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Expanding into London flexible officesInvesting in opportunityJanuary 2018
rdireit.com
1Agenda
• Business update post FY17 results• Strategic rationale for major capital recycling• Transaction and deal specifics• Overview of the UK flexible office sector• Portfolio effects• Outlook and conclusion• Q&A
Investing in income-led opportunity St Dunstan’s, Monument
2RDI market update post FY17 resultsStrong investment and operational activity underpins a solid year to date performance
Committed to being the UK’s leading income focused REIT
• New name and refreshed brand• Leasing activity
• Completed 59 lease events totalling £5.3m gross annualised rent
• Occupancy remains high
• TK Maxx fitting out
• Key retail tenants delivered pleasing Christmas results
• Continued success in active recycling:• Increased holding in IHL from
17% to 74%
• Completed the sale of the Leopard portfolio for €205m at a 10.8% premium realising €117.5m (£103.5m) of equity
• Strategic disposals of smaller assets totalling £28.8m, including: – Two regional offices in Bristol
and Plymouth
– Retail asset in Hull, let to House of Fraser
• Acquisition of Kingston Business Park for £18.8m at NIY of 5.8%, presenting clearly identified opportunities
• Acquisition of 80% interest in high quality London flexible office portfolio valued at £161.7m
Kingston-upon-Thames Business Park
3Relentless focus on delivering sustainable and growing incomeRecycling low growth income at a premium and capitalising on £/€ cyclical high
Opportunistic disposal capitalising on exceptionally strong investment market:German Retail Portfolio
• €205m disposal at £20m profit• €12.7m net annualised rental income;
implied 5.8% NIY• 66 assets with average lot size: €3.1m
• Limited near to medium-term income growth
• Completed on 29 December 2017
Increase investment in strong property fundamentals and structural growth opportunity:Office Space In Town (OSIT’s) portfolio
Recycle
• 80% interest in 4 flexible London offices valued at £161.7m
• £10.3m EBITDA; implied NIY >6%(1)
• Average lot size: £40.4m
• Significant income growth opportunity• Completed on 12 January 2018• LTV: 45% in line with strategic priority
to reduce group leverage
Diversified business model provides ability to opportunistically invest for growth(1) Net initial yield net of management fee.
4
• £161.7m portfolio value yielding >6%• Consideration of approximately £72.5m reflecting 80%
interest
• Existing debt of 45% LTV
• Established flexible office operator
• Anticipated yield on equity >9%• Experienced, high quality management team with
aligned interest through retained co-investment and management fee based on % of EBITDA• Office Space In Town was founded in May 2009 by
Giles and Niki Fuchs
• Manage 6 London and 5 regional flexible offices, including the 4 acquired assets
• Income focused cultural fit
• Non‑compete arrangements and right of first refusals on future OSIT developments in place
Transaction summaryEarnings accretive acquisition in line with strategic priorities
HoldCo
PropCo OpCo
80% 20%
Assets
Little Britain
Boundary Row
New Broad Street
St Dunstan’s
RDI experienced with investing in operational/serviced real estate
Ownership structure
Manag
emen
t agreem
ent
5
Increased allocation of capital to areas of long‑term economic growth• Sector outlook supported by occupier trends
and ongoing structural change• Increased exposure to London, particularly
Crossrail and Southbank
Differentiated flexible office business model• Owned model with a proven sustainable track record• Established and experienced operator with
aligned interests• Highly serviced, uniquely designed and wholly
refurbished space in recent years• Not competing directly with ‘lower margin’
co‑working models• Benefiting from progression of start‑ups in to
highly serviced but more ‘corporate’ space
Deal rationaleLondon exposure at over 6% NIY with improved growth prospects
Asset management opportunities• Synergies with existing portfolio• Improved brand awareness• Other revenue opportunities
Scalable platform• Right of first refusal on future developments• Simple integration of future acquisitions and
potential repurposing of existing assets• RDI experienced with investing in operational/
serviced real estate
Alignment with strategic priorities to continue delivering superior, sustainable and growing income
6
St Dunstan’s, EC3R
Boundary Row, SE1
Little Britain, EC1A
New Broad Street, EC2M
Market value: £63.7m £36.3m £32.3m £29.4mCapital value per sqft: 1,090 902 984 830Nearest tube: Monument Southwark St Pauls Liverpool StreetLettable area: 58,432 sqft 35,796 sqft 36,908 sqft 35,419 sqftNumber of desk: 694 453 328 352Number of clients: 58 29 27 35Average monthly desk rate(1): (license fees only)
£814 £635 £663 £644
Implied rent per sqft: £78 £66 £50 £63Occupancy(1): 86% 99% 92% 96%Average stay(1): n/a 30 months 23 months 30 monthsIllustrative opportunities: Shared space
revenuesHotel synergies
Space reconfiguration
Restricted use gym operator
In December 2017, 3 of the acquired assets were included on Easy Offices’ Top 10 serviced offices
Portfolio summary – buyers of strong property fundamentalsHigh quality London flexible office portfolio yielding >6%
(1) Source: Data as at 31 December 2017.
7
Waterloo
Cannon Street
Wapping
Whitechapel
Moorgate
Fenchurch StreetBlackfriars
Charing Cross
Little Britain,St Pauls
New Broad Street,Liverpool Street
St Dunstan’s,Monument
Boundary Row,Waterloo
Liverpool StreetFarringdon
Tottenham CourtRoad
Leicester Square
Embankment
Covent Garden
Temple
Holborn
Chancery Lane
Monument
London Bridge
Mansion House
Southwark
BankSt Paul’sAldgate
Borough
Tower Hill
Barbican
127 Charing Cross Road
Coburg HouseNewington House
Holiday Inn, Southwark
Existing RDI portfolio
OSIT portfolio
Well located assets complementing existing portfolioLocations weighted towards areas in London expected to deliver medium to long-term growth
High occupancy and enquiry levels underpinned by strong occupier demand
8London flexible office sectorLondon is the single largest and most developed flexible office market globally
Market summary and outlook• London economy is suited to flexible space, both culturally
and practically• Demand for flexible space in London is on the rise and supported
by increased occupier demand for flexible, cost efficient space• Flexible workspace and co‑working account for c.7% of Central London
office stock. JLL expects share to increase to 30% by 2030
• The sector is more resilient in times of economic uncertainty• Since Brexit, London job creation has slowed, however flexible offices
share of take‑up has increased
UK growth forecasts 2025CAGR
2014‑25
# serviced offices 6,952 10.7%# workstations 1,562,615 14.8%Monthly desk rate (ave.) £527 4.1%Source: Capital economics.
9Structure of London flexible office sectorOSIT’s ownership model allows control over use, design, density and cost base
Owned model
Leased model
Ownership modelsLondon operators by size
0.50.0 1.0 1.5 2.0 2.5
2.2
1.2
1.2
0.8
0.6
0.4
0.17
Regus
million sqft
WeWork
TOG
Workspace
LEO
i2 Office
RDI (OSIT portfolio)
0.2
0.2
Serviced Office Group
Business Environment Group
Owning the assets allows for:• Control over use, design and service provisions• Flexibility in density, rates and cost management• Freedom to realise asset management opportunities
Source: Serviced Offices: 'A new asset class' – Capital Economics ( June 2016), Savills, Cushman & Wakefield, The Instant Group.
10Competitor landscape changing from providing a product to providing high quality serviceNot competing directly with lower margin co-working models
Traditional office space (c.93% of Central London)• Providing a product• Inflexible longer leases• Generally larger, corporate tenants
Tre
ndy
Co
rpo
rate
Flex
ible
offi
ce s
pace
(c.7
% o
f Cen
tral
Lon
don)
Serviced offices (c.80% of flexible office space)• Providing a high quality and tailored service• Occupier demand from large corporates and smaller,
growing businesses• Flexibility to manage costs and adapt• More ‘corporate’ space
Co‑working space (c.20% of flexible office space)• Provides greater community and creative freedom• Experiencing significant growth and demand from small
companies and start ups• High density, but generally shorter average stay and less
profitable• Generally noisy, disruptive and confidentiality risk
11Current Central London serviced office monthly desk ratesOSIT portfolio provides premium flexible space at mid-market rates
Higher value Lower value
Cost per desk per month
West End Core£900 – £1,500 Southbank
£650 – £800
City Core£500 – £800
Strand£650 – £750
Eastern Fringe£450 – £550
Midtown£500 – £650
Northern Fringe/Shoreditch£450 – £600
Knightsbridge£900 – £1,300
Soho£800 – £950
Canary Wharf£700 – £900
Paddington£700 – £800
North of Mayfair£700 – £850
Victoria£650 – £850
Noho£650 – £800
North£600 – £800
Boundary Row£635 average
St Dunstan’s£814 average
New Broad Street£644 average
Little Britain£663 average
Targeting between 90% and 95% occupancy whilst maintaining competitive desk rates
Source: Knight Frank, Flexible Office ServicesOSIT average monthly desk rates as at 31 December 2017
12
• Globalising markets drive increased satellite offices, outsourcing and offshoring
• Technology supports mobility
• Businesses require flexibility and ability to adapt and save costs
• More flexible workforce with employees demanding flexibility and work life balance
• Collaboration and attracting talent
• Overflow and project space
Structural and behavioural change set to continue driving demand for flexible, cost efficient space
Currently 92% of all London companies have <9 staff. Estimated net growth of 1.8m small firms in next decade
Large corporates taking up more flexible space
Employment rates in key sectors for flexible offices anticipated to grow at twice the rate of wider economy
Occupier trends:
Business with 0 to 49 employees (small)
Business with 50 to 249 employees (medium)
Business with 250 or more employees (large)
2000
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
80
160
90
100
110
120
130
140
150
0.0
0.5
1.0
1.5
2.020%
Overall growthin jobs across thewhole economy
annually
Share of total flexible office space:
Information andcommunications
sector
Professional,scientific and
technicalactivities sector
Adminstrativeand support
serviceactivities sector
Financialand insurance
activitiessector
0.9%
2.0%
1.7%
40% 20%
1.5%
1.9%
Source: Capital Economics Source: Capital Economics
Major international investment bank
indicated an increase in flexible space to account for 30% of
total footprint
13Portfolio effectsSignificant progress in enhancing portfolio property fundamentals whilst maintaining EPRA NIY at 5.7%
Income growth targets underpinned by improved long-term occupier demand
(1) Pro forma reflects the portfolio as at 31 August 2017 adjusted for IHL, Leopard and OSIT transactions.
Increased exposure to long‑term economic growth geographies
Increased weighting to subsectors underpinned by strong occupier demand
Overall retail exposure reduced
28.8%
27.8%
38.5%
28.8%
Greater London Other big cities
13.9%
25.0%
33.9%
16%
60%
24%14.7%
12.2%
46.2%
21%
46%
33%
Pro forma(1)Pro forma(1) Pro forma(1)As at 31 Aug 2017As at 31 Aug 2017 As at 31 Aug 2017
UK Indexed Germany indexed Open market rent reviews exposed to strong occupier demand
Hotels Retail Commercial
14Outlook and conclusionSustainable and growing income underpinned by strong occupier demand
• Continued delivery against strategic priorities• Relentless focus on superior, sustainable and
growing income
• Portfolio quality and income credentials enhanced
• Reducing LTV
• OSIT, a clear income-led opportunity to enhance the portfolio
Medium-term guidance unchanged and continue to target 3% – 5% growth in
underlying earnings per share
Superior income
Sustainable income
Growing income
Scalable business
Efficient capital
structure
Income focused portfolio
Financial discipline
RDI REIT (formerly Redefine International)
15
Q Q&A
A16
Appendices
17Pro forma portfolio
Pro forma Portfolio
% ofportfolio by
market valueMarket
value (£m) Properties
Annualisedgross rentalincome (£m) ERV (£m) EPRA NIY
EPRA topped
up yieldReversionary
yield
Weightedaverage
lease length
EPRAoccupancy
(by ERV) % Indexed
UK Shopping Centres 19% 316.5 6 26.2 27.1 6.4% 6.8% 8.0% 8.0 3.3% 27.5%
UK Retail Parks 10% 169.9 5 11.4 10.8 5.8% 6.2% 6.0% 7.7 3.8% 4.7%
UK Other Retail 2% 28.3 3 2.3 2.3 7.5% 7.5% 7.8% 16.6 — —
UK Retail 31% 514.7 14 39.9 40.2 6.3% 6.6% 7.3% 8.4 3.2% 19.4%
UK Offices – Greater London 6% 90.2 3 3.4 4.4 2.8% 3.3% 4.6% 5.1 4.1% 23.7%
UK Offices – Flexible London 10% 161.7 4 10.3 10.3 6.0% 6.0% 6.0% 2.2 5.6% —
UK Offices – Regions 7% 113.6 15 9.6 9.2 6.9% 7.7% 7.6% 3.3 4.2% 23.0%
UK Distribution & Industrial 7% 117.6 4 6.3 7.5 4.8% 5.0% 6.0% 5.0 3.7% —
UK Automotive 3% 42.8 36 2.9 2.3 6.3% 6.3% 5.0% 12.3 — 100.0%
UK Commercial 33% 525.9 62 32.5 33.7 5.4% 5.7% 6.0% 4.3 4.2% 18.2%
Greater London RBL portfolio 11% 184.4 7 11.9 12.5 6.0% 6.0% 6.4% 8.3 — —
Edinburgh 2% 39.1 1 2.6 3.0 6.1% 6.1% 7.1% 8.5 — 3.4%
IHL Hotels – RBL portfolio 5% 75.4 5 6.0 6.0 7.5% 7.5% 7.5% 10.0 — —
IHL Hotels – Travelodge portfolio 2% 29.0 4 1.6 1.6 5.3% 5.3% 5.3% 21.1 — 100.0%
Enfield Travelodge 1% 16.1 1 0.7 0.7 4.2% 4.2% 4.2% 29.9 — 100.0%
UK Hotels 21% 344.0 18 22.8 23.8 6.2% 6.2% 6.5% 10.3 — 10.5%
Total UK 85% 1,384.6 94 95.2 97.7 5.9% 6.2% 6.6% 7.5 2.8% 16.9%
German Shopping Centres 11% 181.3 3 9.4 10.6 4.2% 4.3% 5.5% 4.8 0.6% 94.5%
German Supermarkets and Retail Parks 4% 68.7 11 4.8 4.9 5.9% 5.9% 6.6% 5.2 3.2% 94.4%
Europe 15% 250.0 14 14.2 15.5 4.7% 4.7% 5.8% 4.9 1.4% 94.5%
Total 100% 1,634.6 108 109.4 113.2 5.7% 6.0% 6.5% 7.1 2.6% 27.0%
18Product overview
Membership/product Contrib.(1) Description Desks/Clients Pricing(2) Avg. length
Office/ Desk rental 80%
• Private offices with capacity for 1‑60 people
• Flexible terms to allow for growth and change
• Access to all buildings in the portfolio
1,826 desks146 clients(3)
Pricing based per room per month:• £500 – £900+ implied
rate per desk
• Initial contract average 11 months
• Length of stay average 30(3) months
Meeting rooms 7%
• 37 individually designed meeting rooms• Capacity for 4‑100 people• Suitable for bespoke meetings, training
courses, seminars, interviews, product launches, etc.
• Catering facility provided
Pricing based on a per room per hour basis:• £20-£250 per hour• Larger spaces and
meetings are done on a delegate rate
Average annual spend, including catering:• Over £6.5k per internal
client• Over £250k by external
clients
Contracted Service Fees 10%
• Contracted IT and telephony, including bandwidth, handsets, call charges, IP’s, rack rental, etc.
• Beverage charges
Pricing based on individual tailored packages:• Introduced target
package price of £85 per head in 2017
Average annual spend:• Over £82 per desk
at 100% occupancy, including call charges
Adhoc Service Fees 3% • Including office customisation, support
services, photocopying, postage, etc.Pricing per product or service
• n/a
Virtual 0.1%• Virtual office product, which allows
clients to connect to all centres• Includes telephone answering and
mail handling
• Priced per month full Virtual product at £150
• Monthly rolling contracts
(1) Based on 2017 Sales Income.(2) Pricing excludes VAT.(3) As of Dec 2017.
19St Dunstan’s – London Monument‘Sunseekers Luxury Yachts’
Occupancy (%)
71
2016
86
2017
Average monthly desk rate (£) license fees only
694
2016
814
2017
Historic performance International Property Awards UK 2016Best office interior London
Note: St Dunstan’s only trading since 2015.
20Boundary Row – London Waterloo‘Alice in Wonderland’
Occupancy (%)
96
2016
96
2015
81
2014
99
2017
Historic performance Featured as Rightmove’s Dream PropertyOctober 2017
606
2016
584
2015
495
2014
635
2017
Average monthly desk rate (£) license fees only
21Little Britain – London St Paul’s‘Old English culture and English authors’
Historic performance
Occupancy (%)
93
2016
95
2015
90
2014
92
2017
661
2016
613
2015
577
2014
663
2017
Average monthly desk rate (£) license fees only
22New Broad Street – London Liverpool Street‘Historic London board game’
Historic performance
Occupancy (%)
91
2016
90
2015
93
2014
96
2017
623
2016
640
2015
545
2014
644
2017
Average monthly desk rate (£) license fees only