Edison Investment Research Limited: Edison issues outlook on Regional REIT (RGL)

London, UK, 4 October 2017

Edison issues outlook on Regional REIT (RGL)

Regional REIT's (RGL) interim results show strong growth in assets, with the portfolio reaching £640m compared with £386m at the time of the IPO in November 2015. Rental income during the period was solid but lacked some of the momentum we had hoped for given the continuing positive supply-demand situation in regional commercial property markets. This should accelerate in H2 and through next year as recently acquired assets contribute fully and as occupancy increases, including the launch of several key refurbishment projects. RGL's dividend yield, fully covered by earnings, is highly attractive, while its regional focus should prove more resilient to macroeconomic headwinds than London real estate.

RGL's prospective dividend yield of 7.5% is currently the highest of all UK REITs, while its price/EPRA NAV of 0.96% sits within the middle of the range despite a strong focus on asset management with potential for capital gains. The geographic spread of its non-London portfolio, its sector and tenant diversity, and high asset yield all mitigate macroeconomic risks. The successful launch of major refurbishment projects later in the year would provide scope for gains.Click here to view the full report.

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