UK office investment company Regional REIT has confirmed it is “exploring a range of refinancing options” amid lacklustre performance and a dividend cut last year. However, it stopped short of confirming a further equity issue, contrary to some media reports.
In an announcement on the London Stock Exchange this morning (12 March), the trust responded to press speculation that it will take part in a £75m equity capital raise.
“As indicated in the previous announcements, the company is actively exploring a range of refinancing options, including debt and/or equity, in respect of the existing £50m retail bond given its maturity date in August 2024,” it said.
“The company confirms that significant preparatory work has been undertaken to date in respect of both the debt and equity options, which remain under active consideration.”
It added that, if the REIT does issue further equity, it expects this to be “at a material discount” to its current share price and would be subject to, “among other things, shareholder approval”.
Regional REIT, which holds £775.7m in assets, is currently trading on a 72.5% discount to its net asset value, according to AIC data. It is currently 79% geared and has a dividend yield of 25.1%.
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Despite cutting its dividend by 27% during the second half of last year, it held its Q4 dividend at 1.2p per share last month – maintaining the same payouts made over the previous three months.
In the same dividend declaration notice, the trust’s board said its two key priorities were to maintain its dividend, and to reduce the underlying portfolio’s net loan-to-value ratio to 40%.
Regional REIT currently holds 144 properties containing 978 ‘company’ tenants, accounting for some 29,000 employees. According to a survey that it conducted among its tenants last month, there is 71.4% “active office occupation” across the portfolio, compared to 65.4% in June 2023, while employees have returned to the office at an average of 4.1 days per week.
“Pre-pandemic active occupation is estimated at 70%”, the trust said. “The asset manager’s study of the office portfolio shows that current active occupation is 102% of the pre-pandemic occupancy levels and is expected to grow further.”
