Edison Investment Research Limited: Regional REIT (RGL): Return to the office gathers momentum

London, UK, 7 June 2022

Regional REIT (RGL): Return to the office gathers momentum

This note focuses on the outlook for income-driven returns from Regional REIT (RGL). With the ‘return to the office’ accelerating, RGL expects a positive demand-supply balance to generate rental growth, increased occupancy and valuation gains. Q122 DPS increased c 3% to 1.65p. Income risk is mitigated by portfolio diversification, while fully fixed or hedged borrowing costs protect against further interest rate increases. 

Reflecting the potential impact of a deteriorating political and economic environment, we have reduced our EPRA earnings forecasts by c 2% and the fully covered FY22 DPS to 6.6p (from 6.7p). This continues to reflect an attractive yield of 7.9% while the shares trade at a 14% discount to NAV.

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