Investing in opportunity April 2018 rdireit.com 1 Agenda - PowerPoint PPT Presentation

Interim results presentation Investing in opportunity April 2018 rdireit.com

1 Agenda • Introduction and highlights Mike Watters (CEO) • Financial results Donald Grant (CFO) • Capital allocation Stephen Oakenfull (Deputy CEO) • Portfolio strategy update Adrian Horsburgh (Property Director) • Outlook and conclusion Mike Watters (CEO) • Q&A 2018 interim results presentation

2 Strong H1 delivering superior, sustainable and growing income +10.7% +12.8% +8.2% +2.2% Total annualised Underlying earnings Underlying EPS EPRA NAV per share accounting return £211.8m £284.9m 48.0% Disposal proceeds achieving Acquisitions yielding >9% on equity LTV reduced by 200bps 8.7% premium Growing income Superior income Sustainable income • Progressive dividend (+3.9%) • Continue to deliver one of the • Fully covered dividend highest dividend yields on NAV with pay-out ratio of 92.5% • Gross rental income of £55.5m at 6.3% (4.2% UK REIT average) • Occupancy remains high at 97.3% (1) (+2.1% like-for-like) • Industry leading cost ratio • WAULT of 6.8 years • 25.9% of rental income indexed to effjciently convert rent (8.2 years to expiry) (1) • Developments completed in Derby to dividends • Reduced overall retail exposure and Ingolstadt post period end (1) Excluding RBH managed hotels and London serviced offjces. 2018 interim results presentation

3 Strength of business underpinned by progress against strategic priorities Strategic priorities designed to continue driving sustainable and growing income Financial Effjcient capital Income focused discipline structure portfolio • Transparency on earnings • LTV achieved in line with • Portfolio income characteristics and alignment to operational medium-term targets and enhanced through active cash fmow continued progress capital recycling • Medium-term targets linked to • Actively investing resource in • Scalable operational platforms senior management incentives to investor programme/outreach give competitive edge drive accountability • Portfolio weighted towards • Scrip dividend to be matched by sectors with positive outlook share buy-back programme to limit shareholder dilution 2018 interim results presentation

Financial results

5 Underlying earnings (including share of joint ventures) HY18 HY17 Change Change Summary income statement £m £m £m % Net rental income 50.6 46.0 4.6 Other income 0.6 2.8 (2.2) Administrative costs (7.3) (8.8) 1.5 Net fjnance expense (14.6) (15.0) 0.4 Other items (3.2) (1.2) (2.0) EPRA earnings 26.1 23.8 2.3 Company adjustments: – Reverse debt accretion charges (non-cash) 0.4 0.5 (0.1) – FX loss (unrealised) 0.9 — 0.9 Underlying earnings 27.4 24.3 3.1 +12.8 Underlying earnings per share 1.46p 1.35p +8.2 Dividend per share 1.35p 1.30p +3.9 Diluted weighted average shares in issue 1,875.5m (28 February 2017: 1,804.4m). EPRA cost ratio improved to 15.7% 2018 interim results presentation

6 Gross rental income (£m) (including share of joint ventures) Like-for-like +2.1% 0.3 Nil 0.6 Nil 6.8 0.1 55.5 50.8 (3.1) Disposals Acquisitions Development UK Commercial UK Retail UK Hotels Europe Gross rental income Gross rental income (HY18) (HY17) 2018 interim results presentation

7 Valuations (including share of joint ventures) Market Market value value Gain/ Gain/ EPRA HY18 FY17 (loss) (1) (loss) NIY (2) £m £m £m % % UK Commercial 357.0 345.8 10.2 2.9 5.3 UK Retail 494.1 501.8 (12.1) (2.4) 6.7 UK Hotels 243.4 239.6 2.6 1.1 6.0 UK total 1,094.5 1,087.2 0.7 0.1 5.9 Europe 221.3 226.5 (5.4) (2.4) 4.5 €+1.5% Total like‑for‑like 1,315.8 1,313.7 (4.7) (0.4) CCY+0.3% Acquisitions 300.7 — Disposals — 201.6 Development 30.4 23.4 Total property portfolio 1,646.9 1,538.7 5.7 (1) Gain/(loss) includes the efgect of capital expenditure, tenant incentives, headlease amortisation and FX. (2) Reported EPRA NIY for total segment. Disposals during the period were completed at a 8.7% premium to the last reported market value 2018 interim results presentation

8 Debt and gearing (including share of joint ventures) Key statistics Medium-term target HY18 FY17 HY17 LTV 45% – 50% 48.0% 50.0% (1) 49.9% Weighted average debt maturity 7.0yrs 7.3yrs 6.8yrs Weighted average cost of debt 3.2% – 3.4% 3.3% 3.1% 3.3% Debt with interest rate protection >75% 99.2% 93.0% 97.0% Interest cover (2) >3x 3.5x 3.2x 3.1x (1) Proforma adjusted from 51.3% to refmect transactions between 31 August 2017 and FY17 results announcement on 26 October 2017. (2) Group interest cover calculated as net rental income divided by net fjnance cost. Interest cover continues to improve despite increase in the weighted average debt cost, the result of higher property yields and lower leverage 2018 interim results presentation

9 EPRA NAV per share (p) Up 2.2% to 42.3p 0.4 1.0 1.46 (1.3) (0.4) (0.26) 42.3 41.4 EPRA NAV Underlying Profits on Valuation Dividends FX loss Other EPRA NAV (FY17) earnings disposal and gains gains (HY18) on acquisition Total shares on issue 1,905.1m (31 August 2017: 1,828.1m). Total accounting return of 10.7% (annualised) 2018 interim results presentation

10 Cash fmow and available facilities (£m) (including share of joint ventures) 142.6 (99.9) 99.9 26.0 45.0 (44.5) 63.4 10.0 (18.8) (3.9) 53.4 54.9 Cash and Operating Disposals Acquisitions Net debt Dividends Other Cash and available cash flow and capital repaid available facilities (FY17) expenditure facilities (HY18) Undrawn, committed facilities Modest capital commitment of £8.5m 2018 interim results presentation

11 Medium-term guidance maintained Linked to management incentives to drive accountability Key performance indicators Medium-term target HY18 FY17 HY17 Rental income growth (like-for-like) 2% – 5% 2.1% 3.7% 3.3% Rent collection >95% within 7 days 89.3% 94.3% 94.0% EPRA cost ratio <15% 15.7% 19.8% (1) 20.7% (1) Cost of debt 3.2% – 3.4% 3.3% 3.1% 3.3% LTV 45% – 50% 48.0% 50.0% (2) 49.9% Interest cover >3x 3.5x 3.2x 3.1x Pay-out ratio 90% – 95% 92.5% 94.5% 96.3% Underlying earnings per share growth 3% – 5% 8.2% n/a n/a (1) 17.2% and 18.0% respectively, when adjusted for non-recurring items. (2) Proforma adjusted from 51.3% to refmect transactions between 31 August 2017 and FY17 results announcement on 26 October 2017. Dividend of 1.35p representing growth of 3.9% on HY17 2018 interim results presentation

Capital allocation

13 Continued reduction in leverage Meaningful reduction in LTV and cost of debt over last six years Historic weighted average cost of debt and LTV (%) Cost of debt LTV 5.5% 85% 80% 5.0% 5.0% 75% 75.4% 70% 4.5% 65% 60% 4.0% 55% 48.0% LTV (%) 50% 3.5% Weighted average cost of debt (%) 3.3% 45% 3.0% 40% FY2011 FY2012 FY2013 FY2015 FY2016 FY2017 HY2018 FY2014 • Refjnancing or extending facilities at lower leverage • Reinvestment has been undertaken at lower and reduced margins marginal leverage • Revised dividend policy and pay-out ratio providing • Medium term target to achieve a partially headroom to operational cash fmow unsecured debt structure • Cost of debt increased to 3.3% (+20bps) Medium term target of 45% – 50% LTV 2018 interim results presentation

14 Well structured debt profjle Limited refjnancing risk with no material maturities until 2020 Debt maturity profjle (£m) Group debt £844.7m (FY2017: £842.2m) 366.1 GBP Europe bank debt UK bank debt • Gross LTV: 58.4% Euro • Gross LTV: 49.1% 15% • LTV cov ave: 66.5% • LTV cov ave: 68.7% 193.8 18% 155.3 67% 57.8 47.0 UK non-bank debt 21.2 3.5 • Gross LTV: 67.6% FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27 FY28+ • LTV cov ave: 85.0% • Lower rates secured for an extended period • Net Group LTV 48.0% • £303m AUK facility provides fmexible capital structure and • Total LTV covenant average 71.2% (1) cost of debt effjciencies • German assets funded with Euro debt providing • 99.2% of debt at fjxed or capped rates natural FX hedge (1) £24.9m of Group debt is not subject to an LTV covenant. Weighted average debt maturity of 7.0 years Material covenant headroom 2018 interim results presentation

15 Adapting to change in regulatory landscape under MIFID II Efgective and timely investor communication strategy Company compiled consensus as at New investor material: 20 April 2018: • Key information document – although not a requirement Four analysts included (1) • Quarterly factsheet FY19 FY20 FY18 • Analyst Excel workbook Underlying EPS (p) 2.86 2.92 2.99 • Website under development % year-on-year growth 3.9 2.3 2.4 Dividend per share (p) 2.65 2.73 2.80 Investor engagement: % year-on-year growth 2.1 3.0 2.4 • London CMD and property tour on 28 June 2018 EPRA NAV per share (p) 41.6 42.2 42.9 • Dedicated IR to facilitate investor meetings % year-on-year growth 0.4 1.7 1.5 (1) Included most recent estimates from all analysts who published updated forecasts following recent material disposals and acquisitions. 2018 interim results presentation