Regional REIT Cuts Dividend to 4p as Leverage Keeps Falling

Regional REIT (LON: RGL), a UK real estate investment trust externally managed by ESR Europe LSPIM Limited, which owns and manages a diversified portfolio of regional commercial properties, predominantly offices, cut its interim dividend to 4.0p per share for the six months to 30 June, down from 5.0p a year earlier, as half-year results released before the market opened today showed earnings falling.

The shares closed at 94.4p yesterday, within a 52-week range of 82.34p to 115.72p. The results landed before today’s open, ahead of this session’s trading.

EPRA earnings per share, the underlying measure of core rental profit, fell to 4.2p from 5.2p a year earlier, and occupancy slipped to 74.3% from 78.6%. The company sold £21.5m of properties in the first half, marginally below book value, and used the proceeds to pay down debt. Stephen Inglis, chief executive of ESR Europe LSPIM, which advises Regional REIT, said the disposals were “demonstrating the intrinsic and attractive value of our assets, and reducing the net LTV to 38.5% as at 30 June 2026”.

That leverage improvement is the counterweight to the smaller payout: net loan-to-value, debt measured against property value, fell to 38.5% from 43.2% a year earlier and 40.4% at the last year-end, while gross borrowings dropped to £243.8m from £310.0m. Portfolio valuation fell 5.1% to £526.7m over the same period, and EPRA net tangible asset value per share dropped to 188.7p from 194.4p.

Dividend cover rose to 1.1x from 1.0x, and management now plans to distribute a minimum of 90% of property rental profit going forward, a policy meant to keep the payout tied to cash generation rather than the earlier, more generous level. For income-focused holders, that formalises a smaller but better-covered dividend.

Management is still targeting an 8p full-year dividend for 2026, pointing to 26 new lettings in the period generating £1.9m of annualised rent, 2.0% above ERV, including a 146,262 sq ft deal in Nottingham that cut annualised void costs by about £700,000.