NEW YORK, Sept. 4, 2018 /PRNewswire/ -- Regency
Affiliates, Inc. (OTC Pink: RAFI) ("Regency") today announced that it will raise its quarterly dividend to 6.40 cents per common share on October 5, 2018 to shareholders of record at the
close of trading on September 28, 2018.
Management Comments
"We are pleased to declare a quarterly dividend of 6.40 cents per common share reflecting a 2.4%
increase over the level of quarterly dividend established in September 2017," commented
Laurence Levy, Chairman and Chief Executive of Regency. "We continue to be comfortable with this
dividend level particularly as we benefit from the cash flows generated by our investment in Mobile Energy and our ownership of
the portfolio of self-storage assets in and around Harrisburg, Pennsylvania. These businesses
continue to perform well and generate strong, predictable cash flow."
"Our Security West investment represents a 50% interest in real estate occupied by the United States Social Security
Administration under a lease expiring in October 2018. As previously reported on April 16, 2018, the General Service Administration ("GSA") has indicated that it proposes to exercise a 10-year
renewal option to lease up to 824,563 rentable square feet of space at the Security West Complex. The renewal option contemplates
the lease of the 824,563 rentable square feet at a monthly rental rate of $1.36 per square foot
consistent with the current lease rate. The GSA would have full or partial termination rights at the end of the second year of
the renewal term. The current mortgage balance will be amortized to approximately $12.1 million on
September 30, 2018, down from $98.5 million at the lease commencement
on June 24, 2003. Management of the Security West investment has indicated they plan to extend the
maturity date of the loan prior to its current November 15, 2018 maturity date."
"Regency also owns an indirect 50% interest in Mobile Energy which owns and operates an energy facility located in
Mobile, Alabama. The facility supplies co-generated steam and electricity for use in
Kimberly-Clark's mill operations under a 15 year agreement
signed in 2004. This investment currently generates approximately $3.7 million of cash
distributions per annum for Regency after debt amortization at the project level. In April 2017,
Kimberly-Clark announced that it will invest $75 million to construct a new on-site cogeneration energy plant at its mill. The construction of the new plant
is expected to take place over a two-year period. We are actively engaged with our Mobile Energy partners at Detroit Edison to
maximize cash flow for the remainder of our contract. As it presently stands, at the expected conclusion of the Kimberly-Clark contract in April 2019, Mobile
Energy is expected to have fully discharged its debt out of operating cash flow and is projected to hold additional operating
cash balances supplemented by cash reserves which are expected to be released at the expiration of the contract."
"Regency owns five stand-alone self-storage facilities in the Harrisburg, Pennsylvania
vicinity acquired for a total purchase price of $35.0 million of which $25.3
million was financed via a non-recourse ten-year debt financing, with a four year interest only period ending in 2020 and
thereafter a thirty year amortization schedule. The facilities were purchased via a joint venture with SSCP Management LLC
("SSCP"). Pursuant to the terms of the joint venture, Regency earns a 7.5% per annum preferred distribution on its $11.2 million capital contribution. Surplus cash flow after the preferred distribution is allocated 80% to
Regency and 20% to SSCP. Regency received its ninth distribution from the joint venture in the third quarter of 2018 in the
amount of $210,576 reflecting the 7.5% per annum preferred distribution driven by the ongoing
operating performance of the business. We remain pleased with the continued strong improvement in occupancy and related cash
flows at our self-storage facilities."
"We are continuing to review and evaluate further investment opportunities for Regency and intend to grow the company by
investing in other attractive long term opportunities that meet our business characteristics and valuation criteria."
In order to facilitate efficient processing of the dividend, management strongly suggests all shareholders with shares held in
certificate form contact our transfer agent, Transfer Online, Inc. at (503) 227-2950 and confirm that the registration
information is correct.
About Regency Affiliates
Regency Affiliates, Inc. invests in businesses that generate attractive, predictable and sustainable returns on capital. We
are currently invested in three businesses:
- A 50% interest in the Security West Complex located on 34.3 acres in Woodlawn, Maryland.
The facility is occupied under a lease expiring in October 2018 by the United States Social
Security Administration. The GSA has indicated that it proposes to exercise a 10-year renewal option to lease up to 824,563
rentable square feet of space at the Security West Complex. The renewal option contemplates the lease of the 824,563 rentable
square feet at a monthly rental rate of $1.15 per square foot consistent with the current lease
rate. The GSA would have full or partial termination rights at the end of the second year of the renewal term;
- An indirect 50% interest in Mobile Energy which owns and operates an energy facility located on approximately 11 acres of
land in Mobile, Alabama. The facility supplies up to 61 megawatts of co-generated steam and
electricity for use in Kimberly-Clark's mill operations under
a 15 year agreement signed in 2004; and
- A majority joint-venture interest in a portfolio of five stand-alone self-storage facilities in the Harrisburg, Pennsylvania vicinity comprising approximately 337,000 square feet of net rentable space in
excess of 2,500 climate and non-climate controlled storage units.
Forward-Looking Statements
This press release contains forward-looking statements. Forward-looking statements are statements that are predictive in
nature or depend on or refer to future events and can be identified by the words "may," "might," "will," "should," "anticipate,"
"believe," "expect," "intend," "estimate," "hope," or similar expressions. Forward-looking statements are inherently subject to
risks and uncertainties, many of which cannot be predicted with accuracy or are otherwise beyond our control and some of which
might not even be anticipated. You are cautioned not to place undue reliance on these forward-looking statements, which speak
only as of the date they are made. Future events and actual results affecting our strategic plan as well as our financial
position, results of operations and cash flows, could differ materially from those described in or contemplated by the
forward-looking statements. Important factors that contribute to such risks include, but are not limited to, a default or
catastrophe involving the properties in which we invest, the extent to which we are able to raise additional capital, and
competition for additional investment opportunities. We undertake no obligation to update or revise any forward looking
statement, whether as a result of new information, future events or otherwise. For a more detailed description of these
uncertainties and other factors, please see our website at www.regencyaffiliates.com.
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SOURCE Regency Affiliates, Inc.