rdireit.com investing in opportunity · 2018 full year results presentation continuously improving...

Investing in opportunity Full year results presentation

October 2018

rdireit.com

2018 full year results presentation

1Agenda

• Introduction and highlights Mike Watters (CEO)

• Financial results Donald Grant (CFO)

• Capital allocation Stephen Oakenfull (Deputy CEO)

• Portfolio update Adrian Horsburgh (Property Director)

• Outlook and conclusion Mike Watters (CEO)

• Q&A


2FY18 highlightsStrong results with 3.8% growth in the dividend to 2.70p, fully covered

(1) Reflecting post year end transactions.

+7.4%Underlying earnings

growth to £53.5m

+3.3%Underlying EPS

growth to 2.84p

+3.4%EPRA NAV per share

growth to 42.8p

+9.8%Total accounting return

£255.7mDisposal proceeds

achieving 8.9% premium

£284.9mAcquisitions yielding

>9% on equity

46.2%Proforma LTV to 47.3%(1)


3Delivering superior, sustainable and growing incomeUnderpinned by a stronger balance sheet and significantly improved portfolio

Superior income

Sustainable income

Growing income

Superior income

6.3% Top quartile yield on NAV (UK-REIT

average 4.2%)

15.6% EPRA cost ratio;

efficiently converting rent

to dividends

Liquid and transparent investment in commercial real estate

27.0% Indexed rent

31.1% Serviced income

with strong CPI correlation

41.9% Open rent

reviews weighted to sectors with

positive outlook

Growing income

Sustainable income

95.1% pay-out ratio

7.0 years WAULT to

first break with 97.1% occupancy

6.7 years debt maturity

with 99.6% finance costs fixed/capped

Hampton by Hilton, London Gatwick Airport

Strategic priority:Financial discipline• Transparency on earnings and

alignment to operational cash flow

• Targeting one of the lowest industry EPRA cost ratios

• Dividend fully covered by earnings and operational cash flow

• Medium term targets linked to senior management incentives to drive accountability

Financial results


5Underlying earnings(including share of joint ventures)

FY18 FY17 Change Change Summary income statement £m £m £m %

Net rental income 100.7 93.5 7.2

Other income 1.8 2.7 (0.9)

Administrative costs (14.4) (15.6) 1.2

Net finance expense (29.0) (29.0) —

Other items (2.8) 2.3 (5.1)

Non-controlling interests (4.4) (3.0) (1.4)

EPRA earnings 51.9 50.9 1.0

Company adjustments:

– Reverse debt accretion charges (non-cash) 0.8 0.9 (0.1)

– FX loss/(gain) 0.8 (2.0) 2.8

Underlying earnings 53.5 49.8 3.7 +7.4

Underlying earnings per share 2.84p 2.75p +3.3

Dividend per share (declared H2: 1.35p) 2.70p 2.60p +3.8Diluted weighted average shares in issue 1,892.3m (31 August 2017: 1,811.9m).

EPRA cost ratio improved to 15.6% (17.2% in FY17)


6

(10.2)

Disposals

Like-for-like+2.1%

1.1 Nil

UK Retail

0.5

UK Hotels

0.1

EuropeNet rental income(FY17)

93.5

Acquisitions

15.1

Development UK Commercial

0.6

Net rental income(FY18)

100.7

Net rental income (£m)


7Valuations(including share of joint ventures)

Market Market EPRA value value Gain/ Gain/ topped up FY18 FY17 (loss)(1) (loss) NIY(2) £m £m £m % %

UK Commercial 332.0 307.4 23.1 7.5 5.2UK Retail 481.0 501.8 (26.1) (5.2) 6.8UK Hotels 245.9 239.6 5.1 2.1 5.9UK total 1,058.9 1,048.8 2.1 0.2 6.0Europe 226.1 226.5 (0.9) (0.4) 4.9Totallike‑for‑like 1,285.0 1,275.3 1.2 0.1 Acquisitions 303.3 —

Development 32.1 23.4

Disposals — 240.0

Totalpropertyportfolio 1,620.4 1,538.7 5.8(1) Gain/(loss) includes the effect of capital expenditure, tenant incentives, head lease amortisation and FX.(2) Reported EPRA topped up NIY for total segment.

Disposals during the year were completed at a 8.9% premium to the last reported market value

CCY+0.6%

€+2.2%


8Debt and gearing

Key statistics Medium term target FY18 HY18 FY17

LTV (%) 45% – 50% 46.2(1) 48.0 50.0(2)

Weighted average debt maturity (years) 6.7 7.0 7.3

Weighted average cost of debt (%) 3.2% – 3.4% 3.4 3.3 3.1

Debt with interest rate protection (%) >75% 99.6 99.2 93.0

Interest cover(3) (times) >3x 3.5 3.5 3.2(1) Increasing to 47.3% post period end.(2) Proforma adjusted from 51.3% to reflect transactions between 31 August 2017 and FY17 results announcement.(3) Group interest cover calculated as net rental income divided by net finance cost.

LTV continues to move towards the lower end of our target range


9

Underlying earnings

Valuation gains

Profits on disposal and gains

on acquisition

Dividends FX loss OtherEPRA NAV (FY17)

EPRA NAV (FY18)

2.84

0.61.2

(2.65) (0.3) (0.29)41.4

42.8

EPRA NAV per share (p)Up 3.4% to 42.8p

Total shares on issue 1,900.4m (31 August 2017: 1,828.1m).

Total accounting return of 9.8%


10

Undrawn, committed facilities

Cash and available

facilities (FY17)

53.4

10.063.4

Operatingcash flow

58.8

Disposals Acquisitions and capital

expenditure

(106.4)

Net debt repaid

188.0

Dividends

(82.6)

Other

(41.1)(10.3)

Cash and available

facilities (FY18)

134.8

75.0

59.8

Cash flow and available facilities (£m)(including share of joint ventures)

Capital commitments of £9.5m, increasing to £27.5m post period end


11

Key statistics Medium term target FY18 HY18 FY17 HY17

Rental income growth like-for-like (%) 2% – 5% 2.1 2.1 3.7 3.3

Rent collection (%) >95% within 7 days 98.0 89.3 94.3 94.0

EPRA cost ratio (%) <15% 15.6 15.7 19.8(1) 20.7(1)

Cost of debt (%) 3.2% – 3.4% 3.4 3.3 3.1 3.3

LTV (%) 45% – 50% 46.2(2) 48.0 50.0(3) 49.9

Interest cover (times) >3x 3.5 3.5 3.2 3.1

Pay-out ratio (%) 90% – 95% 95.1 92.5 94.5 96.3

Underlying earnings per share growth (%) 3% – 5% 3.3 8.2 n/a n/a(1) 17.2% and 18.0% respectively, when adjusted for non-recurring items.(2) Increasing to 47.3% post period end.(3) Proforma adjusted from 51.3% to reflect transactions between 31 August 2017 and FY17 results announcement.

Medium term guidance maintainedLinked to management incentives to drive accountability

Full year dividend of 2.70p representing growth of 3.8% on FY17

20 St Dunstans Hill, London

Capital allocation

Strategic priority:Efficientcapital structure• Stronger balance sheet

with LTV at the lower end of medium term guidance

• Continued success in allocating capital to sectors supported by occupier demand


13Meaningful improvement in leverageFocus on both balance sheet and income statement leverage

Continued reduction in LTV to 46.2%(1) • Refinanced or extended facilities at lower leverage

and reduced margins• Reinvestment at lower marginal leverage

Lower income statement leverage• Significant improvement in interest cover to 3.5x • Cost of debt increased marginally to 3.4% • Increase in interest rates likely, however… • 99.6% interest costs fixed/capped

Improvement in leverage KPIs

55

FY18FY16 HY17 HY18

53.4%

2.7x

3.5x

46.2%(1)

FY17

LTV (%)

45

50

2.5

3.0

3.5

Interest cover (x)

4.0

(1) 47.3% when adjusted for transactions between 31 August 2018 and FY18 results announcement.


14

GBP

Euro

FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY28+FY27

336.4

55.1

20.947.6

154.9

193.3

FY19

UK bank debt

• Gross LTV: 47.5%• LTV cov ave: 68.2%

Europe bank debt


UK non-bank debt


16%

65%19%

Well structured debt profile

Debtmaturityprofile(£m) Group debt £808.2m (FY17: £842.2m)

• Limited refinancing risk with no material maturities until FY21

• Refinancing early to secure attractive rates

• £303m AUK facility provides flexible capital structure and cost of debt efficiencies

• Weighted average debt maturity of 6.7 years

• Net Group LTV 46.2%(1)

• Cash and undrawn facilities of £134.8m

• £69.6m ungeared properties

• German assets funded with Euro debt providing natural FX hedge

(1) 47.3% when adjusted for transactions between 31 August 2018 and FY18 results announcement.

Advanced negotiations to extend to FY24


15Continuously improving portfolio qualityIncome-led diversified business model provides ability to actively invest for growth

Efficient reinvestment demonstrates relentless focus on income and ability to effectively recycle capital

High growth

Low growth

Low yield

Travelodge portfolio (IHL) £29.0m; 5.3% NIY

German supermarket portfolio €205m; 10.8% premium; 5.8% NIY

Acquisitions (acquisition value) Disposals (gross proceeds)

EPRA topped up yield 5.8%

Six regional offices £59.8m; 8.9% premium; 6.4% NIY

Kingston, Canbury Business Park £18.8m; 5.8% NIY

Post year end distribution and industrial £52.3m; implied NIY >6%

RBH managed hotels (IHL)£75.4m; implied NIY 7.5%

London serviced offices£161.7m; implied NIY >6%

Hull, House of Fraser£11.0m; 12.8% discount; 9.7% NIY

High yield


16Recycling low growth income at a premium Total disposals of £255.7m at an average 8.9% premium to book value

Strategic disposals

House of Fraser department store, Hull

• High street retail asset in Hull on a 22 year lease

• Sold for £11.0m; a 12.8% discount to book value

• Pro-actively removed covenant risk

Opportunistic disposals

German supermarket portfolio

• €205m disposal; a 10.8% premium

• €12.7m net annualised rental income; implied NIY of 5.8% on sales price

• 66 assets with average lot size of €3.1m

Realisingvaluefollowingactiveasset managementRegional offices

• Disposal of six regional offices for £59.8m; an 8.9% premium

• £4.1m net annualised rental income; implied NIY of 6.4% on sale price

• Maturing regional office investment market


17Investing in opportunity: Space as a serviceRDI well placed to capitalise on structural changes and occupier demand

Scalable operating platforms provide unique market position

Increased exposure to limited service, branded hotels

• Increased holding in IHL from 17.2% to 74.1%; saving costs following de-listing

• Portfolio of nine hotels (weighted to Greater London and Edinburgh) with an implied NIY of 6.9%

• Current market value at £119.0m, an increase of 14.0% on acquisition pricing

ExpandingintoLondonservicedoffices

• 80% holding in four London serviced offices; implied NIY >6%

• Well located and recently refurbished

• High quality offering at mid-market rates

• Longevity of income supported by established and experienced operator with aligned interest

Earnings accretive acquisition complementing existingportfolio

High yielding London exposure with structural support

2011

0

30

25

20

15

10

5

2012

2013

2016

2014

2015

2017

2018

Serviced office take-upSub-5k deals

% of market

Flexible office vs sub-5,000 sqft take-up in central London (% of market)

Source: CBRE/Savills.


18Serviced assets fully integrated and performing in line with expectationsOutlook remains positive although new supply needs to be absorbed

RBH managed hotels (incl. acquired IHL hotels) 89% by value in Greater London and Edinburgh

Londonservicedoffices ExposuretoCrossrailandSouthbankmarkets

Both sub-sectors proven to be defensive in weaker markets

£96.6 (+1.9%)Average room rate

£74.3 (-1.6%) EBITDApersqfton

flexible space

92.2% (-170bps) Averagedeskoccupancy

£82.5 (+1.7%)Revenue per available room

84.7% (-20bps)Weighted average occupancy

£685 (-1.4%) Average deskrate (licencefeeonly)

£819 (+0.5%) Total revenueperavailable desk

Performance relative to prior year. Performance relative to acquisition in January 2018.


19Disciplined acquisitions are paying off Growth achieved by assets acquired over the last three years has significantly outperformed the pre-existing portfolio

Acquisitionsdeliveredsignificantvalueoverthelastthree years(£m)

• 44% of current portfolio acquired in the last three years

• 82% of new acquisitions located in London and South East

• Increased exposure to occupier demand underpinned by structural change

• Best in class scalable operational platforms with aligned interests

• Clearly identified asset management initiatives to deliver significant value over medium term

AUK portfolio (£489.9m)

IHL portfolio (£104.4m)

London serviced offices portfolio (£161.7m)

At acquisition

774.8

(+10.1%)853.1

31 Aug 2018

Market value

Disposal gross proceeds

Market value subsequently sold

+10.8% like‑for‑like

growth

£143.6m disposals

+6.2% premium on acquisition

price

Major transactions:

20 Little Britain, London

Portfolioupdate

Strategicpriority: Incomefocused portfolio

• Portfolio income characteristics enhanced through significant capital recycling

• Portfolio weighted towards sectors with positive outlook

• Scalable operational platforms give competitive edge

• Clearly identified asset management initiatives to deliver significant value over the medium term


21Income focused portfolio overviewClear visibility of medium term income and growth opportunities

Operational highlights• 2.1% like-for-like net rental growth

• Occupancy remains high at 97.1%

• Shopping centre occupancy (96.4%) and net income maintained

• Primark opened at Ingolstadt

• Completion of Berlin food court refurbishment

• Recent acquisitions aligned to occupier demand

• Market leading aligned operational partners

Strong income characteristics

7.0 years weighted average

lease length to firstbreak(8.4yearsto expiry)

5.6% EPRA NIY

reversionary yield 6.3%

£1.62bnmarketvalue

69.5% by marketvalue

invested in keycitiesandUK SouthEast

Openmarketrent reviews weighted to sectors with

positive outlook

Limited development

risk

Best in class aligned operational partners

and scalable operational platforms

Active in‑houseasset

management expertise

97.1% Occupancy

31.1% Serviced income

27.0% Indexed rents


22

FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27 FY28+ London serviced offices(2)

RBH managed

hotels

6.0

9.8

5.7

7.0

5.14.5

3.0

20.2

5.0

9.2

23.5

10.6

Serviced income

Income security supported by diversified portfolioClear income visibility with WAULT of 7.0 years to first break (8.4 years to expiry)(1)

Leaseexpiriestofirstbreakbygrossrentalincome(£m) Tenantprofile• Diverse and high quality covenants• Over 500 tenants with no single

tenant >3.2%

• Top 10 tenants account for 21.5% of the total rent roll

Top ten tenantsAs at % of gross 31 August 2018 rental income Units

B&Q 3.2 5Tesco 3.2 1Primark 2.9 2UK Government 2.6 11Travelodge 2.2 5Royal Mail 1.8 2OBI 1.5 3Wilko 1.4 3Debenhams 1.4 2Refresco Gerber 1.3 2

(1) Excluding RBH managed hotels and London serviced offices.(2) Flexible space only.

Includes £1.9m recurring

commercialisation income


23

Food and discount anchored retail

Strong occupier demand

18.2

23.3

Fashion anchored retail 10.7

24.2

7.0

49.9

% w

eigh

ted

to s

tron

g oc

cupier d

emand

Food and discount anchored retail

Strong occupier demand

18.2

23.3

Fashion anchored retail 10.7

24.2

7.0

49.9

% w

eigh

ted

to s

tron

g oc

cupier d

emand

Openmarketrentreviewsby gross annualised income (%)

Strong occupier demand, including logistics, Londonofficesandwelllocatedretailparks

TravelodgeportfoliowithlongdatedRPI linkedleases

Indexationby gross annualised income (%)

13.8

13.2

UK

Germany

27.0% Indexed

Portfolio well positioned to deliver continued rental growthMedium term target of 2% – 5% rental growth per annum

Serviced incomeby gross annualised income (%)

Defensiveservicedincomesupportedbystrong occupier demand

21.49.7

Limited service hotels

London serviced offices(1)

31.1% space as a se

rvic

e

21.49.7

Limited service hotels

London serviced offices(1)

31.1% space as a se

rvic

e

(1) EBITDA net of management fee and FF&E.


24Experiencing significant polarisation within our UK Retail portfolio Maintaining net income, high occupancy and footfall above national average

CVAs and administrations resulted in a £0.8m reduction in gross annualised rent following pro-active leasing activity (0.7% of total rent roll)

UKretailparks

11% by market value

UK shopping centre – London

4% by market value

UK shopping centre – Fashion anchored(2)

6% by market value

UK shopping centres – Food & discount anchored(1)

8% by market value

(1) Includes Northampton, Seaham and Warrington. (2) Includes Wigan and Coventry.

St. Georges, Harrow

• No impact from CVAs• Occupancy 96.0%

PrioryPark,Merton

• 80% by value in London and South East

• Merton: ALDI replaced Toys R Us on 20 year lease

• Watford: completed lease at > £80 per sqft

• Further high yielding "drive-thru" units underway

Weston Favell, Northampton

• Multiple visits per week and less affected by online

• Occupancy 94.7%• Affordable rent is key

(FY18: £12.5 per sqft)

West Orchards, Coventry

• Occupancy is key to maintain footfall (FY18: 97.3%)

• +£0.8m net income at Coventry; +19% return on food court refurbishment cost

• Pro-actively working with Debenhams


25Significantly increased exposure to strong property fundamentalsIncome-led criteria ensuring sustainability of income and growth opportunities

Income‑ledopportunitieslocated next to Crossrail development

Areas undergoing significantregeneration

Structural change Last mile distribution

• >50,000 Crossrail passengers expected per day

• Progressing plans to add +50% to the lettable area in 2021

• Market value +37% (+£13.5m) since acquisition

• Situated within £3.0bn Elephant and Castle regeneration area

• Own two offices valued at £35m

• Rent review to £1.4m, +46.5% (+£0.4m) on previous passing rent

• £1.6m of rent subject to review and expected to deliver growth of >40%

• Camino Park, Crawley +72.4% (+£30.4m) in value since acquisition

Charing Cross Road, London NewingtonHouse,Southwark CaminoPark,Crawley


26Increased exposure to distribution and industrial at >6% yieldPost year end acquisitions in line with strategic priorities and investment criteria

Distribution development, Bicester

• £26.0m forward funding of two well located distribution units

• Phased purchase on completion with development cost certainty

• Anticipated yield on cost >6.5% once let

• Completion expected late 2019

SouthwoodBusinessPark, Farnborough

• £26.3m, reflecting a 6.2% NIY

• 91.9% occupied with 5 year WAULT

• Strong property fundamentals:

• South East industrial market within M3 corridor

• Limited surrounding supply

• Low site cover at 37%


27Actively managing income optimisationIncome-led business plans form the foundation of our income commitment

%ofportfoliobygrossannualisedrentalincome

on completion

41.7% Core secure

income

17.8% Income-led

asset management opportunities

37.2% Growth income

3.3% Mature assets

Sustainable income

Capital recycling Growing income

Asset management priorities for the next 12 months:

• Complete and progress development plans and asset management initiatives

• Recycle low growth assets at a premium

• Optimise serviced income and operationalmargins

• Doubledigitupliftson upcoming logistics rent reviews

• Maintain income through: • High occupancy• Cost reductions

20 St Dunstans Hill, London

Outlook and conclusion

Strategicpriority: Scalable and sustainable business

• Income focused investment remains relevant

• Continued focus on strengthening the balance sheet and enhancing portfolio fundamentals


29Committed to being the UK's leading income focused REITDemand for companies to deliver predictable and growing income remains strong

Portfoliorebalancedforincome growth

Scalable aligned operational platformssupportedby

structural change

Dividend covered by underlying EPS and

operationalcashflow

Strategic priorities, medium term targets and dividend policy unchanged

Disciplined acquisition strategy and reasonable levels of liquidity outweigh the risk of lower growth in earnings in the short term

Strong and improving operationalcostefficiencies

Smart active asset management

Continuedefficientreduction inleverage


30

Q Questions


31

A Appendices


32

Income focused portfolio

Corporate activity

Significantly strengthened the business over the last three yearsSignificant progress against strategic priorities

IHL acquisition

£104.4mScheme of

arrangement completed in

November 2017

Transformational AUK acquisition

£489.9mCompleted in March 2016

London Serviced Office acquisition

£161.7mJanuary 2018

£1.0bnbymarket valueFY15

3%4%

12%

13%

22%

46%

Other retail Shopping centres

HotelsAutomotive

UK offices

German offices

UK (33%)

German (13%)

£1.62bnbymarket value

Other retail Retailparks

30%

Shoppingcentres

Hotels

Servicedoffices

Office Distribution

UK (18%)

Germ

any (12%)

23%

11%

10%

11% 4%

11%

FY18

Efficient capital structure £303m

AUK flexible banking facility

51.8%LTV

2.3xInterest cover

3.5xInterest cover

46.2%LTV

Major transactions and activities:

February 2017 Capital Markets Day• Medium term

targets • Re-align dividend to

operational cash flow

April 2017 Removed all JV cross ownerships with Redefine Properties

December 2017 Name change to RDI REIT P.L.C.

January 2018 Established OSIT strategic partnership

Disposal of Leopard portfolio

€205mDecember 2017


33RDI REIT P.L.C. – the UK's leading income focused REITRelentless focus to deliver superior, sustainable and growing income

• 6.3% dividend yield on NAV (UK REIT average 4.2%)

• Diversifiedportfolio and tenant base

• High and stable occupancy demonstrating robust occupier demand

• A weighted average lease length of 7.0yearstobreak (8.4 years to expiry)

• Serviced income accounts for over 31.1% of annualised rent, with longevity of income supported by experienced and aligned operational partners and strong occupier demand

• 27.0% indexed rental income

• Reversionaryyieldof6.3%, 70bps higher than the current portfolio net initial yield

• Europe's two largest and most liquid real estate markets:

• 84% UK

• 16% Germany

• Over 500 tenants

• Top 10 tenants account for 21.5% of rent

• No single tenant >3.2%

• Fully covered dividend

• Medium term target underlying EPS growth of 3% – 5% p.a. Index inclusion:

Superior income

Sustainable income

Growing income

Strong income characteristics

Primary listing LSE: RDI Secondary listing JSE: RPL

£1.62bn income focused portfolio

By sector:

Other retail Retailparks

11%

23%30%

11%

4%11%

10%

Shoppingcentres

HotelsOffice Servicedoffices

Distribution

Germ

any (12%)

UK (18%)

>35%>35%

A FTSE 250CompanyCorporate holding

<30%


34

RDI culture• Hands-on, lean management team

• Entrepreneurial spirit

• Cultural obsession to deliver income

• Efficient deal makers

• In-house expertise

• Strong relationships and alignment with strategic partners

RDIbusinessmodelandincome‑ledstrategicpriorities

Incomefocusedportfolio• Strong property fundamentals to ensure

limited volatility through the cycle

• Ability to invest in opportunities across sectors

• Sufficient scale and cost efficient portfolio

Efficientcapitalstructure• Strengthen the balance sheet

• Operational flexibility

• Competitive cost of capital

Scalable business• Improved liquidity

• Access to capital markets

• Limited volatility

Financial discipline• Fully covered dividend

• Efficient conversion of rental income into profit

• Measurable medium term targets to improve accountability and clear linkage to management incentives

Designed to deliver superior, sustainable and growing income

Superior income

Sustainable income

Growing income


35

Globalneedforpredictable and recurring income• Low economic growth

• Low interest rate environment

• Rising inflation

• Ageing population

Assetbackedincomeisrelativelypredictable• Income and value backed by good quality real estate

• Intrinsic value in real estate with alternate use value

• Less operational risk when compared to non-property income

REITs were designed to give investors efficientaccesstocommercialproperty income• Transparent and liquid property investment

• Efficiently convert rental income to profit

• Limited development risk

Long‑termpropertytotalreturns are largelydrivenbyincome• Income can be influenced by management

• Capital returns are volatile in the short to medium term and influenced by market sentiment

• Increasing income returns through active asset management will drive sustainable capital growth

ThecompositionofhistoricUKpropertytotal returns

The case for our asset backed income business modelOpportunity for a liquid and scalable REIT delivering a yield of >5.0% on NAV

30 years 73%

20 years 74%

10 years 140%

5 years 65%

Capital return Income return Source: MSCI Lazarus


36Portfolio analysis

NOTE: WAULT and occupancy excludes RBH managed hotels portfolio and serviced office portfolio. Relevant operational metrics disclosed separately.

Weighted % of Annualised EPRA average EPRA portfolio by Market gross rental topped Reversionary lease length occupancy % As at 31 August 2018 market value Properties Area (m2) value (£m) income (£m) ERV (£m) EPRA NIY up yield yield (years) (by ERV) Indexed

UK Commercial Offices – Serviced 10 4 15,473 163.4 11.0 10.9 6.0 6.0 6.0 n/a n/a —Offices – greater London 7 4 14,938 113.3 5.1 5.9 4.0 4.0 4.8 3.6 96.7 13.3Offices – regional 4 9 28,091 60.7 4.4 4.5 5.8 6.6 7.0 5.1 95.5 22.0UKOffices 21 17 58,502 337.4 20.5 21.3 5.3 5.4 5.8 4.3 96.2 8.1Distribution & industrial 8 3 94,754 134.7 6.4 7.9 4.4 4.4 5.5 4.2 100.0 3.1Automotive 3 35 17,358 43.8 2.8 2.3 6.2 6.2 4.9 11.3 100.0 100.0UK Commercial 32 55 170,614 515.9 29.7 31.5 5.1 5.2 5.6 5.3 98.1 16.0UK Retail Shopping centres 18 6 158,295 290.9 26.1 25.8 6.9 7.3 8.1 7.7 96.4 25.8Retail parks 11 6 60,742 184.8 12.0 11.9 5.7 5.9 6.0 8.2 94.7 10.2Other retail — 1 4,790 5.3 0.6 0.4 5.9 9.0 7.6 3.9 100.0 —UK Retail 29 13 223,827 481.0 38.7 38.1 6.4 6.8 7.3 7.8 95.9 20.6UK Hotels Greater London 12 7 29,426 186.5 12.5 12.5 5.7 5.7 6.3 n/a n/a —Regional 8 6 31,392 130.9 11.0 10.9 6.6 6.6 7.0 n/a n/a 0.9RBHmanagedportfolio 20 13 60,818 317.4 23.5 23.4 6.1 6.1 6.6 n/a n/a 0.4Travelodge 3 5 16,573 47.5 2.5 2.6 4.8 4.8 5.1 18.2 100.0 95.3UK Hotels 23 18 77,391 364.9 26.0 26.0 5.9 5.9 6.4 18.2 100.0 9.3Total UK 84 86 471,832 1,361.8 94.4 95.6 5.8 6.0 6.4 7.5 96.8 16.0Europe German shopping centres 12 3 45,834 190.6 10.5 10.4 3.9 4.6 5.1 5.0 98.7 94.9German retail parks and other 4 11 52,016 68.0 4.7 4.8 5.7 5.7 6.6 5.2 96.6 95.4Total Europe 16 14 97,850 258.6 15.2 15.2 4.4 4.9 5.5 5.0 98.0 95.1Total 100 100 569,682 1,620.4 109.6 110.8 5.6 5.8 6.3 7.0 97.1 27.0Ownershipbreakdown: Wholly owned (at 100%) 64 68 430,953 1,035.1 68.3 69.5 5.3 5.7 6.2 7.0 96.9 34.8Assets with minority holdings (accounted for at 100%) 34 28 125,311 559.9 39.4 39.5 6.0 6.0 6.3 7.5 98.2 12.3Held in joint ventures (proportionate %) 2 4 13,418 25.4 1.8 1.8 6.4 6.4 6.7 5.5 100.0 52.9


37Weighted average lease length dateEarliest of lease break/expiry profile

Annualised gross rental As at 31 August 2018 (£m) income FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27+

UK Commercial 19.1 1.7 2.3 2.5 1.7 3.9 1.4 0.6 1.0 0.3 3.7

UK Retail 38.7 3.9(1) 1.8 2.3 6.4 2.6 1.3 3.0 1.7 3.9 11.8

UK Hotels 2.5 — — — — — — — — — 2.5

Total UK 60.3 5.6 4.1 4.8 8.1 6.5 2.7 3.6 2.7 4.2 18.0Germany 15.2 0.4 2.9 0.9 1.7 2.7 2.4 0.9 0.3 0.8 2.2

Total (excl. RBH managed hotels and Londonservicedoffices) 75.5 6.0 7.0 5.7 9.8 9.2 5.1 4.5 3.0 5.0 20.2DefensiveservicedincomeRBH managed hotels 23.5

London serviced offices (flexible space only) 10.6

Total 109.6

(1) Includes £1.9m recurring commercialisation income.


38Top 20 propertiesTop 20 properties make up >60% of total portfolio

% of EPRA Weighted EPRA portfolio by Ownership topped Reversionary average occupancy % As at 31 August 2018 market value % Area (m2) EPRA NIY up yield yield lease length (by ERV) Indexed

Berlin, Schloss-Strassen Center 5.2 100.0 18,581 4.2 4.2 4.9 5.1 97.1 91.0Northampton, Weston Favell 4.8 100.0 30,757 6.8 7.4 8.0 7.4 94.4 53.9Hamburg, Bahnhof Altona 4.6 100.0 15,042 4.8 4.8 5.2 3.5 99.8 97.8Crawley, Camino Park Distribution Centre 4.5 100.0 33,171 3.5 3.5 5.2 4.7 100.0 7.1London, Harrow, St Georges 4.3 100.0 20,133 5.7 5.8 6.3 3.4 98.6 4.0Wigan, Grand Arcade 4.3 100.0 41,487 7.7 8.0 8.4 8.1 97.5 36.8London, Monument, St Dunstans 4.1 80.0 5,428 6.1 6.1 6.0 n/a n/a —London, Charing Cross Road 3.6 100.0 3,716 3.2 3.2 3.9 4.4 100.0 33.7Banbury, Banbury Cross Retail Park 3.1 100.0 16,610 5.0 5.5 6.6 6.8 82.5 13.4

London, Watford, The Arches Retail Park 3.1 100.0 11,599 6.0 6.0 5.3 9.0 100.0 —

Top 10 properties 41.6 Bridgwater, Express Park Distribution Centre 3.0 100.0 47,207 5.4 5.4 6.0 3.3 100.0 —London, Southwark Holiday Inn Express 2.9 82.5 3,936 5.0 5.0 5.3 n/a n/a —Edinburgh, DoubleTree Hilton 2.7 82.5 7,250 6.1 6.1 6.2 n/a n/a 3.3London, Merton, Priory Retail Park 2.2 100.0 6,255 5.0 5.0 5.1 8.7 100.0 —London, Liverpool Street, New Broad Street 2.1 80.0 3,291 5.4 5.4 5.3 n/a n/a —London, Earl's Court Holiday Inn Express 2.0 82.5 2,781 5.9 5.9 6.3 n/a n/a —London, St Paul's, Little Britain 2.0 80.0 3,429 5.3 5.3 5.6 n/a n/a —Ingolstadt, City Arcaden 2.0 100.0 12,211 1.1 5.0 5.1 8.2 100.0 97.5London, Limehouse Holiday Inn Express 1.9 82.5 5,747 5.6 5.6 6.1 n/a n/a —

London, Waterloo, Boundary Row 1.9 80.0 3,326 7.2 7.2 7.1 n/a n/a —

Top 20 properties 64.3


39

Annualised gross rental FY19 FY20 FY21 FY22 FY23 As at 31 August 2018 income (£m) (%) (%) (%) (%) (%)

UK CommercialOffices – serviced(1) 11.0 96.7 96.7 98.7 98.0 96.7Offices – greater London 5.1 — — 10.2 9.2 25.9Offices – regional 4.4 29.8 29.4 6.3 16.2 30.0UKOffices 20.5 6.5 6.4 5.0 6.5 12.9Distribution & industrial 6.4 35.0 16.1 24.0 16.4 —Automotive 2.8 47.0 25.5 18.3 — 7.8UK Commercial 29.7 11.0 10.3 10.4 8.0 9.7UK Retail UK Shopping centres 26.1 5.1 6.4 8.4 18.9 20.3UK Retail parks 12.0 11.9 21.6 8.9 32.8 13.2UK Other retail 0.6 — — — — 35.8UK Retail 38.7 7.1 11.0 8.4 22.9 18.3UK Hotels RBH managed portfolio 23.5 99.9 99.9 99.9 100.0 99.9Travelodge 2.4 11.4 45.4 10.2 28.4 —UK Hotels 26.0 91.6 94.8 91.5 93.6 90.5Total UK 94.4 6.6 8.8 6.0 12.7 10.6Germany Shopping centres 10.5 13.4 17.2 9.2 15.1 6.5Retail parks and other 4.7 6.4 5.4 5.0 5.0 3.7Germany 15.2 11.2 13.6 7.9 12.0 5.7Total 109.6 7.3 9.6 7.1 12.6 9.9

Rent subject to upcoming rent reviews and serviced income

(1) Assuming all flexible leases are on 12 month licence agreements.


40Debt facilities

Principal debt Cost of Principal debt (proportionate) debt As at 31 August 2018 Lender Currency £m £m Maturity (%)

AUK HSBC, RBS, Barclays, Santander GBP 228.0 228.0 Sep 2020 2.8AUKfacility 228.0 228.0 Serviced office portfolio Barclays, Deutsche Bank GBP 72.8 72.8 Dec 2019-Aug 2022 3.126 Esplanade Lloyds Bank GBP 17.0 8.5 Dec 2022 6.1UKOffices 89.8 81.3 Kwik Fit portfolio Aviva GBP 9.8 9.8 Jun 2029 6.4UK Automotive 9.8 9.8 Aviva UK shopping centre Aviva GBP 145.1 145.1 Apr 2042 5.5St George’s, Harrow Berlin Hyp GBP 37.2 37.2 Apr 2021 2.9West Orchards, Coventry Santander GBP 11.2 11.2 Nov 2021 4.2UK Retail 193.5 193.5 RBH Hotels portfolio Aareal Bank GBP 113.4 113.4 Nov 2021 3.0IHL Portfolio Santander GBP 51.7 51.7 Jul 2020-Dec 2021 3.3UK Hotels 165.1 165.1 EuropeBahnhof Altona, Hamburg HSH Nordbank Euro 40.4 40.4 Feb 2024 2.7Schloss-Strassen Center, Berlin HSH Nordbank Euro 55.6 55.6 Mar 2021 1.9German shopping centres 96.0 96.0 Premium Portfolio Munchener Euro 11.8 11.8 Feb 2020 1.3OBI Portfolio BayernLB Euro 12.4 12.4 Dec 2022 1.6Bremen/Lindenhoff BayernLB Euro 3.1 3.1 Sep 2019 2.0Waldkraiburg BayernLB Euro 4.3 2.2 Jun 2024 1.7Kaiserslautern BayernLB Euro 3.4 1.8 Jun 2024 1.7Hückelhoven BayernLB Euro 6.1 3.2 Jun 2024 1.7Germansupermarketsandretailparks 41.1 34.5 Total 823.3 808.2


41Reconciliation of underlying earnings

Underlying

Company earnings

IFRS proportionately consolidated EPRA adjustments specific adjustments

proportionately For the year ended 31 August 2018 Group JVs Total Group JVs consolidated Group JVs consolidated

Rental income 110.2 1.8 112.0 — — 112.0 — — 112.0 Rental expense (11.1) (0.2) (11.3) — — (11.3) — — (11.2)Net rental income 99.1 1.6 100.7 — — 100.7 — — 100.7Other income 1.8 — 1.8 — — 1.8 — — 1.8Administrative costs and other fees (14.2) (0.2) (14.4) — — (14.4) — — (14.4)Net operating income 86.7 1.4 88.1 — — 88.1 — — 88.1 Gain on revaluation of investment property 10.8 (0.2) 10.6 (10.8) 0.2 — — — — Gain on revaluation of investment property held for sale 0.9 — 0.9 (0.9) — — — — — Gain on disposal of investment property 1.5 — 1.5 (1.5) — — — — — Gain on disposal of investment property held for sale 1.8 — 1.8 (1.8) — — — — — Net gain on disposal of subsidiary 15.4 — 15.4 (15.4) — — — — —Net gain on acquisition of subsidiaries 4.4 — 4.4 (4.4) — — — — — Other income and expense (0.4) — (0.4) 0.4 — — — — — Foreign exchange loss (0.8) — (0.8) — — (0.8) 0.8 — —Profitfromoperations 120.3 1.2 121.5 (34.4) 0.2 87.3 0.8 — 88.1Net finance costs (28.7) (1.1) (29.8) — — (29.8) 0.8 — (29.0)Other finance expense (0.6) — (0.6) 0.4 — (0.2) — — (0.2)Change in fair value of derivative financial instruments 6.1 0.7 6.8 (6.1) (0.7) — — — — 97.1 0.8 97.9 (40.1) (0.5) (57.3) 1.6 — 58.9Net loss on sale of joint venture interests (0.1) — (0.1) 0.1 — — — — — Net impairment reversal of joint ventures and associate interests 0.1 — 0.1 (0.1) — — — — — Share of post-tax profit from associate 0.3 — 0.3 — — 0.3 — — 0.3Movement in losses restricted in joint venture — (0.6) (0.6) — 0.3 (0.3) — — (0.3)Profitbeforetax 97.4 0.2 97.6 (40.1) (0.2) 57.3 1.6 — 58.9Taxation (1.1) (0.2) (1.3) 0.1 0.2 (1.0) — — (1.0)Profitfortheyear 96.3 — 96.3 (40.0) — 56.3 1.6 — 57.9Non-controlling interests (7.4) — (7.4) 3.0 — (4.4) — — (4.4)Profitattributabletoequityholders 88.9 — 88.9 (37.0) — 51.9 1.6 — 53.5 Weighted average number of shares (millions) 1,886.5 1,886.5 1,886.5 Diluted weighted average number of shares (millions) 1,892.3 1,892.3 1,892.3 Earnings per share (pence) 4.7 2.75 2.84

EPRA earnings proportionately


42Reconciliation of non-controlling interest Europe (several individually NCI share of earnings for the year ended 31 August 2018 Servicedoffices IHL RHHL immaterialNCI) TotalNCI

Principal place of business United Kingdom United Kingdom United Kingdom Germany Country of incorporation Isle of Man BVI BVI Various NCI % 20.0% 25.9% 17.52%

Summarisedstatementofcomprehensiveincome £m £m £m £m £m

Rental income 2.0 2.4 2.6 0.7 7.7

Rental expense (0.7) (0.4) — (0.1) (1.2)

Net rental income 1.3 2.0 2.6 0.6 6.5Other income 0.2 — — — 0.2

Administrative expenses (0.2) (0.3) — — (0.5)

Net operating income 1.3 1.7 2.6 0.6 6.2Net finance costs (0.3) (0.4) (0.6) (0.1) (1.4)

Profitbeforetax 1.0 1.3 2.0 0.5 4.8Tax — — — — —

Profitbeforeandaftertax 1.0 1.3 2.0 0.5 4.8Shareholder loan interest (eliminates at RDI Group level) — — — (0.4) (0.4)

Underlying earnings 1.0 1.3 2.0 0.1 4.4Change in fair value of derivatives — 0.3 — — 0.3

Gain/(loss) on revaluation of investment property 0.3 0.3 0.9 (0.1) 1.4

Gain on disposal of subsidiaries — — — 1.2 1.2

Deferred tax — — — (0.1) (0.1)

Shareholder loan interest (eliminates at RDI Group level) — — — 0.2 0.2

Non‑underlyingearnings 0.3 0.6 0.9 1.2 3.0

Total earnings 1.3 1.9 2.9 1.3 7.4


43Reconciliation of London serviced office earningsfor the year ended 31 August 2018 Servicedoffices Restofportfolio Grouptotal Year ended Year ended Year ended 31 August 31 August 31 August 2018 2018 2018 Continuing operations £m £m £m

Revenue 10.8 101.2 112.0 Rental income 9.8 100.4 110.2 Rental expense (3.3) (7.8) (11.1)

Net rental income 6.5 92.6 99.1

Other income 1.0 0.8 1.8

Administrative costs and other fees (1.0) (13.2) (14.2)

Net operating income(¹) 6.5 80.2 86.7

Gain on revaluation of investment property 1.6 9.2 10.8

Other gains and losses from operations — 22.8 22.8

Profitfromoperations 8.1 112.2 120.3

Net finance expense (1.4) (27.9) (29.3)

Change in fair value of derivative financial instruments (0.1) 6.2 6.1

6.6 90.5 97.1 Equity accounted profits — 0.3 0.3

Profitbeforetax 6.6 90.8 97.4

Taxation — (1.1) (1.1)

Profitfortheyear 6.6 89.7 96.3

Profit attributable to:

Equity holders of the Parent 5.3 83.6 88.9

Non-controlling interests 1.3 6.1 7.4

6.6 89.7 96.3

(1) Net operating income of serviced office portfolio equates to EBITDA of the trading business (£10.3m annualised).


RDI REIT contact details

MikeWattersChief Executive Officere: [email protected]

StephenOakenfullDeputy Chief Executive Officere: [email protected]

Donald GrantChief Financial Officere: [email protected]

Adrian HorsburghProperty Directore: [email protected]

JanineAckermannHead of Investor Relations e: [email protected]

RDI REIT P.L.C.33 Regent Street

London

SW1Y 4NB

t: +44 (0) 20 7811 0100

Visit us onlinewww.rdireit.com

@RDIREIT

RDI REIT

rdireit.com investing in opportunity · 2018 full year results presentation continuously improving...

Documents