of days spent in the office across the portfolio now up to four days a week, together with a lack of high quality and sustainable regional office space and no real new supply coming on stream.
However, it says it does not anticipate that the business will start seeing the benefits of this increased momentum until 2026.
Following the capital raise in 2024, Regional REIT’s transformed balance sheet allows the company to advance its capex programme and pursue additional initiatives over the next 12 months, it said. These initiatives include securing higher value planning consents to drive value. Additionally, proceeds from planned portfolio sales will be used to further reduce the company’s LTV.
The group has declared a dividend of 7.8p per share, up from 5.25p the previous year.
Stephen Inglis, head of ESR Europe LSPIM, the asset manager, said: “While 2024 was another challenging year for both the property market and the regional office sector in particular, Regional REIT continued to deliver a strong operational performance, and the successful completion of the £110.5m equity raise has transformed the company’s balance sheet.
“With this increased flexibility, Regional REIT is well placed to take advantage of the significant opportunities for value creation within the portfolio.
“We now have the capital to refurbish assets to drive rental income growth while simultaneously pursuing accretive initiatives, such as securing planning consents ahead of sales, and this has the potential to deliver good shareholder value over the medium term.”
He added: “We fully recognise that we remain at the start of the pathway to recovery and the company remains laser-focused on continuing to further reduce its LTV.
“There is a lot of work to do, and this will remain a priority through 2025, with £18.6m of disposals already in legal due diligence.
“It is clear that we are starting to see an improvement in sentiment in the UK office market, albeit there will be a lag before we see this reflected in the company’s financial performance.
“There continues to be occupational headwinds, however, the diversified nature of Regional REIT’s tenant base combined with the high quality nature of its occupiers and its competitive rents significantly mitigates any risk.
“With supportive fundamentals, extensive scope for value creation within the portfolio, and increased balance sheet flexibility, Regional REIT can look to the future with optimism.”