Regional REIT Limited, a UK-based real estate investment trust, reported its full-year results for 2025, highlighting resilient operational performance despite challenging market conditions. The company strengthened its balance sheet through a successful multi-bank refinancing of £72.4m of debt, completed £51.6m of disposals at 1.3% above book value, and reduced its loan-to-value (LTV) ratio to 40.4%. Regional REIT secured 64 new market lettings at 3.9% above 2024 ERV, demonstrating its ability to navigate a subdued leasing market.
The company acknowledged the prolonged downturn in the property cycle and geopolitical uncertainties, which have tempered near-term activity. In response, the Board adopted a more prudent approach, targeting an 8p dividend per share for 2026 and aiming to distribute a minimum of 90% of the profit from the property rental business. This strategy provides flexibility for essential capital expenditure to improve assets and capitalize on increasing demand for quality space.
Regional REITs portfolio valuation decreased to £555.2m, driven by sales and a 5.0% like-for-like decline, partially offset by capital expenditure benefits. EPRA NTA stood at £315.2m, and EPRA EPS was 11.8p. The company declared a fully covered 10p dividend for 2025 and plans to distribute a minimum of 90% of rental profits going forward.
The company continued to focus on strengthening its balance sheet, targeting similar disposal levels in 2026, with £41m of disposals already completed, contracted, or in negotiation. Net LTV improved to 40.4%, and gross borrowings decreased to £266.2m. Cash and cash equivalents were £37.7m.
Leasing performance remained strong, with 64 new lettings totaling £3.2m of rent at 3.9% above 2024 ERV. EPRA occupancy was 75.9%, and rent collection was robust at 99.3%. Regional REIT executed its capital expenditure program, improving EPC ratings, with 84.5% of the portfolio attaining EPC C or better.
The companys portfolio strategy focused on sales and investing in core assets, with 18 capital expenditure projects completed in 2025 and more underway. The core portfolio represented 62.9% of the total, with an EPRA occupancy of 86.5%.
Looking ahead, Regional REIT emphasized the structural supply-demand imbalance in regional offices, driven by high construction costs and limited new developments. The company is well-positioned to benefit from this imbalance, with a focus on quality, energy-efficient space. However, near-term market conditions are expected to remain challenging due to macroeconomic uncertainty and increased costs related to the Middle East conflict.
Post-period, Regional REIT completed £12.3m of disposals, further reducing borrowings by £7.8m. Notable lettings and renewals post-period end totaled £0.7m, reflecting 17.0% above ERV.
In summary, Regional REIT demonstrated resilience in 2025, strengthening its balance sheet, executing its portfolio strategy, and positioning itself for long-term growth in the regional office market, despite near-term challenges.
| Metric | 2024 | 2025 | Change |
|---|---|---|---|
| Portfolio Valuation (£m) | 622.5 | 555.2 | -10.8% |
| EPRA NTA (£m) | 340.8 | 315.2 | -7.5% |
| Net LTV (%) | 41.8 | 40.4 | -3.4% |
| Gross Borrowings (£m) | 316.7 | 266.2 | -15.9% |
| Cash and Cash Equivalents (£m) | 56.7 | 37.7 | -33.5% |
| Net Rental Income (£m) | 46.0 | 40.3 | -12.4% |
| EPRA Occupancy (%) | 77.5 | 75.9 | -2.1% |
| Dividend per Share (p) | 7.8 | 10.0 | +28.2% |