Regional REIT raising £110.5m to reduce loan-to-value

Regional REIT announced a fully-underwritten capital raising of £110.5m on Thursday, to help eliminate its short-term liabilities and pay down bank facilities.

The London-listed firm said the raise would take place through a placing, overseas placing and open offer, with 1,105,149,821 new shares to be issued at 10p each.

It also planned a one-for-10 share consolidation to streamline its share structure and enhance financial stability.

The funds raised would primarily be used to redeem a £50m retail bond maturing on 6 August, eliminating short-term liabilities and reducing the need for coupon distributions.

Furthermore, £26.3m would be allocated to reducing bank facilities, providing greater covenant headroom, and £28.4m would be directed towards selective capital expenditure aimed at enhancing near-term earnings and long-term value.

The financial manoeuvre was expected to reduce the company's loan-to-value (LTV) ratio from 56.8% to 40.6%.

Regional REIT said the capital raising was fully underwritten by Bridgemere Investments, founded by Steve Morgan CBE, ensuring the necessary capital to support the company's strategic goals.

The board said the firm’s investment properties were valued at £647.8m as of 21 June, down from £700.7m at the end of 2023, amidst broader market adjustments.

Additionally, the company announced that chairman Kevin McGrath and non-executive director Dan Taylor were planning to resign following the next annual general meeting, in line with the company’s governance policy and AIC guidelines.

“Following a comprehensive review of a wide range of options to accelerate a reduction in indebtedness and the repayment of the £50m retail bond which matures in August, the board believes this capital raising is the best available solution for shareholders,” said chairman Kevin McGrath.

“The capital raising, supported by Bridgemere, will enable the company to strengthen significantly Regional REIT's financial position, reducing indebtedness and provide the company with greater financial flexibility and liquidity headroom.”

At 1414 BST, shares in Regional REIT were down 28.59% at 15.5p.

Reporting by Josh White for Sharecast.com.