Regional REIT Limited

Good afternoon and welcome to the regional REIT Limited investor presentation. Throughout this recorded presentation, investors will be in listen-only mode. Questions are encouraged and can be submitted at any time via the Q&A tab situated on the right-hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to the management team. Stephen, good afternoon, sir.

Thank you very much and good afternoon everyone and welcome to the presentation of the half-year results of Regional REIT for the period ending 30th of June 2026. It is my intention this afternoon to take you through the results for 2026 and then spend a bit more time updating you on what we are witnessing in the marketplace and our continued progress that has been made towards our strategic goals. As mentioned earlier, Q&A we'll deal with at the end and if you can submit your questions, we'll try and get through as many of them as possible. If I may now introduce this afternoon's team from Regional REITs, Manager ESR Elspim, I'm Stephen Inglis, Chief Executive Officer and also on the call this afternoon, Simon Marriott, Property Fund Manager and Adam Dickinson, Investor Relations Manager. Well after another six months of political and economic change and instability, I think we are almost back to where we have been many times before over the course of the last few years. Thank you very much. Political turmoil in the UK with yet another new Prime Minister, six in ten years, and Europe-wide with disenfranchised voters and the rise of the far right. This background impacts the UK economy, either directly in the case of increased energy costs or more subtly, but also, as I said, impacting business confidence and the vital part of business confidence in growing the economy and creating jobs, which has in turn an impact on the requirement for physical space. So a backdrop of uncertainty and continuing headwinds. However, against this backdrop, we are making steady progress in reducing the company's debt, selling non-performing, underperforming assets and leasing up space marginally ahead of the expiries and breaks being exercised. So despite all of this, I think the company is making good progress and has made good progress over the course of the past six months. Adam, you can take maybe the slide three, thank you. So a quick summary of the 2026 half year highlights. So as I mentioned in my opening remarks, whilst things are undoubtedly difficult and the leasing market remains slightly subdued, we have nonetheless undertaken 26 new lettings, delivering £1.9 million in new rental income and delivering a £700,000 annualised saving in reductions to void costs. We're making good progress on sales with £21.5 million of sales completed in the period and these were on vacant or partly vacant assets and this has allowed us to reduce debt and reduce void costs so accretive to income. and we further reduced LTV which now sits at 38.5% through repayment from those sales proceeds and finally of course we've delivered a fully covered four pence dividend in line with our target of eight pence for the full year 2026. Slide four please Adam. So just looking at the key highlights, our strategy to reposition the portfolio continues. We remain committed to creating a high quality income focused portfolio with targeted value add opportunities. The portfolio value currently stands at £526.7 million, down as a result of sales and a small 1.3% valuation reduction. EPRA occupancy is mainly down. This may look at first as counterintuitive given the leasing activity that I was just commenting on and the sale of vacant units. This is mainly due to the CAPEX projects completing and coming back into the EPRA numbers. So it's very much a timing issue. Actual occupancy has improved over 2% over the period. CAPEX in the period at £1.4 million looks low. This is mainly as a result of the significant letting that we have undertaken in the period where we anticipated expending £5 million of CAPEX. However, as part of the deal, the tenant is now undertaking that. and we will obviously commit that capex elsewhere in the portfolio to improve the overall quality of the portfolio and consequently the income and you're on track to do 10 million pounds per annum which is our previously stated estimate. Earnings per share in line with our estimate allowing us to fully cover the four pence per share dividend for the half year. and LTV as mentioned in my opening remarks down. Gross borrowings have decreased to £243.8 million just due to those sales and the pay down of debt. Slide five please Adam. The Strategic Sales Programme continues and the rationale obviously for sale to reduce debt in advance of the refinancing in December 27 and December 28 facilities a little bit more detail on which to follow and to reduce costs associated with non-core and non-performing assets so you're attempting to sell the non-performing non-income producing assets which we were successful in the first six months The sales programme continues with a further two sales completed post period end for £4.3 million and there are a further 11 assets either contracted into the last list of hands or in late sales negotiations i.e. where we've agreed terms accounting for a further circa £32 million of potential proceeds. and total then assuming the sales complete before the year end, we could well be selling around 58 million pounds in line with our previous guidance of 50 to 60 million of sales for the full year. Slide six please, Adam. Thank you. So portfolio repositioning for long-term growth. If we look at the average rent, average rent continues to grow Yields, as you'll see on the right-hand side, have effectively remained static since June 25, so over the last three periods. That kind of suggests that the valuation market certainly has stabilised and that we may well be now at the bottom of the market, all things being equal. but we continue to see average rents creeping up. Offices, the vast majority of our portfolio almost 90% buy value and obviously the lettings there in terms of what we previously discussed but clearly the one big letting are all getting 1.1 million of income across two buildings in Nottingham. That's the annualised rent, that's not the income for 2026 given rent-free periods. But that was the annualised rent over the 10-year life of that letting. and average requirements in the market increasing so we are seeing some upscaling of several tenants to our benefit in some cases but obviously to our detriment in others where we have lost tenants where they have moved to bigger buildings and rent collection remains strong, 99.7% in the period to date. That will ultimately become 100%, those 0.3% is just an issue of timing and when those rents are collected. You'll see the full year figure there at 100%.

Okay, slide seven, please.