Annual Financial Report 2025 Full Year Results
Summary by AI BETAClose X
24 March 2026
Regional REIT Limited
("Regional REIT", the "Group" or the "Company")
2025 Full Year Results
Resilient operational performance in challenging market in 2025
Positioning the business for the future in 2026
Regional REIT (LSE: RGL), the regional commercial property specialist, today announces its full year results for the 12 months to 31 December 2025.
Stephen Inglis, Head of ESR Europe LSPIM, Investment Adviser, said:
"Regional REIT delivered good progress last year against its main targets despite continued challenging market conditions. We strengthened the balance sheet with a successful multi-bank refinancing of £72.4m of debt, completed £51.6m of disposals at 1.3% above book value and reduced the LTV to 40.4% at the end of the year. In addition, in a testing letting market the company secured 64 new market lettings at 3.9% above 2024 ERV. We are focussed on continuing this progress in 2026.
However, against a prolonged downturn in the property cycle and with the war in the Middle East adding to geopolitical and economic uncertainty, the leasing market remains subdued, with some tenants taking longer to make decisions, and often choosing not to move at all. While this backdrop continues to temper near‑term activity, emerging supply constraints for quality, energy‑efficient space across key UK regional markets provide a supportive medium‑term outlook.
In this context, the Board feels it is right to act with increased prudence, targeting* an 8p dividend per share for 2026; distributing a minimum 90% of the profit from the property rental business going forward in alignment to the REIT regulation. This will give the Company additional flexibility as we continue our accretive and essential capital expenditure programme to improve our assets and benefit from increasing occupier demand for quality space.
Along with our key objectives to maximise leasing activity and reduce void costs, we remain focused on strengthening the balance sheet further. We are aiming to achieve disposals at a similar level in 2026 as they were in 2025, while progressing targeted asset repositioning to drive long‑term value.
The investment case for regional offices remains clear. There is an increasing supply and demand imbalance for quality office space in the regions, and a looming shortage of Grade A accommodation conforming to EPC A and B. These structural trends, supported by limited new construction in recent years, will ultimately drive higher occupancy in the Regional REIT portfolio and at higher rents, which will underpin improved valuations over the medium term."
*The dividend target stated in this announcement is a target only and not a profit forecast. There can be no assurance that this target will be met, or that the Company will make any distributions at all and it should not be taken as an indication of the Company's expected future results.
Portfolio valuation
· Portfolio valuation £555.2m (2024: £622.5m) - driven in part by the sales programme
· Like-for-like portfolio valuation decreased by 5.0% year-on-year, (3.0% decline excluding capital expenditure adjustment, with the benefits yet to be captured in the valuation); reflecting a decline of 2.9% in the second half
· EPRA NTA £315.2m (2024: £340.8m)
Resilient operational performance supporting fully covered dividend
· EPRA EPS 11.8p (2024: 19.2p)
· Dividend declared of 10p (2024:7.8p); fully covered
· Plan to distribute a minimum 90% of the profit from the property rental business going forward; targeting a dividend of 8 pence per share dividend for 2026
Continued focus on strengthening the balance sheet
· Disposals at £51.6m (before costs) (2024: £30.8m)
· 2026 targeting a similar quantum of disposals to 2025, with c. £41m either completed, contracted, under offer, or in negotiation to date
· Net LTV 40.4% (2024: 41.8%)
· Gross borrowings down to £266.2m (2024: 316.7m)
· Cash and cash equivalents £37.7m (2024: £56.7m)
· Successfully refinanced £72.4m debt facility on competitive terms
Strong leasing performance
· Completed 64 new market lettings totalling £3.2m of rent at 3.9% above 2024 ERV
· EPRA occupancy 75.9% by ERV (2024:77.5%)
· Net rental income £40.3m (2024: £46.0m)
· Rent collection strong at 99.3% (2024: 98.6%)
Executing capital expenditure programme to improve EPC ratings and drive value
84.5% of our portfolio has now attained EPC ratings C plus or better (2024: 82.7%), while EPC B plus and exempt continued to rise to 60.0% (2024: 57.7%).
Portfolio strategy update
Regional REIT continued to make progress in executing its portfolio strategy in 2025, advancing sales while investing capex to build the core category and selectively maximising opportunities to enhance the value of non-core sites ahead of disposal. As this strategy develops, and as the remaining portfolio strengthens, these disposals will improve the business's overall occupancy figures.
The Group completed 18 capital expenditure projects in 2025 at a total cost of £10.1m. These projects span commencement dates in 2024 and 2025. A further 10 projects are currently on site with an estimated cost of £3.9m, and 13 additional projects have been identified for the next stage at a projected cost of c. £9.4m.
Portfolio segmentation as at 31 December 2025:
|
Segment |
£m |
Portfolio (%) |
EPRA Occupancy (%) |
|
Core |
349.0 |
62.9% |
86.5% |
|
Capex to Core |
103.4 |
18.6% |
66.4% |
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Value Add |
55.8 |
10.0% |
46.1% |
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Sales |
47.0 |
8.5% |
54.8% |
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
Sales - assets targeted for disposal programme
Outlook
There remains a structural supply and demand imbalance in the regional office market. This is driven by prohibitively high construction costs with the lowest new UK office construction starts for at least 15 years** and the clear need for high quality, well located, and energy efficient space outside of London.
However, market conditions are expected to remain challenging in the near term, with the broader macroeconomic uncertainty leading to a more cautious letting market, and the business is likely to face increased costs as a result of the conflict in the Middle East, the long-term impact of which remains unclear. In addition, as announced last year, we experienced some significant tenant breaks in 2025, the full effects of which will be reflected in our financial metrics in 2026.
Even so, Regional REIT's leasing activity in 2025 combined with the successful execution of our ongoing disposal programme demonstrates our ability to deliver upon the strategy for shareholders. With occupiers prioritising high quality, well located and energy efficient workspace, on the back of the business's capital expenditure programme, it is well positioned to benefit when market conditions stabilise.
We hope for a swift end to hostilities in the Middle East and a normalisation of oil prices, allowing interest rates to resume their downward trend and economic confidence to resume.
**CoStar, 2026 Regional Office Outlook, Q1 2026
Post period end
Disposals
Since 31 December 2025, the Company has completed 5 disposals and three part sales for an aggregate total of £12.3m (before costs).
Borrowings
Following the post period end disposals, Group borrowings have been further reduced by £7.8m to £258.4m.
Lettings
A further 7 notable new lettings and renewals achieved post period end for 44,693 sq.ft. amounting to £0.7m, reflecting 17.0% above ERV.
· The Royals, Altrincham Road, Manchester - Existing tenant Threesixty Services LLP has renewed existing lease of 8,117 sq. ft. of space at a rental income of £125,850 (£15.50/ sq. ft.). The lease is to June 2030.
· Woodlands Court, Bristol - Hill Partnerships Ltd. has let 3,584 sq. ft. of office space to January 2036, with an option to break in 2031, at a rental income of £73,930 pa (£20.63/ sq. ft.).
· Century Park, Altrincham - Existing tenant Odema Ltd. has renewed existing lease of 2,618 sq. ft. of space at a rental income of £37,500 (£14.33/ sq. ft.). The lease is to September 2030.
· 300 Bath Street, Glasgow - Securigroup Ltd. has let 9,618 sq. ft. of space to November 2035 with a break option in 2031, at a rental income of £246,023 (£25.58/ sq. ft.).
o Additionally, the tenant let a further 2,945 sq. ft. of space to December 2030 with a break option in 2028, at a rental income of £42,702 (£14.50/ sq. ft.).
· Mochdre Commerce Park, Colwyn Bay - A Nelson & Co Ltd. has renewed existing lease of 12,971 sq. ft. of space to November 2026 with an option to break in April 2026, at a rental income of £58,370 pa (£4.50/ sq. ft.).
· 1 Burgage Square, Merchant Square, Wakefield - Ikaro Group Ltd. has renewed existing lease of 4,840 sq. ft. of space to October 2032 at a rental income of £72,600 pa (£15.00/ sq. ft.).
Forthcoming Events
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19 May 2026 |
Q1 2026 Trading update |
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Q1 2026 Dividend declaration |
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AGM
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8 September 2026 |
2026 Interim Results |
- ENDS -
Enquiries:
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Regional REIT Limited |
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Press enquiries through FTI Consulting |
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ESR Europe Europe LSPIM Ltd. |
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Investment Adviser to the Group |
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Adam Dickinson, Investor Relations, Regional REIT Ltd. |
Tel: +44 (0) 203 831 9776 |
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Stephen Inglis, Head 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 wholly of income producing UK assets, predominantly offices located in the regional centres outside of the M25 motorway. The portfolio is geographically diversified, with 112 properties, 1,146 units and 659 tenants as at 31 December 2025, with a valuation of c.£555.2m.
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: 549300D8G4NKLRIKBX
FINANCIAL KEY POINTS
Year Ended 31 December 2025
Income focused - opportunistic buying and strategic selling, coupled with intensive asset management, continues to secure long-term income.
|
Portfolio Valuation |
£555.2m (2024: £622.5m) |
|
IFRS NAV per Share |
197.0p (2024: 216.9p) |
|
EPRA** NTA per Share |
194.4p (2024: 210.2p) |
|
Dividend per share |
10.0p (2024: 7.8p)* |
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Net Loan to Value Ratio*** |
40.4% (2024: 41.8%) |
|
Weighted Average Cost of Debt*** |
3.3% (2024: 3.4%) |
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Weighted Average Debt Duration*** |
2.6 yrs (2024: 2.9 yrs) |
* During 2024 the Company offered 15 new Ordinary Shares for every 7 existing Ordinary Shares. This resulted in an increase of 1,105,149,821 Ordinary Shares being issued. Subsequently there was a 10 for 1 split with the resulting Ordinary Shares in issue being 162,088,483. See note 28 for details of the restatement.
** The European Public Real Estate Association ("EPRA"). 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 provided in the full Annual Report.
*** Alternative Performance Measures. Details are provided in the Glossary of Terms and the EPRA Performance Measures in the full Annual Report.
Operational KEY POINTS
Year Ended 31 December 2025
Income focused with intensive asset management.
|
Properties |
112 (2024: 126) |
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Units |
1,146 (2024: 1,271) |
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Tenants |
659 (2024:780) |
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Rent Roll |
£50.4m (2024: £60.7m) |
|
Portfolio by region and sector (by value) |
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England & Wales |
83.4% (2024: 83.4%) |
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Office |
90.3% (2024: 90.7%) |
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Property disposal proceeds (net of costs) |
£48.4m (2024: £28.6m) |
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Number of properties |
14 assets and 4 part sales |
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EPRA Occupancy by ERV* |
75.9% (2024: 77.5%) |
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WAULT to expiry |
4.5 yrs (2024: 4.6 yrs) |
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WAULT to first break by ERV* |
2.7 yrs (2024: 2.9yrs) |
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Net rental & Property income |
£40.3m (2024: £46.0m) |
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Average rent* (per sq ft) |
£14.20 (2024: £13.92) |
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Average property value |
£5.0m (2024: £4.9m) |
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Reversionary yield |
12% (2024: 11.6%) |
* Alternative Performance Measures. Details are provided in the Glossary of Terms and the EPRA Performance Measures in the full Annual Report.
PERFORMANCE KEY POINTS
Year ended 31 December 2025
A key focus on delivering high dividend distributions to shareholders.
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Dividends declared per Share |
Pence per share |
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2025* |
10.0 |
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2024* |
7.80 |
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2023 |
5.25 |
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2022 |
6.60 |
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2021 |
6.50 |
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2020 |
6.40 |
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2019 |
8.25 |
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2018 |
8.05 |
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2017 |
7.85 |
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2016 |
7.65 |
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2015 |
1.00 |
* During 2024 the Company offered 15 new Ordinary Shares for every 7 existing Ordinary Shares. This resulted in an increase of 1,105,149,821 Ordinary Shares being issued with effect from 19 July 2024. Subsequently there was a 10 for 1 consolidation which took effect on the 29 July 2024, with the resulting Ordinary Shares in issue being 162,088,483.
Member of FTSE All-Share Index since March 2016.
Member of FTSE EPRA NAREIT UK Index since June 2016.
Chairman's Statement
"Key achievements include delivering significant disposals to reduce debt, securing refinancing on attractive terms, further aligning the Investment Adviser's remuneration with shareholder returns, and continuing to improve the portfolio's EPC ratings."
David Hunter, Chairman
In my first year as Chairman of Regional REIT the Company has made meaningful progress against its strategy. Key achievements include delivering significant disposals to reduce debt, securing refinancing on attractive terms, further aligning the Investment Adviser's remuneration with shareholder returns, and continuing to improve the portfolio's EPC ratings. However, market conditions have delayed a recovery in values and in leasing, suppressing earnings, and we have also had to contend with several significant tenant lease breaks, which have created income shortfalls and unwelcome void costs. It was, however, encouraging to see yields stabilise during the year.
Overview
2025 marked a year of meaningful strategic delivery for the Company, albeit there remains much work to do. We completed £51.6m (before costs) of disposals, ahead of target, which supported a reduction in LTV to 40.4% by year end. The year also saw the early refinancing of a £72.4m debt facility previously due to mature in August 2026, and the restructuring of the management contract. The latter takes effect from 1 January 2026 and when in full force will generate c.£0.9m of annual fee savings and strengthen shareholder alignment. Alongside this, the continued focus on improving the sustainability profile of the portfolio resulted in 84.5% of assets achieving EPC C or better, with 60.0% now rated EPC B or above.
The repositioning of the portfolio across the four segments - Core, Capex to Core, Value Add, and Sales - progressed well during the year. While the leasing market remained subdued and void costs weighed on income, there was sustained focus on accelerating the ongoing sales programme. Enquiry levels for our high quality, energy efficient space demonstrated the continued appeal of well
located regional offices. Disciplined capital expenditure continued to underpin improved letting prospects and supported the long-term performance of Core assets, while disposals continued to streamline the portfolio.
The focus for 2026 is to continue to invest capital to improve the quality and letting prospects of key properties, reducing void costs and at the same time to continue to sell under performing and non-core assets. However, we naturally watch with concern the war in the Middle East and its impact on interest rates, inflation and growth, all of which inevitably affect real estate markets.
Financial Resources
The Company's EPRA NTA decreased to £315.2m (IFRS NAV: £319.3m) as at 31 December 2025, representing a decrease of £25.6m from £340.8m (IFRS NAV: £351.6m) as at 31 December 2024. This decrease was largely a reflection of previous changes in income following tenant breaks. A strong cash balance of £37.7m was retained as of 31 December 2025 (2024: £56.7m), of which £37.7m was
unrestricted (2024: £55.9m).
The Company's debt position, which is comprised entirely of fixed and hedged interest rate debt, helped the Company mitigate rate volatility. Though the weighted average cost of debt reduced to 3.3% at the end of 2025 (2024: 3.4%), the refinancing announced on the 24 December will increase it. The Net Loan-to-Value (LTV) decreased to 40.4% as of 31 December 2025 (2024: 41.8%).
The Company continues to execute its controlled disposal programme, which during the period consisted of 14 assets and 4-part sales of assets, amounting to £51.6m, before costs. The Company will be targeting at least the same quantum of disposals in 2026.
Sustainability
I am again pleased to report the significant progress achieved by the ESG Working Party in 2025, with the Company's Global Real Estate Sustainability Benchmark (GRESB) improving to 76 from 73, with a two Green Star status. Additionally, we continued to achieve advancements in our EPC ratings and EPRA sustainability accreditation.
84.5% of our portfolio has now attained EPC ratings C plus or better (compared with 82.7% on 31 December 2024), while EPC B plus and exempt continued to rise to 60.0% (compared with 57.7% on 31 December 2024). This progress moves us nearer to meeting the Minimum Energy Efficiency Standard ('MEES') target of EPC B, well ahead of the stated 2030 target. Importantly, with limited office supply in the regions, providing high quality, energy efficient space can be a key differentiator for Regional REIT, driving improved occupancy and rental growth.
Market Environment
In 2025, although the UK regional office market began to stabilise after three years of decline, with total investment rising 1.2% year-on-year to £3.1 billion, according to Lambert Smith Hampton (LSH)1, the year was marked by a slow start. The first three quarters were below the five-year quarterly average, but ended strongly in Q4 when investment surged to £1.5 billion-nearly three times Q3 levels and 65% higher than Q4 2024. Growth was driven primarily by non-London South East offices, which jumped from £0.1 billion in Q3 to £1.2 billion in Q4, while the rest of the UK contributed steadily at £0.3 billion. Smaller office parks also showed a moderate rebound in the mid-year quarters. Although total investment remains below the five-year average, these trends indicate growing investor confidence in the long-term prospects of regional offices. Cautious optimism is supported by strong demand for modern, flexible office space, limited prime stock in key regional cities, and supportive local economic conditions. Workforce trends continue to influence demand, with 44% of UK employees commuting exclusively to work, 28% working on a hybrid basis, 13% working fully from home, and the remaining 15% operating with no fixed place of work or other arrangements in 20252.Regional office values are adjusting, with genuine yield compression expected, particularly for prime assets completing through 2026. Secondary yields appear to have bottomed at around 13%, reflecting opportunities at cyclical lows amid constrained supply3. Transaction volumes are projected to continue to recover in 2026, driven by quality and sustainability-focused deals, while the Royal Institution of Chartered Surveyors suggests the market may be at its cyclical low or entering the early stages of a recovery4.
1 Lambert Smith Hampton (January 2026) UK Investment Transactions: Q4 2025
2 ONS: Opinions and Lifestyle Survey from the Office for National Statistics, 2025
3 Lambert Smith Hampton (January 2026) UK Investment Transactions: Q4 2025
4 RICS (March 2025) RICS survey calls the bottom of the UK commercial real estate market as yields
harden across all sectors, Royal Institution of Chartered Surveyors.
Dividends
The dividend remains a significant component of total shareholder returns. During the period under review, the Company declared total dividends of 10.0pps (2024: 7.80pps*). In line with our policy, the Company has paid a fully covered dividend for 2025, having also paid a covered dividend for 2024. Since inception, the Company has declared dividends amounting to 75.35pps and has distributed approximately £267.6m in dividends to shareholders.
Going forward, the Company will distribute a minimum 90% of the profit from the property rental business, which is in accordance with regulatory requirements, targeting** a fully covered 8 pence per share dividend for 2026 but will retain earnings where possible to support the Company's 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 to benefit from rental and capital uplift and remains confident in the Company's strategy and medium‑term outlook.
* During 2024 the Company offered 15 new Ordinary Shares for every 7 existing Ordinary Shares. This resulted in an increase of 1,105,149,821 Ordinary Shares being issued. Subsequently there was a 10 for 1 consolidation with the resulting Ordinary Shares in issue being 162,088,483.
** The dividend target stated in this announcement is a target only and not a profit forecast. There can be no assurance that this target will be met, or that the Company will make any distributions at all and it should not be taken as an indication of the Company's expected future results.
Performance
The Company's total shareholder return for 2025 was +1.1%, versus the return of +11.1% for the FTSE EPRA NAREIT UK Total return Index over the same period. The annualised EPRA Total Return was +0.4% p.a. (2024: +0.6% p.a.).
Board Changes
As noted in last year's annual report, I was appointed to the Board with effect from 2 January 2025, replacing Kevin McGrath as the chairman in March 2025 after the completion of a handover period.
As announced on 21 July 2025, Sarah Whitney was appointed as an Independent Non-Executive Director to the Board on 4 August 2025, and has subsequently been appointed to the Audit, Nomination and Management Engagement and Remuneration Committees. Sarah brings a breadth of relevant experience as a Chartered Accountant following over 35 years advising companies on strategy, corporate finance, real estate and economic development matters.
Annual General Meeting
The notice for the 2026 AGM will be published on our website and circulated to Shareholders in line with the Company's Articles of Incorporation. In accordance with the Company's Articles of Incorporation and the AIC Code, all Directors will stand for re-election at the AGM and Sarah Whitney will stand for election. Directors maintain their professional development through regular briefings from the Company Secretary and the Company's other advisers. As well as being committed to orderly succession planning, the Board will enhance its skills base as necessary. The Board looks forward to engaging with Shareholders at the AGM.
Shareholder and Stakeholder Engagement
The satisfaction of tenants is fundamental to our ongoing success. We are committed to providing high-quality workspaces that accommodate diverse business needs, from small, flexible offices to expansive corporate headquarters. Proactive engagement with tenants forms an integral component of our asset management approach, enabling us to better understand their requirements, address challenges, and enhance their working environments, particularly in an era where hybrid working has created a need for more generous working spaces with ancillary facilities.
We are also committed to open and transparent communication with Shareholders to ensure that the Company's strategy is understood. The Company also supports shareholder participation; additional information can be accessed at www.regionalreit.com and within this Annual Report.
Outlook
The supply and demand dynamics for well-located, high-quality office space continue to support rental performance, enabling reversionary income capture through targeted investment. Although office conditions remain challenging, adjusted pricing and selective disposals demonstrate our ability to crystallise value, alongside initiatives to raise occupancy and reduce vacancy related costs. With occupiers prioritising efficient, sustainable and engaging workplaces, the Company is positioned to benefit from stabilising market conditions using prudent leverage as confidence strengthens across the commercial property sector.
We hope for a swift end to hostilities in the Middle East and a normalisation of oil prices, allowing interest rates to resume their downward trend and economic confidence to resume.
David Hunter
Chairman
23 March 2026
INVESTMENT ADVISER'S REPORT
Stephen Inglis
Head of ESR Europe LSPIM Ltd
Investment Adviser
Overview
The UK commercial property market remained challenging through 2025, particularly across regional office markets, where subdued leasing activity and broader economic uncertainty continued to influence sentiment. Nevertheless, stabilising yields, a tightening supply of high-quality regional workspace and increased occupier focus on efficient, sustainable buildings provided early signs of improving fundamentals. In this environment, Regional REIT's portfolio valuation concluded the year at £555.2m, representing a like-for-like decline of 5.0%, primarily reflecting income changes from a small number of tenant lease breaks. Encouragingly, yields remained stable throughout the second half of the year.
A disciplined and proactive disposals programme underpinned much of the strategic progress delivered during 2025. Total disposals reached £51.6m (before costs), ahead of the targeted disposal amount of £50.0m for 2025. These sales contributed directly to strengthening the balance sheet, reducing loan-to-value to 40.4% by year-end. In December, the Company also completed the refinancing of £72.4m of debt originally due to mature in August 2026, thereby mitigating near-term refinancing risk and improving funding clarity.
Operational performance remained resilient despite market headwinds. During the year, the business completed 64 new market lettings totalling £3.2m of rent at 3.9% above 2024 ERV, demonstrating continued demand for well-presented and well-located space. Rent collection remained extremely strong at 99.3%, supporting income stability. EPRA occupancy stood at 75.9%, a modest year-on-year reduction in line with expectations following lease breaks and disposal activity. Capital expenditure increased to £11.8m, reinforcing the Company's commitment to improving sustainability, energy performance and overall tenant appeal. This programme contributed to further improvement in EPC ratings across the portfolio.
As the business looks ahead to 2026, the priority will be disciplined capital allocation and continued portfolio repositioning to enhance letting prospects and reduce void costs. Retaining earnings where appropriate will allow the Company to fund essential investment in the assets most capable of delivering long-term value. This approach reflects the impact of previous lease breaks, the subdued
leasing environment and the need to maintain financial flexibility in the face of evolving debt costs. Supported by a strengthened balance sheet, stabilising market conditions and a clear strategic focus, Regional REIT enters the new year with determination and confidence in its ability to deliver sustained operational progress and long-term value creation for shareholders.
KEY POINTS FROM 2025
High Level of Rent Collection
Achieved a high level of rent collection. As at 13 March 2026, rent collection remains robust, with FY 2025 at 99.3%, adjusting for monthly rent and agreed collections plans, which is similar to the equivalent date in 2025 when 98.6% had been collected.
Increase in Average Rent
Average rent by let sq. ft. increased by 2.0% from £13.92 per sq. ft. in December 2024 to £14.20 per
sq. ft. in December 2025.
New Lettings - Greater than ERV
During 2025, 64 new market lettings were completed totalling £3.2m rent roll, with these lettings being 3.9% above 2024 ERV.
Increase in GRESB Score
The Company submitted its Fourth Global Real Estate Sustainability Benchmark ("GRESB") assessment resulting in an increased score of 76 from 73.
Disposals Programme
Disposals at £51.6m (before costs), (2024: £30.8m).
Debt Refinance and Cost Savings
Early refinancing of a £72.4m debt facility previously due to mature in August 2026, and the restructuring of the management contract. The latter takes effect from 1 January 2026 and when in full force will generate c.£0.9m of annual fee savings and strengthen shareholder alignment.
Investment Activity in the UK Commercial Property Market
In 2025, the UK economy exhibited modest growth but the macro-economic backdrop was mixed. Real GDP expanded by around 1.3% over the year, up from 1.1% in 2024. Inflation remained above the Bank of England's 2.0% target, averaging around 3.4%, driven in part by rising energy and core services prices. Labour market conditions softened, with unemployment rising to 5.2%, while job vacancies remained subdued, indicating increased slack. Overall, 2025 was characterised by subdued GDP expansion, persistent inflation above target, and a softening labour market, creating a difficult backdrop for policymakers and markets.
In 2025, the UK regional office market showed signs of stabilisation with data from Lambert Smith Hampton (LSH) indicating that total investment edged up 1.2 % year-on-year to £3.1 billion, ending a three-year period of decline. Investment volumes highlight an improving year-end performance, with Q4 driving a strong and positive finish reaching £1.5 billion, nearly three times the Q3 2025 level and 65.1% higher than the same quarter in 2024. The rest of South East Offices led this increase, rising sharply from £0.5 billion in Q3 to £1.2 billion in the final quarter of the year. Investment volumes in the rest of the UK were more modest, at £0.5 billion in Q4 2025, but remained consistent with previous quarters, providing a stable contribution to the total performance. Office parks, while smaller in scale, contributed steadily throughout the year and showed a moderate rebound in the middle quarters, adding positively to Q4 2025 results. The first three quarters of 2025 remained below the five-year quarterly average, reflecting a slow start. Overall, 2025 reflects a slow start followed by a strong, yet concentrated, year-end finish1. Although investment remains below the five-year average, recent trends suggest growing confidence among investors in the long-term prospects of regional office.
There are several reasons for cautious optimism: strong demand for modern, flexible office space, limited prime stock in key regional cities, and supportive local economic drivers. While macroeconomic risks persist, these factors indicate the market may be positioned for a gradual upturn. The broader UK office market is evolving, and although each subsector faces its own headwinds, businesses continue to require quality office space. Furthermore, the Office for National Statistics ("ONS") data2 shows that in 2025, 44% of workers in the UK on average travelled exclusively to work, while only 13% worked from home fulltime, a drop from 25% in 2021. Additionally, approximately 28% of the UK workforce were hybrid working in 2025. A recent survey by Savills highlights that more than 90% of HR professionals believe that real estate is an important driver in attracting and retaining talent3.
Regional office values are adjusting, and genuine yield compression is expected, particularly for prime transactions completing through 2026. Following significant price corrections, investors can now access opportunities at cyclical lows amid constrained supply. Transaction volumes are projected to recover through 2026, driven by deals that prioritise quality and sustainability. Meanwhile, after a sustained period of outward yield shift, notional secondary regional yields appear to have bottomed out in Q4 at around 13%, according to Lambert Smith Hampton4.
1 JLL (December 2025): The shifting landscape of UK offices
2 ONS: Opinions and Lifestyle Survey from the Office for National Statistics, 2025
3 Savills & Personnel Today, 2025
4 Lambert Smith Hampton (January 2026) UK Investment Transactions: Q4 2025
Occupational Demand in the UK Regional Office Market
Avison Young estimates that take-up of office space across nine regional office markets5 totalled 7.6 million sq. ft. in 2025, 7.2% below the level of take-up recorded in 2024 and 3.6% lower than the 5-year average. The annual fall in take-up can be attributed to decreased demand for city centre offices with take-up 13.8% lower in 2025. Conversely, out-of-town take-up increased by 3.8% year-on-year from 2.8 million sq. ft. to 2.9 million sq. ft., helping to sustain overall activity. Looking at quarterly performance, 2025 began strongly at 2.1 million sq. ft. let during Q1, up 11.7% on the same quarter in 2024, with both city centre and out-of-town offices outperforming. However, demand was subdued in Q2 and Q3 2025 relative to 2024 figures. Encouragingly, momentum strengthened again in Q4 2025, with take-up reaching 2.1 million sq. ft., broadly in line with the 2.2 million sq. ft. recorded in Q4 2024.
Occupational demand was driven by the professional sector, which accounted for the highest proportion of take-up at 25.6% in 2025. Following the professional sector, the media & telecoms sector and the public services, education & health sector and technology accounted for the second and third largest proportion of take-up in the regional cities, accounting for 15.8% and 14.3% respectively. Research from Savills shows that the professional sector and the media & telecoms sector were also the most active sectors over the last five years6.
According to data from CoStar7, there was an increase in availability for all regional office stock with total supply rising by 1.5% in 2025 to 82.2 million sq. ft. However, research from the British Property Federation shows that 81% of commercial buildings in major English cities are rated below EPC B, meaning a large share of the stock is at risk of obsolescence. While commercial building owners are making gradual year-on-year improvements, ongoing policy uncertainty means that around 2.0 billion sq. ft. of commercial real estate in major cities remains below EPC B8. This raises questions over how much of the reported availability is genuinely lettable, with substantial sections of regional markets constrained by ageing, non-compliant buildings and limited options for occupiers.
Supply constraints are becoming increasingly pronounced at the prime end of the market. Although overall Grade A availability remains elevated in historic terms, a clear distinction has emerged between 'conventional' Grade A space and a much more limited pool of new-generation prime buildings. Demand, driven by occupiers' flight to quality and stricter energy performance requirements, is increasingly concentrated on this segment.
As a result, prime space remains relatively scarce, accounting for just 5% of total availability-down from 9% two years ago-highlighting its limited presence in the market, according to research from LSH9.
The research from CoStar indicates that 2025 recorded the lowest level of construction starts in more than 15 years, totalling just 4.9 million sq. ft. across ten regional markets. In terms of future development, it is estimated that approximately 2.5 million sq. ft. of office space is currently under construction in the Big Nine regional markets. Avison Young expects refurbishment activity to continue to play a key role in offsetting the shortfall caused by subdued newbuild starts. This is reflected in the delivery pipeline, where refurbishments account for 53% of schemes scheduled for completion in 2026, up from 41% in 2025 and 33% in 2024.
According to monthly data from MSCI, rental value growth held up well for the rest of UK office markets in the 12 months ended December 2025 with growth of 3.2%10. Conversely, central London offices experienced slightly more modest growth of 2.9% over the same period. Avison Young expects rental growth to continue across most markets during 202611. Demand for quality office space has put an upward pressure on rents, with growth of 4.8% recorded across the Big Nine regional markets in 2025. According to research from Avison Young, average headline rents are now
approximately £40.72 per sq. ft.
The Investment Adviser views current supply-demand dynamics as creating a strong opportunity for repositioning secondary offices. The limited availability of prime space, combined with a persistent shortfall in speculative development, creates scope to upgrade fundamentally sound, modern office buildings to prime specification and capture stronger rental performance.
Moreover, occupier demand for secondary regional offices may strengthen as businesses face intensifying cost pressures, particularly in the wake of the UK Government's latest Business Rates revaluation, effective from April 2026. The revaluation, undertaken by the Valuation Office Agency, reassesses rateable values based on more recent rental evidence, and in many prime city-centre markets this is expected to translate into higher business rates liabilities. With standard multipliers applying to office properties, and no targeted relief comparable to that available to parts of the retail and hospitality sectors, occupiers of prime space are likely to face a marked increase in overall occupational costs, compounding existing rental and operating expenses. As a result, cost-sensitive businesses may be compelled to re-evaluate their space requirements and increasingly consider more affordable secondary regional locations, where lower rents and comparatively modest rateable values offer better value and greater flexibility within constrained operating budgets.
5 Nine regional office markets mentioned by Avison Young include: Birmingham, Bristol, Cardiff,
Edinburgh, Glasgow, Leeds, Liverpool, Manchester & Newcastle
6 Savills: The Regional Office Market Overview, Q4 2025
7 CoStar, Regional Office Outlook, Q1 2026. 10 regional cities include: Birmingham, Bristol, Cardiff, Edinburgh, Glasgow, Leeds, Liverpool, Manchester, Newcastle, Nottingham
8 British Property Federation, February 2026
9LSH, Regional office report, Q3 2025
10MSCI (February 2025), MSCI Portfolio Analysis Service
11Avison Young, Big Nine Q4 2023, February 2024
Regional REIT's Office Assets
EPRA occupancy of the Group's regional offices of 74.2% as at 31 December 2025 (2024: 76.4%). A like-for-like comparison of the Group's regional offices' EPRA occupancy, as at 31 December 2025 versus 31 December 2024, shows occupancy of 74.4% (2024: 76.1%). WAULT to first break was 2.6 years (2024: 2.7 years); like-for-like WAULT to first break of 2.6 years (2024: 2.6 years).
Property Portfolio
As at 31 December 2025, the Group's property portfolio was valued at £555.2 million (2024: £622.5 million), with rent roll of £50.4 million (2024: £60.7 million), and an EPRA occupancy of 75.9% (2024: 77.5%).
On a like-for-like basis, 31 December 2025 versus 31 December 2024, EPRA occupancy was 76.0% (2024: 77.3%).
There were 112 properties (2024: 126) in the portfolio, with 1,146 units (2024: 1,271) and 659 tenants (2024: 780). If the portfolio was fully occupied at Cushman & Wakefield's view of market rents, the rental income would be £77.0 million per annum as at 31 December 2025 (2024: £83.2 million).
As at 31 December 2025, the net initial yield on the portfolio was 5.3% (2024: 5.9%), the equivalent yield was 10.5% (2024: 10.4%) and the reversionary yield was 12.0% (2024: 11.6%).
Property Portfolio by Sector
|
Sector |
Properties |
Valuation (£m) |
% by valuation |
Sq. ft. (m) |
Occupancy (EPRA) (%) |
WAULT to first break (yrs) |
Gross rental income (£m) |
Average rent (£psf) |
ERV (£m) |
Capital rate (£psf) |
Net Initial Yield (%) |
Equivalent yield (%) |
Reversionary yield (%) |
|
Office |
98 |
501.6 |
90.3 |
4.6 |
74.2 |
2.6 |
45.5 |
15.60 |
72 |
108.58 |
5.1 |
10.7 |
12.3 |
|
Retail |
9 |
20.3 |
3.7 |
0.2 |
95.5 |
3.5 |
1.9 |
10.16 |
2.1 |
97.69 |
7.2 |
8.8 |
9.2 |
|
Industrial |
4 |
23.8 |
4.3 |
0.4 |
97.1 |
2.8 |
1.9 |
5.45 |
2.1 |
56.81 |
6.3 |
7.8 |
8.2 |
|
Other |
1 |
9.6 |
1.7 |
0.1 |
100.0 |
10.1 |
1.0 |
11.97 |
0.8 |
113.99 |
10.6 |
9.6 |
7.6 |
|
Total |
112 |
555.2 |
100.0 |
5.3 |
75.9 |
2.7 |
50.4 |
14.20 |
77.0 |
104.17 |
5.3 |
10.5 |
12.0 |
Property Portfolio by Region
|
Region |
Properties |
Valuation (£m) |
% by valuation |
Sq. ft. (m) |
Occupancy (EPRA) (%) |
WAULT to first break (yrs) |
Gross rental income (£m) |
Average rent (£psf) |
ERV (£m) |
Capital rate (£psf) |
Net Initial Yield (%) |
Equivalent yield (%) |
Reversionary yield (%) |
|
Scotland |
24 |
92.2 |
16.6 |
1.0 |
79.8 |
3.5 |
8.9 |
13.82 |
15.1 |
90.29 |
4.1 |
11.1 |
12.8 |
|
Southeast |
18 |
88.1 |
15.9 |
0.7 |
71.2 |
2.1 |
7.9 |
17.68 |
11.8 |
125.44 |
6.5 |
10.5 |
12.0 |
|
Northeast |
17 |
95.9 |
17.3 |
0.8 |
76.3 |
3.2 |
7.5 |
14.44 |
11.9 |
117.58 |
5.0 |
10.0 |
11.0 |
|
Midlands |
21 |
121.2 |
21.8 |
1.3 |
78.8 |
3.3 |
11.7 |
13.31 |
16.9 |
93.14 |
5.4 |
10.8 |
12.3 |
|
Northwest |
14 |
63.7 |
11.5 |
0.7 |
61.7 |
1.6 |
5.9 |
14.93 |
9.7 |
97.17 |
4.5 |
10.6 |
12.3 |
|
Southwest |
12 |
54.0 |
9.7 |
0.4 |
79.4 |
1.6 |
4.8 |
15.79 |
7.3 |
134.86 |
5.5 |
10.9 |
12.5 |
|
Wales |
6 |
40.3 |
7.2 |
0.4 |
91.1 |
2.9 |
3.6 |
10.16 |
4.3 |
92.54 |
7.1 |
9.1 |
9.7 |
|
Total |
112 |
555.2 |
100.0 |
5.3 |
75.9 |
2.7 |
50.4 |
14.20 |
77.0 |
104.17 |
5.3 |
10.5 |
12.0 |
Tables may not sum due to rounding
Top 15 Investments (market value) as at 31 December 2025
|
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 (years) |
|
300 Bath Street, Glasgow |
Office |
Glasgow Tay House Centre Ltd, University of Glasgow, Fairhurst Group LLP, ESR Europe LSPIM Ltd |
19.0 |
3.4 |
152,478 |
86.0 |
1.3 |
2.5 |
2.8 |
|
Norfolk House, Smallbrook Queensway, Birmingham |
Office |
Global Banking School Ltd, Lakbhir Dhillon and Balbier Dhillon, HP Asia Ltd |
17.3 |
3.1 |
118,530 |
81.9 |
1.6 |
3.2 |
6.3 |
|
Hampshire Corporate Park, Eastleigh |
Office |
Lloyd's Register EMEA, Complete Fertility Ltd, Silverstream Technologies (UK) Ltd, National Westminster Bank Plc |
16.2 |
2.9 |
84,043 |
53.2 |
1.0 |
2.1 |
3.1 |
|
Beeston Business Park, Nottingham |
Office/ Industrial |
Metropolitan Housing Trust Ltd, SMS Electronics Ltd, GTT- EMEA Ltd |
15.6 |
2.8 |
215,336 |
82.7 |
1.2 |
2.4 |
4.1 |
|
1-4 Llansamlet Retail Park, Nantyffin Rd, Swansea |
Retail |
Wren Kitchens Ltd, Dreams Ltd, NCF Furnishings Ltd |
14.5 |
2.6 |
74,425 |
100.0 |
1.2 |
2.4 |
3.7 |
|
Eagle Court, Coventry Road, Birmingham |
Office |
Virgin Media Ltd, Rexel UK Ltd, Goldbeck Construction Ltd |
13.8 |
2.5 |
132,690 |
100.0 |
1.2 |
2.5 |
1.9 |
|
Manchester Green, Manchester |
Office |
Chiesi Ltd, Ingredion UK Ltd, Assetz SME Capital Ltd |
13.0 |
2.3 |
107,760 |
82.6 |
1.5 |
3.1 |
1.3 |
|
Linford Wood Business Park, Milton Keynes |
Office |
IMServ Europe Ltd, Senceive Ltd, Autotech Recruit Ltd |
12.2 |
2.2 |
107,414 |
67.9 |
1.2 |
2.4 |
2.4 |
|
Capitol Park, Leeds |
Office |
Hermes Parcelnet Ltd, Harron Homes Ltd, BDW Trading Ltd |
11.8 |
2.1 |
86,758 |
100.0 |
1.1 |
2.1 |
2.7 |
|
Ashby Park, Ashby De La Zouch |
Office |
Ceva Logistics Ltd, Ashfield Healthcare Ltd, Brush Electrical Machines Ltd |
11.5 |
2.1 |
87,874 |
92.7 |
1.2 |
2.5 |
2.3 |
|
Orbis 1, 2 & 3, Pride Park, Derby |
Office |
Firstsource Solutions UK Ltd, DHU Health Care C.I.C., Tentamus Pharma (UK) Ltd |
11.4 |
2.1 |
121,884 |
100.0 |
1.8 |
3.6 |
3.8 |
|
Lightyear - Glasgow Airport, Paisley |
Office |
Rolls-Royce Submarines Ltd, Heathrow Airport Ltd, Loganair Ltd |
11.2 |
2.0 |
73,499 |
71.1 |
1.3 |
2.6 |
3.8 |
|
The Coach Works, Leeds |
Office |
Abstract Tech Ltd, Canal & River Trust, Virtual College Ltd |
10.0 |
1.8 |
41,122 |
50.9 |
0.5 |
1.0 |
1.7 |
|
Origin 1 & 2, Crawley |
Office |
DMH Stallard LLP, Menzies LLP, Spirent Communications Plc |
9.8 |
1.8 |
45,856 |
68.3 |
0.8 |
1.6 |
2.8 |
|
Buildings 2, Bear Brook Office Park, Aylesbury |
Office |
Utmost Life and Pensions Ltd, Musarubra UK Subsidiary 3 Ltd, Agria Pet Insurance Ltd |
9.7 |
1.7 |
61,643 |
100.0 |
1.1 |
2.1 |
1.6 |
|
Total |
|
|
196.8 |
35.4 |
1,511,312 |
81.4 |
18.2 |
36.1 |
3.1 |
Tables may not sum due to rounding
Top 15 Tenants (share of rental income) as at 31 December 2025
|
Tenant |
Property |
Sector |
WAULT to first break (years) |
Lettable area |
Annualised gross rent (£m) |
% of gross rental income |
|
Global Banking School Ltd |
Norfolk House, Birmingham |
Education |
6.9 |
73,628 |
1.4 |
2.8 |
|
Virgin Media Limited |
Eagle Court, Coventry Road, Birmingham
Southgate Park, Peterborough |
Information and communication
|
3.0 |
75,309 |
1.4 |
2.7 |
|
EDF Energy Ltd |
800 Aztec West, Bristol Endeavour House, Sunderland |
Electricity, gas, steam and air conditioning supply |
4.8 |
118,850 |
1.0 |
2.0 |
|
First Source Solutions UK Ltd |
Orbis 1, 2 & 3, Pride Park, Derby |
Administrative and support service activities |
2.8 |
62,433 |
1.0 |
2.0 |
|
The Secretary of |
1 Burgage Square, Wakefield |
Public sector |
3.5 |
96,654 |
1.0 |
1.9 |
|
Odeon Cinemas Ltd |
Kingscourt Leisure Complex, Dundee |
Information and |
9.8 |
41,542 |
0.8 |
1.5 |
|
True Potential LLP |
Newburn & Gateway House, Newcastle |
Not specified |
4.5 |
54,584 |
0.6 |
1.3 |
|
SpaMedica Limited |
1175 Century Way, Thorpe Park, Leeds Albert Edward House, Preston Fairfax House, Wolverhampton Southgate Park, Peterborough Foundation Chester Business Park, Chester |
Human health and social work activities
|
2.1 |
40,529 |
0.6 |
1.2 |
|
DHU Health Care C.I.C. |
Orbis 1, 2 & 3, Pride Park, Derby |
Human health and social work |
5.3 |
42,301 |
0.6 |
1.1 |
|
Lloyds Bank Plc |
Victory House Meeting House Lane, Medway |
Financial and insurance activities |
0.4 |
48,372 |
0.5 |
1.1 |
|
NewFlex Ltd |
The Genesis Centre, Warrington |
Real estate activities |
1.0 |
19,087 |
0.5 |
1.1 |
|
Lloyds Register EMEA |
Hampshire House, Hampshire Corporate |
Registered Society |
1.4 |
21,695 |
0.5 |
1.0 |
|
Hermes Parcelnet Limited t/a Evri |
Capitol Park, Leeds |
Transportation and storage |
3.0 |
25,790 |
0.5 |
1.0 |
|
Pearson Education Ltd |
The Lighthouse, Salford Quays, Manchester
|
Education |
1.4 |
24,804 |
0.5 |
1.0 |
|
Homeserve Membership Limited |
1175 Century Way, Thorpe Park, Leeds |
Construction |
1.4 |
29,468 |
0.5 |
0.9 |
|
Total |
|
|
3.8 |
775,046 |
11.4 |
22.7 |
Tables may not sum due to rounding.
Property Portfolio Sector and Region Splits by Valuation and Income as at 31 December 2025
By Valuation
As at 31 December 2025, 90.3% (2024: 90.7%) of the portfolio by market value was offices and 3.7% (2024: 3.6%) was retail. The balance was made up of industrial, 4.3% (2024: 3.7%) and other, 1.7% (2024: 1.7%). By UK region, as at 31 December 2025, Scotland represented 16.6% (2024: 16.6%) of the portfolio and England 76.1% (2024: 77.1%); the balance of 7.2% (2024: 6.3%) was in Wales. In England, the largest regions were the Midlands, the North East and the South East.
By Income
As at 31 December 2025, 90.4% (2024: 90.5%) of the portfolio by income was offices and 3.8% (2024: 4.4%) was retail. The balance was made up of industrial, 3.9% (2024: 3.2%), and other, 1.9% (2024: 1.9%). By UK region, as at 31 December 2025, Scotland represented 15.7% (2024: 16.0%) of the portfolio and England 77.1% (2024: 78.0%); the balance of 7.1% was in Wales (2024: 6.0%). In England, the largest regions were the Midlands, the South East and the North East.
Lease Expiry Profile
The WAULT on the portfolio is 4.5 years (2024: 4.6 years); WAULT to first break is 2.7 years (2024: 2.9 years). As at 31 December 2025, 12.8% (2024: 13.8%) of income was from leases which will expire within one year, 12.1% (2024: 10.5%) between one and two years, 37.5% (2024: 39.7%) between two and five years and 37.7% (2024: 36.1%) after five years.
Tenants by Standard Industrial Classification (SIC)
As at 31 December 2025, 12.3% of income was from tenants in the information and communication activities sector (2024: 10.5%), 11.5% from the administrative and support service activities sector (2024: 11.2%), 9.8% from the wholesale and retail trade sector (2024: 8.7%), 7.5% from the professional, scientific and technical activities sector (2024: 11.8%) and 6.9% from the education sector (2024: 5.9%). The remaining exposure is broadly spread.
No tenant represents more than 3.0% of the Group's rent roll as at 31 December 2025, the largest being 2.8% (2024: 2.8%).
FINANCIAL REVIEW
Net Asset Value
Between 1 January 2025 and 31 December 2025, the EPRA NTA* of the Group decreased to £315.2m (IFRS NAV: £319.3m) from £340.8m (IFRS NAV: £351.6m) as at 31 December 2024, equating to a decrease in the diluted EPRA NTA of 15.8pps to 194.4pps (IFRS: 197.0pps). This is after the dividends declared in the period amounting to 9.7pps. (See Note 13).
The investment property portfolio was valued at £555.2m (2024: £622.5m). The decrease of £67.3m since the December 2024 year-end is a reflection of revaluation movement loss of £28.6m, £48.4m of net property disposals and £3.2m loss on the disposal of investment properties, offset by subsequent expenditure of £11.8m and acquisitions of £1.1m. Overall, on a like-for-like basis, the portfolio value decreased by 5.0% 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:
|
|
|
Year ended |
Year ended |
|
|
|
31 December 2025 (£m) |
31 December 2024 (£m) |
|
Acquisitions |
|
|
|
|
|
Net (after costs) |
1.2 |
0.0 |
|
|
Gross (before costs) |
1.1 |
0.0 |
|
Disposals |
|
|
|
|
|
Net (after costs) |
48.4 |
28.6 |
|
|
Gross (before costs) |
51.6 |
30.8 |
|
Capital Expenditure |
|
|
|
|
|
Net (after dilapidations) |
11.8 |
8.2 |
|
|
Gross (before dilapidations) |
11.8 |
8.5 |
*The Group has determined that EPRA net tangible assets (NTA) is the most relevant measure.
Further details of the EPRA performance measures are provided in the full Annual Report.
The diluted EPRA NTA per Share decreased to 194.4pps (2024: 210.2pps). The EPRA NTA is reconciled in the table below:
|
|
£m |
Pence per Share |
|
|
Opening EPRA NTA (31 December 2024) |
|
340.7 |
210.2 |
|
Net rental and property income |
|
40.3 |
24.8 |
|
Administration and other expenses |
|
(9.9) |
(6.1) |
|
Loss on the disposal of investment properties |
|
(3.2) |
(2.0) |
|
Change in the fair value of investment properties |
|
(26.6) |
(16.4) |
|
Change in value of right of use assets |
|
(0.1) |
(0.1) |
|
EPRA NTA after operating profit |
|
341.1 |
210.4 |
|
Net finance expense |
|
(11.2) |
(6.9) |
|
Share of loss of associate company |
|
0.0 |
(0.0) |
|
Realised gain on derivative financial instruments |
|
1.2 |
0.8 |
|
EPRA NTA before dividends paid |
|
331.1 |
204.3 |
|
Dividends paid* |
|
(15.7) |
(9.7) |
|
EPRA NTA before capital raise |
|
315.4 |
194.6 |
|
Capital raise expenses |
|
(0.3) |
(0.2) |
|
Closing EPRA NTA (31 December 2025) |
|
315.2 |
194.4 |
Table may not sum due to rounding
* As at 31 December 2025, 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 year ended 31 December 2025 amounted to £30.3m (2024: £36.1m). Loss after finance and before taxation was £16.4m (2024: £39.5m). 2025 included a full rent roll for the portfolio of properties held as at 31 December 2024, plus the partial rent roll for properties disposed of during the period.
Rental and property income amounted to £60.4m, excluding recoverable service charge income and other similar items (2024: £65.2m). The decrease was primarily the result of the decrease in the rent roll being held during the year to 31 December 2025.
More than 80% of the rental income is collected within 30 days of the due date and the allowance for doubtful debts in the period amounted to £0.3m (2024: £0.5m).
Non-recoverable property costs, excluding recoverable service charge income and other similar costs, amounted to £20.2m (2024: £19.3m), and the rent roll decreased to £50.4m (2024: £60.7m).
Realised losses on the disposal of 14 of the investment properties and 4-part sales in the period amounted to £3.2m (2024: 3.2m). The change in the fair value of investment properties amounted to a loss of £28.6m (2024: loss of £54.7m) and an adjustment of £2.0m (2024: £2.0m) from rent smoothing.
Net capital expenditure amounted to £11.8m (2024: £8.2m). The change in value of right of use asset amounted to a charge of £0.1m (2024: charge £0.1m).
Interest income amounted to £1.0m (2024: £1.4m).
Finance expenses amount to £12.2m (2024: £15.2m). The decrease is due to the repayment of the £50m Retail Bond in August 2024 and bank borrowing repayments in 2024 of £54.0m and in 2025 of £50.5m.
The EPRA cost ratio, including direct vacancy costs, was 49.8% (2024: 44.7%). The EPRA cost ratio, excluding direct vacancy costs was 18.4% (2024: 17.4%). The ongoing charges for the year ending 31 December 2025 were 9.0% (2024: 9.3%) and excluding direct vacancy costs 3.3% (2024: 3.5%).
The EPRA Total Return from Listing to 31 December 2025 was 4.3% (2024: 5.6%), with an annualised rate of 0.4% pa (2024: 0.6% pa).
Dividend
In relation to the year from 1 January 2025 to 31 December 2025, the Company declared dividends totalling 10.00pps (2024: 7.8pps)*. A schedule of dividends can be found in the full Annual Report.
Going forward, the Company will distribute a minimum 90% of the profit from the property rental business, which is 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 to benefit from rental and capital uplift and remains confident in the Company's strategy and medium-term outlook.
* During 2024 the Company offered 15 new Ordinary Shares for every 7 existing Ordinary Shares. This resulted in an increase of 1,105,149,821 Ordinary Shares being issued. Subsequently there was a 10 for 1 consolidation with the resulting Ordinary Shares in issue being 162,088,483.
Debt Financing and Gearing
Borrowings comprise third-party bank debt. The bank debt is secured over properties owned by the Group and repayable over the next two to four years. The weighted average maturity of the bank debt is 2.6 years (2024: 2.9 years).
The Group's borrowing facilities are with the 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 31 December 2025 amounted to £266.2m (2024: £316.7m) (before unamortised debt issuance costs), with £nil available to be drawn.
At 31 December 2025, the Group's cash and cash equivalent balances amounted to £37.7m (2024: £56.7m), of which £37.7m (2024: £55.9m) was unrestricted cash.
The Group's net loan to value ("LTV") ratio stands at 40.4% (2024: 41.8%) before unamortised costs.
Debt Profile and LTV Ratios as at 31 December 2025
|
|
Facility |
Outstanding debt* |
Maturity date |
Gross loan to value** |
Annual interest rate |
|
Lender |
£'000 |
£'000 |
% |
% |
|
|
Scottish Widows Ltd. and Aviva Investors Real Estate Finance |
118,339 |
118,339 |
Dec-27 |
50.8 |
3.28 Fixed |
|
Royal Bank of Scotland, Bank of Scotland & Santander UK |
72,449 |
72,449 |
Dec-28 |
44.9 |
2.40 over 3mth £ SONIA |
|
Scottish Widows Ltd |
32,325 |
32,325 |
Dec-28 |
45.6 |
3.37 Fixed |
|
Santander UK |
43,113 |
43,113 |
Jun-29 |
48.5 |
2.20 over 3 months £ SONIA |
|
|
266,226 |
266,226 |
|
|
|
Table may not sum due to rounding.
The Investment Adviser continues to monitor the borrowing requirements of the Group. As at 31 December 2025, the Group had headroom against its borrowing covenants.
The net gearing ratio (net debt to Ordinary Shareholders' equity (diluted) of the Group was 70.3% as at 31 December 2025 (2024: 73.9%).
Interest cover, excluding amortised costs, stands at 3.0 times (2024: 2.7 times) and including amortised costs, stands at 2.5 times (2024: 2.4 times).
* Before unamortised debt issue costs
** Based on Colliers International Property Consultants Ltd.
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.
|
|
|
31 December 2025 |
31 December 2024 |
|
|
|
% |
% |
|
Borrowings interest rate hedged |
|
101.0 |
100.0 |
|
Thereof: |
|
|
|
|
Fixed |
|
56.6 |
52.7 |
|
Swap |
|
32.3 |
30.4 |
|
Cap |
|
12.1 |
16.9 |
|
WACD1 |
|
3.3 |
3.4 |
Table may not sum due to rounding
1WACD - Weighted Average Effective Interest Rate including the cost of hedging
Tax
The Group entered the UK REIT regime on 7 November 2015 and all the Group's UK property rental business 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 England.
During 2025, the Group recognised a tax credit of £14,083 (2024: charge of £64,590), in relation to entities that are not included in the REIT tax regime.
PRINCIPAL RISKS AND UNCERTAINTIES
Effective risk management is embedded throughout Regional REIT and underpins the execution of the Company's strategy, the positioning of the business for growth and maintaining the regular income over a long-term sustainable horizon.
Risk Framework and Approach
The Board acknowledges the importance of embedding a framework to identify, actively monitor, manage and mitigate its risks, which include, but are not limited to: market, major market disruption, funding, tenants, financial and tax changes, operational, cyber security, regulatory, environmental and emerging risks.
The Board has overall responsibility for the Company's system of risk management and internal controls. It is supported by the Audit Committee in the management of risk. The Audit Committee is responsible for determining the principal risks facing the business and reviewing, at least annually, the effectiveness of the Company's financial control, risk management and internal control processes.
Over the long term, the business will face other challenges and emerging threats for which it remains vigilant.
However, the Board also views the risks as opportunities that, when effectively managed, can enhance performance. Thus, having an effective risk management process is key to support the delivery of the Company's strategy.
Approach to Managing Risk - Identification, Evaluation And Mitigation
The risk management process emphasis is upon awareness and is structured to identify, evaluate, manage and mitigate, rather than eliminate risks faced. The Company maintains a detailed and formal matrix of current principal risks, which uses risk scoring to evaluate risks consistently. This allows the risks to be monitored and mitigated as part of a risk management process with the Audit Committee undertaking, at a minimum on a six-monthly basis or more frequently if required, a robust evaluation of these risks facing the Company.
Risks are identified and assessed according to their potential impact on the Company and to their likelihood occurrence. The Audit Committee utilises the risk matrix to prioritise individual risks, allocating scores to each risk for both the likelihood of its occurrence and the severity its impact. Those with the highest gross rating in terms of impact are highlighted as top risks within the matrix and are defined as principal risks.
Although the Board believes that it has a robust framework of internal controls in place, it recognises it can provide only reasonable, and not absolute, assurance against material financial misstatement or loss and is designed to manage, not eliminate, risk.
Risk Appetite
Taking risks is an essential and inherent facet of operating any business. As such the risk management approach is not to eliminate all risk but to ensure that appropriate strategies are in place to identify, actively monitor, manage and mitigate the key risks.
The Board is responsible for defining the level of risk that the Company assumes and ensuring that it remains in-line with the Company's strategy. Risk appetite is integral to the Board's approach to risk management, business planning and decision making. The level and type of risk that the Company is willing to bear will vary over time.
The Board, in collaboration with the Investment Adviser, and with the latest information available, regularly reviews the risk appetite of the Company, allowing a prompt response to identified emerging risks.
Emerging Risks
The Board is cognisant of emerging risks defined as potential trends, sudden events or changing risks, which are characterised by a high degree of uncertainty in terms of probability of occurrence and possible effects on the Company. Once emerging risks become sufficiently clear, they may be classed as a principal risk and added to the risk matrix.
To help manage emerging risks and discuss other wider matters affecting property, the Board has an annual strategy meeting. The Board considers having a clear strategy is the key to managing and mitigating emerging risk.
The Company's principal risks consist of the nine most significant risks which are composed of six strategic and three operational risks. The risks relate to market, major market disruption, funding, tenants, financial and tax changes, operational, cyber security, regulatory, environmental and emerging risks.
The below list, in no particular order, sets out the current identifiable principal and emerging risks, including their impact and the actions taken by the Company to mitigate them. It does not purport to be an exhaustive list of all the risks faced by the Company.
Principal Risk Summary
|
Principal Risk |
Evolution of the trend during the year |
|
|
1. |
Market |
ó |
|
2. |
Major market disruption |
|
|
3. |
Funding |
ó |
|
4. |
Tenants |
|
|
5. |
Financial and tax changes |
ó |
|
6. |
Operational |
ó |
|
7. |
Cyber security |
|
|
8. |
Accounting, legal and regulatory |
ó |
|
9. |
Environmental and energy efficiency standards |
|
1. Market
|
|||||||||||||||||||||||
|
2. Major market disruption
|
|||||||||||||||||||||||
|
3. Funding
4. Tenants |
|||||||||||||||||||||||
|
Potential Impact |
Mitigation |
Movement in the period ó |
|||||||||||||||||||||
|
Lower occupier demand or poor selection of tenants could result in lower income from reduced lettings or defaults. |
· An active asset management programme with a focus on the Investment Adviser working with individual tenants to assess any occupational issues and to manage any potential bad debts. · Diversified portfolio of properties let, where possible, to a large number of low-risk tenants across a wide range of standard industrial classifications throughout the UK. · Potential acquisitions are reviewed for tenant overlap and potential disposals are similarly reviewed for tenant standard industrial classification concentration.
|
· This risk remains stable in view of the increasing diversification of properties, tenants and geographies in the portfolio. · The tenant mix and their underlying activity has continued to increasingly diversify, with the number of tenants amounting to 659 at the year-end (2024:780). |
|||||||||||||||||||||
|
A high concentration of lease term maturity and/or break options could result in a more volatile contracted rent roll. |
· The portfolio lease and maturity concentrations are monitored by the experienced Investment Adviser to minimise concentration. · There is a focus on securing early renewals and increased lease periods. · The requirement for suitable tenants and the quality of the tenant is managed by the experienced Investment Adviser who maintains close relationships with current tenants and with letting agents. |
· The WAULT to first break as at 31 December 2025 was 2.7 years (2024: 2.9 years). · The largest tenant is 2.8% (2024: 2.8%) of the gross rental income, being EDF Energy Limited. · The team remains vigilant to the financial well-being of our current tenants and continues to liaise with tenants and agents. |
|||||||||||||||||||||
|
Increased working from home impacts tenant demand for space. |
· Providing high-quality working environment in portfolio properties. |
· There is continued evidence of a return to working from office space. |
|||||||||||||||||||||
|
|
|||||||||||||||||||||||
5. Financial and Tax Changes
|
Potential Impact |
Mitigation |
Movement in the period ó |
|
Changes to the UK REIT and non-REIT regimes tax and financial legislation. |
· The Board receives advice on these changes where appropriate and will act accordingly. |
· Advice is received from several corporate advisers, including tax adviser KPMG LLP and the Company adapts to changes as required. |
6. Operational
|
Potential Impact |
Mitigation |
Movement in the period ó |
|
Business disruption could impinge on the normal operations of the Company. |
· The contingency plans in place to ensure there are no disruptions to the core infrastructure, which would impinge on the normal operations of the Company.
|
· The Investment Adviser annually reviews the Disaster and Business Continuity Plans.
|
|
· An annual due diligence exercise is carried out on all principal third-party service providers. |
· The annual due diligence visits were undertaken with the Company's principal third-party service providers. No concerns were identified from the visits.
|
|
|
· As an externally managed investment company, there is a continued reliance on the Investment Adviser and other third-party service providers.
|
· The Investment Adviser is a viable going concern. |
|
|
· All acquisitions undergo a rigorous due diligence process and all multi-let properties undergo an annual comprehensive fire risk.
|
· The Investment Adviser continues to monitor changes in Health and Safety regulations.
|
|
|
· The impact of physical damage and destruction to investment properties is mitigated by ensuring all are covered by a comprehensive building, loss of rent and service charge plus terrorism insurance with the exception of a small number of "self-insure" arrangements covered under leases.
|
· The Investment Adviser reviews the adequacy of insurance cover on an ongoing basis. |
7. Cyber security
|
Potential Impact |
Mitigation |
|
|
Information security and cyber threat resulting in data loss, or negative regulatory, reputational, operational (including GDPR), or financial impact. |
· The Investment Adviser has a dedicated Information Technology team, which monitors information security, privacy risk and cyber threats ensuring their respective operations are not interrupted. · As required the building management systems are reviewed for cyber security risk.
|
· The Investment Adviser reviews the respective Information Technology polices and the material third party service suppliers on as required basis to ensure they reflect current and possible future threats. |
|
Cyber fraud could result in financial loss to the Group and inability to operate. |
· The Investment Adviser takes all appropriate precautions to ensure cyber deterrents are deployed. |
· This remains an ever evolving threat. |
8. Accounting, Legal, and Regulatory
|
Potential Impact |
Mitigation |
Movement in the period ó |
|
Changes to accounting, legal and/or regulatory legislation, including sanctions could result in changes to current operating processes. |
· Robust processes are in place to ensure adherence to accounting, legal and regulatory requirements, including sanctions and Listing Rules. · All contracts are reviewed by the Company's legal advisors. · The Administrator, Sub-Administrator and the Company Secretary attend relevant Board meetings in order to be aware of all announcements that need to be made. · All compliance issues are raised with the Company's Financial Adviser. |
· The Company continues to receive advice from its corporate advisers and has incorporated changes where required. · The Administrator and Company Secretary continue to attend all Board meetings and advise on Listing Rule requirements in conjunction with the Corporate Broker and Financial Adviser.
|
|
Loss of REIT status |
· The HMRC REIT regime requirements are monitored by the Investment Adviser and external advisors including the Company's tax adviser KPMG LLP and its Sub-Administrator Waystone Administration Solutions (UK) Limited. |
· The Company continues to receive advice from external advisers on any anticipated future changes to the REIT regime. |
9. Environmental and Energy Efficiency Standards
|
Potential Impact |
Mitigation |
Movement in the period ó |
|
The Company's cost base could be impacted, and management time diverted, due to climate changes and associated legislation. |
· The Board receives regular updates on environmental, social, governance and potential legislation changes from its advisers. · The Company has engaged an environmental consultancy, CBRE, to assist with improving the Global Real Industry Sustainability Benchmark (GRESB).
|
· Additional attention continues to be devoted to this area to ensure the appropriate approach is applied and embedded in Company activities. |
|
Changes to the environment could impact upon the operations of the Company. |
· Property acquisitions undergo a rigorous due diligence process, including an environmental assessment. · The Investment Adviser monitors the portfolio for any detrimental environmental impact, by way of frequent inspections of the properties, and the annual insurance review process.
|
· The rigour of the environmental assessments process continues to be reviewed with the aim of enhancing it. |
|
An Energy Performance Rating of E and below may impact the Company's ability to sell or lease an asset. |
· The Company continues to review each property to ensure adherence with Energy Performance Rating requirements. · The energy efficiency of investment acquisitions is fully considered as part of the due diligence process for the acquisition of a property. |
· The Investment Adviser is continually reviewing the feasibility of enhancing Energy Performance Ratings to exceed the minimum requirement. |
Changes to the Principal Risks and Uncertainties
The Board, via the Audit Committee, has reviewed and agreed the movement during the year to each of the identified principal risks and uncertainties following review of these risks, having considered the characteristics of these and the broader economic and geopolitical factors influencing them.
The risk framework has been refined for 2025 to improve clarity and alignment with the Company's operating environment: the former Strategic Risk has been retitled Market Risk to better reflect its underlying drivers, the separate Valuation Risk has been removed as valuation movements are now captured within Market and Funding risks, and the previous Healthcare and Economic risks have been consolidated into Major Market Risk to reflect their overlapping macroeconomic characteristics and combined impact on the business.
A potential emerging risk is the adoption of artificial intelligence in office-based roles, which could pose both a risk and opportunity for the demand of office space. The Board, alongside the Investment Adviser, continues to monitor developments in this area.
The potential impact of these risks on the Company's long-term strategy is considered and evaluated to ensure informed decision-making and proactive management.
SUSTAINABILITY REPORT
The Sustainability Report is provided in the full Annual Report.
GOING CONCERN AND VIABILITY STATEMENT
Going concern
The Directors confirm that they have a reasonable expectation that the Group has adequate resources to continue as a going concern. This expectation is underpinned by having made an assessment of the Group's ability to continue in operational existence, giving due consideration to the Group's cashflow forecast, which encompasses cash resources, rental income, acquisitions and disposals of investment properties, elective and committed capital expenditure, dividend distributions and the borrowing facilities interest payments and the respective maturities.
The group ended the year under review with £37.7m of cash and cash equivalents of which £7k was restricted cash. The Group remained compliant with all loan covenants on borrowing facilities, with a net LTV of c. 40.4%, based upon the value of the Group's investment properties as at 31 December 2025. Rental income collections remained strong with 99.3% of rent invoiced in the year collected as at 13 March 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 £118.3m 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 these Financial Statements were approved. Based on the above, together with available market information, the Directors are not aware of any material uncertainties that may cast significant doubt upon the Group's ability to continue as a going concern. Accordingly, the Directors consider that it is appropriate to continue to prepare the Financial Statements on a going concern basis.
Viability Statement
In accordance with the Association of Investment Companies Corporate Governance Code (the "AIC Code") the Directors have assessed the prospects of the Group and future viability over a three-year period from the year end, being longer than the 12 months required by the going concern provision. The Board conducted a review with regard to the Group's long-term strategy, principal risks and risk appetite, current position asset performance and future plans. Following this review, the Board determined that three years to 31 December 2028 is the maximum timescale over which the performance of the Group can be forecast with any material degree of accuracy and is therefore an appropriate period over which to consider the Group's viability. Achievement of the one-year forecast has a greater level of certainty and is used to set near-term targets across the Group. Achievement of the subsequent forecasted years is less certain than the one-year forecast. However, the Board's forecast provides a longer-term outlook against which strategic decisions can be made.
Assessment of Review Period
The Board chose to conduct the review for a three-year period giving consideration to:
• The Group's WAULT of 2.7 years to first break
• The Group's detailed forecast covering a rolling three-year period
• The Group's weighted average debt to maturity was 2.6 years as at 31 December 2025
Assessment of Prospects and Viability
The financial planning process considers the Group's profitability, capital values, LTV, cashflows, dividend cover, banking covenants, funding obligation and other key financial metrics over the coming three-year period. In addition, property companies are now operating in a more favourable lending climate, with the lowered LTV and strengthened balance sheet the Group is in a good position to refinance the next bank loan maturity in December 2027 of £118.3m.
Furthermore, the Board, in conjunction with the Audit Committee, carried out a robust assessment of the principal risks and uncertainties facing the Group, including those that would threaten its business model, strategy, future performance, solvency or liquidity over the three-year period. The risk review process provided the Board with assurance that the mitigations and management systems are operating as intended.
The Board believes that the Group is positioned to manage its principal risks and uncertainties successfully, notwithstanding the current economic and political environment. The Board's expectation is further underpinned by the regular briefings provided by the Investment Adviser. These briefings consider market conditions, investment opportunities, the Company's ability to raise third-party funds and deploy these promptly, changes in the regulatory landscape and current political and economic risks and uncertainties. These risks, and other potential risks which may arise, continue to be closely monitored by the Board.
Confirmation of Viability
The Board confirms that it has a reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due over the next three years, taking into account the Group's current position and the principal risks and uncertainties.
The Directors have carefully reviewed areas of potential financial risk. The Directors have satisfied themselves that the Group has adequate financial resources to continue in operational existence for the foreseeable future.
Extract FROM the Directors' REPORT
The full Directors' Report, which includes the Corporate Governance Statement, is provided in the full Annual Report.
Share Capital
As at 31 December 2025, the Company's total issued share capital was 162,088,483 Ordinary Shares (2024: 162,088,483).
All of the Company's Ordinary Shares are listed on the Main Market segment of the London Stock Exchange and each Ordinary Share carries one vote.
There is only one class of Ordinary Shares in issue for the Company, in adherence to the REIT requirements. The only other shares the Company may issue are particular types of non-voting restricted preference shares, of which none (2024: none) are currently in issue.
At the AGM held on 15 May 2025, the Directors were granted authority to allot Ordinary Shares on a non- pre-emptive basis for cash up to a maximum number of 16,208,848 Shares (representing approximately 10% of the number of Ordinary Shares in issue on 28 March 2025).
The Directors were also granted the authority to disapply pre-emption rights in respect of the allotment of Ordinary Shares up to a maximum number of 16,208,848 Shares (being 10% of the issued Share capital on 28 March 2025) where the allotment of such Shares is for the sole purpose of financing an acquisition or other capital investment as defined by the Pre-Emption Group's Statement of Principles.
No Shares were issued under these authorities during the year under review, and the authorities will expire at the Company's 2026 AGM where resolutions for their renewal will be sought, or, if sooner, on 15 August 2026.
At the AGM held on 15 May 2025, the Company was authorised to purchase up to a maximum of 16,208,848 of its own Ordinary Shares (being 10% of the Company's issued Share capital on 28 March 2025). No Shares have been purchased under this authority during the year under review, which will expire at the Company's 2026 AGM, where a resolution for the renewal of this authority will be sought, or, if sooner, on 15 August 2026.
Restrictions on the Transfer of Shares
Subject to the Articles, as well as applicable foreign securities laws, a shareholder may transfer all or any of their Ordinary Shares in any manner which is permitted by Guernsey law or in any other manner which is from time to time approved by the Board.
If any Ordinary Shares are owned directly, indirectly or beneficially by a person believed by the Board to be a "Non-Qualified Holder" (see below), the Board may give notice to such person requiring them either: (i) to provide the Board within 30 days of receipt of such notice with sufficient satisfactory documentary evidence to satisfy the Board that such person is not a Non-Qualified Holder, or (ii) to sell or transfer their Ordinary Shares to a person who is not a Non-Qualified Holder within 30 days and within such 30 days to provide the Board with satisfactory evidence of such sale or transfer and pending such sale or transfer, the Board may suspend the exercise of any voting or consent rights and rights to receive notice of or attend any meeting of the Company and any rights to receive dividends or other distributions with respect to such Ordinary Shares.
Where condition (i) or (ii) is not satisfied within 30 days after the serving of the notice, (i) the person will be deemed, upon the expiration of such 30 days, to have forfeited their Ordinary Shares or (ii) if the Board in its absolute discretion so determines, the Company may dispose of the Ordinary Shares at the best price reasonably obtainable and pay the net proceeds of such a disposal to the former holder.
A Non-Qualifying Holder is defined as any person whose ownership of Ordinary Shares, or the transfer of Ordinary Shares to such person, may:
• cause the Company's assets to be deemed "plan assets" for the purposes of the US Internal Revenue Code of 1986 (as amended), or US Employee Retirement Income Security Act of 1974 (as amended);
• cause the Company to be required to register as an "investment company" under the US Investment Company Act 1940;
• cause the Company or any of its securities to be required under the US Exchange Act, the US Securities Act or any similar legislation;
• cause the Company not being considered a "Foreign Private Issuer", as such term is defined in rule 3b-4(c) under the US Exchange Act;
• cause the Investment Adviser to be required to register as a municipal Adviser under the US Exchange Act;
• result in the Company being disqualified from issuing securities pursuant to Rule 506 of Regulation D under the US Securities Act;
• cause a loss of partnership status for US federal income tax purposes or a termination of the US partnership under US Internal Revenue Code of 1986 (as amended), Section 708;
• result in a person holding Ordinary Shares in violation of the transfer restrictions put forth in any prospectus published by the Company from time to time; or
• cause the Company to be a "controlled foreign corporation" for the purposes of Section 957 of the US Internal Revenue Code of 1986, (as amended), or may cause the Company to suffer any pecuniary or tax disadvantage or any person who is deemed to be a Non-Qualified Holder by virtue of their refusal to provide the Company with information that it requires in order to comply with its obligations under exchange of information agreements.
Restrictions on Voting Rights
Other than those discussed above, the Company does not have any restrictions on shareholder voting rights.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Annual Report and the Group Financial Statements in accordance with applicable laws and regulations.
Guernsey company law requires the Directors to prepare financial statements for each financial year. The Directors are required under the UK Listing Rules of the Financial Conduct Authority to prepare the group financial statements in accordance with UK-adopted International Accounting Standards.
The financial statements of the Group are required by law to give a true and fair view of the state of the Group's affairs at the end of the financial period and of the profit or loss of the Group for that period and are required by UK-adopted International Accounting Standards to present fairly the financial position and performance of the Group.
In preparing each of the Group financial statements, the Directors are required to:
· select suitable accounting policies and then apply them consistently;
· present a true and fair view of the financial position, financial performance and cash flows of the Company;
· present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;
· make judgements and accounting estimates that are reasonable and prudent;
· state whether they have been prepared in accordance with UK-adopted International Accounting Standards; and
· prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group's transactions; disclose with reasonable accuracy at any time the financial position of the Group; enable them to ensure that the financial statements comply with the requirements of The Companies (Guernsey) Law 2008 and, as regards the Group financial statements, the UK-adopted International Accounting Standards. They are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website.
Legislation in Guernsey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
RESPONSIBILITY STATEMENT OF THE DIRECTORS IN RESPECT OF THE CONSOLIDATED ANNUAL REPORT
Each of the Directors, whose names and functions are found within the full Annual Report, confirms that to the best of each person's knowledge:
· the financial statements, prepared in accordance with UK-adopted International Accounting Standards, give a true and fair view of the assets, liabilities, financial position and profit of the Group and the undertakings included in the consolidation taken as a whole;
· the Strategic Report, including the Investment Adviser's Report, includes a fair review of the development and performance of the business and the position of the Group and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties they face; and
· the Annual Report and financial statements for the year ended 31 December 2025, taken as a whole, are fair, balanced and understandable and provide the information necessary for Shareholders to assess the Group's position, performance, business model and strategy.
This responsibility statement was approved by the Board of Directors and signed on its behalf by:
David Hunter
Chairman, 23 March 2026
FINANCIAL STATEMENTS
Consolidated Statement of Comprehensive Income for the Year Ended 31 December 2025
|
|
Notes |
Year ended 31 December 2025 £'000 |
|
Year ended 31 December 2024 £'000 |
|
Continuing Operations |
|
|
|
|
|
Revenue |
|
|
|
|
|
Rental and property income |
5 |
78,628 |
|
90,981 |
|
Property costs |
6 |
(38,373) |
|
(45,021) |
|
Net rental and property income |
|
40,255 |
|
45,960 |
|
Administrative and other expenses |
7 |
(9,944) |
|
(9,851) |
|
Operating profit before gains and losses on property assets and other investments |
|
30,311 |
|
36,109 |
|
Loss on disposal of investment properties |
14 |
(3,172) |
|
(3,180) |
|
Change in fair value of investment properties |
14 |
(26,612) |
|
(56,732) |
|
Change in fair value of right of use assets |
26 |
(139) |
|
(138) |
|
Operating profit/(loss) |
|
388 |
|
(23,941) |
|
Finance income |
9 |
991 |
|
1,394 |
|
Finance expenses |
10 |
(12,215) |
|
(15,224) |
|
Share of loss of associate company |
16 |
(24) |
|
- |
|
Net movement in fair value of derivative financial instruments |
25 |
(5,506) |
|
(1,703) |
|
Loss before tax |
|
(16,366) |
|
(39,474) |
|
Taxation |
11 |
14 |
|
(65) |
|
Total comprehensive losses for the year (attributable to owners of the parent company) |
|
(16,352) |
|
(39,539) |
|
Loss per Share - basic and diluted |
12 |
(10.1)p |
|
(33.5)p |
The notes below are an integral part of these consolidated financial statements.
Total comprehensive losses all arise from continuing operations.
Consolidated Statement of Financial Position as at 31 December 2025
|
|
Notes |
31 December 2025 £'000 |
|
31 December 2024 £'000 |
|
|
Assets |
|
|
|
|
|
|
Non-current assets |
|
|
|
|
|
|
Investment properties |
14 |
542,191 |
|
607,458 |
|
|
Right of use assets |
26 |
10,710 |
|
10,849 |
|
|
Investments in associates |
16 |
348 |
|
276 |
|
|
Non-current receivables on tenant loan |
17 |
- |
|
144 |
|
|
Derivative financial instruments |
25 |
3,145 |
|
11,608 |
|
|
|
|
556,394 |
|
630,335 |
|
|
Current assets |
|
|
|
|
|
|
Derivative financial instruments |
25 |
1,739 |
|
- |
|
|
Trade and other receivables |
18 |
40,717 |
|
35,079 |
|
|
Cash and cash equivalents |
19 |
37,726 |
|
56,719 |
|
|
|
|
80,182 |
|
91,798 |
|
|
Total assets |
|
636,576 |
|
722,133 |
|
|
Liabilities |
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
Trade and other payables |
20 |
(29,265) |
|
(31,647) |
|
|
Deferred income |
21 |
(13,540) |
|
(14,364) |
|
|
Lease liabilities |
26 |
(435) |
|
- |
|
|
Deferred tax liabilities |
22 |
- |
|
(741) |
|
|
|
|
(43,240) |
|
(46,752) |
|
|
Non-current liabilities |
|
|
|
|
|
|
Deferred tax liabilities |
22 |
(754) |
|
- |
|
|
Bank and loan borrowings |
23 |
(262,319) |
|
(312,323) |
|
|
Lease liabilities |
26 |
(10,977) |
|
(11,444) |
|
|
|
|
(274,050) |
|
(323,767) |
|
|
Total liabilities |
|
(317,290) |
|
(370,519) |
|
|
Net assets |
|
319,286 |
|
351,614 |
|
|
Equity |
|
|
|
|
|
|
Stated capital |
27 |
618,010 |
|
618,266 |
|
|
Accumulated losses |
|
(298,724) |
|
(266,652) |
|
|
Total equity attributable to owners of the parent company |
319,286 |
|
351,614 |
|
|
|
Net asset value per Share - basic and diluted |
28 |
197.0p |
|
216.9p |
The notes below are an integral part of these consolidated financial statements.
Consolidated Statement of Changes in Equity 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 losses |
|
- |
|
(16,352) |
|
(16,352) |
|
Dividends paid |
13 |
- |
|
(15,720) |
|
(15,720) |
|
Cost of shares issued in 2024 |
27 |
(256) |
|
- |
|
(256) |
|
Balance at 31 December 2025 |
|
618,010 |
|
(298,724) |
|
319,286 |
For the year ended 31 December 2024
|
|
|
Attributable to owners of the parent company |
||||
|
|
Notes |
Stated capital £'000 |
|
Accumulated losses £'000 |
|
Total £'000 |
|
Balance at 1 January 2024 |
|
513,762 |
|
(207,673) |
|
306,089 |
|
Total comprehensive loss |
|
- |
|
(39,539) |
|
(39,539) |
|
Dividends paid |
13 |
- |
|
(19,440) |
|
(19,440) |
|
Shares issued |
27 |
110,515 |
|
- |
|
110,515 |
|
Cost of shares issued |
27 |
(6,011) |
|
- |
|
(6,011) |
|
Balance at 31 December 2024 |
|
618,266 |
|
(266,652) |
|
351,614 |
The notes below are an integral part of these consolidated financial statements.
Consolidated Statement of Cash Flows for the Year Ended 31 December 2025
|
|
Year ended 31 December 2025 £'000 |
|
Year ended 31 December 2024 £'000 |
|
Cash flows from operating activities |
|
|
|
|
Loss before tax |
(16,366) |
|
(39,474) |
|
Change in fair value of investment properties |
26,612 |
|
56,732 |
|
Share of loss of associate company |
24 |
|
- |
|
Change in fair value of financial derivative instruments |
5,506 |
|
1,703 |
|
Loss on disposal of investment properties |
3,172 |
|
3,180 |
|
Change in fair value of right of use assets |
139 |
|
138 |
|
Finance income |
(991) |
|
(1,394) |
|
Finance expense |
12,215 |
|
15,224 |
|
Increase in trade and other receivables |
(5,509) |
|
(2,027) |
|
(Decrease)/increase in trade and other payables |
(1,772) |
|
295 |
|
Decrease in deferred income |
(824) |
|
(1,233) |
|
Cash generated from operations |
22,206 |
|
33,144 |
|
Interest paid |
(10,251) |
|
(13,229) |
|
Taxation received/(paid) |
51 |
|
(4) |
|
Net cash flow generated from operating activities |
12,006 |
|
19,911 |
|
Investing activities |
|
|
|
|
Investments in associates |
(96) |
|
(276) |
|
Investment property acquisitions and subsequent expenditure |
(12,942) |
|
(8,249) |
|
Sale of investment properties |
48,425 |
|
28,574 |
|
Interest received |
978 |
|
1,391 |
|
Net cash flow generated from investing activities |
36,365 |
|
21,440 |
|
Financing activities |
|
|
|
|
Proceeds received on derivative financial instruments |
1,218 |
|
2,698 |
|
Dividends paid |
(15,152) |
|
(22,301) |
|
Proceeds from share issue |
- |
|
110,515 |
|
Share issue costs |
(1,430) |
|
(4,837) |
|
Bank borrowings repaid |
(50,508) |
|
(54,016) |
|
Bank borrowing costs paid |
(1,057) |
|
(761) |
|
Repayment of retail eligible bonds |
- |
|
(50,000) |
|
Lease repayments |
(435) |
|
(435) |
|
Net cash flow used in financing activities |
(67,364) |
|
(19,137) |
|
Net increase/(decrease) in cash & cash equivalents |
(18,993) |
|
22,214 |
|
Cash and cash equivalents at the start of the year |
56,719 |
|
34,505 |
|
Cash and cash equivalents at the end of the year |
37,726 |
|
56,719 |
The notes below are an integral part of these consolidated financial statements.
Notes to the Consolidated Financial Statements for the Year Ended 31 December 2025
1. Corporate information
The Group's consolidated financial statements for the year ended 31 December 2025 comprise the results of the Company and its subsidiaries (together constituting the "Group") and were approved by the Board and authorised for issue on 23 March 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 the Shares were admitted to trading on the LSE.
The nature of the Group's operations and its principal activities are set out in the Strategic Report in the Full Annual Report.
The address of the registered office is Mont Crevelt House, Bulwer Avenue, St. Sampson, Guernsey GY2 4LH.
2. Basis of preparation
In accordance with Section 244 of The Companies (Guernsey) Law 2008, the Group confirms that the financial information for the year ended 31 December 2025 are derived from the Group's audited financial statements and that these are not statutory accounts and, as such, do not contain all information required to be disclosed in the financial statements prepared in accordance with UK-adopted International Accounting Standards.
The statutory accounts for the year ended 31 December 2025 have been audited and approved, but have not yet been filed.
The Group's audited financial statements for the year ended 31 December 2025 received an unqualified audit opinion and the auditor's report contained no statement under section 263(2) or 263(3) of The Companies (Guernsey) Law 2008.
The financial information contained within this preliminary statement was approved and authorised for issue by the Board on 23 March 2026.
2.1 Functional and presentation currency
The financial information is presented in Pounds Sterling, which is also the functional currency of all Group companies, and all values are rounded to the nearest thousand (£'000) pounds, except where otherwise indicated.
2.2 Going concern
The Directors confirm that they have a reasonable expectation that the Group has adequate resources
to continue as a going concern. This expectation is underpinned by having made an assessment of the Group's ability to continue in operational existence, giving due consideration to the Group's cashflow forecast, which encompasses cash resources, rental income, acquisition and disposals of investment properties, elective and committed capital expenditure, dividend distributions and the borrowing facilities and the respective maturities.
No material uncertainties have been detected which would influence the Group's ability to continue as a going concern for a period of at least 12 months from the approval of these financial statements. The Directors have satisfied themselves that the Group has adequate financial resources to continue in operational existence for this period. Accordingly, the Board of Directors continue to adopt the going concern basis in preparing the financial statements.
Further details are provided in the Going Concern and Viability Statement in the Full Annual Report.
2.3 New standards, amendments and interpretations
New standards, amendments to standards and interpretations which came into effect for accounting periods starting on or after 1 January 2025 are as follows:
Amendments to IAS 21 'The Effects of Changes in Foreign Exchange Rates' (effective for periods beginning on or after 1 January 2025) provides clarification upon treatment for transactions in a foreign currency that is not exchangeable into another currency at the measurement date.
During the year ended 31 December 2025, none of the above had a material impact on the financial statements.
2.4 New standards, amendments and interpretations effective for future accounting periods
A number of new standards, amendments to standards and interpretations are effective for periods beginning on or after 1 January 2026 and have not been applied in preparing these financial statements. These are:
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.
IFRS 18 'Presentation and Disclosure in Financial Statements (effective for periods beginning on or after 1 January 2027) replaces IAS 1 'Presentation of Financial Statements'.
IFRS 19 'Subsidiaries without Public Accountability:
Disclosures (effective for periods beginning on or after 1 January 2027) specifies reduced disclosure requirements that an eligible entity is permitted to apply instead of the disclosure requirements in other IFRS Accounting Standards.
The Directors are reviewing these amendments and new standards. IFRS 18 will have some presentational impacts on the financial statements which are currently being assessed.
3. Significant accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and 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 property
The 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 and IFRS 13.
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 14.
The fair value of investment property is equal to the independent property valuer's valuation of £555.2m (2024: £622.5m) less the value of the assets arising from rent smoothing of £13.0m (2024: £15.0m).
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 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 of the significant risks and rewards of ownership of these properties and so accounts for the leases as operating leases.
3.2.2 Consolidation of entities in which the Group holds less than 50% but has power to control
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 now reside in a new special purpose vehicle ("SPV"). 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 (valued at 31 December 2025 at £14,160,000), 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.
3.2.3 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.
4. Summary of material accounting policies
The accounting policies adopted in this report are consistent with those applied in the financial statements for the year ended 31 December 2024 and have been consistently applied for the year ended 31 December 2025.
4.1 Basis of consolidation
The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the date of the Statement of Financial Position.
4.2 Subsidiaries
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group.
They are deconsolidated from the date that control ceases.
Inter-company transactions, balances and unrealised gains and losses on transactions between Group companies are eliminated in full. When necessary, amounts reported by subsidiaries have been adjusted to conform to the Group's accounting policies.
4.2.1 Disposal of subsidiaries
When the Group ceases to have control over an entity, any retained interest in the entity is re-measured to its fair value at the date when control is lost, with the change in the carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.
4.3 Associates
Associates are entities over which the investor has significant influence, being the power to participate in the financial and operating policy decisions of the investee but is not control or joint control of those policies. and holds 20% or more of the voting power.
The Group adopts the equity method of accounting on such assets. On initial recognition, the investment in an associate is recognised at cost, and the carrying amount is increased or decreased to recognise the investor's share of the profit or loss of the associate after the date of acquisition less distributions received.
The Group's share of the Associates' profit or loss is recorded in the Consolidated Income Statement.
4.4 Segmental information
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker is the person or group that allocates resources to and assesses the performance of the operating segments of an entity. The Group has determined that its chief operating decision-maker is the Board of Directors.
After a review of the information provided for management purposes, it was determined that the Group has one operating segment and therefore segmental information is not disclosed in these consolidated financial statements. No single customer comprises in excess of 10% of the Group's revenue in either 2025 or 2024.
4.5 Investment property
Investment property comprises freehold or leasehold properties that are held to earn rentals or for capital appreciation, or both, rather than for sale in the ordinary course of business or for use in production or administrative functions.
Investment property is recognised, usually, on legal completion, when the risks and rewards of ownership have been transferred, and is measured initially at cost including transaction costs. Transaction costs include transfer taxes, professional fees for legal services and other costs incurred in order to bring the property to the condition necessary for it to be capable of being utilised in the manner intended. Subsequent to initial recognition, investment property is stated at fair value. The Group now recognise the fair value of investment property to be the value calculated by the independent property valuer less the value of assets arising from rent smoothing. Gains or losses arising from changes in the fair value are included in the Group's Consolidated Statement of Comprehensive Income in the period in which they arise under IAS 40, 'Investment Property'.
Additions to investment property include costs of a capital nature only. Expenditure is classified as capital when it results in identifiable future economic benefits, which are expected to accrue to the Group. All other property expenditure is charged in the Group's Consolidated Statement of Comprehensive Income as incurred.
Investment properties cease to be recognised when they have been disposed of or withdrawn permanently from use and no future economic benefit is expected. The difference between the net disposal proceeds and the carrying amount of the asset (being the fair value at the start of the financial year) would result in either gains or losses at the retirement or disposal of investment property. Any gains or losses are recognised in the Group's Consolidated Statement of Comprehensive Income in the period of retirement or disposal.
4.6 Derivative financial instruments
Derivative financial instruments, comprising interest rate caps and swaps for hedging purposes, are initially recognised at fair value and are subsequently measured at fair value, being the estimated amount that the Group would receive or pay to sell or transfer the agreement at the period end date, taking into account current interest rate expectations and the current credit rating of the lender and its counterparties. The gain or loss at each fair value remeasurement date is recognised in the Group's Consolidated Statement of Comprehensive Income.
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data is available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs significant to the fair value measurement as a whole.
4.7 Financial assets
The Group classifies its financial assets as at fair value through profit or loss or at amortised cost, depending on the purpose for which the asset was acquired. Currently the only assets classified at fair value through profit or loss are derivative financial instruments.
Assets held at amortised cost arise principally from the provision of goods and services (e.g. trade and other receivables), but also incorporate other financial assets where the objective is to hold these assets in order to collect contractual cash flows which comprise the payment of principal and interest. They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue and are subsequently carried at amortised cost being the effective interest rate method, less provision for impairment.
The Group's financial assets comprise, equity investments, 'trade and other receivables', 'tenant loan' and 'cash and cash equivalents'.
The tenant loan relates to a loan made to a tenant which is subject to interest. The amount receivable has been recognised at amortised cost using the effective interest method. Impairment provisions are recognised based on the expected credit loss model detailed within IFRS 9.
4.8 Trade and other receivables
Trade and other receivables are recognised initially at fair value and subsequently carried at amortised cost less provision for impairment. Where the time value of money is material, receivables are carried at amortised cost using the effective interest method. Impairment provisions are recognised based on the expected credit loss model detailed within IFRS 9.
The Group recognises a loss allowance for expected credit losses on trade receivables. The loss allowance is based on lifetime expected credit losses. Trade receivables are grouped based on shared credit risk characteristics and the days past due. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition. The expected credit losses on these financial assets are estimated based on the Group's historical credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions and an assessment of both the current as well as the forecast direction of conditions at the reporting date. Impaired balances are reported net, however, impairment provisions are recorded within a separate provision account with the loss being recognised within administration costs within the Consolidated Statement of Comprehensive Income. On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision.
Lease premiums and other lease incentives provided to tenants are recognised as an asset and amortised over the period from date of lease commencement to termination date. As disclosed in note 4.13, rental income arising from operating leases on investment property is accounted for on a straight-line basis over the lease terms, this practice is known as rent smoothing. As a result, income is often recognised ahead of rent invoices, so an asset arises on rent smoothing which is included in the trade and other receivables note 18. This amount is not considered to be a financial instrument.
4.9 Cash and cash equivalents
Cash and cash equivalents include cash in hand and deposits held at banks with original maturities of three months or less. Cash also includes amounts held in restricted accounts that are unavailable for everyday use.
4.10 Trade and other payables
Trade and other payables are initially recognised at their fair value being at their invoiced value inclusive of any VAT that may be applicable. Payables are subsequently measured at amortised cost using the effective interest method.
4.11 Bank and other borrowings
All bank and other borrowings (comprising bank loans and retail eligible bonds) are initially recognised at cost net of attributable transaction costs. Any attributable transaction costs relating to the issue of the bank borrowings are amortised through the Group's Statement of Comprehensive Income over the life of the debt instrument on a straight-line basis. After initial recognition, all bank and other borrowings are measured at amortised cost, using the effective interest method.
Bank and other borrowings are derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in Group's Consolidated Statement of Comprehensive Income.
4.12 Dividends payable to Shareholders
Equity dividends are recognised and accrued from the date declared and when they are no longer at the discretion of the Company.
4.13 Rental and property income
Rental income arising from operating leases on investment property is accounted for on a straight-line basis over the lease terms and is included in gross rental and property income in the Group's Consolidated Statement of Comprehensive Income.
For leases which contain fixed or minimum uplifts, the rental income arising from such uplifts is recognised on a straight-line basis over the lease term.
Tenant lease incentives are recognised as a reduction of rental revenue on a straight-line basis over the term of the lease. The lease term is the non-cancellable period of the lease together with any further term for which the tenant has the option to continue the lease where, at the inception of the lease, the Directors are reasonably certain that the tenant will exercise that option.
Surrender premiums received from tenants to terminate leases or surrender premises are recognised in the Group's Statement of Comprehensive Income when the right to receive them arises.
Dilapidation income is recognised in the Group's Statement of Comprehensive Income when the right to receive it arises.
When the Group is acting as an agent, the commission, rather than gross income, is recorded as revenue.
Income arising from expenses recharged to tenants is recognised in the year in which the compensation becomes receivable. 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.
4.14 Property costs
Non-recoverable property costs contain service and management charges related to empty properties.
Service and management charges are recognised in the accounting period in which the services are rendered.
Recoverable property costs contain service charges and other similar costs which are recognised in the accounting period in which the services are rendered.
4.15 Interest income
Interest income is recognised as interest accrued on cash balances held by the Group. Interest charged to a tenant on any overdue rental income is also recognised within interest income.
4.16 Finance costs
Interest costs are expensed in the period in which they occur. Arrangement fees that a Group entity incurs in connection with bank and other borrowings are amortised over the term of the loan.
4.17 Taxation
As the Company is managed and controlled in the UK, it is considered to be tax resident in the UK.
The tax currently payable is based on the taxable profit/(loss) for the period. Taxable profit/(loss) differs from net profit/(loss) as reported in the Consolidated Statement of Comprehensive Income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current and deferred tax is calculated using tax rates that have been enacted or substantively enacted at the date of the Statement of Financial Position.
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 UK 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.
There are a small number of entities within the Group which fall outside the REIT rules and are subject to UK taxes on profits and property gains.
4.18 Deferred tax
Deferred tax is provided in full using the liability method on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit/(loss). The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates that are expected to apply in the period when the liability is settled or the asset is realised based on tax rates (and tax laws) enacted or substantively enacted at the date of the Statement of Financial Position. A deferred tax asset is recognised only to the extent that it is probable that future profits will be available for offset.
The deferred tax liability in relation to investment properties that are measured at fair value is determined assuming that the property will be recovered entirely through sale.
Deferred tax has been recognised on the unrealised property valuation gains/(losses) of properties owned by Group entities which fall outside of the REIT tax rules.
The current rate of UK Corporation Tax is 25%.
4.19 Stated capital
Stated capital represents the consideration received by the Company for the issue of Ordinary Shares. Ordinary Shares are classed as equity.
4.20 Leased assets
The Group has a number of leases concerning the long-term lease of land associated with its long leasehold investment properties. These leased assets are capitalised as "right of use assets" by recognising the present value of the lease payments as an asset and a financial liability representing the obligation to make future lease payments.
Right of use assets are valued at fair value and the change in fair value is recognised in the Consolidated Statement of Comprehensive Income.
The associated financial liability is valued at the present value of future lease payments using an applicable incremental borrowing rate. The value of the financial liability is revalued at each reporting date. Lease payments reduce the financial liability and interest on the financial liability is recognised in finance costs.
5. Rental and property income
|
|
|
Year ended 31 December 2025 £'000 |
|
Year ended 31 December 2024 £'000 |
|
Rental income - freehold property |
50,235 |
|
53,406 |
|
|
Rental income - long leasehold property |
10,197 |
|
11,833 |
|
|
Recoverable service charge income and other similar items |
18,196 |
|
25,742 |
|
|
Total |
78,628 |
|
90,981 |
|
6. Property costs
|
|
|
Year ended 31 December 2025 £'000 |
|
Year ended 31 December 2024 £'000 |
|
Direct Vacancy Irrecoverable costs |
19,011 |
|
17,791 |
|
|
Other property expenses |
1,166 |
|
1,488 |
|
|
Recoverable service charge expenditure and other similar costs |
18,196 |
|
25,742 |
|
|
Total |
38,373 |
|
45,021 |
|
Direct vacancy costs include service charges, utility costs, rates, insurance, repairs and maintenance.
7. Administrative and other expenses
|
|
|
Year ended 31 December 2025 £'000 |
|
Year ended 31 December 2024 £'000 |
|
Investment management fees |
1,947 |
|
1,362 |
|
|
Property management fees |
2,257 |
|
2,541 |
|
|
Asset management fees |
1,949 |
|
1,360 |
|
|
Directors' remuneration (see note 8) |
309 |
|
265 |
|
|
Administration fees |
662 |
|
679 |
|
|
Legal and professional fees |
2,205 |
|
2,509 |
|
|
Marketing and promotion |
83 |
|
71 |
|
|
Other administrative costs |
220 |
|
186 |
|
|
Allowance for doubtful debts |
299 |
|
454 |
|
|
Abortive costs |
- |
|
412 |
|
|
Bank charges |
13 |
|
12 |
|
|
|
9,851 |
|
1 |
|
|
Total |
9,944 |
|
9,851 |
|
Services provided by the Company's Auditor and its associates
The Group has obtained the following services from the Company's Auditor and its associates:
|
|
|
Year ended 31 December 2025 £'000 |
|
Year ended 31 December 2024 £'000 |
|
Fees payable to the Company's Auditor for the audit of the Company's annual accounts |
114 |
|
110 |
|
|
Fees payable to the Group's Auditor and its associates for the audit of the Company's subsidiaries |
147 |
|
147 |
|
|
Total fees payable for audit services |
261 |
|
257 |
|
|
Fees payable to the Group's Auditor and its associates for other services: |
|
|
|
|
|
Audit-related services |
34 |
|
33 |
|
|
Corporate finance work for the share issue |
- |
|
150 |
|
|
Total fees payable to the Group's Auditor and its associates |
295 |
|
440 |
|
8. Directors' remuneration
Key management comprises the Directors of the Company. A summary of the Directors' emoluments is set out in the Directors' Remuneration Report in the Full Annual Report.
|
|
|
Year ended 31 December 2025 £'000 |
|
Year ended 31 December 2024 £'000 |
|
Directors' fees |
289 |
|
243 |
|
|
Employer's National Insurance contributions |
20 |
|
22 |
|
|
Total |
309 |
|
265 |
|
9. Finance income
|
|
Year ended 31 December 2025 £'000 |
|
Year ended 31 December 2024 £'000 |
|
Interest income |
991 |
|
1,394 |
|
Total |
991 |
|
1,394 |
10. Finance expense
|
|
|
Year ended 31 December 2025 £'000 |
|
Year ended 31 December 2024 £'000 |
|
Interest payable on bank borrowings |
10,251 |
|
11,881 |
|
|
Amortisation of loan arrangement fees |
1,561 |
|
1,497 |
|
|
Bond interest |
- |
|
1,344 |
|
|
Bond issue costs amortised |
- |
|
93 |
|
|
Bond expenses |
- |
|
5 |
|
|
Lease interest |
403 |
|
404 |
|
|
Total |
12,215 |
|
15,224 |
|
11. Taxation
|
|
Year ended 31 December 2025 £'000 |
|
Year ended 31 December 2024 £'000 |
|
Corporation tax (credit)/ charge |
(27) |
|
32 |
|
Increase in deferred tax liability |
13 |
|
33 |
|
Total |
(14) |
|
65 |
The current tax charge is reduced by the UK REIT tax exemptions. The tax charge for the year can be reconciled to the loss in the Consolidated Statement of Comprehensive Income as follows:
|
|
Year ended 31 December 2025 £'000 |
|
Year ended 31 December 2024 £'000 |
|
Loss before taxation |
(16,366) |
|
(39,474) |
|
UK Corporation Tax rate |
25.00% |
|
25.00% |
|
Theoretical tax at UK Corporation Tax rate |
(4,092) |
|
(9,868) |
|
Effects of: |
|
|
|
|
Revaluation of investment property |
6,653 |
|
14,183 |
|
Permanent differences |
(87) |
|
(169) |
|
Profits from the tax-exempt business |
(2,501) |
|
(4,114) |
|
Deferred tax movement |
13 |
|
33 |
|
Total |
(14) |
|
65 |
Permanent differences are the differences between an entity's taxable profits and its results as stated in the financial statements. These arise because certain types of income and expenditure are non-taxable or disallowable, or because certain tax charges or allowances have no corresponding amounts in the financial statements.
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 they are not held for trading purposes or sold in the three years after completion of development. The Group is otherwise subject to UK corporation tax.
As a REIT, Regional REIT Ltd is required to pay PID's 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.
UK Corporation Tax arises on entities which form part of the Group 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 maintain this status for 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.
12. Earnings per Share
Earnings per Share amounts are calculated by dividing (losses)/profits for the year attributable to ordinary equity holders of the Company by the weighted average number of Ordinary Shares in issue during the year.
In accordance with IAS 33 "Earnings per Share", the weighted average number of shares have been recalculated as though the bonus issue and share consolidation were in place from 1 January 2024.
The calculation of basic and diluted earnings per Share is based on the following:
|
|
|
Year ended 31 December 2025 £'000 |
|
Year ended 31 December 2024 £'000 |
|
Calculation of earnings per Share |
|
|
|
|
|
Net loss attributable to Ordinary Shareholders |
(16,352) |
|
(39,539) |
|
|
Adjustments to remove: |
|
|
|
|
|
Changes in value of investment properties |
26,612 |
|
56,732 |
|
|
Changes in value of right of use assets |
139 |
|
138 |
|
|
Loss on disposal of investment properties |
3,172 |
|
3,180 |
|
|
Changes in fair value of interest rate derivatives and financial assets |
5,506 |
|
1,703 |
|
|
Abortive costs |
- |
|
412 |
|
|
Deferred tax charge |
13 |
|
33 |
|
|
EPRA earnings |
19,090 |
|
22,659 |
|
|
Weighted average number of Ordinary Shares |
162,088,483 |
|
118,199,045 |
|
|
Loss per Share - basic and diluted |
(10.1)p |
|
(33.5)p |
|
|
EPRA earnings per Share - basic and diluted |
11.8p |
|
19.2p |
|
13. Dividends
All dividend rates stated in this note represent the dividend rates announced to the London Stock Exchange. Following a share issue and 1 for 10 share consolidation on 29 July 2024, the number of Ordinary Shares in issue decreased from 515,736,583 Ordinary Shares to 162,088,483 Ordinary Shares.
|
|
|
Year ended 31 December 2025 £'000 |
|
Year ended 31 December 2024 £'000 |
|
Dividend of 2.20 (2024: 1.20) pence per Ordinary Share for the period 1 October - 31 December |
3,565 |
|
6,188 |
|
|
Dividend of 2.50 (2024: 1.20) pence per Ordinary Share for the period 1 January - 31 March |
4,052 |
|
6,189 |
|
|
Dividend of 2.50 (2024: 2.20) pence per Ordinary Share for the period 1 April - 30 June |
4,052 |
|
3,566 |
|
|
Dividend of 2.50 (2024: 2.20) pence per Ordinary Share for the period 1 July - 30 September |
4,052 |
|
3,567 |
|
|
Unpaid dividends held by Registrar |
(1) |
|
(70) |
|
|
Total |
15,720 |
|
19,440 |
|
On 20 February 2025, the Company announced a dividend of 2.20 pence per Share in respect of the period 1 October 2024 to 31 December 2024. The dividend payment was made on 4 April 2025 to shareholders on the register as at 28 February 2025.
On 15 May 2025, the Company announced a dividend of 2.50 pence per Share in respect of the period 1 January 2025 to 31 March 2025. The dividend payment was made on 11 July 2025 to shareholders on the register as at 23 May 2025.
On 9 September 2025, the Company announced a dividend of 2.50 pence per Share in respect of the period 1 April 2025 to 30 June 2025. The dividend payment was made on 17 October 2025 to shareholders on the register as at 19 September 2025.
On 12 November 2025, the Company announced a dividend of 2.50 pence per Share in respect of the period 1 July 2025 to 30 September 2025. The dividend payment was made on 9 January 2026 to shareholders on the register as at 21 November 2025.
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 will be paid on 10 April 2026 to shareholders on the register as at 27 February 2026. The financial statements do not reflect this dividend.
The Board intends to pursue a dividend policy with quarterly dividend distributions. The level of future payment of dividends will be determined by the Board having regard to, amongst other things, the financial position and performance of the Group at the relevant time, UK REIT requirements, and the interest of shareholders.
14. 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 Limited, 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 valuations have been prepared in accordance with the RICS Red Book and incorporate the recommendations of the International Valuation Standards Committee which are consistent with the principles set out in IFRS 13.
The valuations are 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 year ended 31 December 2025 |
|
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 |
||
|
Disposal proceeds, net of costs |
|
(48,193) |
|
(232) |
|
(48,425) |
||
|
Loss on disposal of investment properties |
|
(3,094) |
|
(78) |
|
(3,172) |
||
|
Change in fair value during the period |
(20,976) |
|
(7,619) |
|
(28,595) |
|||
|
Valuation advised by the property valuers at 31 December 2025 |
429,936 |
125,294 |
555,230 |
|||||
|
Less adjustments for rent smoothing assets (note 18) |
(9,780) |
(3,259) |
(13,039) |
|||||
|
Fair Value at 31 December 2025 |
420,156 |
122,035 |
542,191 |
|||||
|
|
||||||||
|
Group Movement in investment properties for the year ended 31 December 2024 |
|
|
|
|
|
|
||
|
Valuation at 1 January 2024 |
|
562,395 |
|
138,325 |
|
700,720 |
||
|
Property additions - acquisitions |
|
- |
|
- |
|
- |
||
|
Property additions - subsequent expenditure |
|
7,286 |
|
963 |
|
8,249 |
||
|
Disposal proceeds, net of costs |
|
(28,574) |
|
- |
|
(28,574) |
||
|
Loss on disposal of investment properties |
|
(3,180) |
|
- |
|
(3,180) |
||
|
Change in valuation during the period |
|
(45,031) |
|
(9,704) |
|
(54,735) |
||
|
Valuation advised by the property valuers at 31 December 2024 |
|
492,896 |
|
129,584 |
|
622,480 |
||
|
Less adjustment for rent smoothing assets (note 18)* |
|
(10,795) |
|
(4,227) |
|
(15,022) |
||
|
Fair Value at 31 December 2024 |
|
482,101 |
|
125,357 |
|
607,458 |
||
* The analysis of the comparative rent smoothing adjustment between leasehold and freehold property has been updated.
The net book value of properties disposed of during the year amounted to £51,597,000 (2024: £31,754,000).
The historic cost of the properties is £773,287,000 (2024: £850,152,000).
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 valuer's assessment of the value of investment properties secured at 31 December 2025 was £555,230,000 (2024: £622,480,000).
The table below shows the total change in fair value during the year.
|
|
31 December 2025 £'000 |
31 December 2024 £'000 |
|
Change in valuation during the period |
(28,595) |
(54,735) |
|
Change in rent smoothing assets adjustment |
1,983 |
(1,997) |
|
Total |
(26,612) |
(56,732) |
The following table provides the fair value measurement hierarchy for investment property:
|
Date of valuation: |
Total £'000 |
Quoted active prices (level 1) £'000 |
Significant observable inputs (level 2) £'000 |
Significant unobservable inputs (level 3) £'000 |
|
31 December 2025 |
542,191 |
- |
- |
542,191 |
|
31 December 2024 |
607,458 |
- |
- |
607,458 |
The hierarchy levels are defined in note 30.
It has been determined that the entire investment properties portfolio should be classified under the level 3 category. The table below shows the movement in the year on the level 3 category:
|
|
|
Year ended 31 December 2025 £'000 |
|
Year ended 31 December 2024 £'000 |
|
Balance at the start of the year |
|
607,458 |
|
687,695 |
|
Additions |
|
12,942 |
|
8,249 |
|
Disposals |
|
(48,425) |
|
(28,574) |
|
Loss on the disposal of investment properties |
(3,172) |
|
(3,180) |
|
|
Change in fair value during the year |
|
(26,612) |
|
(56,732) |
|
Balance at the end of the year |
|
542,191 |
|
607,458 |
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, 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 (ERV) 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 31 December 2025, 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.
The impact of climate change on the portfolio and the principal risk around environmental and energy efficiency standards are disclosed in the Strategic Report section of the Full Annual Report.
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's 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 range: £16,200 - £3,512,000 per annum (2024: £14,200 - £3,237,000 per annum)
Significant input: rental growth
Rental Growth: decrease in contracted income of -13.79% (2024: 8.64% decrease) from December 2024 (£53,840,436) to December 2025 (£46,413,666). There is a gross contracted rent reduction, as per normal operations it is a combination of property disposals, space under refurbishments 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 below table.
Unobservable inputs
The significant unobservable inputs (level 3) are sensitive to changes in the estimated future cash flows from investment properties such as increases and decreases in contracted rents, operating expenses and capital expenses, plus transactional activity in the real estate market.
Geographical and sector specific market evidence reviewed in the course of preparing the December 2025 valuation had an initial yield range of 6.0% to 20.9% (2024: 6.00% to 25.19%).
As set out within the significant accounting estimates and judgements, 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.
ERV and equivalent yield range by sector:
|
Significant Unobservable Inputs |
|||||
|
Sector |
Valuation £'000 |
ERV Range (£ per sq ft p.a.) |
ERV Weighted average (£ per sq ft) |
Equivalent Yield Range % |
Equivalent Yield Weighted Average % |
|
As at December 2025 |
|||||
|
Industrial |
£23,825.00 |
£4.00 - £9.49 |
7.07 |
6.40% - 21.38% |
8.51 |
|
Retail |
£20,290.00 |
£2.07 - £40.00 |
15.94 |
8.20% - 13.41% |
8.82 |
|
Alternatives |
£9,550.00 |
£5.00 - £13.50 |
9.28 |
9.67% |
9.67 |
|
Office by Region |
|||||
|
Office South East |
£88,075.00 |
£5.00 - £29.01 |
18.65 |
8.24% - 32.55% |
10.28 |
|
Office South West |
£53,950.00 |
£12.28 - £22.90 |
18.54 |
9.93%- 14.34% |
11.33 |
|
Office Midlands |
£112,590.00 |
£3.01 - £35.04 |
15.37 |
9.52% - 12.10% |
10.97 |
|
Office North West |
£62,725.00 |
£6.61 - £21.99 |
16.95 |
8.53% - 16.59% |
10.89 |
|
Office North East |
£89,950.00 |
£8.29 - £37.13 |
18.13 |
8.36% - 12.00% |
10.21 |
|
Office Wales |
£17,650.00 |
£10.01 - £13.50 |
12.01 |
8.89% - 11.01% |
10.48 |
|
Office Scotland |
£76,625.00 |
£4.50 - £90.21 |
17.77 |
9.39% - 14.16% |
10.41 |
|
Total |
£555,230.0 |
|
|
|
|
The impact of changes to the significant unobservable inputs:
|
|
2025 Impact on statement of comprehensive income £'000 |
2025 Impact on statement of financial position £'000 |
2024 Impact on statement of comprehensive income £'000 |
2024 Impact on statement of financial position £'000 |
|
Improvement in ERV by 5% |
25,062 |
25,062 |
27,490 |
27,490 |
|
Worsening in ERV by 5% |
(24,787) |
(24,787) |
(27,009) |
(27,009) |
|
Improvement in yield by 0.125% |
8,061 |
8,061 |
9,064 |
9,064 |
|
Worsening in yield by 0.125% |
(7,837) |
(7,837) |
(8,792) |
(8,792) |
The 0.125% yield movement applied is considered reasonable, as it reflects a shift commonly observed in normal market conditions and is consistent with independent valuer guidance for diversified UK commercial real estate portfolios. This margin therefore represents a reasonably possible change in key unobservable inputs at the reporting date.
15. Investment in subsidiaries
List of subsidiaries which are 100% owned and controlled by the Group:
|
|
Country of incorporation |
Ownership % |
|
1 Beaufort Office Park Management Company Limited |
United Kingdom |
100% |
|
1 Glasgow Airport Business Park Management Company Limited |
United Kingdom |
100% |
|
1 Origin Apartments Management Company Limited |
United Kingdom |
100% |
|
2 Regional Commercial MIDCO Ltd |
Jersey |
100% |
|
2 RR Bennett House Ltd |
Jersey |
100% |
|
2 RR Brand Street Ltd |
Jersey |
100% |
|
2 RR Bristol Ltd |
Jersey |
100% |
|
2 RR Chancellor Court Ltd |
Jersey |
100% |
|
2 RR Falcon Ltd |
Jersey |
100% |
|
2 RR Glasgow Ltd |
Jersey |
100% |
|
6 RR Glasgow II Ltd |
United Kingdom |
100% |
|
2 RR Harvest Ltd |
Jersey |
100% |
|
2 RR Hounds Gate Ltd |
Jersey |
100% |
|
2 RR Milburn House Ltd |
Jersey |
100% |
|
2 RR Minton Place Ltd |
Jersey |
100% |
|
2 RR Newstead Court Ltd |
Jersey |
100% |
|
2 RR Portland Street Ltd |
Jersey |
100% |
|
2 RR Rainbow (Aylesbury) Ltd |
Jersey |
100% |
|
2 RR Rainbow (North) Ltd |
Jersey |
100% |
|
2 RR Rainbow (South) Ltd |
Jersey |
100% |
|
2 RR Range Ltd |
Jersey |
100% |
|
5 RR Reflex Limited |
United Kingdom |
100% |
|
3 RR Sea Dundee Ltd |
United Kingdom |
100% |
|
3 RR Sea Hanover Street Ltd |
United Kingdom |
100% |
|
2 RR Sea Lamont I Ltd |
Jersey |
100% |
|
2 RR Sea Lamont II Ltd |
Jersey |
100% |
|
3 RR Sea St. Helens Ltd |
United Kingdom |
100% |
|
3 RR Sea Stafford Ltd |
United Kingdom |
100% |
|
3 RR Sea Strand Ltd |
United Kingdom |
100% |
|
4 RR Sea TAPP Ltd |
Guernsey |
100% |
|
4 RR Sea TOPP Bletchley Ltd |
Guernsey |
100% |
|
4 RR Sea TOPP I Ltd |
Guernsey |
100% |
|
2 RR Sheldon Court Ltd |
Jersey |
100% |
|
2 RR Star Ltd |
Jersey |
100% |
|
2 RR St James Court Ltd |
Jersey |
100% |
|
2 RR Strathclyde BP Ltd |
Jersey |
100% |
|
2 RR UK (Central) Ltd |
Jersey |
100% |
|
2 RR UK (Cheshunt) Ltd |
Jersey |
100% |
|
2 RR UK (Port Solent) Ltd |
Jersey |
100% |
|
2 RR UK (South) Ltd |
Jersey |
100% |
|
2 RR Wallington Ltd |
Jersey |
100% |
|
2 RR Westminster House Ltd |
Jersey |
100% |
|
2 RR Wing Portfolio Ltd |
Jersey |
100% |
|
2 Tay Properties Ltd |
Jersey |
100% |
|
2 TCP Arbos Ltd |
Jersey |
100% |
|
2 TCP Channel Ltd |
Jersey |
100% |
Registered Office Address
1 Leeds House, Central Park, Leeds LS11 5DZ
2 Second Floor, No.4 The Forum, Grenville Street, St Helier, Jersey JE2 4UF
3 19th Floor, 51 Lime Street, London EC3M 7DQ
4 2nd Floor, Lefebvre Place, Lefebvre Street, St Peter Port, Guernsey GY1 2JP
5 300 Bath Street, First Floor West, Glasgow G2 4JR
6 Ferguson House, 15 Marylebone, London, NW1 5JD
All of the above entities have been included in the Group's consolidated financial statements.
By virtue of an Amended and Restated Call Option Agreement dated 3 November 2018, the Directors consider that the Group has control of View Castle Limited and its subsidiaries (the "View Castle Group").
Under this option, the Group has the ability to acquire any of the properties held by the View Castle Group by issuing an option notice for a nominal consideration of £1. The recipient of the option notice will be obliged to convey its title within one month after receipt of the option notice.
Despite having no equity holding, the Group controls the View Castle Group as the option agreement has the effect 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.
The companies which make up the View Castle Group are as follows:
|
List of subsidiaries that are controlled by the Group: |
Country of incorporation |
Control % |
|
1 Credential (Wardpark North) Ltd |
United Kingdom |
100% |
|
1 Credential Estates Ltd |
United Kingdom |
100% |
|
2 Rocket Unit Trust |
Jersey |
100% |
|
1 Squeeze Newco 2 Ltd |
United Kingdom |
100% |
|
1 View Castle Ltd |
United Kingdom |
100% |
|
1 View Castle (Milton Keynes) Ltd |
United Kingdom |
100% |
|
1 View Castle (Properties) Ltd |
United Kingdom |
100% |
Registered Office Address
1 300 Bath Street, First Floor West, Glasgow G2 4JR
2 Gaspé House, 66-72 Esplanade, St Helier, Jersey JE2 3QT
All of the above entities have been included in the Group's consolidated financial statements up to 31 December 2025.
16. Investment in associates
The Company has an investment in an associate, Sugarbird Solar (UK) Limited ("SolarCo"), which represents 40% of the issued share capital. Sunbird Solar International (Cyprus) Limited contributed 60% of the issued share capital.
The investment represents a minority interest with significant influence but not control over SolarCo. SolarCo is operated and managed by Sunbird Solar International (Cyrpus) Limited.
In addition, the Company has holdings in two property management companies acquired for nil value.
The table below shows the movement in the investment during the year:
|
|
31 December 2025 £'000 |
31 December 2024 £'000 |
|
At start of year |
276 |
- |
|
Amounts paid for investment |
96 |
276 |
|
Share of losses |
(24) |
- |
|
At end of year |
348 |
276 |
|
List of companies not wholly owned by the Group: |
Country of incorporation |
Holding % |
|
HCP (Estate Management) Limited |
United Kingdom |
49% |
|
Sugarbird Solarco (UK) Limited |
United Kingdom |
40% |
17. Non-current receivables on tenant loans
|
|
31 December 2025 £'000 |
31 December 2024 £'000 |
|
At start of year |
337 |
578 |
|
Amounts repaid in the year |
(193) |
(241) |
|
At end of year |
144 |
337 |
|
Asset due within 1 year (note 18) |
144 |
193 |
|
Asset due after 1 year |
- |
144 |
|
|
114 |
337 |
During 2016, the Group entered into a loan agreement with a tenant for £1,926,000. The loan is subject to interest of 4% above the base rate of the Bank of Scotland on late payments and is repayable in instalments over ten years. No impairment has been recognised against the non-current receivable as at 31 December 2025 or 31 December 2024.
18. Trade and other receivables
|
|
31 December 2025 £'000 |
31 December 2024 £'000 |
|
Gross amount receivable from tenants |
11,291 |
9,696 |
|
Less provision for impairment |
(252) |
(1,451) |
|
Net amount receivable from tenants |
11,039 |
8,245 |
|
Current receivables - tenant loans (note 17) |
144 |
193 |
|
Income tax |
- |
24 |
|
Other receivables |
2,169 |
1,495 |
|
Assets arising from rent smoothing (note 14) |
13,039 |
15,022 |
|
Prepayments and accrued income |
14,326 |
10,100 |
|
|
40,717 |
35,079 |
The maximum exposure to credit risk at the reporting date is the carrying value of the amounts disclosed above in note 30.1. The Group does not hold any collateral as security.
The aged analysis of trade receivables that are past due but not impaired was as follows:
|
|
31 December 2025 £'000 |
31 December 2024 £'000 |
|
< 30 days |
7,211 |
3,928 |
|
30-60 days |
475 |
722 |
|
> 60 days |
3,605 |
5,046 |
|
Net amount receivable from tenants |
11,291 |
9,696 |
|
Less provision for impairment |
(252) |
(1,451) |
|
Net Amount receivable from tenants |
11,039 |
8,245 |
The Directors consider the fair value of receivables equals their carrying amount.
The table above shows the aged analysis of trade receivables included in the table which are past due but not impaired. These relate to tenants for whom there is no recent history of default.
Provision for impairment of trade receivables movement as follows:
|
|
31 December 2025 £'000 |
31 December 2024 £'000 |
|
At start of year |
1,451 |
915 |
|
Provision for impairment in the year |
901 |
1,739 |
|
Receivables written off as uncollectable |
(1,346) |
(195) |
|
Unused provision reversed |
(754) |
(1,008) |
|
At end of year |
252 |
1,451 |
Other categories within trade and other receivables do not include impaired assets. Receivables are written off as uncollectable where there is no reasonable expectation of recovery.
19. Cash and cash equivalents
|
|
31 December 2025 £'000 |
|
31 December 2024 £'000 |
|
Group |
|
|
|
|
Cash held at bank |
37,719 |
|
55,869 |
|
Restricted cash held at bank |
7 |
|
850 |
|
At end of year |
37,726 |
|
56,719 |
Comparatives have been re-analysed between restricted and non-restricted balances.
Restricted cash balances of the Group comprise:
• £7,000 (2024: £850,000) of funds held in blocked bank accounts which are controlled by the Group's lenders and are released once certain loan conditions are met. The restricted funds arose on net proceeds from investment property disposals.
The following amounts are not analysed as restricted balances:
• £8,604,000 (2024: £9,847,000) of cash funds represent service charge income received from tenants for settlement of future service charge expenditure.
• £2,710,000 (2024: £2,698,000) of cash funds represent tenants' rental deposits.
The restricted cash balances are all accessible within 90 days so meet the definition of cash and cash equivalents.
20. Trade and other payables
|
|
31 December 2025 £'000 |
|
31 December 2024 £'000 |
|
Withholding tax due on dividends paid |
512 |
|
429 |
|
Dividends announced but not paid |
4,052 |
|
3,567 |
|
Trade payables |
3,147 |
|
2,377 |
|
Other payables |
15,521 |
|
19,182 |
|
Value added tax |
2,066 |
|
1,974 |
|
Accruals |
3,967 |
|
4,118 |
|
At end of year |
29,265 |
|
31,647 |
Other payables principally include rent deposits held and service charge costs.
The Directors consider the fair value of trade and other payables to equal their carrying amounts.
21. Deferred income
Deferred rental income of £13,540,000 (31 December 2024: £14,364,000) represents rent received in advance from tenants.
22. Deferred tax liabilities
|
|
31 December 2025 £'000 |
|
31 December 2024 £'000 |
|
Deferred tax |
754 |
|
741 |
|
At end of year |
754 |
|
741 |
|
The movement on deferred tax liability is shown below: |
|
|
|
|
At start of year |
741 |
|
708 |
|
Deferred tax on the valuation of investment properties |
13 |
|
33 |
|
At end of year |
754 |
|
741 |
The deferred tax liability relates to the potential tax liability that may crystalise when investment properties are sold. It is calculated on the revaluation gains of investment properties held by the Group which fall outside of the REIT regime.
23. Bank and loan borrowings
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. Any associated fees in arranging the bank borrowings unamortised as at the year-end are offset against amounts drawn on the facilities as shown in the table below:
|
|
31 December 2025 £'000 |
|
31 December 2024 £'000 |
|
Bank borrowings drawn at start of year |
316,734 |
|
370,750 |
|
Bank borrowings repaid |
(50,508) |
|
(54,016) |
|
Bank borrowings drawn at end of year |
266,226 |
|
316,734 |
|
Less: unamortised costs at start of year |
(4,411) |
|
(5,147) |
|
Less: loan issue costs incurred in the year |
(1,057) |
|
(761) |
|
Add: loan issue costs amortised in the year |
1,561 |
|
1,497 |
|
At end of year |
262,319 |
|
312,323 |
|
Maturity of bank borrowings |
|
|
|
|
Repayable within 1 year |
- |
|
- |
|
Repayable between 1 to 2 years |
118,339 |
|
99,789 |
|
Repayable between 2 to 5 years |
147,887 |
|
216,945 |
|
Repayable after more than 5 years |
- |
|
- |
|
Unamortised loan issue costs |
(3,907) |
|
(4,411) |
|
|
262,319 |
|
312,323 |
The table below lists the Group's borrowings.
|
Lender |
Facility £'000 |
Outstanding debt* £'000 |
Maturity date |
Gross loan to value** |
Annual interest rate |
Amortisation |
|
Scottish Widows Ltd & Aviva Investors Real Estate Finance |
118,339 |
118,339 |
Dec-27 |
50.8% |
3.28% Fixed |
None |
|
Scottish Widows Ltd |
32,325 |
32,325 |
Dec-28 |
45.6% |
3.37% Fixed |
None |
|
Royal Bank of Scotland, Bank of Scotland and Santander |
72,449 |
72,449 |
Dec-28 |
44.9% |
2.40% over 3mth £ SONIA
|
Mandatory prepayment |
|
Santander UK |
43,113 |
43,113 |
Jun-29 |
48.5% |
2.20% over 3 months £ SONIA |
Mandatory prepayment |
|
Total bank borrowings |
266,226 |
266,226 |
|
|
|
|
SONIA = Sterling Over Night Indexed Average
* Before unamortised debt issue costs
** Based upon Colliers International Property Consultants limited property valuations
The percentage of borrowings at variable rates of interest was 43.4% (2024: 47.2%).
The weighted average term to maturity of the Group's debt at the year-end was 2.6 years (2024: 2.9 years).
The weighted average interest rate payable by the Group on its total bank borrowings, excluding hedging costs, as at the year-end was 4.6% (2024: 5.2%).
The Group weighted average interest rate, including and hedging activity at the year end, amounted to 3.3% per annum (2024: 3.4% per annum).
The Group has been in compliance with all of the financial covenants relating to the above facilities as applicable throughout the year covered by these consolidated financial statements. Each facility has distinct covenants which generally include: historic interest cover, projected interest cover, LTV cover and debt service 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 a 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 25, the Group uses a combination of interest rate swaps and fixed rate bearing loans to hedge against cash flow interest rate risks. The Group's exposure to interest rate volatility is minimal.
24. Retail Eligible Bonds
The table below shows the movement on the Company's £50,000,000 4.5% Retail Eligible Bonds that matured on 6 August 2024. These unsecured bonds were listed on the London Stock Exchange ORB platform until their maturity in the year.
|
|
31 December 2025 £'000 |
|
31 December 2024 £'000 |
|
Bond principal at start of year |
- |
|
50,000 |
|
Unamortised issue costs at start of year |
- |
|
(93) |
|
Amortisation of issue costs |
- |
|
93 |
|
Maturity |
- |
|
(50,000) |
|
At end of year |
- |
|
- |
25. 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.
|
|
31 December 2025 £'000 |
|
31 December 2024 £'000 |
|
Fair value at start of period |
11,608 |
|
16,009 |
|
Early break costs received |
(1,218) |
|
(2,698) |
|
Revaluation in period |
(5,506) |
|
(1,703) |
|
Fair Value at end of year |
4,884 |
|
11,608 |
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. Further details can be found in note 30.1.
During the year the notional amount on derivative instruments was reduced with a cash amount realised of £1,218,000 (2024: £2,698,000).
The value of derivatives maturing in less than 1 year £1,739,000 (2024: £nil)
The table below lists the hedging and swap notional amounts and rates against the details of the Group's loan facilities.
|
Lender |
Facility £'000 |
Outstanding debt* £'000 |
Loan maturity date |
Annual interest rate |
Notional amount £'000 |
Swap/cap rate |
|
Scottish Widows Ltd & Aviva Investors Real Estate Finance |
118,339 |
118,339 |
Dec-27 |
3.28% Fixed |
n/a |
n/a |
|
Scottish Widows Ltd |
32,325 |
32,325 |
Dec-28 |
3.37% Fixed |
n/a |
n/a |
|
Royal Bank of Scotland, Bank of Scotland and Santander UK |
72,449 |
72,449 |
Dec-28** |
2.40% over 3mth £ SONIA
|
51,4201 23,7802
|
0.99%3 0.97%3
|
|
Santander UK |
43,113 |
43,113 |
Jun-29 |
2.20% over 3mth £ SONIA
|
34,5851 8,5292
|
1.39% 1.39%
|
|
Total bank borrowings |
266,226 |
266,226 |
|
|
|
|
1 Interest rate swap
2 Interest rate cap
3 Average rate of the three derivative providers
* Before unamortised debt issue costs
** Derivative maturity date is 27 August 2026. As detailed in note 35, Subsequent Events,
the Group has executed new derivatives maturing in December 2028.
SONIA = Sterling Over Night Indexed Average
As at 31 December 2025, the swap notional arrangements were £86.0 million (2024: £96.1 million) and the cap notional arrangements amounted to £32.3 million (2024: £53.5 million).
The Group weighted average effective interest rate was 3.3% (2024: 3.4%) inclusive of hedging costs and the Retail Eligible Bond, which matured in August 2024.
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 debt portfolio using interest rate derivatives and fixed- rate facilities. As at the year end, the total proportion of hedged debt equated to 101.0% (2024: 100.0%), as shown below.
|
|
31 December 2025 £'000 |
|
31 December 2024 £'000 |
|
Total bank borrowings |
266,226 |
|
316,734 |
|
Notional value of interest rate caps and swaps |
118,314 |
|
149,637 |
|
Fixed rate borrowings |
150,664 |
|
167,097 |
|
|
268,978 |
|
316,734 |
|
Proportion of hedged debt |
101.0% |
|
100.0% |
Table may not sum due to rounding
26. Leases
|
Right of use asset |
31 December 2025 £'000 |
|
31 December 2024 £'000 |
|
At start of year |
10,849 |
|
10,987 |
|
Fair value movement |
(139) |
|
(138) |
|
At end of year |
10,710 |
|
10,849 |
|
Lease liability |
31 December 2025 £'000 |
|
31 December 2024 £'000 |
|
At start of year |
11,444 |
|
11,475 |
|
Lease payments |
(435) |
|
(435) |
|
Interest charges |
403 |
|
404 |
|
At end of year |
11,412 |
|
11,444 |
The Group's lease commitments which are now represented by the right of use asset and lease liability are spread across 10 (2024: 10) separate leases with the two largest leases at Northern Cross Basingstoke and Quantum Court Edinburgh making up 48% (2024: 48%) of the balance. Total commitments on leases in respect of land and buildings are as follows:
|
Group |
31 December 2025 £'000 |
|
31 December 2024 £'000 |
|
Payable within 1 year |
435 |
|
435 |
|
Payable between 1 and 2 years |
435 |
|
435 |
|
Payable between 2 and 5 years |
1,305 |
|
1,305 |
|
Payable after 5 years |
33,308 |
|
33,563 |
|
At end of year |
35,483 |
|
35,738 |
27. Stated capital
Stated capital represents the consideration received by the Company for the issue of Ordinary Shares.
During the previous year, the Company offered 15 new Ordinary Shares for every 7 existing shares. This resulted in an increase of 1,105,149,821 Ordinary Shares being issued. Subsequently, there was a 10 for 1 consolidation with the resulting Ordinary Shares in issue being 162,088,483.
|
|
|
31 December 2025 £'000 |
|
31 December 2024 £'000 |
|
Group |
|
|
|
|
|
Issued and fully paid Shares of no par value |
|
|
|
|
|
At start of the year |
618,266 |
|
513,762 |
|
|
Shares issued in year |
- |
|
110,515 |
|
|
Cost of shares issued in 2024 |
(256) |
|
(6,011) |
|
|
At end of the year |
618,010 |
|
618,266 |
|
|
Number of Shares in issue |
|
|
|
|
|
At start of the year |
162,088,483 |
|
515,736,583 |
|
|
Shares issued in year |
- |
|
1,105,149,821 |
|
|
Reduction in shares (see note above) |
- |
|
(1,458,797,921) |
|
|
At end of the year |
162,088,483 |
|
162,088,483 |
|
28. Net asset value (NAV) per Share
Basic NAV per Share is calculated by dividing the net assets in the Statement of Financial Position attributable to ordinary equity holders of the parent by the number of Ordinary Shares outstanding at the end of the year. See Note 27 for further explanation.
Further detail of the EPRA performance measures can be found in the Full Annual Report.
|
|
|
31 December 2025 £'000 |
|
31 December 2024 |
|
Group |
|
|
|
|
|
Net asset value per Consolidated Statement of Financial Position |
319,286 |
|
351,614 |
|
|
Adjustment for calculating EPRA net tangible assets: |
|
|
|
|
|
Derivative financial instruments |
(4,884) |
|
(11,608) |
|
|
Deferred tax liability |
754 |
|
741 |
|
|
EPRA Net Tangible Assets |
315,156 |
|
340,747 |
|
|
Number of Ordinary Shares in issue |
162,088,483 |
|
162,088,483 |
|
|
Net asset value per Share - basic and diluted |
|
197.0p |
|
216.9p |
|
EPRA Net Tangible Assets per Share - basic and diluted |
|
194.4p |
|
210.2p |
29. Notes to the Statement of Cash Flows
29.1 Reconciliation of changes in liabilities to cash flows arising from financing activities
|
|
Bank loans and borrowings £'000 |
Retail Eligible Bonds £'000 |
Lease liabilities £'000 |
Total £'000 |
|
Balance at 1 January 2025 |
312,323 |
- |
11,444 |
323,767 |
|
Changes from financing cash flows: |
|
|
|
|
|
Bank borrowings repaid |
(50,508) |
- |
- |
(50,508) |
|
Bank and bond borrowing costs paid |
(1,057) |
- |
- |
(1,057) |
|
Lease payments |
- |
- |
(435) |
(435) |
|
Total changes from financing cash flows |
(51,565) |
- |
(435) |
(52,000) |
|
Amortisation of issue costs |
1,561 |
- |
- |
1,561 |
|
Unwinding of discount |
- |
- |
403 |
403 |
|
Total other changes |
1,561 |
- |
403 |
1,964 |
|
Balance at 31 December 2025 |
262,319 |
- |
11,412 |
273,731 |
|
|
Bank loans and borrowings £'000 |
Retail Eligible Bonds £'000 |
Lease liabilities £'000 |
Total £'000 |
|
Balance at 1 January 2024 |
365,603 |
49,907 |
11,475 |
426,985 |
|
Changes from financing cash flows: |
|
|
|
|
|
Bank borrowings repaid |
(54,016) |
- |
- |
(54,016) |
|
Bank and bond borrowing costs paid |
(761) |
- |
- |
(761) |
|
Repayment of bond |
- |
50,000) |
- |
(50,000) |
|
Lease payments |
- |
- |
(435) |
(435) |
|
Total changes from financing cash flows |
(54,777) |
(50,000) |
(435) |
(105,212) |
|
Amortisation of issue costs |
1,497 |
93 |
- |
1,590 |
|
Unwinding of discount |
- |
- |
404 |
404 |
|
Total other changes |
1,497 |
93 |
404 |
1,994 |
|
Balance at 31 December 2024 |
312,323 |
- |
11,444 |
323,767 |
30. Financial risk management
30.1 Financial instruments
The Group's principal financial assets and liabilities are those that arise directly from its operations: trade and other receivables, trade and other payables and cash and cash equivalents. The Group's other principal financial assets and liabilities are bank and other loan borrowings, amounts due to interest rate derivatives and lease liabilities, the main purpose of which is to finance the acquisition and development of the Group's investment property portfolio.
Set out below is a comparison by class of the carrying amounts of the Group's financial instruments that are carried in the financial statements and their fair value:
|
|
31 December 2025 |
31 December 2024 |
||
|
Group |
Carrying value £'000 |
Fair value £'000 |
Carrying value £'000 |
Fair value £'000 |
|
Financial assets - measured at amortised cost |
|
|
|
|
|
Trade and other receivables |
13,352 |
13,352 |
10,077 |
10,077 |
|
Cash and short-term deposits |
37,726 |
37,726 |
56,719 |
56,719 |
|
Financial assets - measured at fair value through profit or loss |
|
|
|
|
|
Interest rate derivatives |
4,884 |
4,884 |
11,608 |
11,608 |
|
Financial liabilities - measured at amortised cost |
|
|
|
|
|
Trade and other payables |
(26,687) |
(26,687) |
(29,244) |
(29,244) |
|
Bank and loan borrowings |
(262,319) |
(259,060) |
(312,323) |
(301,293) |
|
Lease liability |
(11,412) |
(11,412) |
(11,444) |
(11,444) |
The following financial assets and liabilities are recorded in the Consolidated Statement of Financial Position at amortised cost but their fair value is different as disclosed above. Their fair values are determined as follows:
· The fair value of bank and loan borrowings is determined by reference to mark-to-market valuations provided by the lenders.
· The fair value of the lease liability has been determined as the present value of future cash flows discounted using the Group's incremental borrowing rate.
The following financial assets and liabilities are recorded in the Consolidated Statement of Financial Position at fair value which is determined as follows:
· The fair value of interest rate derivatives is recorded in the Consolidated Statement of Financial Position and is determined by forming an expectation that interest rates will exceed strike rates and discounting these future cash flows at the prevailing market rates as at the year end.
Fair value hierarchy
The following table provides the fair value measurement hierarchy for financial assets and liabilities measured at fair value through profit or loss.
|
|
Total £'000 |
Quoted active prices (level 1) £'000 |
Significant observable inputs (level 2) £'000 |
Significant unobservable inputs (level 3) £'000 |
|
Balance at 31 December 2025 |
|
|
|
|
|
Interest rate derivatives |
4,884 |
- |
4,884 |
- |
|
31 December 2024 |
|
|
|
|
|
Interest rate derivatives |
11,608 |
- |
11,608 |
- |
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 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.
There have been no transfers between levels during the year.
30.2 Risk management
The Group is exposed to market risk (including interest rate risk), credit risk and liquidity risk. The Board of Directors oversees the management of these risks. The Board of Directors reviews and agrees policies for managing each of these risks that are summarised below.
30.3 Market risk
Market risk is the risk that the fair values of financial instruments will fluctuate because of changes in market prices. The financial instruments held by the Group that are affected by market risk are principally the Group's bank balances along with a number of interest rate swaps entered into to mitigate interest rate risk.
The Group's interest rate risk arises from long-term borrowings issued at variable rates, which expose the Group to cash flow interest rate risk. Borrowings issued at variable rates expose the Group to fair value interest rate risk. The Group manages its cash flow interest rate risk by using floating to fixed interest rate swaps, interest rate caps and interest rate swaps. Interest rate swaps have the economic effect of converting borrowings from floating rates to fixed rates. Interest rate caps limit the exposure to a known level. No quantitative analysis relating to market risk is disclosed as this is not deemed to be material.
30.4 Credit risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Group is exposed to credit risk from both its leasing activities and financing activities, including deposits with banks and financial institutions. Credit risk is mitigated by tenants being required to pay rentals in advance under their lease obligations. The credit quality of the tenant is assessed based on an extensive credit rating scorecard at the time of entering into a lease agreement.
Outstanding trade receivables are regularly monitored. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial asset.
30.5 Credit risk related to trade receivables
Trade receivables, primarily tenant rentals, are presented in the Group's Statement of Financial Position net of provisions for impairment. Credit risk is primarily managed by requiring tenants to pay rentals in advance and performing tests around strength of covenant prior to acquisition.
30.6 Credit risk related to financial instruments and cash deposits
One of the principal credit risks of the Group arises with the banks and financial institutions. The Board of Directors believes that the credit risk on short-term deposits and current account cash balances is limited because the counterparties are banks, who are committed lenders to the Group, with high credit ratings assigned by international credit-rating agencies.
The list of bankers for the Group, with their latest Fitch credit ratings, was as follows:
|
Bankers |
Fitch Ratings |
|
Aviva |
A- Stable |
|
Bank of Scotland plc |
AA- Stable |
|
Royal Bank of Scotland |
AA- stable |
|
Santander UK |
A- Stable |
|
Scottish Widows Limited |
A+ Stable |
30.7 Liquidity risk
Liquidity risk arises from the Group's management of working capital and, going forward, the finance charges and principal repayments on its borrowings. It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due, as the majority of the Group's assets are investment properties and are therefore not readily realisable. The Group's objective is to ensure that it has sufficient available funds for its operations and to fund its capital expenditure. This is achieved by continuous monitoring of forecast and actual cash flows by management.
The table below summarises the maturity profile of the Group's financial liabilities based on contractual undiscounted payments:
While the bank borrowings aged liability interest rate derivative aged liability within the below table are presented separately, the payment obligation of the bank borrowings is the net of the two balances.
|
Group at 31 December 2025 |
Within 1 year £'000 |
Between 1 and 2 years £'000 |
Between 2 and 5 years £'000 |
After 5 years £'000 |
Total £'000 |
|
|
|
|
|
|
|
|
|
|
Trade and other payables |
(26,687) |
- |
- |
- |
(26,687) |
|
|
Bank borrowings and interest payments |
(13,028) |
(131,368) |
(160,416) |
- |
(304,812) |
|
|
Interest rate derivatives |
4,167 |
4,167 |
5,988 |
- |
14,322 |
|
|
Lease liability |
(435) |
(435) |
(1,305) |
33,308) |
(35,483) |
|
|
|
(35,983) |
(127,636) |
(155,733) |
(33,308) |
(352,660) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group at 31 December 2024 |
Within 1 year £'000 |
Between 1 and 2 years £'000 |
Between 2 and 5 years £'000 |
After 5 years £'000 |
Total £'000 |
|
|
Trade and other payables |
(29,244) |
- |
- |
- |
(29,244) |
|
|
Bank borrowings and interest payments |
(16,875) |
(114,129) |
(233,016) |
- |
(364,020) |
|
|
Interest rate derivatives |
6,554 |
5,025 |
4,919 |
- |
16,498 |
|
|
Lease liability |
(435) |
(435) |
(1,305) |
(33,563) |
(35,738) |
|
|
|
(40,000) |
(109,539) |
(229,402) |
(33,563) |
(412,504) |
|
31. Capital management
The primary objective of the Group's capital management is to ensure that it remains a going concern and continues to qualify for UK REIT status.
The Group's capital is represented by reserves and bank borrowings. The Board, with the assistance of the Investment Adviser, monitors and reviews the Group's capital so as to promote the long-term success of the business, facilitate expansion, deliver a quarterly dividend distribution and to maintain sustainable returns for shareholders.
The Group's policy on borrowings is as follows: the level of borrowing will be on a prudent basis for the asset class and will seek to achieve a low cost of funds, while maintaining flexibility in the underlying security requirements and the structure of both the portfolio and of Regional REIT.
Based on current market conditions, the Board will target Group net borrowings of 40% of Investment Property Values at any time. However, the Board may modify the Group's borrowing policy (including the level of gearing) from time to time in light of then-current economic conditions, relative costs of debt and equity capital, fair value of the Company's assets, growth and acquisition opportunities or other factors the Board deems appropriate.
The optimal debt financing structure for the Group will have consideration for key metrics including: fixed or floating interest rate charged, debt type, maturity profile, substitution rights, covenant and security requirements, lender type, diversity and the lender's knowledge and relationship with the property sector.
32. Operating leases
The future minimum lease payments receivable under non-cancellable operating leases in respect of the Group's property portfolio are as follows:
|
Group |
31 December 2025 £'000 |
|
31 December 2024 £'000 |
|
Receivable within 1 year |
38,284 |
|
47,096 |
|
Receivable between 1-2 years |
35,360 |
|
42,215 |
|
Receivable between 2-5 years |
68,465 |
|
85,709 |
|
Receivable after 5 years |
50,095 |
|
66,075 |
|
|
192,204 |
|
241,095 |
The Group has in excess of 650 operating leases.
The number of years remaining on these operating leases varies between 1 and 991 years. The amounts disclosed above represent total rental income receivable up to the next lease break point on each lease. If a tenant wishes to end a lease prior to the break point, a surrender premium will be charged to cover the shortfall in rental income received.
33. Segmental information
After a review of the information provided for management purposes, it was determined that the Group has one operating segment and therefore segmental information is not disclosed in these consolidated financial statements.
34. Transactions with related parties
Transactions with the Directors
The following persons and entities are related parties because they have significant influence over the reporting entity or are key management personnel or the reporting entity.
Directors' remuneration is disclosed within the Directors' Remuneration Report in the full Annual Report and note 8 to the financial statements. Directors' beneficial interests in the Ordinary Shares of the Company are disclosed within the Directors' Report.
Bridgemere Investments Limited ("BIL") is deemed a related party of the Company by virtue of its significant shareholding, holding 22.10% of the issued share capital as disclosed in the TR-1 announcement dated 10 July 2025. In addition, Ms. Nicole Burstow serves as a Non-Executive Director of the Company and is employed by BIL, with her directorship fees being payable to BIL; further detail regarding these fees is provided in the Full Annual Report and note 8 to the financial statements. BIL is therefore considered a related party, and all transactions and arrangements with BIL during the year were conducted on an arm's-length basis and in accordance with the Company's governance procedures.
The Investment Adviser does not meet the definition of a related party transaction. Full details of the management arrangements are available in the Full Annual Report.
The Group identifies Sugarbird Solar (UK) Ltd. as a related party under IAS 24 on the basis of its 40% investment and resulting significant influence. During the year, the Group made equity contributions of £96,000 and advanced shareholder loan funding of £64,000, all on normal commercial terms. The Group's share of results has been recognised in accordance with IAS 28. Sugarbird Solar (UK) Ltd. has transacted with the Group during 2025. The transactions during the year and the balances at the year-end being de minimis.
35. Subsequent Events
On 19 February 2026, the Company declared the Q4 2025 dividend of 2.50pps, which will be paid to shareholders on 10 April 2026.
On 11 December 2025, the Company declared the Company's investment management and asset management agreements will be merged into a single Amended and Restated Master Investment Management and Services Agreement ("IMA"), streamlining the management structure and enhancing operational efficiency. This new agreement, comes into effect 1 January 2026, has been entered into with ESR Europe Investment Management Ltd ("AIF Manager") who continues in its role and ESR Europe LSPIM Ltd ("Investment Adviser"), who continues in its role as asset manager and has also taken over the role of investment adviser from ESR Europe (Private Markets) Ltd. Further information regarding these changes can be found in the Full Annual Report.
Following the 24 December 2025 announcement of the Group's £72.4m refinancing, the Group entered into new interest rate hedging arrangements after the reporting date. On 27 February 2026, the Group executed new derivatives comprising GBP 40.6 million of swaps and GBP 17.4 million of caps, effective from August 2026 and maturing on December 2028, matching the maturity profile of the new refinancing.
Company Information
Directors
David Hunter (Chairman and Independent Non-Executive Director)
Massy Larizadeh (Senior Independent Non-Executive Director, Chair of the Nomination
Committee and Management Engagement and Remuneration 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
Regional REIT Limited
ISIN: GG00BSY2LD72
SEDOL: BSY2LD72
Legal Entity Identifier: 549300D8G4NKLRIKBX73
Company website
www.regionalreit.com
FURTHER INFORMATION
The Company's annual report and accounts for the year ended 31 December 2025 will be available to view shortly on www.regionalreit.com.
The annual report will also be submitted shortly in full unedited text to the Financial Conduct Authority's National Storage Mechanism and will be available for inspection at data.fca.org.uk/#/nsm/nationalstoragemechanism in accordance with DTR 6.3.5(1A) of the Financial Conduct Authority's Disclosure Guidance and Transparency Rules.
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