Regional REIT : Proposed £50 million Issue of Equity

24 June 2019

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE MARKET ABUSE REGULATION (EC NO. 596/2014) ('MAR')

NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, BY ANY MEANS OR MEDIA TO US PERSONS OR IN OR INTO, OR FROM THE UNITED STATES, AUSTRALIA, CANADA, NEW ZEALAND, THE REPUBLIC OF SOUTH AFRICA, JAPAN, ANY EEA STATE OTHER THAN THE UNITED KINGDOM OR ANY OTHER JURISDICTION IN WHICH THE PUBLICATION, DISTRIBUTION OR RELEASE OF THIS ANNOUNCEMENT WOULD BE UNLAWFUL.

The material in this announcement is for informational purposes only and does not constitute an offer of securities for sale or a solicitation of any offer to buy or subscribe for securities in Australia, Canada, Japan, New Zealand, the Republic of South Africa, any EEA State other than the United Kingdom or any other jurisdiction in which such an offer or solicitation is unlawful.

This announcement is not for publication or distribution, directly or indirectly, in or into the United States of America. This announcement is not an offer of securities for sale into the United States. The securities referred to herein have not been and will not be registered under the United States Securities Act of 1933, as amended, and may not be offered or sold within the United States except pursuant to an applicable exemption from registration. No public offering of securities is being made in the United States.

This announcement is an advertisement for the purposes of the Prospectus Rules of the UK Financial Authority ('FCA') and does not constitute a prospectus. Investors must subscribe for any shares referred to in this announcement only on the basis of information contained in a prospectus expected to be published by Regional REIT Limited (the 'Prospectus') in its final form later today and not in reliance on this announcement. A copy of the Prospectus will, following publication, be available for inspection from the Company's registered office and on its website (www.regionalreit.com). This announcement does not constitute, and may not be construed as, an offer to sell or an invitation or recommendation to purchase, sell or subscribe for any securities or investments of any description, or a recommendation regarding the issue or the provision of investment advice by any party.

Terms not otherwise defined in this announcement have the meanings that will be given to them in the Prospectus.

Regional REIT Limited

('Regional REIT' or the 'Company', together with its subsidiaries, the 'Group')

Proposed Placing, Open Offer, Offer for Subscription and Intermediaries Offer and Notice of General Meeting

Further to its announcement on 17 May 2019 that the Company was considering an equity fundraise to take advantage of its growing near-term pipeline of opportunities in the investment market, the Board of Directors (the 'Board') of Regional REIT (ticker: RGL), the regional real estate investment specialist focused on building a diverse portfolio of income producing regional UK core and core plus office and industrial property assets, today announces the proposed issue of further Ordinary Shares ('New Ordinary Shares') in the Company to raise gross proceeds of approximately £50 million, the details of which will be set out in the Prospectus expected to be published by the Company later today. The proposed fundraise will comprise a Placing, Open Offer, Offer for Subscription and Intermediaries Offer (collectively, the 'Capital Raising').

Summary

· Proposed issue of up to 46,948,357 New Ordinary Shares pursuant to the Capital Raising targeting gross proceeds of approximately £50 million

· Qualifying Shareholders will be offered the opportunity to participate in the Open Offer on the basis of 1 New Ordinary Share for every 8 Existing Ordinary Shares

· Qualifying Shareholders will also be offered the opportunity to subscribe for New Ordinary Shares in addition to their Open Offer Entitlements under the Excess Application Facility

· The Board has reserved the right to increase the size of the Capital Raising by up to 46,948,357 New Ordinary Shares

· The Issue Price is 106.5 pence per New Ordinary Share. This represents a discount of 1.8 per cent. to the Closing Price per Ordinary Share on 21 June 2019 of 108.4 pence per Ordinary Share

· The Issue Price represents a discount of 7.8 per cent. to the audited EPRA Net Asset Value per Ordinary Share as at 31 December 2018 of 115.5 pence per Ordinary Share

· Negotiations are ongoing concerning the acquisition of a geographically-diverse portfolio of six office assets (the 'Target Assets') which provide a range of interesting asset management opportunities for Regional REIT ⁽¹⁾

· London & Scottish Property Investment Management Limited (the 'Asset Manager'), on behalf of the Company, has identified a significant pipeline of assets (in excess of £500 million), including the Target Assets, which meet the Company's investment objective and policy and which could, it believes, be acquired in a relatively short time frame

· The Capital Raising is also expected to broaden the Company's investor base and enhance the size and liquidity of the Company's share capital as well as provide the Group with the opportunity to capitalise on further economies of scale that an enhanced capital base may bring

· The Company today also announces it is targeting a dividend of 8.25 pence per share for the year ending 31 December 2019 (2018 - 8.05p) ⁽²⁾

Notes:

^{(1) The potential acquisition of the Target Assets remains subject to ongoing due diligence by the Asset Manager and the Company's other professional advisers and, although there can be no assurance that the Target Assets will be purchased by the Company, these negotiations are at an advanced stage.}

^{(2) This is a target only and not a profit forecast and there can be no assurances that it will be met.}

This summary should be read in conjunction with the full text of the announcement and the Prospectus, when available.

Kevin McGrath, Chairman of Regional REIT, commented:

'The Board of Regional REIT is delighted to be announcing this fundraise to support the next period of growth for the Group. The investment strategy of the Group has returned considerable income returns together with capital growth for Shareholders and, together with the Asset Manager's active property management approach, we look forward to continuing to meet the investment criteria of the Company for both existing and new Shareholders.'

Stephen Inglis, Chief Executive Officer of London & Scottish Property Investment Management Limited, the Asset Manager, commented:

'We have identified a substantial pipeline of potential deals at prices where we can readily achieve the returns we target for the Company and in a market with fewer investors for the type of assets we are currently reviewing. We continue to see beneficial occupational supply/demand dynamics in our core markets and expect this to continue. We are announcing this fundraise to maximise potential returns from the strong opportunities that we are seeing in our markets and we look forward to updating the market further on our progress in the coming months.'

Regional REIT Limited is expected shortly to publish the Prospectus in connection with the Capital Raising which will include a notice convening an extraordinary general meeting to approve certain matters necessary to implement the Capital Raising (the 'Notice of Extraordinary General Meeting'). The Prospectus will, when published, be available on the Company's website (www.regionalreit.com), subject to certain access restrictions, and at the National Storage Mechanism viawww.morningstar.co.uk/uk/NSM.

Enquiries:
Regional REIT Limited
Toscafund Asset Management	[phone]
Investment Manager to the Group
Adam Dickinson, Investor Relations for Regional REIT Limited
London & Scottish Property Investment Management Limited	[phone]
Asset Manager to the Group
Stephen Inglis, Derek McDonald, Simon Marriott
Peel Hunt	[phone]
Sponsor, Sole Broker and Bookrunner
ECM Syndicate: Alastair Rae, Rory James-Duff, Sohail Akbar
Corporate: Capel Irwin, Harry Nicholas, Carl Gough
Buchanan Communications	[phone]
Financial PR
Charles Ryland, Victoria Hayns, Henry Wilson

Expected timetable of principal events

Event	Time and date	2019
Record Time for entitlements under the Open Offer	6.00 p.m. on	20 June
Publication and despatch of the Prospectus (including the Notice of Extraordinary General Meeting) and Application Forms and Capital Raising commences		24 June
Ex-entitlements date for the Open Offer	8.00 a.m. on	24 June
Open Offer Entitlements and Excess Open Offer Entitlements credited to stock accounts of Qualifying CREST Shareholders in CREST		25 June
Recommended latest time for requesting withdrawal of Open Offer Entitlements and Excess Open Offer Entitlements from CREST	4.30 p.m. on	12 July
Recommended latest time and date for depositing Open Offer Entitlements and Excess Open Offer Entitlements into CREST	3.00 p.m. on	15 July
Latest time and date for receipt of Forms of Proxy and receipt of electronic proxy appointments via CREST	10.00 a.m. on	16 July
Latest time and date for splitting of Open Offer Application Forms (to satisfy bona fidemarket claims only)	3.00 p.m. on	16 July
Extraordinary General Meeting	10.00 a.m. on	18 July
Announcement of results of Extraordinary General Meeting		18 July
Latest time and date for receipt of completed Application Forms and payment in full under the Open Offer or settlement of relevant CREST instruction (as appropriate). Open Offer Entitlements and Excess Open Offer Entitlements disabled in CREST	11.00 a.m. on	18 July
Latest time and date for receipt of completed Subscription Forms and payment in full in respect of the Offer for Subscription	1.00 p.m. on	18 July
Latest time and date for receipt of completed applications from the Intermediaries in respect of the Intermediaries Offer	3.00 p.m. on	18 July
Latest time and date for receipt of Placing commitments	5.00 p.m. on	18 July
Results of the Capital Raising announced through a Regulatory Information Service	by 7.00 a.m. on	19 July
Admission and commencement of dealings in New Ordinary Shares	8.00 a.m. on	23 July
CREST accounts credited with uncertificated New Ordinary Shares		23 July
Where applicable, definitive share certificates despatched by post in the week commencing		29 July

Each of the times and dates in the timetable above is subject to change without further notice. References to a time of day are to London time. Different deadlines and procedures may apply in certain cases. If any of the times and/or dates change, the revised time and/or date will be notified to the London Stock Exchange, the FCA and through a Regulatory Information Service.

Different deadlines and procedures may apply in certain cases. For example, Shareholders who hold their Existing Ordinary Shares through a CREST member or other nominee may be set earlier deadlines by the CREST member or other nominee than the times and dates noted above.

Background to, and reasons for, the Capital Raising

Overview of the Company, its objectives and investment characteristics

The Group continues to see opportunities to purchase assets at attractive yields and with the potential to secure good quality income streams which can be distributed to Shareholders through the Company's quarterly dividend programme. The Group's portfolio also offers continued potential for capital growth, which has the potential to supplement the income returns generated from the Group's assets.

The Directors continue to see a wide range of acquisition and refurbishment opportunities which meet the Group's acquisition and investment criteria, giving rise to a strong pipeline of capital deployment opportunities.

Accordingly, the Group is seeking to raise Gross Capital Raising Proceeds of approximately £50 million through the Capital Raising which it will seek to deploy, together with debt finance where relevant and appropriate, in line with its investment strategy, and to put the Group in a position of strength when seeking to capitalise on its pipeline of assets (in excess of £500 million).

Benefits of the Capital Raising

The Directors believe that the Capital Raising will:

· allow the Company to capitalise on opportunities within its pipeline of assets in an attractive market, including the acquisition of the Target Assets which is expected to be earnings accretive;

· allow the Asset Manager to exploit opportunities to grow income and create value through active asset management;

· enhance the portfolio characteristics and increase income diversification; and

· potentially broaden the investor base and increase liquidity in the Ordinary Shares.

Current trading trends and prospects

The fully diluted EPRA NAV for the year ended 31 December 2018 was 115.5 pence per Ordinary Share, up from 105.9 pence per Ordinary Share for the year ended 31 December 2017. Dividends declared for the period ended 31 December 2018 amounted to 8.05 pence per Ordinary Share, which represented an increase of 3 per cent. from the year ended 31 December 2017.

In the period to 31 December 2018, the value of the gross investment property portfolio was £718.4 million, down from £737.3 million in the period to 31 December 2017. As at 14 June 2019, the Company's property portfolio was spread across 149 properties consisting of 1,184 individual units with a total of 835 tenants, which were valued at £721.2 million in aggregate, with an annualised gross rental income of £58.2 million per annum reflecting a yield of 6.1 per cent. on a weighted average unexpired lease term of 5.4 years (3.4 years to first break). The valuation of £721.2 million as of 14 June 2019 reflected an increase of £2.8 million from the valuation of £718.4 million as at 31 December 2018. As set out below, since 31 December 2018 the Company has completed the purchase of Norfolk House in Birmingham for £20 million (net of costs) and disposed of Aspect Court and Tokenspire Business Park for an aggregate of £19.9 million (before costs) at an aggregate £1.9 million (10.2 per cent.) premium to their 31 December 2018 valuation.

Gross bank borrowings rose from £376.5 million for the year ended 31 December 2017, to £380.3 million for the year ended 31 December 2018 with a Group loan to value ratio of 38.3 per cent.. The weighted average effective interest rate of bank borrowings for the year ended 31 December 2018 was 3.5 per cent. per annum excluding the zero dividend preference shares which were fully repaid on 9 January 2019 and including hedging, with a weighted average maturity of 6.4 years.

In the period to 31 December 2018, EPRA occupancy was 89.4 per cent., up from 88.2 per cent. for the year ended 31 December 2017. As at 14 June 2019, EPRA occupancy increased to 88.9 per cent., comprising 835 tenants.

Office real estate amounted to 76.1 per cent. (by value) of the Property Portfolio for the period ended 31 December 2018, while industrial real estate amounted to 15.5 per cent. of the Property Portfolio. Retail and other real estate sectors remain non-core to the Group and amounted to 8.5 per cent. of the Property Portfolio.

As at 31 December 2018, the largest single tenant represented 2.7 per cent. of gross rental income, while the largest property represented 4.6 per cent. of the Property Portfolio.

The following events have occurred since 31 December 2018:

· on 10 January 2019, Regional REIT ZDP plc repaid approximately £39.9 million to the holders of the 6.5 per cent. ZDP shares for their final capital entitlement, which matured on 9 January 2019;

· on 4 February 2019, the Company completed its acquisition of Norfolk House, Smallbrook Queensway, Birmingham, for a consideration of £20m with a net initial yield of 7.92 per cent., in an off market transaction;

· on 23 May 2019, the Company declared its first quarterly dividend in respect of the period from 1 January 2019 to 31 March 2019 of 1.90 pence per Ordinary Share;

· on 10 June 2019, the Company disposed of the office building known as Aspect Court, Pond Hill, Sheffield to Sheffield Hallam University for £8.8 million reflecting a net initial yield of 6.6 per cent. and an uplift of 39.7 per cent. since acquisition and 24.8 per cent. against the 31 December 2018 valuation;

· on 14 June 2019, the Company announced that it had contracted to sell Tokenspire Business Park in Beverley for £11.1 million representing a net initial yield of 7.0 per cent. and a 30.6 per cent. uplift to the acquisition price;

· on 20 June, the Company announced that a £66 million 10-year facility had been agreed with Santander UK, which refinanced the existing £44 million facility that was due to mature in November 2022; and

· on 20 June, the Company announced that a new £55 million 5-year facility had been agreed with The Royal Bank of Scotland, which refinanced the existing £27 million facility with The Royal Bank of Scotland and the £19 million facility with HSBC, both of which were due to mature in December 2021.

Since 2015 Admission, the Company has achieved total shareholder return of 39.4 per cent. (as at 17 June 2019).

Future Prospects

In the first quarter of 2019, the Group continued to trade well in a market where demand for its assets remained strong and the potential deal pipeline was healthy and diverse. The Group continues to trade in line with the Directors' expectations for the year and the Directors remain confident as to the Group's ability to return to a fully covered dividend once the Net Capital Raising Proceeds have been fully deployed which is expected to be during 2019. This is underpinned by the Group's active asset management which is achieving good results with both recent acquisitions and the established portfolio.

While the Board is aware of general economic caution in light of uncertainty over the negotiations in respect of the UK's decision to exit the European Union and the potential for rises in inflation and interest rates, it believes that the Group is well placed to meet the challenges that could arise in this environment. The Group owns a sizeable portfolio with critical mass. It is cash generative with an occupier base representing some of the strongest covenants in the UK office and light industrial sectors. The Board therefore remains optimistic in its outlook for the Company.

Principal Terms of the Capital Raising

The Company is proposing to raise Gross Capital Raising Proceeds of approximately £50 million (Net Capital Raising Proceeds of approximately £48.3 million) by way of the Placing, Open Offer, Offer for Subscription and Intermediaries Offer of up to 46,948,357 New Ordinary Shares, representing, in aggregate, 11.2 per cent. of the Enlarged Issued Share Capital, at an Issue Price, in each case, of 106.5 pence per New Ordinary Share.

The Issue Price represents a discount of 1.8 per cent. to the Closing Price of 108.4 pence. The Issue Price has been set by the Directors following their assessment of market conditions and following discussion with a number of institutional investors. The Directors are in agreement that the level of discount and method of issue are appropriate to secure the investment sought.

Should the Directors make use of the ability to increase the size of the Capital Raising, the Company will announce the total number of New Ordinary Shares by which the Capital Raising has been increased in an announcement through a Regulatory Information Service prior to Admission.

The Capital Raising is not underwritten. The Placing may be scaled back in order to satisfy valid applications under the Open Offer and/or the Offer for Subscription and/or the Intermediaries Offer, the Offer for Subscription may be scaled back in favour of the Placing and/or Open Offer and/or the Intermediaries Offer and the Intermediaries Offer may be scaled back in order to satisfy valid applications under the Open Offer and/or the Placing and/or the Offer for Subscription.

The Directors have the discretion in consultation with Peel Hunt to scale back the Placing and/or the Offer for Subscription and/or the Intermediaries Offer in favour of the Open Offer by reallocating New Ordinary Shares that would otherwise be available under the Placing and/or the Offer for Subscription and/or the Intermediaries Offer to be available to Qualifying Shareholders through the Excess Application Facility under the Open Offer. Any New Ordinary Shares that are not taken up under the Open Offer will be reallocated to the Placing and/or the Offer for Subscription and/or the Intermediaries Offer and be available thereunder.

The Directors have the discretion to determine, in consultation with Peel Hunt, the basis of allotment between Qualifying Shareholders under the Excess Application Facility and any scaling back of or reallocation of the Placing and/or Offer for Subscription and/or Intermediaries Offer. In exercising this discretion, the Directors generally intend to give priority to existing Shareholders over prospective new Shareholders, although the Directors will seek to balance the benefits to the Company of allowing existing Shareholders to maintain or increase the size of their relative shareholdings with expanding the Shareholder base of the Company.

The Capital Raising is conditional (inter alia) upon the following:

· the Capital Raising Resolution being passed by the Shareholders at the Extraordinary General Meeting (without material amendment);

· the Placing Agreement becoming unconditional in all respects (save for the condition therein relating to Admission) and not having been terminated in accordance with its terms prior to Admission; and

· Admission becoming effective by not later than 8.00 a.m. on 23 July 2019 (or such later time and/or date as the parties to the Placing Agreement may agree, being not later than 8.00 a.m. on 9 August 2019).

Accordingly, if any of such conditions are not satisfied, or, if applicable, waived, or if the Placing Agreement is terminated in accordance with its terms prior to Admission, the Capital Raising will not proceed and any Open Offer Entitlements and Excess Open Offer Entitlements admitted to CREST will thereafter be disabled and application monies will be returned (at the applicants' risk) without interest as soon as possible.

The New Ordinary Shares (assuming Gross Capital Raising Proceeds of £50 million) will, in aggregate, represent approximately 11.2 per cent. of the Company's issued Ordinary Shares following Admission.

Priority will be given to the Open Offer but there will be no priority given to applications under the Placing, Offer for Subscription or Intermediaries Offer.

The Placing

Peel Hunt, as placing agent of the Company, will use reasonable endeavours to place the Placing Shares with institutional (and certain other) investors at the Issue Price. The number of Placing Shares issued may be scaled back at the Directors' discretion (in consultation with Peel Hunt) by reallocating New Ordinary Shares that would otherwise be available under the Placing to be available to Qualifying Shareholders through the Excess Application Facility under the Open Offer and/or applications for New Ordinary Shares under the Offer for Subscription and/or Intermediaries Offer. Any Open Offer Shares not subscribed for under the Open Offer may be allocated to Placees or anyone agreeing to subscribe for New Ordinary Shares under the Offer for Subscription and/or Intermediaries Offer, with the net proceeds of the Placing being retained by the Company.

The Open Offer

Qualifying Shareholders will have the opportunity under the Open Offer to subscribe for New Ordinary Shares at the Issue Price, payable in full on application and free of expenses, pro rata to their existing shareholdings, on the following basis:

1 New Ordinary Share for every 8 Existing Ordinary Shares

held by them and registered in their names at the Record Time. Fractions of Ordinary Shares will not be allotted and each Qualifying Shareholder's entitlement under the Open Offer will be rounded down to the nearest whole number. Fractional entitlements to New Ordinary Shares will be aggregated and will ultimately accrue for the benefit of the Company.

The Directors fully recognise the importance of pre-emption rights to Shareholders and consequently 46,602,642 New Ordinary Shares are being offered to existing Shareholders by way of the Open Offer. The Directors consider this appropriate and in the best interests of Shareholders.

Any New Ordinary Shares not taken up pursuant to the Open Offer will be made available under the Excess Application Facility, the Placing, the Offer for Subscription and/or the Intermediaries Offer. There will be no priority given to applications under the Placing, the Offer for Subscription, the Intermediaries Offer or the Excess Application Facility pursuant to the Capital Raising. No applications under the Open Offer will be accepted from any persons located in the United States or any other Restricted Jurisdiction.

Excess Application Facility

Qualifying Shareholders may apply to subscribe for Excess Shares using the Excess Application Facility, should they wish. Qualifying Non-CREST Shareholders wishing to apply to subscribe for Excess Shares may do so by completing the relevant sections on the Open Offer Application Form. Qualifying CREST Shareholders who wish to apply to subscribe for more than their Open Offer Entitlements will have Excess Open Offer Entitlements credited to their stock account in CREST and should refer to paragraph 2.5 of Appendix A to the Prospectus for information on how to apply for Excess Shares pursuant to the Excess Application Facility.

The Excess Application Facility will comprise Open Offer Shares that are not taken up by Qualifying Shareholders under the Open Offer pursuant to their Open Offer Entitlements. Qualifying Shareholders' applications for Excess Shares will, therefore, be satisfied only to the extent that corresponding applications by other Qualifying Shareholders are made for less than their pro rata Open Offer Entitlements. If there is an over-subscription resulting from excess applications, allocations in respect of such excess applications will be scaled-back at the absolute discretion of Peel Hunt in consultation with the Board, who will have regard to the pro rata number of Excess Shares applied for by Qualifying Shareholders under the Excess Application Facility. No assurances can therefore be given that applications by Qualifying Shareholders under the Excess Application Facility will be met in full, in part or at all.

Further information on the Open Offer and the terms and conditions on which it is made, including the procedure for application and payment, will be set out in Appendix A to the Prospectus and, where relevant, in the Open Offer Application Form.

General

If Admission does not take place on or before 8.00 a.m. on 9 August 2019 (being the long-stop date for the Open Offer), the Open Offer will lapse and application monies under the Open Offer will be refunded to the applicants, by cheque (at the applicant's risk) in the case of Qualifying Non-CREST Shareholders and by way of a CREST payment in the case of Qualifying CREST Shareholders, without interest as soon as practicable thereafter.

Shareholders should be aware that the Open Offer is not a rights issue. As such, Qualifying Non-CREST Shareholders should note that their Open Offer Application Forms are not negotiable documents and cannot be traded. Qualifying CREST Shareholders should note that, although the Open Offer Entitlements and Excess Open Offer Entitlements will be admitted to CREST and be enabled for settlement, the Open Offer Entitlements and Excess Open Offer Entitlements will not be tradeable or listed and applications in respect of the Open Offer may only be made by the Qualifying Shareholder originally entitled or by a person entitled by virtue of a bona fide market claim. New Ordinary Shares for which application has not been made under the Open Offer will not be sold in the market for the benefit of those who do not apply under the Open Offer and Qualifying Shareholders who do not apply to take up their entitlements will have no rights nor receive any benefit under the Open Offer. Any New Ordinary Shares which are not applied for under the Open Offer Entitlements and Excess Open Offer Entitlements may be allocated to Placees or made available under the Offer for Subscription, the Intermediaries Offer and/or the Excess Application Facility, and the net proceeds will be retained, for the benefit of the Company.

Offer for Subscription

New Ordinary Shares will also be available under the Offer for Subscription at the Issue Price. Further information on the Offer for Subscription and the terms and conditions of the Offer for Subscription, including the procedure for application and payment, will be set out in Appendix C to the Prospectus and, where relevant, in the Subscription Form.

Commitments under the Offer for Subscription, once made, may not be withdrawn without consent of the Directors.

Intermediaries Offer

Investors may also subscribe for New Ordinary Shares at the Issue Price pursuant to the Intermediaries Offer. Only the Intermediaries' retail investor clients in the United Kingdom, the Channel Islands and the Isle of Man will be eligible to participate in the Intermediaries Offer. Investors may apply to any one of the Intermediaries to be accepted as their client.

No New Ordinary Shares allocated under the Intermediaries Offer will be registered in the name of any person whose registered address is outside the United Kingdom, the Channel Islands or the Isle of Man. A minimum subscription of £1,000 per Underlying Applicant will apply and thereafter an Underlying Applicant may apply for further New Ordinary Shares. Allocations to Intermediaries will be determined solely by the Company (following consultation with Peel Hunt).

An application for New Ordinary Shares in the Intermediaries Offer means that the Underlying Applicant agrees to acquire the New Ordinary Shares applied for at the Issue Price. Each Underlying Applicant must comply with the appropriate money laundering checks required by the relevant Intermediary and all other laws and regulations applicable to their agreement to subscribe for New Ordinary Shares. Where an application is not accepted or there are insufficient New Ordinary Shares available to satisfy an application in full, the relevant Intermediary will be obliged to refund the Underlying Applicant as required and all such refunds shall be made without interest. The Company, the Asset Manager, the Investment Manager and Peel Hunt accept no responsibility with respect to the obligation of the Intermediaries to refund monies in such circumstances.

Each Intermediary has agreed, or will on appointment agree, to the Intermediaries Terms and Conditions, which regulate, inter alia, the conduct of the Intermediaries Offer on market standard terms and provide for the payment of a commission and/or fee (to the extent permissible by the rules of the FCA) to Intermediaries from the Intermediaries Offer Adviser acting on behalf of the Company if such Intermediary elects to receive a commission and/or fee. Pursuant to the Intermediaries Terms and Conditions, in making an application, each Intermediary will also be required to represent and warrant that they are not located in the United States and are not acting on behalf of anyone located in the United States.

In addition, the Intermediaries may prepare certain materials for distribution or may otherwise provide information or advice to retail investors in the United Kingdom, subject to the terms of the Intermediaries Terms and Conditions. Any such materials, information or advice are solely the responsibility of the relevant Intermediary and will not be reviewed or approved by any of the Company, the Investment Manager, the Asset Manager or the Intermediaries Offer Adviser. Any liability relating to such documents shall be for the relevant Intermediaries only.

The Intermediaries Terms and Conditions provide for the Intermediaries to have an option (where the payment of such commission and/or fee is not prohibited) to be paid a commission and/or fee by the Intermediaries Offer Adviser (acting on behalf of the Company) where it has elected to receive such commission and/or fee in respect of the New Ordinary Shares allocated to and paid for by them pursuant to the Intermediaries Offer.

Dilution

Following the issue of New Ordinary Shares proposed to be allotted pursuant to the Capital Raising, Qualifying Shareholders who take up their full Open Offer Entitlements will not suffer a dilution to their interests in the Company (assuming Gross Capital Raising Proceeds of approximately £50 million).

Qualifying Shareholders who do not take up any of their Open Offer Entitlements, and Restricted Shareholders, will suffer a dilution of 11.2 per cent. to their interests in the Company (assuming Gross Capital Raising Proceeds of approximately £50 million).

Basis of Allocation

The Placing may be scaled back in favour of the Open Offer and/or the Offer for Subscription and/or the Intermediaries Offer, the Offer for Subscription may be scaled back in favour of the Placing and/or the Open Offer and/or the Intermediaries Offer and the Intermediaries Offer may be scaled back in favour of the Placing and/or the Open Offer and/or the Offer for Subscription. The Open Offer is being made on a pre-emptive basis to Qualifying Shareholders and is not subject to scaling back in favour of the Placing and/or the Offer for Subscription and/or the Intermediaries Offer. The Directors have the discretion (in consultation with Peel Hunt) to scale back the Placing and/or the Offer for Subscription and/or the Intermediaries Offer in favour of the Open Offer by reallocating New Ordinary Shares that would otherwise be available under the Placing and/or the Offer for Subscription and/or the Intermediaries Offer to Qualifying Shareholders through the Excess Application Facility under the Open Offer. Any New Ordinary Shares that are available under the Open Offer and are not taken up by Qualifying Shareholders pursuant to their Basic Entitlements and under the Excess Application Facility will be reallocated to the Placing and/or the Offer for Subscription and/or the Intermediaries Offer and be available thereunder.

The Directors have the discretion (in consultation with Peel Hunt) to determine the basis of allotment between Qualifying Shareholders under the Excess Application Facility and any scaling back of or reallocation of Open Offer Shares to the Placing and/or the Offer for Subscription and/or the Intermediaries Offer. In exercising this discretion, the Directors generally intend to give priority to existing Shareholders over prospective new Shareholders, although the Directors will seek to balance the benefits to the Company of allowing existing Shareholders to maintain or increase the size of their relative shareholdings with expanding the Shareholder base of the Company.

Directors' Participation

The Directors, their immediate family members and persons connected with them, are interested in an aggregate of 2,283,162 Existing Ordinary Shares (representing approximately 0.61 per cent. of the Existing Ordinary Shares). The Directors intend to participate in the Capital Raising and will in aggregate subscribe for 591,547 New Ordinary Shares.

Related Party Transaction

Martin Hughes is a related party of the Company for the purposes of Chapter 11 of the Listing Rules as a result of him being an associate of the Investment Manager. Martin Hughes, through Toscafund Investments Limited, a private company which he controls, has agreed to subscribe for up to 4,694,835 New Ordinary Shares under and on the terms of and conditions to, the Capital Raising, which is classified as a smaller related party transaction for the purposes of Chapter 11.1.10R of the Listing Rules.

Dividends

Currently, the Company pays dividends on a quarterly basis with dividends declared in February, May, August and November in each year and paid as soon as practicable thereafter.

The Company declared its first quarterly dividend for the year ending 31 December 2019 on 23 May 2019, which is expected to be paid on 12 July 2019 to Shareholders on the register on 7 June 2019.

The next dividend is expected to be declared in August 2019 and paid in October 2019 (the '2019 Q2 Dividend'). The Board's current intention is to pay an amount of approximately 1.90 pence per Ordinary Share in relation to the 2019 Q2 Dividend.

The Company intends to pursue a progressive dividend policy and its quarterly dividends provide a source of regular income for Shareholders, thus improving their cashflow return profile. The annual dividend target for the year ending 31 December 2019 is 8.25 pence per Ordinary Share. ⁽¹⁾

The New Ordinary Shares will rank pari passu in all respects with the Existing Ordinary Shares and will have the same rights and restrictions as each Existing Ordinary Share, including in respect of any dividends or distributions declared following Admission, including the 2019 Q2 Dividend.

^{(1) This is a target only and not a profit forecast and there can be no assurances that it will be met.}

Admission

Application will be made for the New Ordinary Shares to be admitted to listing on the premium listing segment of the Official List and to trading on the London Stock Exchange's Main Market for listed securities. It is expected that Admission will become effective and dealings in the New Ordinary Shares will commence at 8.00 a.m. on 23 July 2019.

Extraordinary General Meeting

The Capital Raising is subject to a number of conditions, including Shareholders' approval to disapply pre-emption rights pursuant to the Capital Raising Resolution, as such rights are set out in the Articles.

If the Capital Raising Resolution is not approved at the Extraordinary General Meeting, the Company will be unable to complete the Capital Raising. The Notice of Extraordinary General Meeting, which is to be convened for 10.00 a.m. on 18 July 2019, will be set out in Part 15 of the Prospectus.

A Form of Proxy for use at the Extraordinary General Meeting or at any adjournment thereof will accompany the Prospectus. Whether or not Shareholders intend to be present in person at the Extraordinary General Meeting, Shareholders are requested to complete and sign the Form of Proxy in accordance with the instructions printed on it and return it as soon as possible, but in any event so as to be received no later than 10.00 a.m. on 16 July 2019 by the Company's registrars, Link Asset Services PXS 1, 34 Beckenham Road, Beckenham, Kent BR3 4ZF. The lodging of the Form of Proxy (or the electronic appointment of a proxy) will not preclude Shareholders from attending and voting at the Extraordinary General Meeting in person if they so wish. Shareholders may also submit their proxies electronically at www.signalshares.com and logging into their share portal account or registering for the share portal if they have not already done so. To register for the share portal Shareholders will need their investor code set out on the form of proxy. Once registered, they will be able to vote immediately. If Shareholders hold shares in CREST, they may appoint a proxy by completing and transmitting a CREST Proxy Instruction to the issuer's agent, ID RA10, so that it is received no later than 10.00 a.m. on 16 July 2019.

The results of the votes cast at the Extraordinary General Meeting will be announced as soon as possible once known through a Regulatory Information Service and on the Company's website (www.regionalreit.com). It is expected that this will be on 19 July 2019.

Appendix 1: DEFINITIONS

In this announcement, the following expressions have the following meanings unless the context requires otherwise:

Admission	admission of New Ordinary Shares proposed to be allotted and issued pursuant to the Capital Raising to the Official List and to trading on the London Stock Exchange's Main Market for listed securities becoming effective in accordance with, respectively, the Listing Rules and the Admission and Disclosure Standards;
Articles	the articles of incorporation of the Company;
Asset Manager	London & Scottish Property Investment Management Limited, a private limited company incorporated in Scotland with registered number SC608667 and whose registered office is at Venlaw 349 Bath Street, Glasgow, Scotland, G2 4AA;
Board	the board of Directors of the Company;
Business Day	any day (other than a Saturday or Sunday or any public holiday in England and Wales) on which banks generally are open for the transaction of normal banking business in the City of London;
Buyback Resolution	the resolution numbered 3 to be set out in the Notice of Extraordinary General Meeting which, if passed, would empower the Company to make market purchases of Ordinary Shares subject to the provisos set out therein;
certificated or certificated form	in relation to a share or other security, a share or other security, title to which is recorded in the relevant register of the share or other security concerned as being held in certificated form (that is, not in CREST);
Capital Raising	the Placing, the Open Offer, the Offer for Subscription and the Intermediaries Offer;
Capital Raising Resolution	the resolution numbered 1 to be set out in the Notice of Extraordinary General Meeting which, if passed, would authorise the Directors to allot New Ordinary Shares pursuant to the Capital Raising as if Article 5.2 of the Articles did not apply to any such allotments;
Closing Price	the closing middle market quotation of an Existing Ordinary Share on the Business Day prior to the date of announcement of the Capital Raising;
CREST	the paperless settlement procedure operated by Euroclear enabling system securities to be evidenced otherwise than by certificates and transferred otherwise than by written instrument;
CREST member	a person who has been admitted by Euroclear as a system-member (as defined in the CREST Regulations);
CREST Regulations	the Uncertificated Securities Regulations 2001 (SI 2001/3755);
Disapplication Resolution	the resolution numbered 2 to be set out in the Notice of Extraordinary General Meeting to disapply pre-emption rights;
Directors	the directors of the Company whose names will be set out in Part 8 ('Directors, Managers and Corporate Governance') of the Prospectus (each a 'Director');
EEA	the European Economic Area;
Enlarged Share Capital	the Existing Ordinary Shares and the New Ordinary Shares;
EPRA	the European Public Real Estate Association;
Euroclear	Euroclear UK & Ireland Limited, a company registered in England and Wales under registered number 02878738;
Excess Application Facility	the facility for Qualifying Shareholders to apply for Excess Shares in excess of their Open Offer Entitlements;
Excess Open Offer Entitlements	in respect of each Qualifying CREST Shareholder who has taken up his Open Offer Entitlement in full, the entitlement (in addition to the Open Offer Entitlement) to apply for Excess Shares, credited to his stock account in CREST pursuant to the Excess Application Facility, which may be subject to scaling-back in accordance with the terms of the Prospectus;
Excess Shares	Open Offer Shares which may be applied for by Qualifying Shareholders in addition to their Open Offer Entitlement;
Existing Ordinary Share	the existing Ordinary Shares in issue at the date of this announcement;
Extraordinary General Meeting	the extraordinary general meeting of the Company proposed to be held at 10.00 a.m. on 18 July 2019 to consider the Resolutions, the notice of which (being the Notice of Extraordinary General Meeting) will be set out in Part 15 of the Prospectus, including any adjournment thereof;
Financial Conduct Authority or FCA	the UK Financial Conduct Authority (or any successor regulatory organisation);
Form of Proxy	the form of proxy for use at the Extraordinary General Meeting which accompanies this document;
Gross Capital Raising Proceeds	up to £50 million or up to £100 million if the size of the Capital Raising is increased by the maximum amount available;
Group	the Company and its subsidiary undertakings from time to time and 'Group Company' shall mean any one of them;
Intermediaries	the entities to be listed in paragraph 12 of Part 13 of the Prospectus, together with any other intermediary (if any) that is appointed by the Company in connection with the Intermediaries Offer after the date of the Prospectus and 'Intermediary' shall mean any one of them;
Intermediaries Booklet	the booklets entitled 'Regional REIT Limited: Information for Intermediaries' and containing, among other things, the Intermediaries Terms and Conditions;
Intermediaries Offer	the offer of New Ordinary Shares by the Intermediaries to retail investors;
Intermediaries Terms and Conditions	the terms and conditions agreed between the Intermediaries Offer Adviser, the Company, the Asset Manager, the Investment Manager and the Intermediaries in relation to the Intermediaries Offer and contained in the Intermediaries Booklets;
Investment Manager	Toscafund Asset Management LLP, registered in England and Wales with registered number OC320318;
Issue Price	106.5 pence per New Ordinary Share;
London Stock Exchange or LSE	London Stock Exchange plc;
Net Asset Value or NAV	the aggregate value of the assets of the Company after deduction of all liabilities, determined in accordance with the accounting policies adopted by the Company from time to time;
Net Capital Raising Proceeds	the Gross Capital Raising Proceeds less applicable fees and expenses of the Capital Raising;
New Ordinary Shares	the new Ordinary Shares proposed to be allotted and issued by the Company pursuant to the Capital Raising;
Offer for Subscription	the offer for subscription of New Ordinary Shares at the Issue Price on the terms and subject to the conditions to be set out in the Prospectus;
Open Offer	the invitation by the Company to Qualifying Shareholders to apply for Open Offer Shares, on the term and conditions to be set out in the Prospectus and, in the case of Qualifying non-CREST Shareholders, in the Open Offer Application Form;
Open Offer Application Form	the personalised application form through which Qualifying Non-CREST Shareholders may apply for New Ordinary Shares under the Open Offer;
Open Offer Entitlements	the entitlement of a Qualifying Shareholder to apply for 1 Open Offer Share for every 8 Existing Ordinary Shares held as at the Record Time;
Open Offer Shares	up to 46,602,642 New Ordinary Shares to be offered to Qualifying Shareholders pursuant to the Open Offer;
Ordinary Shares	ordinary shares of nil par value each in the capital of the Company;
Peel Hunt	Peel Hunt LLP registered in England & Wales with number OC357088 whose registered office is at Moor House, 120 London Wall, London, EC2Y 5ET;
Placee	any person who agrees to subscribe for Placing Shares;
Placing	the conditional placing by Peel Hunt of Placing Shares at the Issue Price on the terms and subject to the conditions in the Placing Agreement and to be set out in the Prospectus;
Placing Agreement	the Placing Agreement dated 24 June 2019 between the Company, Peel Hunt, the Asset Manager and the Investment Manager, details of which will be summarised in paragraph 11.1 of Part 13 of the Prospectus;
Placing Shares	New Ordinary Shares proposed to be allotted and issued by the Company pursuant to the Placing;
Property Portfolio	the portfolio of properties and debt receivables that the Group will acquire from time to time;
Qualifying CREST Shareholders	Qualifying Shareholders holding Ordinary Shares in uncertificated form;
Qualifying Non-CREST Shareholders	Qualifying Shareholders holding Ordinary Shares in certificated form;
Qualifying Shareholder	holders of Ordinary Shares on the register of members of the Company at the Record Date other than Restricted Shareholders;
Record Date	20 June 2019;
Record Time	6.00 p.m. on the Record Date;
Regulatory Information Service or RIS	any channel recognised as a channel for the dissemination of regulatory information by listed companies as defined in the Listing Rules;
Resolutions	the Capital Raising Resolution, the Disapplication Resolution and the Buyback Resolution;
Restricted Jurisdiction	any jurisdiction, including but not limited to Australia, New Zealand, Canada, the Republic of South Africa, Japan and the United States and any EEA state other than the United Kingdom, where the extension or availability of the Capital Raising (and any other transaction contemplated thereby) would (i) result in a requirement to comply with any governmental or other consent or any registration filing or other formality which the Company regards as unduly onerous; or (ii) otherwise breach any applicable law or regulation;
Restricted Shareholders	subject to certain exceptions, Shareholders who have registered addresses in, who are incorporated in, registered in or otherwise resident or located in any Restricted Jurisdiction;
Shareholder	a holder of an Ordinary Share (together 'Shareholders');
Sterling or £	Pounds Sterling, the lawful currency of the United Kingdom;
Subscription Form	the application form in Appendix D to the Prospectus for use in connection with the Offer for Subscription;
uncertificated or in uncertificated form	Ordinary Shares held in uncertificated form in CREST and title to which, by virtue of the CREST Regulations, may be transferred by means of CREST; and
Underlying Applicant	investors who wish to acquire New Ordinary Shares under the Intermediaries Offer who are clients of any Intermediary.

Important notice

Disclaimer

The information in this announcement is for background purposes only and does not purport to be full or complete. No reliance may be placed for any purpose on the information contained in this announcement or its accuracy or completeness.

This announcement is an advertisement and not a prospectus and investors should not subscribe for or purchase any shares referred to in this announcement except on the basis of information to be contained in the Prospectus, when published.

This announcement has been issued by and is the sole responsibility of the Company.

Any purchase of Ordinary Shares in the proposed Capital Raising should be made solely on the basis of the information to be contained in the final Prospectus to be issued by the Company in connection with the Capital Raising and Admission, which is expected to take place later today. No reliance may or should be placed by any person for any purposes whatsoever on the information contained in this announcement or on its completeness, accuracy or fairness. The information contained in this announcement is given at the date of its publication (unless otherwise marked) and is subject to updating, revision and amendment when the definitive Prospectus is published. In particular, the proposals referred to herein are tentative and are subject to verification, material updating, revision and amendment.

The timetable for the Capital Raising, including the date of Admission, may be influenced by a range of circumstances such as market conditions. There is no guarantee that the Capital Raising and the Admission will occur and you should not base your financial decisions on the Company's intentions in relation to the Capital Raising and Admission at this stage. Acquiring Ordinary Shares to which this announcement relates may expose an investor to a significant risk of losing all of the amount invested. Persons considering making such an investment should consult an authorised person specialising in advising on such investments. This announcement does not constitute a recommendation concerning the Capital Raising. The value of Ordinary Shares can decrease as well as increase. Potential investors should consult a professional advisor as to the suitability of the Capital Raising for the person concerned. Past performance or information in this announcement or any of the documents relating to the Capital Raising cannot be relied upon as a guide to future performance.

Peel Hunt is authorised and regulated in the United Kingdom by the FCA and is acting exclusively for the Company as its sponsor, broker and intermediaries offer adviser and no-one else in connection with the Capital Raising and Admission. Peel Hunt will not regard any other person as its client in relation to the Capital Raising and Admission and will not be responsible to anyone other than the Company for providing the protections afforded to its clients, nor for providing advice in relation to the Capital Raising and Admission, the contents of this announcement or any transaction, arrangement or other matter referred to herein.

In connection with the Capital Raising and Admission, Peel Hunt and any of its affiliates, acting as investors for their own accounts, may purchase New Ordinary Shares and in that capacity may retain, purchase, sell, offer to sell or otherwise deal for their own accounts in such New Ordinary Shares and other securities of the Company or related investments in connection with the Capital Raising and the Admission or otherwise. Accordingly, references in the Prospectus, once published, to the New Ordinary Shares being issued, offered, subscribed, acquired, placed or otherwise dealt in should be read as including any issue or offer to, or subscription, acquisition, placing or dealing by Peel Hunt and any of its affiliates acting as investors for their own accounts. Peel Hunt does not intend to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligations to do so.

None of the Company, the Investment Manager, the Asset Manager or Peel Hunt nor any of their respective affiliates or agents accepts any responsibility or liability whatsoever for, or makes any representation or warranty, express or implied, as to this announcement, including the truth, accuracy or completeness of the information in this announcement (or whether any information has been omitted from the announcement) or any other information relating to the Company, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available or for any loss howsoever arising from any use of the announcement or its contents or otherwise arising in connection therewith. The Company, the Investment Manager, the Asset Manager and Peel Hunt and their respective affiliates accordingly disclaim all and any liability whether arising in tort, contract or otherwise which they might otherwise have in respect of this announcement or its contents or otherwise arising in connection therewith.

This announcement may include statements that are, or may be deemed to be, 'forward-looking statements'. These forward-looking statements involve known and unknown risks and uncertainties, many of which are beyond the Company's control and all of which are based on the Company's board of directors' current beliefs and expectations about future events. These forward-looking statements may be identified by the use of forward-looking terminology, including the terms 'believes', 'estimates', 'plans', 'projects', 'anticipates', 'expects', 'intends', 'may', 'will' or 'should' or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. These forward-looking statements include all matters that are not historical facts. Forward-looking statements may and often do differ materially from actual results. Any forward-looking statements reflect the Company's current view with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to the Company's business, the results of operations, financial condition prospects, growth and dividend policy of the Company and the industry in which it operates. Forward-looking statements speak only as of the date they are made and cannot be relied upon as a guide to future performance.

These forward-looking statements and other statements contained in this announcement regarding matters that are not historical facts involve predictions. No assurance can be given that such future results will be achieved; actual events or results may differ materially as a result of risks and uncertainties facing the Company. Such risks and uncertainties could cause actual results to vary materially from the future results indicated, expressed or implied in such forward-looking statements. Forward looking statements speak only as of the date of this announcement.

Certain figures contained in this announcement, including financial information, have been subject to rounding adjustments. Accordingly, in certain instances, the sum or percentage change of the numbers contained in this announcement may not conform exactly with the total figure given.

Subject to their legal and regulatory obligations (including under the Listing Rules, Prospectus Rules, the Disclosure Guidance and Transparency Rules and MAR), each of the Company, the Investment Manager, the Asset Manager and Peel Hunt and their respective affiliates expressly disclaim any responsibility, obligation or undertaking to update, review or revise any forward-looking statement contained in this announcement whether as a result of new information, future developments or otherwise.

Information to Distributors

Solely for the purposes of the product governance requirements contained within: (a) MiFID II; (b) Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593 supplementing MiFID II; and (c) local implementing measures (together, the 'Product Governance Requirements'), and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any 'manufacturer' (for the purposes of the Product Governance Requirements) may otherwise have with respect thereto, the New Ordinary Shares have been subject to a product approval process, which has determined that the New Ordinary Shares are: (i) compatible with an end target market of retail investors and investors who meet the criteria of professional clients and eligible counterparties, each as defined in MiFID II; and (ii) eligible for distribution through all distribution channels as are permitted by MiFID II (the 'Target Market Assessment').

Notwithstanding the Target Market Assessment, it should be noted that: (i) the price of the New Ordinary Shares may decline and investors could lose all or part of their investment; (ii) New Ordinary Shares offer no guaranteed income and no capital protection; and (iii) an investment in New Ordinary Shares is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom.

The Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the Capital Raising. Furthermore, it is noted that, notwithstanding the Target Market Assessment, Peel Hunt will only procure investors who meet the criteria of professional clients and eligible counterparties. For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of MiFID II; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to New Ordinary Shares.

Each distributor is responsible for undertaking its own target market assessment in respect of the New Ordinary Shares and for determining appropriate distribution channels.

This announcement does not contain, constitute or form part of any offer or invitation to sell or issue or any solicitation of any offer to purchase or subscribe for any securities in the United States or any other jurisdiction, nor shall it (or any part of it) or with the fact of its distribution form the basis of, or be relied upon in connection with, or act as any inducement to enter into, any contract or commitment therefor.

Recipients of this announcement who intend to purchase or subscribe for shares in the Company following publication of the final prospectus are reminded that any such purchase or subscription must only be made solely on the basis of the information contained in the prospectus relating to the Company in its final form.