Regional REIT has announced a £110.5 million capital raising initiative through a placing fully underwritten by Bridgemere Investments, part of the Bridgemere group established by Steve Morgan CBE. The raising involves issuing 1,105,149,821 new ordinary shares at 10 pence per share.

This capital raising will allow Regional REIT to repay its £50 million Retail Bond, reducing short-term liabilities and eliminating the need for coupon distributions. Additionally, £26.3 million of the proceeds will be used to reduce bank facilities, providing more headroom under existing covenants. The remaining £28.4 million will fund selective capital expenditures, enhancing earnings in the near term and adding value in the mid to long term. This will also reduce the Loan to Value (LTV) ratio from 56.8% to 40.6%.

Kevin McGrath, chairman of Regional REIT, stated, “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 2024, the board believes this capital raising is the best available solution for shareholders. 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.”

Stephen Inglis, chief executive of London & Scottish Property Investment Management Limited, added, “Since the Covid-19 pandemic the company has been operating in a challenging environment resulting in the LTV increasing to 56.8 per cent against a target of less than 40 per cent. The fully underwritten and fully pre-emptive capital raising provides the best long-term solution to the upcoming retail bond refinancing, will put the company on a sound footing reducing the LTV to approximately 40 per cent and provide the flexibility to fund capital expenditure on assets to maximise value and income for shareholders over the long term.”