Regional REIT saw its portfolio valuation fall by 5% in 2025, but has heralded “meaningful progress” over the year led by £51.6m of disposals and 64 new lettings at 3.9% above 2024 estimated rental value (ERV).
Regional REIT’s Excelsior House
The firm’s portfolio value fell by 2.9% in H2 2025, ending the year at £555.2m. This brings the full-year decline to 5%, but the group said this was due in part to a successful sales programme, as well as previously announced changes in income caused by tenant breaks.
Sales of £51.6m were completed across the year, ahead of the firm’s target and at a 1.3% premium to book value. Regional REIT said it was targeting “at least the same quantum of disposals” in 2026.
Meanwhile, loan-to-value (LTV) ratio reduced to 40.4% by year-end, while the annualised rent roll of £50.4m was broadly as expected, although down from £60.7m in 2024.
David Hunter, chair of Regional REIT, said the board was “naturally disappointed that market conditions have delayed a recovery in values and in leasing”, but said there had been “meaningful progress over the past year”.
Hunter continued: “Key achievements included a successful sales programme, an early refinancing of the debt, lowering the LTV post the year-end to below 40%, progressing the capital expenditure programme and the ongoing portfolio repositioning, which all continue to progress in line with the company’s strategy.
“Based on this performance, the board and manager were pleased to announce a complete restructuring of the management contract to secure £0.9m of annual savings and much-improved alignment between the manager and shareholders. At the same time, we have strengthened the board, and the directors are working closely with the manager to ensure that the strategy continues to be delivered effectively.”
Hunter added that the firm’s focus in 2026 is to sell underperforming assets and exceed 2025’s sales volumes while continuing to invest. The group plans to distribute a minimum 90% of the profit for the property rental business. It is also targeting a dividend of 8p per share dividend for 2026.
In December, Regional REIT secured the refinancing of £72.4m of debt that was due to expire in August 2026, while a new management contract was put in place, which the group said would save on fees.
Stephen Inglis, head of ESR Europe LSPIM, which manages Regional REIT, said: “Although the portfolio valuation declined over the six months to 31 December, yields remained stable, with the reduction driven purely by income, indicating a stabilisation in underlying property values.
“While we are pleased to have achieved our key targets for 2025 in what remains a challenging market, ongoing macroeconomic and geopolitical uncertainty continues to affect both market conditions and the company’s performance.”
Inglis added: “We are focused on voids and aim to reduce these significantly, through a combination of the continuing sales programme, cost-saving measures and leasing up vacant grade-A, EPC ‘A’ and ‘B’ accommodation in the portfolio. We are also driving forward the capital expenditure programme, which will lead to greater leasing activity and drive net rent and value.”
