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Real estate investment trusts

Regional REIT Announces Capital Raising of PS110.5m and Share Consolidation

Strategic Insights

— 2 min read

Regional REIT, a UK-based property investment company, has announced a significant capital raising of PS110.5m through a fully underwritten placing. The company will use the funds to repay its PS50m retail bond due to mature in August 2024, reduce bank facilities, and provide flexibility to fund selective capital expenditure on assets. The capital raising is being supported by Bridgemere Investments, a company established by Steve Morgan CBE.

The company's LTV, which had ballooned to 56.8%, will reduce to 40.6% following the capital raising. The funds will also be used to enhance earnings in the near term and increase value in the mid to long-term through strategic capital expenditure on assets. The company's board has proposed a 1 for 10 share consolidation to make the shares more attractive to institutional and public investors.

Regional REIT's chairman, Kevin McGrath, stated that the capital raising is the best solution for shareholders, reducing indebtedness and providing greater financial flexibility and liquidity headroom. The company's chief executive, Stephen Inglis, added that the fully underwritten and pre-emptive capital raising provides the best long-term solution, reducing the LTV to approximately 40% and providing the flexibility to fund capital expenditure on assets to maximize value and income for shareholders.

Key Takeaways:

  • Regional REIT has announced a capital raising of PS110.5m through a fully underwritten placing, which will be used to repay its PS50m retail bond, reduce bank facilities, and fund selective capital expenditure on assets.
  • The company's LTV will reduce from 56.8% to 40.6% following the capital raising.
  • The capital raising is being supported by Bridgemere Investments, which will subscribe for the placing shares at the issue price and has waived its right to a Rule 9 Waiver following approval by shareholders.
  • The company's board has proposed a 1 for 10 share consolidation to make the shares more attractive to institutional and public investors.
  • The capital raising is conditional on shareholder approval at the Extraordinary General Meeting, which will take place on 18 July 2024.
  • Regional REIT's chairman, Kevin McGrath, and CEO, Stephen Inglis, have stated that the capital raising is the best solution for shareholders, reducing indebtedness and providing greater financial flexibility and liquidity headroom.
  • The company is currently engaged in an asset disposal program to reduce its LTV, having completed 13 disposals and three part sales for a combined PS21.9m since 31 December 2023.
  • The Rule 9 Waiver Resolution will be proposed at the EGM, and if not passed, the capital raising will not proceed.

Statistics:

  • PS110.5m: The amount raised through the fully underwritten placing.
  • PS50m: The amount of the retail bond due to mature in August 2024.
  • 56.8%: The company's LTV prior to the capital raising.
  • 40.6%: The company's LTV following the capital raising.
  • 1:10: The proposed share consolidation ratio.
  • PS647.8m: The company's portfolio value on 21 June 2024.
  • PS700.7m: The company's portfolio value on 31 December 2023.
  • 10am: The time of the Extraordinary General Meeting on 18 July 2024.
  • 50.4%: The discount of the issue price to the closing price of the company's shares.
  • 82.3%: The discount of the issue price to the latest published NTA per share.

Sources:

  • Regional REIT press release
  • Association of Investment Companies
  • Bridgemere Investments
  • London & Scottish Property Investment Management Limited
  • The Takeover Panel

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