2026 Half Year Results & Dividend Declaration
Summary by AI BETAClose X
8 September 2026
Regional REIT Limited
("Regional REIT", the "Group" or the "Company")
2026 Half Yearly Results
Successful execution of repositioning strategy in a challenging market
Regional REIT (LSE: RGL), the regional commercial property specialist, today announces its half yearly results for the 6 months to 30 June 2026.
Stephen Inglis, CEO of ESR Europe LSPIM, Investment Adviser, said:
"The Company has made further progress in executing its repositioning strategy in the first half of 2026. We have completed £21.5m (before costs) of disposals, marginally below book value, demonstrating the intrinsic and attractive value of our assets, and reducing the net LTV to 38.5% as at 30 June 2026.
"Despite ongoing challenging external conditions, Regional REIT delivered a resilient operational performance in the first half of 2026, securing 26 new market lettings providing £1.9m of rental income, marginally ahead of the £1.8m of breaks and expiries. Together with the property cost savings from the aforementioned disposals, the forecasted earnings enhancement is expected to be some £1m, which is in line with current market expectations.
"The new lettings include the landmark £1.1m letting of 146,262 sq. ft. space across two buildings in Nottingham, which not only represented a significant achievement in its own right but also reduced our annualised void costs by c. £700,000. This performance is testament to the effectiveness of the Group's active asset management strategy and capital expenditure programme.
"Our focus remains on the disposal of non-core properties which incur higher vacancy costs, whilst prioritising investment in those assets with stronger occupier appeal to create a higher quality portfolio.
"Looking through the near-term economic and geopolitical uncertainty, the investment case for regional offices continues to strengthen. With the regional development pipeline at historically low levels, there is an increasing structural supply and demand imbalance for quality and sustainable Grade A office space in the regions, particularly assets conforming to EPC A and B. With the role of the office now firmly re-established, and more companies looking to take advantage both of the significant skills base and lower costs outside of London, we are already seeing rental growth across many UK cities. This trend is only expected to be reinforced through the Government's renewed focus on the devolution agenda. With its geographically diversified portfolio, quality assets, and established active asset management strategy, Regional REIT is well positioned to benefit from these trends."
Portfolio valuation
· Portfolio valuation reduced by 5.1% to £526.7m (FY25: £555.2m) - due to revaluation movement and £21.5m (before costs) of disposals
· Like-for-like portfolio valuation decreased by 1.3% during the period, (1.1% decline excluding capital expenditure adjustment, with the benefits yet to be captured in the valuation)
· EPRA NTA reduced by 3% to £305.8m (FY25: £315.2m)
Resilient operational performance supporting fully covered dividend
· EPRA EPS 4.2p (HY25: 5.2p)
· Dividend declared of 4.0p (HY25: 5.0p)
· Plan to distribute the minimum 90% of the profit from the property rental business going forward
· Targeting a dividend of 8 pence per share for 2026
Strong leasing performance
· Completed 26 new market lettings totalling £1.9m of rent at 2.0% above ERV
· EPRA occupancy 74.3% by ERV (FY25: 75.9%)
· Rent Roll £48.4m (FY25: £50.4m)
· Rent collection strong at 99.7% (FY25: 100%)
· Post period end a further 10 new lettings and renewals/regears have been achieved across 30,858 sq. ft. providing a further £0.8m of annualised rental income
Executing capex programme to improve EPC ratings and drive value
· Capex £1.4m; on site 10 projects c.£5.0m; due to commence 13 projects c.£9.3m
· 87.0% of our portfolio has now attained EPC ratings C or better (FY25: 84.5%), while EPC B or better and exempt continued to rise to 61.2% (FY25: 60.0%)
Continued focus on strengthening the balance sheet
· Disposals of six properties and six part-sales at £21.5m (before costs) (FY 2025: £51.6m) (before costs); 5.7% below book value
· Targeting at least the same quantum of disposals in 2026 as achieved in FY25
· Currently 11 assets c.£32m are either contracted, under offer or in negotiations
· Further reduction in Net LTV to 38.5% as at 30 June 2026 (FY25: 40.4%; HY25: 43.2%)
· Gross borrowings down to £243.8m (FY25: £266.2m)
· Group cost of debt (incl. hedging) 3.4% pa (FY25: 3.3% pa)
· Cash and cash equivalents £40.8m (FY25: £37.7m)
· Post period end disposals at £4.3m (before costs)
Portfolio strategy update
Regional REIT continued to make progress in executing its repositioning strategy in the first half, completing disposals while rolling out its capex programme to strengthen its core category, with the aim of creating a stronger portfolio comprised of high-quality assets with broad occupier appeal. The company also continued to selectively pursue opportunities to enhance the value of non-core sites ahead of disposal.
|
Segment |
Portfolio HY 2026 £m |
Portfolio FY 2025 £m |
Portfolio HY 2026 (%) |
Portfolio FY 2025 (%) |
EPRA Occupancy HY 2026 (%) |
EPRA Occupancy FY 2025 (%) |
|
Core |
341.8 |
349.0 |
64.9 |
62.9 |
82.0 |
86.5 |
|
Capex to Core |
100.2 |
103.4 |
19.0 |
18.6 |
61.7 |
66.4 |
|
Value Add |
55.2 |
55.8 |
10.5 |
10.0 |
66.3 |
46.1 |
|
Sales |
29.5 |
47.0 |
5.6 |
8.5 |
43.6 |
54.8 |
|
Total |
526.7 |
555.2 |
100.0 |
100.0 |
74.3 |
75.9 |
Core - well positioned to deliver sustainable long-term income
Capex to Core - targeted investment to upgrade assets to secure lettings
Value Add - assets with potential for repositioning and planning gains to be sold in due course
Sales - assets targeted for disposal programme
Q2 2026 Dividend Declaration
In accordance with the 19 February 2026 announcement the Company is declaring that it will pay a dividend of 2.0 pence per share ("pps") for the period 1 April 2026 to 30 June 2026, (1 April 2025 to 30 June 2025: 2.50pps). The entire dividend will be paid as a REIT property income distribution ("PID").
Shareholders have the option to invest their dividend in a Dividend Reinvestment Plan ("DRIP"), and more details can be found on the Company's website:
https://www.regionalreit.com/investors/investors-dividend/dividend-reinvestment-plan.
The key dates relating to this dividend are:
|
Ex-dividend date |
17 September 2026 |
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Record date |
18 September 2026 |
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Last day for DRIP election |
25 September 2026 |
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Payment date |
16 October 2026 |
The level of future payments of dividends will be determined by the Board having regard to, among other factors, the financial position and performance of the Group at the relevant time, UK REIT requirements, the interests of shareholders and the long-term future of the Company.
Outlook
There remains a significant and increasing supply and demand imbalance in the regional office market. High construction costs and significant planning hurdles have resulted in a historically low development pipeline, and with more companies looking to expand their footprint outside of London, there is a shortage of quality, sustainable space in the regions.
However, market conditions continue to be challenging, with the uncertain economic environment and recent political changes leading to companies taking longer to make leasing decisions and dampening the investment market. That is not expected to change in the near-term.
In this context, Regional REIT's ability to maintain leasing momentum and execute selected disposals to strengthen the balance sheet represents a key differentiator. With an increasing pool of occupiers seeking to take advantage of the significant skills base and lower costs outside of London, Regional REIT is well positioned to benefit as market conditions ease.
Forthcoming Events
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12 November 2026 |
Q3 Trading Update |
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23 March 2027 |
Full year 2026 Preliminary Results Announcement |
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18 May 2027 |
May 2027 Trading Update and Outlook Announcement |
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Q1 2027 Dividend Declaration Announcement |
- ENDS -
Enquiries:
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Regional REIT Ltd. |
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Press enquiries through FTI Consulting |
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ESR Europe LSPIM Ltd. |
Tel: +44 (0) 203 831 9776 |
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Investment Adviser to the Group |
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Adam Dickinson, Investor Relations, Regional REIT Ltd. |
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Stephen Inglis, CEO of ESR Europe LSPIM Ltd. |
Tel: +44 (0) 141 248 4155 |
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FTI Consulting |
Tel: +44 (0)20 3727 1000 |
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Financial Communications |
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Dido Laurimore, Giles Barrie, Bryn Woodward |
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About Regional REIT
Regional REIT Limited ("Regional REIT" or the "Company") and its subsidiaries (the "Group") is a United Kingdom ("UK") based real estate investment trust that launched in November 2015. It is managed by ESR Europe LSPIM Limited, the Investment Adviser, and ESR Europe Investment Management Limited, the AIFM.
Regional REIT's commercial property portfolio is comprised of income producing UK assets, predominately offices located in the regional centres outside of the M25 motorway. The portfolio is geographically diversified, with 106 properties, 1,017 units and 616 tenants as at 30 June 2026, with a valuation of c.£526.7m.
Regional REIT pursues its investment objective by investing in, actively managing and disposing of regional Core and Core Plus Property assets. It aims to deliver an attractive total return to its Shareholders, with a strong focus on income supported by additional capital growth prospects.
The Company's shares were admitted to the Official List of the UK's Financial Conduct Authority and to trading on the London Stock Exchange on 6 November 2015. For more information, please visit the Group's website at www.regionalreit.com.
LEI: 549300D8G4NKLRIKBX73
We continue to reposition the portfolio for Long Term Value
|
Group Borrowings |
£243.8m (30 June 2025: £310.0m; 31 December 2025: £266.2m) Group borrowings continue to be reduced |
|
Strategic Sales |
£21.5m (Before costs) (30 June 2025: £7.8m; 31 December 2025: £51.6m) Focused upon reducing property costs, earnings accretion and reducing LTV well in advance of refinancing |
|
Loan-to -value |
38.5% (30 June 2025: 43.2%; 31 December 2025: 40.4%) Strong balance sheet progress with continued deleveraging |
KEY FINANCIALS
Period ended 30 June 2026
|
Portfolio Valuation |
£526.7m (31 December 2025: £555.2m) |
|
IFRS NAV per Share |
190.7p (31 December 2025: 197.0p) |
|
EPRA* NTA per Share** |
188.7p (31 December 2025: 194.4p) |
|
Weighted Average Cost of Debt** |
3.4% (31 December 2025: 3.3%) |
|
Dividend per Share |
4.0p (30 June 2025: 5.0p) |
|
Weighted Average Debt Duration** |
2.1 yrs (31 December 2025: 2.6 yrs) |
*The European Public Real Estate Association ("EPRA") EPRA Performance Measures.
The EPRA's mission is to promote, develop and represent the European public real estate sector. As an EPRA member, we fully support the EPRA Best Practices Recommendations. Specific EPRA metrics can be found in the Company's financial and operational highlights, with further disclosures and supporting calculations in the full Half Yearly Report.
** Details are provided in the Glossary of Terms on Alternative Performance Measures and the EPRA Performance Measures in the full Half Yearly Report.
CHAIRMAN'S STATEMENT
"Over the six-month period to 30 June 2026, the Group has made notable progress in advancing the Board's strategic objectives. The portfolio continues to be actively repositioned across the four segments of Core, Capex to Core, Value Add and Sales, with £21.5m of disposals completed in the period contributing to a reduction in aggregate borrowings and a lower loan-to-value ratio."
Overview
Over the six-month period to 30 June 2026, the Group has made notable progress in advancing the Board's strategic objectives. The portfolio continues to be actively repositioned across the four segments of Core, Capex to Core, Value Add and Sales, with £21.5m (before costs) of disposals completed in the period contributing to a reduction in aggregate borrowings and a lower loan-to value ratio. The ongoing tenant-focused capital expenditure programme continues to deliver vibrant and attractive spaces, supporting rental growth and attracting quality tenants.
This progress has been achieved against a challenging backdrop. Geopolitical uncertainty and UK political change have weighed on the wider economy, slowing the pace of commercial decision making and the investment market, which also has been felt across the regional office market.
The repositioning strategy continues to progress. Capital is being redeployed away from lower quality assets and those with a higher vacancy into buildings with stronger occupier appeal, supported by targeted capital expenditure and a disciplined disposal programme. Asset management initiatives are translating into improved letting activity and a more resilient income profile, including the June 2026 announcement of the £1.1m lettings of 146,262 sq. ft. of space across two buildings in Nottingham, with the tenant undertaking some £5m of improvement works.
Furthermore, the landlord's holding/void costs associated with these were approximately £700,000 per annum, thus demonstrating the material improvement in the asset's income profile off the back of this transaction. While valuation conditions across the regional office sector remain challenging, the underlying quality of the portfolio continues to improve as we dispose of lower-conviction assets.
Though the leasing market remains subdued and elevated void costs continue to weigh on income, leasing momentum has nonetheless been maintained, with further new lettings and renewals concluded since the period end. This reflects the effectiveness of the Group's active asset management and capital expenditure programme in attracting and retaining quality tenants.
As announced in December 2025, the simplified management arrangements agreed between the Board and the Investment Adviser came into force on 1 January 2026. Shareholders are now benefiting from these changes, with the management fee for 2026 calculated on the basis of 75% EPRA net tangible assets ("NTA") and 25% market capitalisation, moving to a 50% NTA and 50% market capitalisation basis from 1 January 2027, progressively aligning the Investment Adviser's remuneration more closely with shareholder returns.
While there is more to do, the Group enters the second half in a stronger position than it began the year. With more stable market conditions emerging, and supportive supply and demand dynamics in the regional office market, the Board expects the benefits of the repositioning strategy to become increasingly evident.
Financial Resources
The Group's EPRA NTA decreased to £305.8m, or 188.7pps (IFRS NAV: £309.1m, or 190.7pps) as at 30 June 2026, down £9.4m from £315.2m, or 194.4pps (IFRS NAV: £319.3m, or 197.0pps) at 31 December 2025. The reduction was primarily due to a £7.1m downward revaluation of the investment property portfolio, equating to a like-for-like decrease of 1.3% (after adjusting for disposals and capital expenditure), which compares favourably with the MSCI Monthly Rest of UK Office Capital Growth Index of -1.5%, and a £2.1m loss on the disposal of investment properties. A cash balance of £40.8m was retained (2025: £37.7m), of which £39.0m was unrestricted (2025: £37.7m). Net Loan-to-Value (LTV) reduced to 38.5% (2025: 40.4%), while the weighted average cost of debt remained stable at 3.4% (2025: 3.3%). The Group's debt is fully fixed and hedged, mitigating interest rate volatility. During the period the Group repaid £22.4m of bank borrowings, reducing the loan principal to £243.8m (2025: £266.2m).
Sustainability
With the continued focus upon the sustainability initiatives, 87.0% of the portfolio has achieved an EPC rating of C or better, ahead of 84.5% reported at 31 December 2025. Solar panels have now been installed across 14 properties, generating 880,000 kW of capacity - equivalent to the annual electricity use of 660 homes - and saving 182.2 tonnes of CO2e. Capital expenditure during the period has sustainability benefits embedded, keeping us well positioned to meet the new Minimum Energy Efficiency Standards target of EPC B ahead of the 2031 deadline.
Dividends
For the period under review, the Company declared fully covered total dividends of 4.0 pence per share ("pps") (six months to 30 June 2025: 5.0pps). Dividends declared were covered 1.1 times by EPRA earnings per share of 4.2p (six months to 30 June 2025: 1.0 times, on EPRA earnings per share of 5.2p).
The Board has approved a dividend of 2.0pps in respect of the period 1 April 2026 to 30 June 2026.
The level of future payment of dividends will be determined by the Board having regard to, among other factors, the financial position and performance of the Group at the relevant time, UK REIT requirements, the interests of shareholders and the long-term future of the Group.
Outlook
The structural supply and demand imbalance in the regional office sector continues to underpin rental growth, with occupiers increasingly prioritising well-located, high-quality space that supports efficient and sustainable working practices. This dynamic continues to support reversionary income capture across the portfolio and reinforces the rationale for the Group's continued investment in capital expenditure and active asset management.
Despite the geopolitical backdrop remaining uncertain, coupled with uncertainty over the UK Government's economic direction and priorities, and with the leasing market still subdued and void costs elevated, leasing momentum has been maintained with further lettings and renewals concluded since the period end. With more stable conditions emerging and supportive supply and demand dynamics in the regional office market, the Board is confident that the strategy is the correct course of action.
David Hunter
Chairman
7 September 2026
INVESTMENT ADVISER REPORT
The Group has continued to make further progress in the execution of its repositioning strategy in the first half of 2026. We completed £21.5m (before costs) of disposals which resulted in our LTV falling to 38.5%. Combined, these initiatives are strengthening our portfolio with the focus upon disposing of non-core properties with higher vacancy and void costs, and prioritising assets with stronger occupier appeal.
We are continuing to operate in a challenging market. Geopolitical uncertainty and the recent political changes in the UK have weighed on the broader economy and slowed the pace of commercial decision making. While transactions are still proceeding, they are taking longer and companies are being more cautious when it comes to making office moves. In this context, successfully executing our repositioning strategy, improving the overall quality of the portfolio to capitalise on the latent demand for quality regional office space, has never been more important.
Despite these challenging external conditions, Regional REIT once against delivered a resilient operational performance in the first half, securing 26 new market lettings providing £1.9m of rental income, marginally ahead of the £1.8m of letting breaks and expiries. This includes the landmark £1.1m letting of 146,262 sq. ft. space across two buildings in Nottingham, which not only represented a significant achievement in its own right, but also reduced annualised void costs by £700,000.
This performance is testament to the effectiveness of the Group's active asset management strategy and capital expenditure programme.
Looking through the near-term uncertainty, the investment case for regional offices has never been clearer. With the development pipeline at historically low levels, there is a significant and increasing structural supply and demand imbalance for quality and sustainable Grade A office space in the regions, particularly assets conforming to EPC A and B. With the role of the office now firmly re-established, and more companies looking to take advantage both of the significant skills base and lower costs outside of London, we are already seeing rental growth across many UK cities. This trend is only expected to be reinforced through the Government's renewed focus on the devolution agenda. With its geographically diversified portfolio, quality assets, and established active asset management strategy, Regional REIT is well positioned to benefit from those trends.
Stephen Inglis
CEO of ESR Europe LSPIM Ltd, Investment Adviser
Investment Activity in the UK Commercial Property Market
In the first half of 2026, the UK economy continued to exhibit modest growth alongside mixed macroeconomic signals. Real GDP expanded by 0.6% in Q1 and 0.4% in Q2, with growth driven mainly by the services sector, while construction output rose only marginally and production was flat; on an annual basis, GDP was around 1.2% higher than the same quarter a year earlier. Inflation had eased through the first half of the year, with CPI falling to 2.6% in June from 2.8% in May, though it subsequently rose to 2.9% in July, above the Bank of England's 2.0% target; price pressures were expected to build further as the year progresses, with the Bank projecting rates approaching 3.25% by Q4, partly reflecting the impact of the Middle East conflict on energy costs. Employment conditions were broadly stable, with the employment rate holding at around 75% for people aged 16 to 64, largely unchanged on both the year and the quarter1.
In the first half of 2026, regional office investment totalled £1.4 billion, up 38.3% on the £1.0 billion recorded in the same period of 2025, according to data from Lambert Smith Hampton (LSH)2. Investment in Q1 reached £0.8 billion, while Q2 2026 eased to £0.6 billion, though this remained 26.7% higher than Q2 2025, showing the improvement has been sustained rather than confined to an early year rebound. The rest of the UK offices led this growth, rising to £0.6 billion in Q1 2026 before settling back to £0.3 billion in Q2. The rest of South East offices (outside of London) contributed £0.2 billion in both quarters, while office parks remained a modest contributor throughout, with £0.04 billion transacted in Q1 and £0.1 billion in Q2. Of the £1.4 billion invested in H1 2026, the rest of the UK accounted for the majority at £0.9 billion (64.1%), with the rest of South East at £0.4 billion (26.5%) and office parks at £0.1 billion (9.4%). This marks a shift from H1 2025, when the mix was more balanced at 44.2%, 38.7% and 17.0% respectively. The rest of the UK's share has risen by 45.0% year on year, while the other two segments have shrunk in relative terms. This concentration was most pronounced in Q1 2026, when the rest of the UK made up 75.3% of regional investment, before normalising somewhat in Q2 to 50.1%. Overall, H1 2026 investment was stronger than last year, with the rest of the UK the main driver of growth.
Yields across the UK regional office market softened modestly in Q2 2026, with prime Big Six yields moving out 25 basis points to 6.75% (10-year income) and prime South East towns holding at 7.25%, reflecting sentiment following the Middle East conflict rather than firm transactional evidence. A wide gap persists between prime and secondary pricing, with next-tier regional markets averaging 8.47% and secondary regional offices at around 13.5%, close to record spreads. Out-of-town assets have repriced more severely than city-centre offices, with the yield gap between them reaching 327 basis points, the widest in 40 years. Against this backdrop, regional offices continue to look relatively well priced compared with sectors more exposed to higher-for-longer rates, such as West End offices (3.75%) and prime distribution (5.25%), offering a compelling entry point for investors.
Occupational Demand in the UK Regional Office Market
There are several reasons for cautious optimism: occupier demand in the office market appears to have reached a more stable footing following the disruption of the pandemic. Earlier fears of widespread downsizing have not materialised to the extent anticipated, in part because more employers are now requiring staff to attend the office more regularly, which has reduced the pressure on businesses to cut back their space requirements. Although occupiers continue to navigate rising costs and broader economic uncertainty, take-up levels have held up reasonably well, with the primary driver of demand across most of the market remaining a preference for higher-quality space, greater flexibility and workplace improvements aimed at supporting productivity.
Avison Young estimates that take-up of office space across nine regional office markets3 totalled 3.4 million sq. ft. in the first half of 2026, 10.0% below the level of take-up recorded during the same period in 2025, and 4.9% lower than the 5-year average. There was a fall in both city centre and out of town take-up in the first half of 2026 compared to the same period in 2025, down by 8.0% and 12.8%, respectively. Looking at quarterly performance, demand in Q1 2026 was subdued, with 1.4 million sq. ft. let during Q1, down 33.3% on the same quarter in 2025, with both city centre and out-of-town offices underperforming relative to trend. However, demand increased in Q2 2026 to 2.0 million sq. ft., 36.8% higher than Q1 2026 and 21.1% higher than the Q2 2025 take-up figure.
Occupational demand was driven by the public services, education and health sector, which accounted for the highest proportion of take-up at 22.1% in the first half of 2026. Following the public services, education and health sector, the professional sector and the technology, media and telecommunications sector accounted for the second and third largest proportion of take-up in the regional cities, accounting for 20.5% and 17.3% respectively. Research from Savills shows that the professional sector and the technology, media and telecommunications sector were also the most active sectors over the last five years4.
According to data from CoStar, there was a decrease in availability for all regional office stock, with total supply falling by 2.4% in the first half of 2026 to 82.2 million sq. ft. However, the British Property Federation estimates that 81% of commercial buildings in major English cities are rated below EPC B, leaving a large share of stock at risk of obsolescence. While gradual improvements are being made year-on-year, ongoing policy uncertainty means that around 2.0 billion sq. ft. of commercial real estate in major cities remains below EPC B5. According to Savills, overall supply in the Big Six office markets remained 12.4% above the 10-year annual average at the end of June 2026, with the vacancy rate increasing to 10.7%6. However, with prime availability only accounting for 17.6% of total availability in the Big Six office markets, this suggests that a significant proportion of reported supply may not be readily lettable, reflecting ageing, non-compliant stock across substantial parts of these regional markets and limiting genuine options for occupiers.
In terms of development, Avison Young7 estimates that approximately 2.5 million sq. ft. of office space is currently under construction in the Big Nine regional markets, with Manchester, Leeds and Birmingham accounting for 41.9%, 16.0% and 15.6%, respectively. Completed development for 2026 is forecast to fall 58.6% below 2025 numbers and 47.0% below trend. This constrained pipeline reflects ongoing viability challenges across regional markets, where construction costs remain similar to those in London and the South East, but achievable rents are lower, an issue of concern for policymakers aiming to support growth beyond the capital8.
1 ONS, August 2026
2 Lambert Smith Hampton, UK Investment Transactions, Q2 2026
3 Nine regional office markets mentioned by Avison Young include: Birmingham, Bristol, Cardiff, Edinburgh, Glasgow, Leeds, Liverpool, Manchester & Newcastle
4 Savills: The Regional Office Market Overview, Q2 2026
5 British Property Federation, February 2026
6 Savills: The Regional Office Market Overview, Q2 2026
7 Avison Young, Big 9, Q2 2026. Nine regional office markets mentioned by Avison Young include: Birmingham, Bristol, Cardiff, Edinburgh, Glasgow, Leeds, Liverpool, Manchester & Newcastle
8 Peel Hunt, Estates Gazette, July 2026
Rental Growth in the UK Regional Office Market
According to monthly data from MSCI, rental value growth for rest of UK offices outperformed in the 12 months ended June 2026 with annual growth of 4.7%. Conversely, central London offices experienced more modest growth of 3.6% over the same period9. MSCI data shows that rolling annual rental growth for rest of UK offices has consistently outperformed London in each of the last 12 months. Avison Young expects rental growth to continue across most markets during 2026 and 202710.
Demand for quality office space has put upward pressure on rents, with growth of 5.6% recorded across the Big Nine regional markets in the first half of 2026. According to research from Avison Young, average headline rents are now approximately £43 per sq. ft., with an average rent free incentive period of approximately 16 months. Rental growth can be attributed to a combination of increased office attendance and constrained supply.
The Investment Manager views current supply and demand dynamics as creating an opportunity for repositioning secondary offices. Limited availability of prime space, combined with a shortfall in speculative development, creates scope to upgrade modern office buildings to prime specification, which may support stronger rental performance. With new-build pipelines constrained by development viability challenges, refurbished space may become a more significant source of prime supply, offering occupiers an alternative route to high-quality space without waiting on new-build delivery. Occupier demand for secondary regional offices may also be influenced by affordability considerations, following the Valuation Office Agency's Business Rates revaluation, effective from April 2026, which is expected to raise rateable values, and in turn liabilities, for some prime office space.
No targeted relief comparable to that available in parts of the retail and hospitality sectors currently applies to office properties. As a result, some cost-sensitive businesses may re-evaluate their space requirements and consider secondary regional locations, where lower rents and comparatively modest rateable values could offer better value within constrained operating budgets. This may be reinforced by broader occupier caution, with some businesses showing a preference for lease regears over relocations in order to limit capital costs associated with fit-out and dilapidations, particularly as headline rents in prime locations continue to rise. With regional growth also a stated focus of Government policy through a renewed devolution agenda, public sector demand may play a role in supporting office take-up, employment levels and investor sentiment across the UK's regional cities.
9 MSCI (February 2025), MSCI Portfolio Analysis Service
10 Avison Young, Big Nine Q4 2023, February 2024
Property Portfolio
As at 30 June 2026, the Group's property portfolio was valued at £526.7m (30 June 2025: £608.3m; 31 December 2025: £555.2m), with rent roll of £48.4m (30 June 2025: £56.7m; 31 December 2025: £50.4m), and an EPRA occupancy of 74.3% (30 June 2025: 78.6%; 31 December 2025: 75.9%).
On a like-for-like basis, 30 June 2026 versus 31 December 2025, EPRA occupancy was 74.3% (31 December 2025: 76.4%).
There were 106 properties (30 June 2025: 123; 31 December 2025: 112) in the portfolio, with 1,017 units (30 June 2025: 1,248; 31 December 2025: 1,146) and 616 tenants (30 June 2025: 740; 31 December 2025: 659). If the portfolio was fully occupied at Colliers International Property Consultants Ltd.'s view of market rents, the rental income would be £72.6m per annum as at 30 June 2026 (30 June 2025: £82.9m; 31 December 2025: £77.0m).
As at 30 June 2026, the net initial yield on the portfolio was 5.7% (30 June 2025: 5.8%; 31 December 2025: 5.3%), the equivalent yield was 10.6% (30 June 2025: 10.5%; 31 December 2025: 10.5%) and the reversionary yield was 12.0% (30 June 2025: 11.8%; 31 December 2025: 12.0%).
Property Portfolio by Sector as at 30 June 2026
|
Sector |
Properties |
Valuation |
% by valuation |
Sq. ft. |
Occupancy (EPRA) |
WAULT to first break |
Gross rental income |
Average rent |
ERV |
Capital rate |
Net initial yield |
Equivalent yield |
Reversionary yield |
|
|
|
(£m) |
(%) |
(m) |
(%) |
(yrs) |
(£m) |
(£psf) |
(£m) |
(£psf) |
(%) |
(%) |
(%) |
|
Office |
92 |
471.4 |
89.5% |
4.3 |
72.5% |
2.7 |
43.7 |
15.37 |
67.5 |
110.31 |
5.5% |
10.9% |
12.3% |
|
Industrial |
4 |
25.3 |
4.8% |
0.4 |
97.3% |
3.2 |
1.8 |
5.14 |
2.3 |
60.33 |
6.5% |
8.0% |
8.0% |
|
Retail |
9 |
20.4 |
3.9% |
0.2 |
93.5% |
2.8 |
1.8 |
9.99 |
2.1 |
99.13 |
7.2% |
8.5% |
9.0% |
|
Other |
1 |
9.6 |
1.8% |
0.1 |
100.0% |
9.6 |
1.0 |
11.97 |
0.8 |
114.58 |
10.6% |
9.5% |
7.6% |
|
Total |
106 |
526.7 |
100.0% |
5.0 |
74.3% |
2.9 |
48.4 |
13.95 |
72.6 |
105.71 |
5.7% |
10.6% |
12.0% |
Tables may not sum due to rounding
Property Portfolio by Region as at 30 June 2026
|
Region |
Properties |
Valuation |
by valuation |
Sq. ft. |
Occupancy (EPRA) |
WAULT to first break |
Gross rental income |
Average rent |
ERV |
Capital rate |
Net initial yield |
Equivalent yield |
Reversionary yield |
|
|
|
(£m) |
(%) |
(m) |
(%) |
(yrs) |
(£m) |
(£psf) |
(£m) |
(£psf) |
(%) |
(%) |
(%) |
|
Scotland |
23 |
89.3 |
17.0% |
0.9 |
74.8% |
3.2 |
8.6 |
13.79 |
13.6 |
95.13 |
5.2% |
11.0% |
12.4% |
|
South East |
16 |
76.8 |
14.6% |
0.6 |
78.6% |
2.2 |
6.5 |
17.59 |
11.1 |
118.52 |
4.9% |
10.6% |
11.8% |
|
North East |
16 |
91.0 |
17.3% |
0.7 |
74.4% |
3.0 |
7.8 |
14.53 |
11.0 |
127.94 |
6.3% |
10.2% |
10.1% |
|
Midlands |
21 |
119.8 |
22.7% |
1.3 |
81.6% |
3.8 |
12.2 |
12.34 |
16.7 |
92.04 |
5.9% |
10.8% |
12.2% |
|
North West |
12 |
56.3 |
10.7% |
0.5 |
63.7% |
1.6 |
5.4 |
14.59 |
8.2 |
102.51 |
6.3% |
10.7% |
12.0% |
|
South West |
12 |
52.9 |
10.0% |
0.4 |
57.0% |
2.2 |
4.3 |
19.01 |
7.6 |
132.23 |
4.8% |
11.6% |
13.3% |
|
Wales |
6 |
40.8 |
7.7% |
0.4 |
90.4% |
2.5 |
3.6 |
10.13 |
4.4 |
93.69 |
7.1% |
9.0% |
9.7% |
|
Total |
106 |
526.7 |
100.0% |
5.0 |
74.3% |
2.9 |
48.4 |
13.95 |
72.6 |
105.71 |
5.7% |
10.6% |
12.0% |
Tables may not sum due to rounding
Top 15 Investments (market value) as at 30 June 2026
|
Property |
Sector |
Anchor tenants |
Market Value (£m) |
% of Portfolio |
Lettable Area (Sq. Ft.) |
EPRA Occupancy (%) |
Annualised gross rent (£m) |
% of gross rental income |
WAULT to first break (yrs) |
|
300 Bath Street, Glasgow |
Office |
Securigroup Ltd, Glasgow Tay House Centre Ltd, University of Glasgow |
19.1 |
3.6 |
152,478 |
56.3 |
1.3 |
2.7 |
2.4 |
|
Norfolk House, Smallbrook Queensway, Birmingham |
Office |
Global Banking School Ltd, Lakbhir Dhillon and Balbier Dhillon, HP Asia Ltd |
17.7 |
3.4 |
118,530 |
81.9 |
1.6 |
3.4 |
5.8 |
|
Beeston Business Park, Nottingham |
Office/ Industrial |
Metropolitan Housing Trust Ltd, SMS Electronics Ltd, GTT-EMEA Ltd |
15.7 |
3.0 |
86,952 |
50.6 |
0.6 |
1.3 |
7.1 |
|
1-4 Llansamlet Retail Park, Nantyffin Rd, Swansea |
Retail |
Wren Kitchens Ltd, Dreams Ltd, NCF Furnishings Ltd |
14.7 |
2.8 |
74,425 |
100.0 |
1.2 |
2.5 |
3.2 |
|
Hampshire Corporate Park, Eastleigh |
Office |
Lloyd's Register EMEA, Complete Fertility Ltd, Silverstream Technologies (UK) Ltd, NatWest Bank Plc |
14.5 |
2.8 |
84,043 |
100.0 |
1.0 |
2.1 |
2.6 |
|
Manchester Green, Manchester |
Office |
Chiesi Ltd, Ingredion UK Ltd, Assetz SME Capital Ltd |
13.0 |
2.5 |
107,760 |
85.3 |
1.6 |
3.4 |
1.1 |
|
Eagle Court, Coventry Road, Birmingham |
Office |
Virgin Media Ltd, Rexel UK Ltd, Brook Sports Ltd |
13.0 |
2.5 |
132,691 |
72.9 |
1.1 |
2.3 |
1.8 |
|
Orbis 1, 2 & 3, Pride Park, Derby |
Office |
Firstsource Solutions UK Ltd, DHU Health Care C.I.C., Tentamus Pharma (UK) Ltd |
12.3 |
2.3 |
121,884 |
100.0 |
1.8 |
3.8 |
3.4 |
|
Linford Wood Business Park, Milton Keynes |
Office |
IMServ Europe Ltd, Mears Ltd, Eddyfi UK Ltd |
12.3 |
2.3 |
107,414 |
73.5 |
1.3 |
2.7 |
2.3 |
|
Lightyear, Glasgow Airport, Paisley |
Office |
Rolls-Royce Submarines Ltd, Heathrow Airport Ltd, Loganair Ltd |
11.2 |
2.1 |
77,693 |
91.2 |
1.2 |
2.5 |
3.6 |
|
Ashby Park, Ashby De La Zouch |
Office |
Ceva Logistics Ltd, Ashfield Healthcare Ltd, Brush Electrical Machines Ltd |
11.1 |
2.1 |
87,874 |
92.8 |
1.2 |
2.6 |
1.9 |
|
Buildings 2, Bear Brook Office Park, Aylesbury |
Office |
Utmost Life and Pensions Ltd, Musarubra UK Subsidiary 3 Ltd, Agria Pet Insurance Ltd |
9.8 |
1.9 |
61,643 |
100.0 |
1.0 |
2.1 |
2.0 |
|
Capitol Park, Leeds |
Office |
Hermes Parcelnet Ltd, Harron Homes Ltd, BDW Trading Ltd |
9.7 |
1.8 |
49,196 |
100.0 |
1.1 |
2.2 |
2.3 |
|
Origin 1 & 2, Crawley |
Office |
Menzies LLP, DMH Stallard LLP, Spirent Communications Plc |
9.7 |
1.8 |
45,856 |
100.0 |
0.8 |
1.7 |
2.4 |
|
Kingscourt Leisure Complex, Dundee |
Other |
Odeon Cinemas Ltd, The Original Bowling Company Ltd |
9.6 |
1.8 |
83,782 |
100.0 |
1.0 |
2.0 |
9.6 |
|
Total |
|
|
193.2 |
36.7 |
1,392,221 |
83.3 |
18.0 |
37.3 |
3.3 |
Tables may not sum due to rounding
Top 15 Tenants (share of rental income) as at 30 June 2026
|
Tenant |
Property |
Sector |
WAULT to first break (yrs) |
Lettable area (Sq Ft) |
Annualised Rent (£m) |
% of Gross rental income |
|
Global Banking School Ltd |
Norfolk House, Smallbrook Queensway, Birmingham |
Education |
6.4 |
73,628 |
1.4 |
2.9% |
|
Virgin Media Ltd |
Eagle Court, Birmingham; Southgate Park, Peterborough |
Information and communication |
2.5 |
75,309 |
1.4 |
2.9% |
|
Glenair UK Ltd |
One & Two Newstead Court, Nottingham |
Manufacturing |
10.0 |
146,262 |
1.1 |
2.2% |
|
EDF Energy Ltd |
Endeavour House, Sunderland |
Electricity, gas, steam and air conditioning supply |
4.2 |
77,565 |
1.0 |
2.1% |
|
Firstsource Solutions UK Ltd |
Orbis 1, 2 & 3, Pride Park, Derby |
Administrative and support service activities |
2.3 |
62,433 |
1.0 |
2.1% |
|
The Secretary of State for Housing, Communities and Local Government |
1 Burgage Square, Merchant Square, Wakefield Bennett House, Stoke On Trent Waterside Business Park, Swansea |
Public Sector |
3.0 |
96,654 |
1.0 |
2.0% |
|
Odeon Cinemas Ltd |
Kingscourt Leisure Complex, Dundee |
Information and communication |
9.3 |
41,542 |
0.8 |
1.6% |
|
True Potential LLP |
Newburn & Gateway House, Newcastle |
Not specified |
3.9 |
54,584 |
0.6 |
1.3% |
|
SpaMedica Ltd |
1175 Century Way, Thorpe Park, Leeds Albert Edward House, Preston Fairfax House, Wolverhampton Southgate Park, Peterborough The Foundation Chester Business Park, Chester |
Human health and social work activities |
2.2 |
40,529 |
0.6 |
1.3% |
|
DHU Health Care C.I.C. |
Orbis 1, 2 & 3, Pride Park, Derby |
Human health and social work activities |
4.8 |
42,301 |
0.6 |
1.2% |
|
Lloyd's Register EMEA |
Hampshire House Hampshire Corporate Park, Eastleigh |
Registered Society |
0.9 |
21,695 |
0.5 |
1.1% |
|
Chiesi Ltd |
Manchester Green, Manchester |
Wholesale and retail trade |
0.5 |
28,752 |
0.5 |
1.0% |
|
Hermes Parcelnet Ltd |
Capitol Park, Leeds |
Transportation and storage |
2.5 |
25,790 |
0.5 |
1.0% |
|
Pearson Education Ltd |
The Lighthouse, Salford Quays |
Education |
0.9 |
24,804 |
0.5 |
1.0% |
|
Homeserve Membership Ltd |
1175 Century Way, Thorpe Park Leeds; Aspect House, Bennerley Road, Nottingham |
Construction |
0.9 |
29,468 |
0.5 |
1.0% |
|
Total |
|
|
4.1 |
841,316 |
11.9 |
24.6% |
Tables may not sum due to rounding
Property Portfolio Sector and Region Splits by Valuation and Income as at 30 June 2026
By Valuation
As at 30 June 2026, 89.5% (30 June 2025: 90.4%; 31 December 2025: 90.3%) of the portfolio by market value was offices and 4.8% (30 June 2025: 3.8%; 31 December 2025: 4.3%) was industrial. The balance was made up of retail 3.9% (30 June 2025: 3.8% 31 December 2025: 3.7%) and other, 1.8% (30 June 2025: 2.0%; 31 December 2025: 1.7%). By UK region, Scotland represented 17.0% (30 June 2025: 15.9%; 31 December 2025: 16.6%), England 75.3% (30 June 2025: 77.5%; 31 December 2025: 76.1%) and Wales 7.7% (30 June 2025: 6.6%; 31 December 2025: 7.2%). In England, the largest regions were the Midlands, the North East and the South East.
By Income
As at 30 June 2026, 90.4% (30 June 2025: 90.7%; 31 December 2025: 90.4%) of the portfolio by income was offices and 3.8% (30 June 2025: 3.1%; 31 December 2025: 3.9%), was industrial. The balance was made up of retail, 3.8% (30 June 2025: 4.2%; 31 December 2025: 3.8%), and other, 2.0% (30 June 2025: 2.0%; 31 December 2025: 1.9%). By UK region, as at 30 June 2026, Scotland represented 17.8% (30 June 2025: 15.6%; 31 December 2025: 15.7%) of the portfolio and England 74.9% (30 June 2025: 78.3%; 31 December 2025: 77.1%); the balance of 7.4% was in Wales (30 June 2025: 6.1%; 31 December 2025: 7.1%). In England, the largest regions were the Midlands, the North East and the South East.
Lease Expiry Profile
The WAULT on the portfolio is 4.8 years (30 June 2025: 4.4; 31 December 2025: 4.5); WAULT to first break is 2.9 years (30 June 2025: 2.8; 31 December 2025: 2.7). As at 30 June 2026, 9.5% (30 June 2025: 11.9%; 31 December 2025: 12.8%) of income was from leases which will expire within one year, 13.5% (30 June 2025: 10.5%; 31 December 2025: 12.1%) between one and two years, 37.8% (30 June 2025: 40.7%; 31 December 2025: 37.5%) between two and five years and 39.2% (30 June 2025: 37.0%; 31 December 2025: 37.7%) after five years.
Tenants by Standard Industrial Classification as at 30 June 2026
As at 30 June 2026, 11.9% of income was from tenants in the information and communication sector (30 June 2025: 11.1%; 31 December 2025: 12.3%), 10.9% from the administrative and support service activities sector (30 June 2025: 11.5%; 31 December 2025: 11.5%), 10.1% from the wholesale and retail trade sector (30 June 2025: 8.7%; 31 December 2025: 9.8%), 8.2% from the manufacturing sector (30 June 2025: 6.2%; 31 December 2025: 6.6%) and 7.5% from the professional, scientific and technical activities sector (30 June 2025: 11.2%; 31 December 2025: 7.5%). The remaining exposure is broadly spread.
No tenant represents more than 3.0% of the Group's rent roll as at 30 June 2026, the largest being 2.9% (30 June 2025: 3.0%; 31 December 2025: 2.8%).
Tenants by SIC Codes (% of gross rent)
|
SIC Code |
% of Headline Rent |
|
Information and communication |
11.9 |
|
Administrative and support service activities |
10.9 |
|
Wholesale and retail trade |
10.1 |
|
Manufacturing |
8.2 |
|
Professional, scientific and technical activities |
7.5 |
|
Education |
7.2 |
|
Human health and social work activities |
6.7 |
|
Financial and insurance activities |
5.7 |
|
Not specified |
4.9 |
|
Public Sector |
4.8 |
|
Construction |
4.8 |
|
Transportation and storage |
4.1 |
|
Other* |
13.2 |
|
Total |
100.0% |
Source: ESR Europe LSPIM Ltd
Charts may not sum due to rounding.
* Other - Accommodation and food service activities, Activities of extraterritorial organisations and
bodies, Activities of households as employers, Agriculture, Forestry and Fishing, Arts, entertainment
and recreation, Charity, Electricity, gas, steam and air conditioning supply, Financial and insurance,
Jersey, Mining and Quarrying, Other service activities, Overseas company, Public administration and
defence; compulsory social security, Real estate activities, Registered Society, Sole Trader, Water
supply, sewerage, waste management and remediation activities
FINANCIAL REVIEW
Net Asset Value
Between 1 January 2026 and 30 June 2026, the EPRA NTA* of the Group decreased to £305.8m (IFRS NAV: £309.1m) from £315.2m (IFRS NAV: £319.3m) as at 31 December 2025, equating to a decrease in the diluted EPRA NTA of 5.7pps to 188.7pps (IFRS: 190.7pps). This is after dividends paid in the period amounting to 4.5pps.
The investment property portfolio was valued at £526.7m (30 June 2025: £608.3m; 31 December 2025: £555.2m). The decrease of £28.5m since the December 2025 year-end is a reflection of a revaluation movement loss and adjustment for rent smoothing of £7.1m, £20.8m of net property disposals and £2.1m loss on the disposal of investment properties, offset by subsequent expenditure of £1.4m. Overall, on a like-for-like basis, the portfolio value decreased by 1.3% during the period, after adjusting for capital expenditure, acquisitions and disposals during the period.
The table below sets out the acquisitions, disposals and capital expenditure for the respective periods:
|
|
|
Six months to 30 June 2026 |
Six months to 30 June 2025 |
Year ended 31 December 2025 |
|
|
|
|
(£million) |
(£million) |
(£million) |
|
|
Acquisitions |
|
|
|
||
|
|
Net (after costs) |
0.0 |
0.0 |
1.2 |
|
|
|
Gross (before costs) |
0.0 |
0.0 |
1.1 |
|
|
Disposals |
|
|
|
||
|
|
Net (after costs) |
20.8 |
7.3 |
48.4 |
|
|
|
Gross (before costs) |
21.5 |
7.8 |
51.6 |
|
|
Capital Expenditure |
|
|
|
||
|
|
Net (after dilapidations) |
1.4 |
6.0 |
11.8 |
|
|
|
Gross (before dilapidations) |
1.7 |
6.0 |
11.8 |
|
Tables may not sum due to rounding
The diluted EPRA NTA per share decreased to 188.7pps (31 December 2025: 194.4pps).
The EPRA NTA is reconciled in the table below:
|
|
|
|
|
|
Six months to 30 June 2026 £m |
Six months to 30 June 2026 Pence per Share** |
|
Opening EPRA NTA (31 December 2025) |
315.2 |
194.4 |
|
Net rental and property income |
16.1 |
9.9 |
|
Administration and other expenses |
(4.4) |
(2.7) |
|
Loss on the disposal of investment properties |
(2.1) |
(1.3) |
|
Change in the fair value of investment properties |
(6.8) |
(4.2) |
|
Change in value of right of use |
(0.1) |
(0.0) |
|
EPRA NTA after operating profit |
317.9 |
196.1 |
|
Net finance expense |
(4.9) |
(3.0) |
|
Share of profit/(loss) of associate company |
(0.0) |
(0.0) |
|
Realised gain on derivative financial instruments |
0.1 |
0.1 |
|
EPRA NTA before dividends paid |
313.1 |
193.2 |
|
Dividends paid |
(7.3) |
(4.5) |
|
EPRA NTA (30 June 2026) |
305.8 |
188.7 |
Tables may not sum due to rounding
* The Group has determined that EPRA net tangible assets (NTA) is the most relevant measure.
Further detail on the new EPRA performance measure can be found in the full Annual Report.
** As at 31 December 2025 and 30 June 2026, there were 162,088,483 Ordinary Shares in issue.
Income Statement
Operating profit before gains and losses on property assets and other investments for the six months ended 30 June 2026 amounted to £11.7m (six months to 30 June 2025: £14.1m; year ended 31 December 2025: £30.3m). Loss after finance and before taxation was £2.8m (six months to 30 June 2025: loss of £7.9m; year ended 31 December 2025: loss of £16.4m). The six months to 30 June 2026 included a full rent roll for the portfolio of properties held as at 30 June 2026, plus the partial rent roll for properties disposed of during the period.
Rental and property income amounted to £26.5m, excluding recoverable service charge income and other similar items (six months to 30 June 2025: £29.8m; year ended 31 December 2025: £60.4m). The decrease was primarily the result of the decrease in the rent roll being held over the six months to 30 June 2026.
More than 80% of the rental income is collected within 30 days of the due date. A net bad debts charge of £0.1m was recognised in the period (six months to 30 June 2025: charge of £0.3m; year ended 31 December 2025: charge of £0.3m).
Non-recoverable property costs, excluding recoverable service charge income and other similar costs, amounted to £10.4m (six months to 30 June 2025: £10.5m; year ended 31 December 2025: £20.2m), and the rent roll decreased to £48.4m (six months to 30 June 2025: £56.7m; 31 December 2025: £50.4m).
Realised loss on the disposal of investment properties amounted to £2.1m (six months to 30 June 2025: loss of £0.6m; year ended 31 December 2025: loss of £3.2m). The disposal losses were from the aggregate disposal of six properties and six part-asset sales in the period, on which individual asset management plans had been completed. The change in the fair value of investment properties amounted to a loss of £6.8m (six months to 30 June 2025: loss of £12.1m; year ended 31 December 2025: loss of £26.6m). Net capital expenditure amounted to £1.4m (six months to 30 June 2025: £6.0m; year ended 31 December 2025: £11.8m). The change in value of right of use asset amounted to a charge of £0.1m (six months to 30 June 2025: charge of £0.1m; year ended 31 December 2025: charge of £0.1m).
Interest income amounted to £0.2m (six months to 30 June 2025: £0.6m; year ended 31 December 2025: £1.0m). Finance expenses amounted to £5.1m (six months to 30 June 2025: £6.2m; year ended 31 December 2025: £12.2m). The decrease is due to the repayment of £22.4m of bank borrowings in the period, building on prior-period debt repayments totalling £50.5m during 2025.
The EPRA cost ratio, including direct vacancy costs, was 56.1% (30 June 2025: 52.6%; 31 December 2025: 49.8%). The EPRA cost ratio, excluding direct vacancy costs, was 19.5% (30 June 2025: 19.4%; 31 December 2025: 18.4%). The ongoing charges for the six months ending 30 June 2026 were 9.5% (30 June 2025: 9.1%; 31 December 2025: 9.0%) and excluding direct vacancy costs 3.3% (30 June 2025: 3.4%; 31 December 2025: 3.3%).
Dividend
For the period from 1 January 2026 to 30 June 2026, the Company declared dividends totalling 4.0pps (six months to 30 June 2025: 5.0pps; year ended 31 December 2025: 10.0pps)*.
The Company will distribute a minimum 90% of the profit from the property rental business, in accordance with regulatory requirements, but will retain earnings where possible to support the business' accretive and
essential capital expenditure programme. The Board believes this approach is firmly in shareholders' long-term interests of improving the quality of the portfolio, so to benefit from rental and capital uplift.
* As at 31 December 2025 and 30 June 2026, there were 162,088,483 Ordinary Shares in issue.
Debt Financing and Gearing
All the Group's borrowings comprise third-party bank debt, secured over properties owned by the Group and repayable over the next one to three years. Following last year's refinancing, the weighted average maturity of the bank debt is 2.1 years (30 June 2025: 2.4 years; 31 December 2025: 2.6 years).
The Group's borrowing facilities are with Scottish Widows Limited & Aviva Investors Real Estate Finance, Royal Bank of Scotland, Bank of Scotland and Santander UK, Scottish Widows Limited, and Santander UK. The total bank borrowing facilities at 30 June 2026 amounted to £243.8m (30 June 2025: £310.0m; 31 December 2025: £266.2m) (before unamortised debt issuance costs), with £nil available to be drawn.
At 30 June 2026, the Group's cash and cash equivalent balances amounted to £40.8m (30 June 2025: £47.1m; 31 December 2025: £37.7m), of which £39.0m (30 June 2025: £42.7m; 31 December 2025: £37.7m) was unrestricted cash.
The Group's net loan to value ("LTV") ratio stands at 38.5% (30 June 2025: 43.2%; 31 December 2025: 40.4%) before unamortised costs.
Debt Profile and LTV Ratios as at 30 June 2026
|
Lender |
Facility (£'000) |
Outstanding Debt* (£'000) |
Maturity |
Gross LTV**% |
Annual Interest Rate % |
|
Scottish Widows Ltd. & Aviva Investors Real Estate Finance |
103,675 |
103,675 |
Dec-27 |
47.3 |
3.28 Fixed |
|
Royal Bank of Scotland, Bank of Scotland & Santander UK |
69,253 |
69,253 |
Dec-28 |
43.2 |
2.4 over 3 months £ SONIA |
|
Scottish Widows Ltd. |
28,615 |
28,615 |
Dec-28 |
44.9 |
3.37 Fixed |
|
Santander UK |
42,253 |
42,253 |
Jun-29 |
48.9 |
2.20 over 3 months SONIA |
|
|
243,796 |
243,796 |
|
|
|
Table may not sum due to rounding
*Before unamortised debt issue costs
** Based on Colliers International Property Consultants Ltd
The Investment Adviser continues to monitor the borrowing requirements of the Group. As at 30 June 2026, the Group has complied with borrowing covenants.
The net gearing ratio (net debt to Ordinary Shareholders' equity (diluted)) of the Group was 65.7% as at 30 June 2026 (30 June 2025: 78.3%; 31 December 2025: 70.3%).
Interest cover, excluding amortised costs, stands at 2.9 times (30 June 2025: 2.7 times; 31 December 2025: 3.0 times) and including amortised costs, stands at 2.3 times (30 June 2025: 2.3 times; 31 December 2025: 2.5 times).
Hedging
The Group applies an interest hedging strategy that is aligned to the property management strategy and aims to mitigate interest rate volatility on at least 90% of the debt exposure.
|
|
Six months ended 30 June 2026 |
Six months ended 30 June 2025 |
Year ended 31 December 2025 |
|
|
% |
% |
% |
|
Borrowings interest rate hedged |
100.4 |
100.0 |
101.0 |
|
Thereof: Fixed |
54.3 |
52.9 |
56.6 |
|
Thereof: Swap |
35.3 |
29.9 |
32.3 |
|
Thereof: Cap |
10.8 |
17.2 |
12.1 |
|
WACD1 |
3.4 |
3.4 |
3.3 |
1 WACD - Weighted Average Effective Interest Rate including the cost of hedging
Tax
The Group entered the UK REIT regime on 7 November 2015 and all of the Group's UK property rental operations became exempt from UK corporation tax from that date. The exemption remains subject to the Group's continuing compliance with the UK REIT rules.
On 9 January 2018, the Company registered for VAT purposes in the United Kingdom.
During the six months to 30 June 2026, the Group recognised no tax charge (six months to 30 June 2025: nil; year ended 31 December 2025: credit of £14,083), in relation to entities that are not included in the REIT tax regime.
PRINCIPAL RISKS AND UNCERTAINTIES
Effective risk management is a cornerstone for Regional REIT to delivering its strategy and integral to the achievement of its objective of delivering long term value through active asset management across the portfolio. The principal risks and uncertainties the Group faces are summarised below and described in detail on pages 58 to 70 of the 2025 Annual Report, which is available on the Group's website: www. regionalreit.com - Annual Report 2025.
The Audit Committee, which assists the Board with its responsibilities for managing risk, regularly reviews the risk appetite of the Company. Taking into consideration the latest information available, the Company is able to assess and respond quickly to new and emerging risks.
The UK real estate sector continues to navigate a complex macroeconomic environment. Global geopolitical uncertainty, including ongoing conflicts in Ukraine and the Middle East and evolving US trade policy, continues to affect supply chains and occupier confidence. Tightening sustainability and energy efficiency standards, together with the emerging potential influence of artificial intelligence on office based demand, require active asset management and disciplined risk management across the portfolio.
A summary of the Group's principal risks and uncertainties for the first half of 2026 is provided here.
Market risk
The value of the Company's assets is dependent on the strength of leasing and capital markets. Adverse market conditions could result in lower dividend income and capital returns to Shareholders.
Major Market Disruption
Major geopolitical events or a further pandemic could impact rental income, property valuations, access to funding at competitive rates and the ability to maintain the dividend policy and adhere to the HMRC REIT regime requirements.
Funding risk
The Group may not be able to secure funding on acceptable terms, which could impinge upon investment opportunities and the ability to grow the Group. Bank reference rates may remain heightened or rise due to wider economic challenges. Breach of covenants within the Company's funding structure could lead to a cancellation of debt funding if the Company is unable to service the debt.
Tenant risk
Type and concentration of tenants could result in lower rental income. A higher concentration of lease term maturity and/or break options could result in a more volatile rental income. The evolution and adoption of artificial intelligence on office based working could impact demand for space.
Financial and Tax Change risk
Changes to UK financial legislation and the tax regime could result in lower earnings and/or potential loss of REIT status.
Operational risk
Business disruption could impinge on the normal operations of the Company. Physical damage to properties, health and safety non-compliance, or reliance on key third-party service providers could result in lower rental income or reputational damage.
Cyber Security
Information security and cyber threats, including cyber fraud, could result in data loss or negative regulatory, reputational, operational (including GDPR), or financial impacts.
Accounting, Legal and Regulatory risk
Changes to accounting, legal and/or regulatory requirements, including sanctions and Listing Rules, could affect current operating processes and the Board's ability to achieve investment objectives and provide favourable returns to Shareholders and/or potential loss of REIT status.
Environmental and Energy Efficiency Standards
Changes to environmental legislation and the Company's cost base could impact operations. An Energy Performance Rating of C and below may impact the Company's ability to sell or lease an asset.
INTERIM MANAGEMENT REPORT AND DIRECTORS' RESPONSIBILITY STATEMENT
Interim Management Report
The important events that have occurred during the period under review, the principal risks and uncertainties and the key factors influencing the financial statements for the remaining six months of the year are set out in the Chairman's Statement and the Investment Adviser's Report.
The principal risks and uncertainties faced by the Group are substantially unchanged since the date of the Annual Report and Accounts for the year ended 31 December 2025 and are summarised above.
The condensed consolidated financial statements for the period from 1 January 2026 to 30 June 2026 have not been audited or reviewed by auditors pursuant to the Financial Reporting Council guidance on Review of Interim Financial Information and do not constitute annual statutory accounts for the purposes of the Law.
Going Concern
The Directors have made an assessment of the Group's ability to continue as a going concern. This assessment included consideration of the Group's cash resources, borrowing facilities, rental income, acquisition and disposals of investment properties, elective and committed capital expenditure and dividend distributions. The Group ended the period under review with £40.8m of cash and cash equivalents, of which £39.0m was unrestricted cash. Borrowing facilities decreased from £266.2m at 31 December 2025 to £243.8m as at 30 June 2026, with an LTV of 38.5%, based upon the value of the Group's investment properties as at 30 June 2026.
Given the amount of unrestricted cash currently held by the Group and, with the next borrowing due to mature being the Scottish Widows Ltd and Aviva Investors Real Estate Finance £103.7m facility in December 2027, the Directors are satisfied that the Group and Company have adequate resources to continue in operational existence for a period of at least 12 months from the date that this Half Yearly Report was approved.
This is underpinned by the robust rent collections and the level of committed capital expenditure in the forthcoming 12 months.
Responsibility Statement of the Directors in respect of the Half-Yearly Report
In accordance with Disclosure Guidance and Transparency Rule 4.2.10R we, the Directors of the Company (whose names are listed in full at the end of this report), confirm that to the best of their knowledge:
· the condensed set of consolidated financial statements has been prepared in accordance with International Accounting Standard (IAS) 34, "Interim Financial Reporting", as contained in UK-adopted International Accounting Standards, as required by Disclosure Guidance and Transparency Rule DTR 4.2.4R, and gives a true and fair view of the assets, liabilities, financial position and profit of the Group;
· this Half-Yearly Report includes a fair review, required under DTR 4.2.7R, of the important events that have occurred during the first six months of the financial year, their impact on the condensed set of consolidated financial statements and a description of the principal risks and uncertainties for the remaining six months of the financial year; and
· this Half-Yearly Report includes a fair review, required under DTR 4.2.8R, of related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position and or performance of the Group during that period; and any changes in the related party transaction described in the last Annual Report that could do so.
This Half-Yearly Report was approved and authorised for issue by the Board of Directors on 7 September 2026 and the above responsibility statement was signed on its behalf by:
David Hunter
Chairman
7 September 2026
Condensed Consolidated Statement of Comprehensive Income for the Six Months Ended 30 June 2026 (unaudited)
|
|
Notes |
Six months ended 30 June 2026 (unaudited) £'000 |
Six months ended 30 June 2025 (unaudited) £'000 |
Year ended 31 December 2025 (audited) £'000 |
|
Continuing Operations |
|
|
|
|
|
Revenue |
|
|
|
|
|
Rental and property income |
5 |
34,269 |
39,919 |
78,628 |
|
Property costs |
6 |
(18,163) |
(20,588) |
(38,373) |
|
Net rental and property income |
|
16,106 |
19,331 |
40,255 |
|
Administrative and other expenses |
7 |
(4,442) |
(5,207) |
(9,944) |
|
Operating profit before gains and losses on property assets and other investments |
|
11,664 |
14,124 |
30,311 |
|
Loss on disposal of investment properties |
13 |
(2,058) |
(578) |
(3,172) |
|
Change in fair value of investment properties |
13 |
(6,806) |
(12,144) |
(26,612) |
|
Change in fair value of right of use assets |
|
(69) |
(69) |
(139) |
|
Operating profit |
|
2,731 |
1,333 |
388 |
|
Finance income |
8 |
226 |
616 |
991 |
|
Finance expenses |
9 |
(5,102) |
(6,240) |
(12,215) |
|
Share of losses of associate company |
|
(21) |
(8) |
(24) |
|
Net movement in fair value of derivative financial instruments |
15
|
(680) |
(3,569) |
(5,506) |
|
Loss before tax |
|
(2,846) |
(7,868) |
(16,366) |
|
Taxation |
10 |
- |
- |
14 |
|
Total comprehensive loss for the period (attributable to owners of the parent Company) |
|
(2,846) |
(7,868) |
(16,352) |
|
|
|
|
|
|
|
Loss per Share - basic and diluted |
11 |
(1.8)p |
(4.9)p |
(10.1)p |
Total comprehensive loss arises from continuing operations.
The notes below are an integral part of these condensed consolidated financial statements.
Condensed Consolidated Statement of Financial Position as at 30 June 2026
|
|
Notes |
30 June 2026 (unaudited) £'000 |
30 June 2025 (unaudited) £'000 |
31 December 2025 (audited) £'000 |
|
Assets |
|
|
|
|
|
Non-current assets |
|
|
|
|
|
Investment properties |
13 |
513,966 |
593,487 |
542,191 |
|
Right of use assets |
|
10,641 |
10,780 |
10,710 |
|
Investments in associates |
|
327 |
268 |
348 |
|
Non-current receivables on tenant loan |
|
- |
48 |
- |
|
Derivative financial instruments |
15 |
3,806 |
7,911 |
3,145 |
|
|
|
528,740 |
612,494 |
556,394 |
|
Current assets |
|
|
|
|
|
Derivative financial instruments |
|
298 |
- |
1,739 |
|
Trade and other receivables |
|
31,897 |
41,054 |
40,717 |
|
Cash and cash equivalents |
|
40,783 |
47,117 |
37,726 |
|
|
|
72,978 |
88,171 |
80,182 |
|
Total assets |
|
601,718 |
700,665 |
636,576 |
|
Liabilities |
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Trade and other payables |
|
(27,357) |
(32,327) |
(29,265) |
|
Deferred income |
|
(13,038) |
(13,930) |
(13,540) |
|
Lease liabilities |
|
(435) |
- |
(435) |
|
Deferred tax liabilities |
|
- |
(741) |
- |
|
|
|
(40,830) |
(46,998) |
(43,240) |
|
Non-current liabilities |
|
|
|
|
|
Deferred tax liabilities |
|
(754) |
- |
(754) |
|
Bank and loan borrowings |
14 |
(240,028) |
(306,360) |
(262,319) |
|
Lease liabilities |
|
(10,960) |
(11,428) |
(10,977) |
|
|
|
(251,742) |
(317,788) |
(274,050) |
|
Total liabilities |
|
(292,572) |
(364,786) |
(317,290) |
|
|
|
|
|
|
|
Net assets |
|
309,146 |
335,879 |
319,286 |
|
Equity |
|
|
|
|
|
Stated capital |
16 |
618,010 |
618,016 |
618,010 |
|
Accumulated losses |
|
(308,864) |
(282,137) |
(298,724) |
|
Total equity attributable to owners of the parent Company |
309,146
|
335,879 |
319,286 |
|
|
Net asset value per Share - basic and diluted |
17 |
190.7p |
207.2p |
197.0p |
The notes below are an integral part of these condensed consolidated financial statements.
Condensed Consolidated Statement of Changes in Equity for the Six Months Ended 30 June 2026
|
|
Attributable to owners of the parent company |
|||
|
|
Notes |
Stated capital £'000 |
Accumulated losses £'000 |
Total £'000 |
|
Balance at 1 January 2026 |
|
618,010 |
(298,724) |
319,286 |
|
Total comprehensive loss |
|
- |
(2,846) |
(2,846) |
|
Dividends paid |
12 |
|
(7,294) |
(7,294) |
|
Balance at 30 June 2026 |
|
618,010 |
(308,864) |
309,146 |
|
|
|
|
|
|
For the six months ended 30 June 2025
|
|
|
Attributable to owners of the parent company |
||
|
|
Notes |
Stated capital £'000 |
Accumulated losses £'000 |
Total £'000 |
|
Balance at 1 January 2025 |
|
618,266 |
(266,652) |
351,614 |
|
Total comprehensive income |
|
- |
(7,868) |
(7,868) |
|
Dividends paid |
12 |
- |
(7,617) |
(7,617) |
|
Cost of shares issued in 2024 |
|
(250) |
- |
(250) |
|
Balance at 30 June 2025 |
|
618,016 |
(282,137) |
335,879 |
|
|
|
|
|
|
For the year ended 31 December 2025
|
|
|
Attributable to owners of the parent company |
||
|
|
Notes |
Stated capital £'000 |
Accumulated losses £'000 |
Total £'000 |
|
Balance at 1 January 2025 |
|
618,266 |
(266,652) |
351,614 |
|
Total comprehensive loss |
|
- |
(16,352) |
(16,352) |
|
Dividends paid |
12 |
- |
(15,720) |
(15,720) |
|
Cost of Shares Issued in 2024 |
|
(256) |
- |
(256) |
|
Balance at 31 December 2025 |
|
618,010 |
(298,724) |
319,286 |
|
|
|
|
|
|
The notes below are an integral part of these condensed consolidated financial statements.
Condensed Consolidated Statement of Cash Flows for the Six Months Ended 30 June 2026
|
|
Six months ended 30 June 2026 (unaudited) £'000 |
Six months ended 30 June 2025 (unaudited) £'000 |
Year ended 31 December 2025 (audited) £'000 |
|
|
Cash flows from operating activities |
|
|
|
|
|
Loss for the year before taxation |
(2,846) |
(7,868) |
(16,366) |
|
|
Change in fair value of investment properties |
6,806 |
12,144 |
26,612 |
|
|
Change in fair value of financial derivative instruments |
680 |
3,569 |
5,506 |
|
|
Share of losses of associate companies |
21 |
8 |
24 |
|
|
Loss on disposal of investment properties |
2,058 |
578 |
3,172 |
|
|
Change in fair value of right of use assets |
69 |
69 |
139 |
|
|
Finance income |
(226) |
(616) |
(991) |
|
|
Finance expense |
5,102 |
6,240 |
12,215 |
|
|
Decrease/(increase) in trade and other receivables |
8,810 |
(5,855) |
(5,509) |
|
|
Decrease/(increase) in trade and other payables |
(1,096) |
1,376 |
(1,772) |
|
|
Decrease in deferred income |
(502) |
(434) |
(824) |
|
|
Cash generated from operations |
|
18,876 |
9,211 |
22,206 |
|
Interest paid |
(4,083) |
(5,200) |
(10,251) |
|
|
Taxation received |
- |
(27) |
51 |
|
|
Net cash flow generated from operating activities |
14,793 |
3,984 |
12,006 |
|
|
Investing activities |
|
|
|
|
|
Investments in associates |
- |
- |
(96) |
|
|
Purchase of investment properties and subsequent expenditure |
(1,406) |
(6,020) |
(12,942) |
|
|
Sale of investment properties |
|
20,767 |
7,268 |
48,425 |
|
Interest received |
|
234 |
619 |
978 |
|
Net cash flow generated from investing activities |
19,595 |
1,867 |
36,365 |
|
|
Financing activities |
|
|
|
|
|
Proceeds received on derivative financial instruments |
|
100 |
128 |
1,218 |
|
Dividends paid |
|
(8,105) |
(7,139) |
(15,152) |
|
Share issue costs |
|
- |
(1,424) |
(1,430) |
|
Bank borrowings repaid |
|
(22,430) |
(6,718) |
(50,508) |
|
Bank borrowing costs paid |
|
(679) |
(83) |
(1,057) |
|
Lease repayments |
|
(217) |
(217) |
(435) |
|
Net cash flow used in financing activities |
(31,331) |
(15,453) |
(67,364) |
|
|
Net increase/(decrease) in cash and cash equivalents for the period |
3,057 |
(9,602) |
(18,993) |
|
|
Cash and cash equivalents at the start of the period |
37,726 |
56,719 |
56,719 |
|
|
Cash and cash equivalents at the end of the period |
40,783 |
47,117 |
37,726 |
|
|
|
|
|
|
|
The notes below are an integral part of these condensed consolidated financial statements.
Notes to the Condensed Consolidated Financial Statements for the Six Months Ended 30 June 2026
1. Corporate information
The condensed consolidated financial statements of the Group for the six months ended 30 June 2026 comprise the results of the Company and its subsidiaries (together constituting the "Group") and were approved by the Board and authorised for issue on 7 September 2026.
The Company is a company limited by shares incorporated in Guernsey under The Companies (Guernsey) Law, 2008, as amended (the "Law"). The Company's Ordinary Shares are admitted to the Official List of the Financial Conduct Authority ("FCA") and traded on the London Stock Exchange ("LSE").
The Company was incorporated on 22 June 2015 and is registered with the Guernsey Financial Services Commission as a Registered Closed-Ended Collective Investment Scheme pursuant to The Protection of Investors (Bailiwick of Guernsey) Law, 2020, as amended, and the Registered Collective Investment Scheme Rules & Guidance 2021.
The Company did not begin trading until 6 November 2015 when its shares were admitted to trading on the LSE. The nature of the Group's operations and its principal activities are set out in the Chairman's Statement.
The registered office address is: Mont Crevelt House, Bulwer Avenue, St. Sampson, Guernsey, GY2 4LH.
2. Basis of preparation
The condensed consolidated financial statements for the six months ended 30 June 2026 have been prepared on a going concern basis in accordance with the Disclosure Guidance and Transparency Rules of the FCA and with IAS 34, Interim Financial Reporting, as contained in UK adopted International Accounting Standards.
The condensed consolidated financial statements have been prepared on a historical cost basis, as modified for the Group's investment properties and certain financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.
The condensed consolidated interim financial information should be read in conjunction with the Group's audited financial statements for the year ended 31 December 2025, which have been prepared in accordance with UK adopted International Accounting Standards. The results presented in this report have not been audited or reviewed in accordance with International Standard on Review Engagements (UK) 2410.
2.1 Comparative period
The comparative financial information presented herein for the year ended 31 December 2025 do not constitute full statutory accounts within the meaning of the Law. The Group's Annual Report and Accounts for the year ended 31 December 2025 were delivered to the Guernsey Financial Services Commission. The Group's independent Auditor's report on those Accounts was unqualified and did not include reference to any matters to which the Auditor drew attention by way of emphasis without qualifying their report.
2.2 Functional and presentation currency
The consolidated financial information is presented in Pounds Sterling, which is also the Group's functional currency, and all values are rounded to the nearest thousand (£'000s) pounds, except where otherwise indicated.
2.3 Going concern
The Directors have made an assessment of the Group's ability to continue as a going concern. This assessment included consideration of the Group's cash resources, borrowing facilities, rental income, acquisition and disposals of investment properties, elective and committed capital expenditure and dividend distributions. The Group ended the period under review with £40.8m of cash and cash equivalents, of which £39.0m was unrestricted cash. Borrowing facilities decreased from £266.2m at 31 December 2025 to £243.8m as at 30 June 2026, with an LTV of 38.5%, based upon the value of the Group's investment properties as at 30 June 2026.
Given the amount of unrestricted cash currently held by the Group and, with the next borrowing due to mature being the Scottish Widows Ltd. and Aviva Investors Real Estate Finance £103.7m facility in December 2027, the Directors are satisfied that the Group and Company have adequate resources to continue in operational existence for a period of at least 12 months from the date that this Half Yearly report was approved.
This is underpinned by the robust rent collections and the level of committed capital expenditure in the forthcoming 12 months.
3. Significant accounting judgements, estimates and assumptions
The preparation of the condensed consolidated financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods.
3.1 Critical accounting estimates and assumptions
The principal estimates that may be material to the carrying amount of assets and liabilities are as follows:
3.1.1 Valuation of investment properties
The fair value of investment property is determined by independent property valuation experts to be the estimated amount for which a property should exchange on the date of the valuation in an arm's length transaction, less the value of assets arising from rent smoothing. Properties have been valued on an individual basis. The valuation experts use recognised valuation techniques applying the principles of both IAS 40 Investment Property and IFRS 13 Fair Value Measurement.
The value of the properties has been assessed in accordance with the relevant parts of the current RICS Red Book. In particular, we have assessed the fair value as referred to in VPS4 item 7 of the RICS Red Book. Under these provisions, the term "Fair Value" means the definition adopted by the International Accounting Standards Board ("IASB") in IFRS 13, namely "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date". Factors reflected include current market conditions, annual rentals, lease lengths and location. The significant methods and assumptions used by the valuers in estimating the fair value of investment property are set out in note 13 below.
The fair value of investment property is equal to the independent property valuer's valuation of £526.7m ( 31 December 2025: £555.2m) less the value of the assets arising from rent smoothing of £12.8m (31 December 2025:£13.0m). This is detailed in note 13 below and is in accordance with IAS 40 paragraph 50, recognising the prepayment cannot be recovered when the investment properties are sold.
3.2. Critical judgements in applying the Group's accounting policies
In the process of applying the Group's accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognised in the condensed consolidated financial statements:
3.2.1 Operating lease contracts - the Group as lessor
The Group has acquired investment properties that are subject to commercial property leases with tenants. The Group has determined, based on an evaluation of the terms and conditions of the arrangements, particularly the duration of the lease terms and minimum lease payments, that it retains all the significant risks and rewards of ownership of these properties and so accounts for the leases as operating leases.
3.2.2 Recognition of income
Service charges and other similar receipts are included in net rental and property income gross of the related costs as the Directors consider the Group acts as principal in this respect.
3.2.3 Consolidation of entities in which the Group holds less than 50%
Management considered that up until 9 November 2018, the Group had de facto control of View Castle Limited and its 27 subsidiaries (the "View Castle Sub Group") by virtue of the amended and restated Call Option Agreement dated 3 November 2015. Following a restructure of the View Castle Sub Group, the majority of properties held within the View Castle Sub Group were transferred into two new special purpose vehicles ("SPVs") with two additional properties to be transferred into these SPVs at a later date. A new call option was entered into dated 9 November 2018 with View Castle Limited and five of its subsidiaries (the "View Castle Group"). As per the previous amended and restated Call Option Agreement, under this new option the Group may acquire any of the properties held by the View Castle Group for a fixed nominal consideration. Despite having no equity holding, the Group is deemed to have control over the View Castle Group as the Option Agreement means that the Group is exposed to, and has rights to, variable returns from its involvement with the View Castle Group, through its power to control.
4. Summary of significant accounting policies
With the exception of new accounting standards listed below, the accounting policies adopted in this report are consistent with those applied in the Group's statutory accounts for the year ended 31 December 2025 and are expected to be consistently applied for the current year ending 31 December 2026. The changes to the condensed consolidated financial statements arising from accounting standards effective for the first time are noted below:
Amendments to IFRS 9 "Financial Instruments" and IFRS 7 "Financial Instruments: Disclosures" (effective for periods beginning on or after 1 January 2026) refine the classification of financial assets and liabilities and introduce enhanced disclosure requirements.
Annual Improvements to IFRS Accounting Standards Volume 11 (effective for periods beginning on or after 1 January 2026) contains amendments to five standards, IFRS1 , IFRS 7, IFRS 9, IFRS 10 and IAS 7 as a result of the IASB's annual improvements project. The aim of which is to improve consistency across the standards.
None of the above have a material impact on the financial statements.
5. Rental and property income
|
|
|
Six months ended 30 June 2026 (unaudited) £'000 |
Six months ended 30 June 2025 (unaudited) £'000 |
Year ended 31 December 2025 (audited) £'000 |
|
Rental income - freehold property |
21,012 |
24,767 |
50,235 |
|
|
Rental income - long leasehold property |
5,526 |
5,049 |
10,197 |
|
|
Recoverable service charge income and other similar items |
7,731 |
10,103 |
18,196 |
|
|
Total |
34,269 |
39,919 |
78,628 |
|
|
|
|
|
|
|
6. Property costs
|
|
|
Six months ended 30 June 2026 (unaudited) £'000 |
Six months ended 30 June 2025 (unaudited) £'000 |
Year ended 31 December 2025 (audited) £'000 |
|
Other property expenses and irrecoverable costs |
10,432 |
10,485 |
20,177 |
|
|
Recoverable service charge expenditure and other similar costs |
7,731 |
10,103 |
18,196 |
|
|
Total |
18,163 |
20,588 |
38,373 |
|
Property costs represent direct operating expenses which arise on investment properties generating rental income.
7. Administrative and other expenses
|
|
|
Six months ended 30 June 2026 (unaudited) £'000 |
Six months ended 30 June 2025 (unaudited) £'000 |
Year ended 31 December 2025 (audited) £'000 |
|
Investment management fees1 |
738 |
1,053 |
1,947 |
|
|
Property management fees |
1,029 |
1,094 |
2,257 |
|
|
Asset management fees |
738 |
1,053 |
1,949 |
|
|
Directors' remuneration |
164 |
157 |
309 |
|
|
Administration fees |
338 |
288 |
662 |
|
|
Legal and professional fees |
1,155 |
1,095 |
2,205 |
|
|
Marketing and promotion |
37 |
37 |
83 |
|
|
Other administrative costs |
107 |
105 |
220 |
|
|
Allowance for doubtful debts |
129 |
319 |
299 |
|
|
Bank charges |
7 |
6 |
13 |
|
|
Total |
4,442 |
5,207 |
9,944 |
|
|
|
|
|
|
|
1 As announced on 11 December 2025, the management fee calculation changed from 1 January 2026 to a blended basis of 75% EPRA Net Tangible Assets and 25% market capitalisation. Further information is available in the 2025 Annual Report.
8. Finance income
|
|
|
Six months ended 30 June 2026 (unaudited) £'000 |
Six months ended 30 June 2025 (unaudited) £'000 |
Year ended 31 December 2025 (audited) £'000 |
|
Interest income |
226 |
616 |
991 |
|
|
Total |
226 |
616 |
991 |
|
|
|
|
|
|
|
9. Finance expense
|
|
|
Six months ended 30 June 2026 (unaudited) £'000 |
Six months ended 30 June 2025 (unaudited) £'000 |
Year ended 31 December 2025 (audited) £'000 |
|
Interest payable on bank borrowings |
4,083 |
5,201 |
10,251 |
|
|
Amortisation of loan arrangement fees |
818 |
838 |
1,561 |
|
|
Lease interest |
201 |
201 |
403 |
|
|
Total |
5,102 |
6,240 |
12,215 |
|
|
|
|
|
|
|
10. Taxation
|
|
|
Six months ended 30 June 2026 (unaudited) £'000 |
Six months ended 30 June 2025 (unaudited) £'000 |
Year ended 31 December 2025 (audited) £'000 |
|
Corporation tax charge |
- |
- |
(27) |
|
|
Increase in deferred tax creditor |
- |
- |
13 |
|
|
Total |
- |
- |
(14) |
|
The Group elected to be treated as a UK REIT with effect from 7 November 2015. The UK REIT rules exempt the profits of the Group's UK property rental business from corporation tax. Gains on UK properties are also exempt from tax, provided that they are not held for trading or sold in the three years after completion of development. The Group is otherwise subject to UK corporation tax.
Income tax, corporation tax and deferred tax above arise on entities which form part of the Group's condensed consolidated accounts but do not form part of the REIT group.
Due to the Group's REIT status and its intention to continue meeting the conditions required to obtain approval in the foreseeable future, no provision has been made for deferred tax on any capital gains or losses arising on the revaluation or disposal of investments held by entities within the REIT group. No deferred tax asset has been recognised in respect of losses carried forward due to unpredictability of future taxable profits.
As a REIT, Regional REIT Ltd is required to pay PIDs equal to at least 90% of the Group's exempted net income. To retain UK REIT status, there are a number of conditions to be met in respect of the principal company of the Group, the Group's qualifying activity and its balance of business. The Group continues to meet these conditions.
11. Earnings per Share
Earnings per share ("EPS") amounts are calculated by dividing profits for the period attributable to ordinary equity holders of the Company by the weighted average number of Ordinary Shares in issue during the period.
The calculation of basic and diluted earnings per share is based on the following:
|
|
|
Six months ended 30 June 2026 (unaudited) £'000 |
Six months ended 30 June 2025 (unaudited) £'000 |
Year ended 31 December 2025 (audited) £'000 |
|
Calculation of earnings per Share |
|
|
|
|
|
Net loss attributable to Ordinary Shareholders |
(2,846) |
(7,868) |
(16,352) |
|
|
Adjustments to remove: |
|
|
|
|
|
Changes in value of investment properties |
6,806 |
12,144 |
26,612 |
|
|
Changes in fair value of right of use assets |
69 |
69 |
139 |
|
|
Loss on disposal of investment properties |
2,058 |
578 |
3,172 |
|
|
Change in fair value of interest rate derivates and financial assets |
680 |
3,569 |
5,506 |
|
|
Deferred tax charge |
- |
- |
13 |
|
|
EPRA net profit attributable to Ordinary Shareholders |
6,767 |
8,492 |
19,090 |
|
|
Weighted average number of Ordinary Shares |
162,088,483 |
162,088,483 |
162,088,483 |
|
|
Losses per Share - basic and diluted |
(1.8)p |
(4.9)p |
(10.1)p |
|
|
EPRA earnings per Share - basic and diluted |
4.2p |
5.2p |
11.8p |
|
12. Dividends
|
|
|
Six months ended 30 June 2026 (unaudited) £'000 |
Six months ended 30 June 2025 (unaudited) £'000 |
Year ended 31 December 2025 (audited) £'000 |
|
Dividend of 2.50 (2025: 2.20) pence per Ordinary Share for the period 1 October - 31 December |
4,052 |
3,565 |
3,565 |
|
|
Dividend of 2.00 (2025: 2.50) pence per Ordinary Share for the period 1 January - 31 March |
3,242 |
4,052 |
4,052 |
|
|
Dividend of nil (2025: 2.50) pence per Ordinary Share for the period 1 April - 30 June |
- |
- |
4,052 |
|
|
Dividend of nil (2025: 2.50) pence per Ordinary Share for the period 1 July - 30 September |
- |
- |
4,052 |
|
|
Unpaid dividends held by Registrar |
- |
- |
(1) |
|
|
Total |
7,294 |
7,617 |
15,720 |
|
On 19 February 2026, the Company announced a dividend of 2.50 pence per Share in respect of the period 1 October 2025 to 31 December 2025. The dividend was paid on 10 April 2026 to Shareholders on the register as at 27 February 2026.
On 19 May 2026, the Company announced a dividend of 2.0 pence per Share in respect of the period 1 January 2026 to 31 March 2026. The dividend will be paid on 10 July 2026 to Shareholders on the register as at 29 May 2026. The financial statements do not reflect this dividend.
13. Investment properties
In accordance with International Accounting Standard, IAS 40, 'Investment Property', investment property has been independently valued at fair value by Colliers International Property Consultants Ltd, a Chartered Surveyor who is an accredited independent valuer with recognised and relevant professional qualifications and with recent experience in the locations and categories of the investment properties being valued. The valuation has been prepared in accordance with the Red Book and incorporates the recommendations of the International Valuation Standards Committee which are consistent with the principles set out in IFRS 13.
Investment property valuations in comparative periods were carried out by Colliers.
The valuation is the ultimate responsibility of the Directors. Accordingly, the critical assumptions used in establishing the independent valuation are reviewed by the Board.
|
Group Movement in investment properties for the six months ended 30 June 2026 (unaudited) |
Freehold property £'000 |
Long Leasehold property £'000 |
Total £'000 |
|
Valuation at 1 January 2026 |
429,936 |
125,294 |
555,230 |
|
Property additions - acquisitions |
- |
- |
- |
|
Property additions - subsequent expenditure |
1,312 |
94 |
1,406 |
|
Property disposals |
(20,771) |
4 |
(20,767) |
|
Loss on disposals of investment properties |
(2,054) |
(4) |
(2,058) |
|
Change in fair value during the period |
(4,012) |
(3,074) |
(7,086) |
|
Valuation at 30 June 2026 (unaudited) |
404,411 |
122,314 |
526,725 |
|
Less adjustment for rent smoothing assets |
(9,642) |
(3,117) |
(12,759) |
|
Fair Value at 30 June 2026 (unaudited) |
394,769 |
119,197 |
513,966 |
|
|
|
|
|
|
Group Movement in investment properties for the six months ended 30 June 2026 (unaudited) |
Freehold Property £'000 |
Long Leasehold Property £'000 |
Total £'000 |
|
Change in fair value during the period |
(4,012) |
(3,074) |
(7,086) |
|
Adjustment for rent smoothing assets at 30 June 2026 |
(9,642) |
(3,117) |
(12,759) |
|
Adjustment for rent smoothing assets at 31 December 2025 |
9,780 |
3,259 |
13,039 |
|
Change in fair value of investment properties |
(3,874) |
(2,932) |
(6,806) |
|
Group Movement in investment properties for the six months ended 30 June 2025 (unaudited) |
|
Freehold property £'000 |
Long Leasehold property £'000 |
Total £'000 |
|
Valuation at 1 January 2025 |
|
492,896 |
129,584 |
622,480 |
|
Property additions - acquisitions |
|
- |
- |
- |
|
Property additions - subsequent expenditure |
|
5,627 |
392 |
6,019 |
|
Property disposals |
|
(7,268) |
- |
(7,268) |
|
Loss on disposals of investment properties |
|
(578) |
- |
(578) |
|
Change in fair value during the period |
|
(9,531) |
(2,792) |
(12,323) |
|
Valuation at 30 June 2025 (Unaudited) |
|
481,146 |
127,184 |
608,330 |
|
Less adjustment for rent smoothing assets |
|
(11,267) |
(3,576) |
(14,843) |
|
Fair Value at 30 June 2025 (Unaudited) |
|
469,879 |
123,608 |
593,487 |
|
|
|
|
|
|
|
Group Movement in investment properties for the year ended 31 December 2025 (audited) |
|
Freehold property £'000 |
Long Leasehold property £'000 |
Total £'000 |
|
Valuation at 1 January 2025 |
|
492,896 |
129,584 |
622,480 |
|
Property additions - acquisitions |
|
1,160 |
- |
1,160 |
|
Property additions - subsequent expenditure |
|
8,143 |
3,639 |
11,782 |
|
Property disposals |
|
(48,193) |
(232) |
(48,425) |
|
Loss on the disposal of investment properties |
|
(3,094) |
(78) |
(3,172) |
|
Change in valuation during the period |
|
(20,976) |
(7,619) |
(28,595) |
|
Valuation at 31 December 2025 (audited) |
|
429,936 |
125,294 |
555,230 |
|
Less adjustment for rent smoothing assets |
|
(9,780) |
(3,259) |
(13,039) |
|
Fair Value at 30 June 2025 (unaudited) |
|
420,156 |
122,035 |
542,191 |
The total change in fair value during the period was a decrease of £6,806,000 (30 June 2025: £12,144,000;
31December 2025 £26,612,000).
The historic cost of the properties is £764,507,000 (30 June 2025: £830,501,000; 31December 2025 £773,287,000).
The net book value of properties disposed of during the period amounted to £22,825,000 (30 June 2025: £7,846,000 31; December 2025 £51,597,000).
Bank borrowings are secured by charges over investment properties held by certain asset-holding subsidiaries.
The banks also hold charges over the shares of certain subsidiaries and any intermediary holding companies of those subsidiaries. The independent valuers assessment of the value of investment properties secured at 30 June 2026 was £526,725,000 (30 June 2025: £608,330,000; 31December 2025 £555,230,000).
The following table provides the fair value measurement hierarchy for investment properties:
|
Date of valuation: |
Total £'000 |
Quoted active prices (level 1) £'000 |
Significant observable inputs (level 2) £'000 |
Significant unobservable inputs (level 3) £'000 |
|
30 June 2026 |
513,966 |
- |
- |
513,966 |
|
|
|
|
|
|
|
30 June 2025 |
593,487 |
- |
- |
593,487 |
|
|
|
|
|
|
|
31 December 2025 |
542,191 |
- |
- |
542,191 |
|
|
|
|
|
|
The hierarchy levels are defined in note 15 below.
It has been determined that the entire investment properties portfolio should be classified under the level 3 category.
There have been no transfers between levels during the period.
The determination of the fair value of the investment properties held by each consolidated subsidiary requires the use of estimates such as future cash flows from investment properties, which take into consideration lettings, tenants' profiles, future revenue streams, capital values of fixtures and fittings, any environmental matters and the overall repair and condition of the property, and discount rates applicable to those assets. Future revenue streams comprise contracted rent (passing rent) and estimated rental value after the contract period. In calculating ERV, the potential impact of future lease incentives to be granted to secure new contracts is taken into consideration. All these estimates are based on local market conditions existing at the reporting date.
As at 30 June 2026, the estimated fair value of each property has been primarily derived using comparable recent market transactions on arm's length terms and assessed in accordance with the relevant parts of the RICS Red Book.
Techniques used for valuing investment properties
The following descriptions and definitions relate to valuation techniques and key significant inputs made in determining the fair values:
Valuation technique: market comparable method
Under the market comparable method (or market approach), a property fair value is estimated based on comparable transactions in the market.
Significant input: market rental
The rent at which space could be let in the market conditions prevailing at the date of valuation £16,200 - £3,448,400 per annum (30 June 2025 £16,200-£3,512,800 per annum; 31 December 2025: £16,200- £3,512,800 per annum).
Significant input: rental growth
The decrease in rent is based on contractual agreements: -2.75% (30 June 2025: 2.48% decrease; 31 December 2025: 13.79% decrease). There is a gross contracted rent reduction, as per normal operations it is a combination of property disposals, space under refurbishment and lease expiries.
Significant input: equivalent yield
The time-weighted average return that a property will produce including purchase costs. The equivalent yield generally sits between the net initial yield and reversionary yield. See table below.
Unobservable inputs:
The significant unobservable inputs (level 3) are sensitive to the changes in the estimated future cash flows from investment properties such as increases and decreases in contract rents, operating expenses and capital expenditure, plus transactional activity in the real estate market.
Geographical and sector specific market evidence reviewed in the course of preparing the June 2026 valuation had an initial yield range of 4.8% to 29.0% (30 June 2025: 3.8% to 18.0%; 31 December 2025: 6.0% to 20.9%).
As set out within the significant accounting estimates and judgements above, the Group's property portfolio valuation is open to judgement and is inherently subjective by nature, and actual values can only be determined in a sales transaction.
Equivalent yield range by sector:
|
|
|
|
Significant Unobservable Inputs |
||
|
|
Valuation |
ERV |
ERV |
Equivalent Yield |
Equivalent Yield |
|
Sector |
£'000 |
Range (£ per sq ft p.a.) |
Weighted Average (£ per sq ft p.a.) |
Range (%) |
Weighted Average (%) |
|
As at June 2026 |
|
|
|
|
|
|
Industrial |
£25,300 |
£4.65-£14.75 |
7.40 |
6.73%-23.73% |
8.81% |
|
Retail |
£20,425 |
£2.07-£40.00 |
15.71 |
7.82%-13.44% |
8.51% |
|
Other |
£9,600 |
£5.00-£13.50 |
9.28 |
9.64% |
10.34% |
|
Office by Region |
|
|
|
|
|
|
Office South East |
£76,750 |
£5.00-£29.01 |
19.26 |
8.58%-32.55% |
10.46% |
|
Office South West |
£52,900 |
£12.28-£23.00 |
19.47 |
9.99%-15.20% |
11.98% |
|
Office Midlands |
£110,200 |
£3.01-£35.04 |
15.18 |
7.50%-13.13% |
11.00% |
|
Office North West |
£55,300 |
£6.61-£22.01 |
16.97 |
9.09%-12.92% |
10.98% |
|
Office North East |
£84,700 |
£8.29-£33.36 |
17.60 |
8.35%-13.12% |
10.45% |
|
Office Wales |
£17,700 |
£10.01-£14.50 |
12.05 |
8.91%-11.00% |
10.46% |
|
Office Scotland |
£73,850 |
£4.50-£23.84 |
17.05 |
9.89%-14.16% |
9.65% |
|
Total |
£526,725 |
|
|
|
|
The impact of changes to the significant unobservable inputs:
|
|
30 June 2026 Impact in statement of comprehensive Income £'000 |
30 June 2026 Impact in statement of financial position £'000 |
31 December 2025 Impact in statement of comprehensive income £'000 |
31 December 2025 Impact in statement of financial position £'000 |
|
Improvement in ERV by 5% |
22,553 |
22,553 |
25,062 |
25,062 |
|
Worsening in ERV by 5% |
(22,112) |
(22,112) |
(24,787) |
(24,787) |
|
Improvement in yield by 0.125% |
7,178 |
7,178 |
8,061 |
8,061 |
|
Worsening in yield by 0.125% |
(6,994) |
(6,994) |
(7,837) |
(7,837) |
|
Improvement in yield by 0.25% |
14,567 |
14,567 |
16,287 |
16,287 |
|
Worsening in yield by 0.25% |
(13,822) |
(13,822) |
(15,523) |
(15,523) |
|
Improvement in yield by 0.5% |
29,778 |
29,778 |
33,456 |
33,456 |
|
Worsening in yield by 0.5% |
(26,929) |
(26,929) |
(30,285) |
(30,285) |
14. Bank and loan borrowings
Bank borrowings are secured by charges over individual investment properties held by certain asset-holding subsidiaries. The banks also hold charges over the shares of certain subsidiaries and any intermediary holding companies of those subsidiaries.
Any associated fees in arranging the bank borrowings unamortised as at the period end are offset against amounts drawn on the facilities as shown in the table below:
|
|
30 June 2026 (Unaudited) £'000 |
30 June 2025 (Unaudited) £'000 |
31 December 2025 (Audited) £'000 |
|
Bank borrowings drawn at start of the period |
266,226 |
316,734 |
316,734 |
|
Bank borrowings drawn |
- |
- |
- |
|
Bank borrowings repaid |
(22,430) |
(6,718) |
(50,508) |
|
Bank borrowings drawn at end of the period |
243,796 |
310,016 |
266,226 |
|
Less: unamortised costs at start of period |
(3,907) |
(4,411) |
(4,411) |
|
Less: loan issue costs incurred in the period |
(679) |
(83) |
(1,057) |
|
Add: loan issue costs amortised in the period |
818 |
838 |
1,561 |
|
At end of period |
240,028 |
306,360 |
262,319 |
|
Maturity of borrowings |
|
|
|
|
Repayable within 1 year |
- |
- |
- |
|
Repayable between 1 to 2 years |
103,675 |
96,382 |
118,339 |
|
Repayable between 2 to 5 years |
140,121 |
213,634 |
147,887 |
|
Repayable after more than 5 years |
- |
- |
- |
|
Unamortised loan issue costs |
(3,768) |
(3,656) |
(3,907) |
|
|
240,028 |
306,360 |
262,319 |
The table below lists the Group's borrowings.
|
Lender |
Facility £'000 |
Outstanding Debt* £'000 |
Maturity Date |
Gross LTV** |
Annual Interest Rate |
Amortisation |
|
Scottish Widows Ltd & Aviva Investors Real Estate Finance |
103,675 |
103,675 |
Dec 2027 |
47.30% |
3.28% Fixed |
None |
|
Royal Bank of Scotland, Bank of Scotland & Santander UK |
69,253 |
69,253 |
Dec 2028 |
43.20% |
2.40% over 3 months SONIA |
Mandatory Prepayment |
|
Scottish Widows Ltd |
28,615 |
28,615 |
Dec 2028 |
44.90% |
3.37% Fixed |
None |
|
Santander UK |
42,253 |
42,253 |
June 2029 |
48.90% |
2.20% over 3 months SONIA |
Mandatory Prepayment |
|
Total bank borrowings |
243,796 |
243,796 |
|
|
|
|
SONIA = Sterling Over Night Indexed Average
* Before unamortised debt issue costs.
** Based upon Colliers International Property Consultants limited property valuation
The percentage of borrowings at variable rates of interest was 45.7% (30 June 2025: 47.1% ; 31 December 2025: 43.4%).
The weighted average term to maturity of the Group's debt at the period end was 2.1 years ( 30 June 2025: 2.4
years; 31 December 2025: 2.6 years).
The weighted average interest rate payable by the Group on its debt portfolio, excluding hedging, as at the period end was 4.6% per annum (30 June 2025: 4.9% per annum; 31 December 2025: 4.6% per annum).
The Group weighted average interest rate, including hedging activity at the period end, amounted to 3.4% per
annum (30 June 2025: 3.4%; 31 December 2025: 3.3% per annum).
The Group has complied with all the financial covenants of the above facilities as applicable throughout the period covered by these condensed consolidated financial statements. Each facility has distinct covenants which generally include: historic interest cover, projected interest cover, loan-to-value cover and debt to rent cover. A breach of agreed covenant levels would typically result in an event of default of the respective facility, giving the lender the right, but not the obligation, to declare the loan immediately due and payable. Where a loan is repaid in these circumstances, early repayment fees will apply, which are generally based on percentage of the loan repaid or calculated with reference to the interest income foregone by the lenders as a result of the repayment.
As shown in note 15 below, the Group uses a combination of interest rate swaps and fixed rate bearing loans to hedge against interest rate risks. The Group's exposure to interest rate volatility is minimal.
15. Derivative financial instruments
Interest rate caps and swaps are in place to mitigate the interest rate risk that arises as a result of entering into variable rate borrowings.
During the period the notional amount on derivative instruments was reduced with a cash amount realised of £101,000 (30 June 2025: £128,000; 31 December 2025: £1,218,000).
|
|
30 June 2026 (Unaudited) £'000 |
30 June 2025 (Unaudited) £'000 |
31 December 2025 (Audited) £'000 |
|
Fair value at start of period |
4,884 |
11,608 |
11,608 |
|
Proceeds received from a reduction in notional amounts |
(100) |
(128) |
(1,218) |
|
Revaluation in period |
(680) |
(3,569) |
(5,506) |
|
Fair value at end of period |
4,104 |
7,911 |
4,884 |
The calculation of fair value of interest rate caps and swaps is based on the following calculation: the notional amount multiplied by the difference between the swap rate and the current market rate and then multiplied by the number of years remaining on the contract and discounted.
The fair value of interest rate caps and swaps represents the net present value of the difference between the cash flows produced by the contracted rate and the current market rate over the life of the instrument.
The table below details the hedging and swap notional amounts and rates against the details of the Group's loan facilities.
|
Lender |
Original facility £'000 |
Outstanding debt* £'000 |
Maturity date |
Annual interest rate |
Notional amount £'000 |
Rate |
|
Scottish Widows Ltd & Aviva Investors Real Estate Finance |
103,675 |
103,675 |
Dec 2027 |
3.28% Fixed |
n/a |
n/a |
|
Royal Bank of Scotland, Bank of Scotland & Santander UK |
69,253 |
69,253 |
Dec 2028 |
2.40% over 3 months £ SONIA |
Swap £51,420 Cap £17,832 |
0.99% 0.99% |
|
Scottish Widows Ltd |
28,615 |
28,615 |
Dec 2028 |
3.37% Fixed |
n/a |
n/a |
|
Santander UK |
42,253 |
42,253 |
June 2029 |
2.20% over 3 months £SONIA |
Swap £34,585 Cap £8,529 |
1.39% 1.39% |
|
Total bank borrowings |
243,796 |
243,796 |
|
|
|
|
SONIA = Sterling Over Night Indexed Average
* Before unamortised debt issue costs
As at 30 June 2026, the notional amounts of swap arrangements were £86.0m (30 June 2025: £92.7m; 31December 2025: £86.0m) and the cap notional arrangements amounted to £26.4m (30 June 2025: £53.5m; 31 December 2025: £32.3m).
The Group weighted average cost of debt was 3.4% (30 June 2025: 3.4%; 31 December 2025; 3.3%) inclusive of hedging costs.
The maximum exposure to credit risk at the reporting date is the fair value of the derivative liabilities.
It is the Group's target to hedge at least 90% of the total loan portfolio using fixed-rate facilities or interest rate derivatives. The hedging on all of the facilities matches the term. As at the period end date, the total proportion of hedged debt equated to 100.4% (30 June 2025: 100.0%; 31December 2025: 101.0%), as shown below.
|
|
30 June 2026 (unaudited) £'000 |
30 June 2025 (unaudited) £'000 |
31 December 2025 (audited) £'000 |
|
Total bank borrowings |
243,796 |
310,016 |
266,226 |
|
Notional value of interest rate caps and swaps |
112,366 |
146,139 |
118,314 |
|
Value of fixed rate debts |
132,290 |
163,877 |
150,664 |
|
|
244,656 |
310,016 |
268,978 |
|
Proportion of hedged debt |
100.4% |
100.0% |
101.0% |
Fair value hierarchy
The following table provides the fair value measurement hierarchy for interest rate derivatives. The different levels are defined as follows.
· Level 1: Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
· Level 2: Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.
· Level 3: Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
For assets and liabilities that are recognised in the condensed consolidated financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by reassessing categorisation at the end of each reporting period.
|
Date of Valuation |
Total £'000 |
Quoted Active Prices (Level 1) £'000 |
Significant Observable Inputs (Level 2) £'000 |
Significant Unobservable Inputs (Level 3) £'000 |
|
30 June 2026 |
4,104 |
- |
4,104 |
- |
|
30 June 2025 |
7,911 |
- |
7,911 |
- |
|
31 December 2025 |
4,884 |
- |
4,884 |
- |
The fair values of these contracts are recorded in the Condensed Consolidated Statement of Financial Position and are determined by forming an expectation that interest rates will exceed strike rates and by discounting these future cash flows at the prevailing market rates as at the period end.
There have been no transfers between levels during the period.
The Group has not adopted hedge accounting.
16. Stated capital
Stated capital represents the consideration received by the Company for the issue of Ordinary Shares.
|
|
30 June 2026 (Unaudited) £'000 |
30 June 2025 (Unaudited) £'000 |
31 December 2025 (Audited) £'000 |
|
Issued and fully paid Shares of no par value |
|
|
|
|
At start and end of period |
618,010 |
618,266 |
618,266 |
|
Shares issued |
- |
- |
- |
|
Share issue costs |
- |
(250) |
(256) |
|
At end of year |
618,010 |
618,016 |
618,010 |
|
Number of Shares in issue |
|
|
|
|
At start and end of period |
162,088,483 |
162,088,483 |
162,088,483 |
|
Shares issued |
- |
- |
- |
|
Share reduction |
- |
- |
- |
|
At end of the year |
162,088,483 |
162,088,483 |
162,088,483 |
17. Net asset value per Share (NAV)
Basic NAV per share is calculated by dividing the net assets in the Condensed Consolidated Statement of Financial Position attributable to ordinary equity holders of the parent by the number of Ordinary Shares in issue at the end of the period.
EPRA net asset value is a key performance measure used in the real estate industry which highlights the fair value of net assets on an ongoing long-term basis. Assets and liabilities that are not expected to crystallise in normal circumstances such as the fair value of derivatives and deferred taxes on property valuation surpluses are therefore excluded.
Net asset values have been calculated as follows:
|
|
30 June 2026 (unaudited) £'000 |
30 June 2025 (unaudited) £'000 |
31 December 2025 (audited) £'000 |
|
Net asset value per Condensed Consolidated Statement of Financial Position |
309,146 |
335,879 |
319,286 |
|
Adjustments for calculating EPRA net tangible assets: |
|
|
|
|
Derivative financial instruments |
(4,104) |
(7,911) |
(4,884) |
|
Deferred tax liability |
755 |
741 |
754 |
|
EPRA Net Tangible Assets |
305,797 |
328,709 |
315,156 |
|
Number of Ordinary Shares in issue |
162,088,483 |
162,088,483 |
162,088,483 |
|
Net asset value per Share - basic and diluted |
190.7p |
207.2p |
197.0p |
|
EPRA Net Tangible Assets per Share - basic and diluted |
188.7p |
202.8p |
194.4p |
18. Segmental information
After a review of the information provided for management purposes, it was determined that the Group had one operating segment and therefore segmental information is not disclosed in these condensed consolidated financial statements.
19. Transactions with related parties
The Company's related party transactions are disclosed in its 2025 Annual Report. There has been no material changes in the related party transactions described in the last annual report.
20. Subsequent Events
There are no subsequent events to report.
COMPANY INFORMATION
Directors
David Hunter (Chairman and Independent Non-Executive Director)
Massy Larizadeh (Senior Independent Director, Chair of the Management Engagement & Remuneration Committee and Nomination Committee)
Nicole Burstow (Non-Executive Director)
Frances Daley (Independent Non-Executive Director, Chair of the Audit Committee)
Stephen Inglis (Non-Executive Director)
Sarah Whitney (Independent Non-Executive Director)
|
Registered Office Regional REIT Limited Mont Crevelt House Bulwer Avenue St. Sampson Guernsey GY2 4LH |
Legal Adviser to the Company Macfarlanes LLP 20 Cursitor Street London EC4A 1LT |
Depositary Ocorian Depositary (UK) Limited 20 Fenchurch Street London EC3M 3BY |
|
|
|
|
|
Company Secretary MUFG Corporate Governance Ltd 51 Lime Street London EC3M 7DQ |
Administrator Orbitus Fund Services (Guernsey) Limited Mont Crevelt House Bulwer Avenue, St. Sampson Guernsey, GY2 4LH |
Public Relations FTI Consulting 200 Aldersgate Aldersgate Street, London EC1A 4HD |
|
|
|
|
|
Investment Adviser ESR Europe LSPIM Limited 300 Bath Street Glasgow G2 4JR |
Sub-Administrator Waystone Administration Solutions (UK) Limited Broadwalk House Southernhay West Exeter, EX1 1TS |
Property Valuer Colliers International Property Consultants Limited 95 Wigmore Street London W1U 1FF |
|
|
|
|
|
AIFM ESR Europe Investment Management Limited Ferguson House 15 Marylebone Road London NW1 5JD |
Registrar MUFG Corporate Markets (Guernsey) Limited Mont Crevelt House Bulwer Avenue, St Sampson Guernsey, GY2 4LH |
Tax Adviser KPMG LLP 319 St Vincent Street Glasgow G2 5AS |
|
|
|
|
|
Financial Adviser and Joint Broker Peel Hunt LLP 7th Floor 100 Liverpool Street London EC2M 2AT |
Financial Adviser and Joint Broker Shore Capital Cassini House 57 St James's Street London, SW1A 1LD |
Independent Auditor RSM UK Audit LLP 4th Floor, G1 5 George Square Glasgow G2 1DY |
Company website: www.regionalreit.com |
|
SHAREHOLDER INFORMATION
Share register enquiries: MUFG Corporate Markets Limited
Please phone: 0371 664 0300 for any questions about:
• changing your address or other details
• your Shares
• buying and selling Shares.
Calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. The Registrar is open between 9.00 and - 17.30, Monday to Friday excluding public holidays in England and Wales. For Shareholder enquiries please email shareholderenquiries@cm.mpms.mufg.com.
Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of this announcement.
National Storage Mechanism
A copy of the Half-Year Report will be submitted shortly to the National Storage Mechanism ("NSM") and will be available for inspection at the NSM, which is situated at:
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
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