3 September 2019 Instinctif property tour rdireit.com
Disclaimer Important notice This document has been prepared by and is the sole those expressed or implied by the forward looking statements. responsibility of the directors (the “Directors”) of RDI REIT P.L.C. Forward looking statements contained in this presentation (the “Company”), and has been prepared solely in connection regarding past trends or activities should not be taken as a with a presentation to be held to provide a market update on representation that such trends or activities will continue in the Company. the future. Except as required by applicable law or regulation, the Company (nor its Directors, offjcers, employees, agents, This document does not and is not intended to constitute, and brokers, fjnancial advisers or representatives) undertakes any should not be construed as, an ofger, inducement, invitation obligation to update or revise any forward looking statements, or commitment to purchase, subscribe to, provide or sell whether as a result of new information, future events or any securities, services or products of the Company in any otherwise. You should not rely on forward looking statements, jurisdiction, or any part of any solicitation of any such ofger, which speak only as of the date of this presentation. inducement, invitation or commitment, or to provide any recommendations for fjnancial, securities, investment or No representations or warranties are or will be made by the other advice or to take any decision. You are encouraged to Directors, the Company nor any adviser or person acting seek individual advice from your personal, fjnancial, legal, tax on their behalf as to the accuracy or completeness of the and other advisers before making any investment or fjnancial information or opinions communicated in this presentation. decisions subscribing for or purchasing any securities. None of the Directors, the Company nor any adviser or person acting on their behalf, shall (without prejudice to any liability Certain statements in this presentation may be forward looking for fraudulent misrepresentation) have any liability whatsoever statements. By their nature, forward looking statements for loss however arising, directly or indirectly, from the use involve a number of risks, uncertainties and assumptions of information or opinions communicated in relation to this about the Company and its subsidiaries and investments that presentation. could cause actual results or events to difger materially from 3 September 2019 | Instinctif property tour
Agenda Introduction and strategic priorities Stephen Oakenfull Deputy Chief Executive Offjcer Portfolio overview Adrian Horsburgh Property Director Financial Donald Grant Chief Financial Offjcer Conclusion Stephen Oakenfull Deputy Chief Executive Offjcer Q&A 1 3 September 2019 | Instinctif property tour
Introduction • Robust operational metrics despite headwinds • Recent acquisitions signifjcantly outperforming pre-existing portfolio • Volatile political and economic backdrop • Challenging retail landscape • A more decisive approach to strategic priorities required Accelerate strategic priorities Lower leverage capital structure Continued reduction in retail More focused capital allocation 2 3 September 2019 | Instinctif property tour
More focused capital allocation Including further material reduction in retail £1.6bn market value Strategic disposals £1.1bn market value Following strategic disposals and assuming no re-investment Aviva ( £177.2m market value) 15% London • 100% retail 21% 23% serviced s offices c i h p 33% 10% • Highly leveraged a r g London o m offices e d • Negative reversion and outlook 13% g n o r t s 43% 20% d n Germany ( £244.2m market value) a 22% e g n a U h K c l ( • 100% retail a 2 % ) 6 r 8 u % 5 2 t 1 % c ) ( u y i n r n t a G S m r e r e G a t e • Above average leverage r L o n d o n Offices Retail Offices Retail parks & other • Low growth outlook Hotels Industrial & Hotels Industrial & distribution distribution Mature ( £88.2m market value) • 5.9% Topped up NIY • 5.5% Topped up NIY • £29.0m retail and £59.2m • 5.9% Reversionary yield • 6.2% Reversionary yield regional offjces • 100% UK focused • Weaker demographics • 79% in Greater London and South East • Mature, secondary assets 3 3 September 2019 | Instinctif property tour
Delivering sustainable income and dividend returns Strategic disposals to result in material reduction in leverage and retail exposure Indicative annualised underlying earnings per share (p) LTV 13.9 Strategic disposals 12.0 c.12.0 (2) 40% (2) (1.9) (2) 35% (2) c.11.2 1.3 10.5 30% 0.5 (2.1) (1.2) HY19 (annualised) Aviva Group ex Aviva Germany Mature Overhead Interest cost Base and assets reduction reduction (1) upside LTV (UK REIT ave. 29%) 48.5% 45.4% 30% – 40% Retail exposure 43% 36% c.22% Debenhams (% of gross rental income) 1.4% 0.8% nil Annualised EPS as a % of NAV (UK REIT ave. 4.0%) 6.8% 6.3% 5.5% – 5.9% (1) Assumes interest saving of 3.5% on debt repaid. (2) Indicative underlying EPS and leverage, assuming share buy-back at £1.50. 4 3 September 2019 | Instinctif property tour
5 Source: Factset, Peel Hunt, Stifel, Panmure Gordon – data refmects analysts' estimates of the next NAV and LTV as at 28 August 2019. P/NAV and LTV Peer group ratings – sector exposure and leverage 100 120 140 160 180 40 60 80 20 0 3 September 2019 | Instinctif property tour 29% Safestore 24% Big Yellow 46% Primary Health Properties 37% Assura 39% Unite 32% LondonMetric 24% Segro 43% Supermarket Income REIT 27% GCP Student Living 41% Secure Income REIT 30% Sirius 38% Warehouse REIT 30% Tritax Big Box 23% Picton 37% Regional REIT 42% Grainger 34% Empiric Student Property 34% P/NAV (%) Hansteen 20% 21% Derwent London Shaftesbury 14% Great Portland Estates LTV (next) 22% Workspace 36% Helical 33% McKay Securities 40% NewRiver 28% Landsec Typically higher retail 31% British Land exposure and/or higher leverage 47% 47% RDI REIT Town Centre 41% Hammerson 51% Capital & Regional 56% Intu Properties
Sum of the parts analysis EPRA NAV per share (pence) (1) As at 28 February 2019 (excl. Aviva) 81% weighted Subject to Sectors benefjting from toward Greater disposal process positive structural change London & South 8.9 12.0 26.8 33.2 Current share price 101.4 pence (2) 190.2 30.7 142.5 37.5 109.3 41.1 UK mature assets (3) Distribution Hotels London offices (incl. London serviced offices) industrial & auto Subtotal UK Retail Subtotal Germany Cash and other EPRA NAV (1) NAV per share contribution based on the Group's economic share of the market value of the assets less the associated debt or pro-rata debt secured against the assets. (2) Share price as at 29 August 2019. (3) UK mature assets include £29.0m of retail assets and £59.2m of regional offjces. 6 3 September 2019 | Instinctif property tour
UK Hotels • Trusted brands • Simple, effjcient operating model • Higher margins with lower volatility • Lower capex requirements • Market leading operator with aligned interests RBH managed hotels (incl. acquired IHL hotels) 90% by value in Greater London, Gatwick and Edinburgh 83.9% (+60bps) £95.5 (+1.4%) Weighted average occupancy Average room rate £81.3 (+2.3%) Revenue per available room Other Edinburgh 10% RDI portfolio growth 8% Gatwick driver over last 2 years Integrally linked to 63% 19% the North terminal Greater London Occupancy has remained consistently high since acquisition 7 3 September 2019 | Instinctif property tour
Germany • Strategic decision to exit Germany • Strong investment market but structural changes in retail a global issue • Supports reduction in retail and leverage • Simplifjes the corporate structure and reduces FX and tax risk Prime yields Range min/max, last 10 years Mean, last 10 years Forecast: Q2 2020 Current (Q2 2019) 8% 7% 6% 5% 4% 3% 3.9% 4.2% 4.2% 2% 3.1% 3.1% 2.6% 1% 3.8 0% -1% -0.3% -2% Risk Office Prime Retail Shopping Logistics Multi-family free rate high street warehouse centre warehouse house park Source: Savills 8 3 September 2019 | Instinctif property tour
London serviced offjces • Market leading operator with aligned interest • Service-led approach, consistent 5-star Google ratings • Quality and personalised service is a key difgerentiator • No co-working, lower density, higher amenity space and good sound insulation • Strong property fundamentals • Demand remains strong London serviced offjces Exposure to Crossrail and Southbank markets £826 (+0.9%) £685 (+0.1%) Total revenue per available desk Average desk rate (licence fee only) 94.5% (+230bps) £69.0 (+0.9%) Average desk occupancy EBITDA per sqft Leased 63.4% 30 months Owned model model (c.20% Average length of stay EBITDA as % of total revenue EBITDA margin) Performance relative to 31 August 2018. 9 3 September 2019 | Instinctif property tour
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