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RDI REIT PLC - Trading update

Release Date: 07/07/2020 08:00
Code(s): RPL     PDF:  
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Trading update

(Incorporated in the Isle of Man)
(Registered number 010534V)
LSE share code: RDI
JSE share code: RPL
LEI: 2138006NHZUMMRYQ1745
(“RDI” or the “Company”)


RDI, the income focused UK Real Estate Investment Trust (“UK-REIT”), provides the following business and trading

Rent collection

Across the Group’s portfolio, approximately 70.1 per cent of gross rents or income due and demanded was collected for
either the June quarter or the month of June where rents are billed monthly. This compares to 54.0 per cent for the March
quarter at approximately the same time post the relevant due date.

Negotiations with occupiers and clients are ongoing and it is expected that the current collection rates will improve or,
in certain cases, result in agreements to remove break options or extend leases.

-   Rent collected across the UK portfolio (excluding UK Hotels and London Serviced Offices) totalled 68.0 per cent
    of rents demanded, adjusted for tenants paying monthly
-   Rents collected across the European portfolio, which are typically paid monthly in advance, were 91.4 per cent of
    rents due
-   Rents associated with the RBH managed hotels are paid quarterly in arrears. As previously announced, no rental
    payments are anticipated for the second half of the financial year ending 31 August 2020
-   Rents for the five-asset Travelodge portfolio have been received in full based on the revised rents following the
    recent CVA
-   96.8 per cent of licence and fixed service fees billed were collected across the London Serviced Office portfolio for
    the month of June. The discount on desk rates being offered to clients has been reduced to 25% from 50%. Income
    collected in June reflects approximately 67.1 per cent of anticipated net revenues, largely as a result of the temporary
    licence fee discount and nominal meeting room and ancillary income during this period.

                                                          Annualised gross rental              % of rent collected –
 Rent collection summary                                                   income                         adjusted(2)
 June quarter                                                                 £m                       30 June 2020
 Offices                                                                        7.1                             76.4
 Distribution and Industrial                                                   13.7                             80.9
 Retail                                                                        18.7                             44.6
 UK total (excl. UK Hotels and LSO)                                            39.5                             68.0
 Europe                                                                        11.8                             91.4
 Total (excl. UK Hotels and LSO)                                               51.3                             71.3
 RBH Managed Hotels                                                            22.1                                 -
 Travelodge portfolio                                                           1.8                            100.0
 London Serviced Offices                                                        8.8                             67.1
 Total                                                                         84.0                             70.1
(1) Annualised gross rental income as at 30 June 2020
(2) Rent collections adjusted for certain tenants which have indicated they are paying monthly and have paid one third
    of quarterly rent demanded

Financing and liquidity

At 29 February 2020 the Group’s proportionate share of debt was £671.9 million. The pro-forma LTV for the Group,
including disposals exchanged or completed after period end, was 41.8 per cent against a weighted average LTV
covenant across the Group’s facilities of 66.7 per cent. The Company had £46.4 million of ungeared assets.

£3.1 million of debt related to a planned disposal has been repaid in the period. Terms have been agreed to extend the
only remaining facility maturing in 2020, a £13.1 million hotel facility, which will be extended for eight months to
provide a co-terminus maturity with a facility maturing in April 2021. It is anticipated that the wider hotel portfolio will
be refinanced on a longer-term basis in due course.

As previously announced, covenant waivers are in place on 96 per cent of debt subject to financial covenants. All of the
Group’s financing facilities are secured against portfolios or individual assets with no recourse to the Group.
The Group’s current cash balance is approximately £80.0 million. The Group’s capital commitments for the next 12
months remain limited at less than £2.0 million.

Operational update

Portfolio occupancy at the end of May 2020, excluding RBH managed hotels and London Serviced Offices, remains
broadly unchanged at 96.3 per cent.

A significant amount of planning and co-ordination has been carried out to ensure the safe re-opening of assets across
the portfolio and to support customers, clients and occupiers wherever possible.

UK Hotel portfolio

The UK Hotel portfolio comprises 18 assets, including 13 assets managed by the Company’s associate, RBH Hotel
Group (“RBH”). The remaining five assets are let to Travelodge UK Holdings Limited (“Travelodge”).

Occupancy across the RBH managed portfolio averaged 24.1 per cent for the four months to the end of June
2020, achieved largely through contracts entered into with local authorities and agencies for occupation by rough
sleepers, the NHS and other key workers.

As at 30 June, ten hotels were open and trading. The remaining hotels are anticipated to open during July 2020 following
the UK Government’s recent update and relaxation of lockdown restrictions.

Demand for forward bookings has shown a steady increase in recent weeks. Hampshire Cricket has confirmed a booking
for a minimum of 80 rooms a night from the end June through to September at the Southampton Holiday Inn Express,
located next to the Ageas Bowl, in order to accommodate various ECB staff, media and security teams.

Travelodge has confirmed that its proposed Company Voluntary Arrangement (“CVA”) was passed by the required
majority of creditors and approved by its shareholders on 19 June 2020.

The five assets let to Travelodge had a pre-CVA passing rent of £2.5 million p.a. (Group share: £2.1 million p.a.). Under
the terms of the CVA, assuming no rent reviews or RDI utilising any of its break rights, the Group’s share of rent will
be reduced by:

    -   £0.4 million for the financial year ending 31 August 2020;
    -   £0.9 million for the financial year ending 31 August 2021; and
    -   £0.3 million for the financial year ending 31 August 2022

From December 2021, rents will revert to the full contractual position. All outstanding payments have recently been
received in full, in accordance with the CVA.

Under the terms of the CVA, landlords have the right to terminate certain leases by giving notice prior to 19 November
2020. This is being actively considered on two hotels where opportunities exist to either operate the hotel directly under
a different brand through the Company’s associate RBH, or where other hotel operators have expressed an interest in
taking a lease.

London Serviced Office portfolio

The London Serviced Office portfolio re-opened on 1 June 2020. Contracted occupancy at the end of May 2020 was
86.2 per cent. (29 February 2020: 89.5 per cent.).

The temporary 50 per cent licence fee discount offered in April and May has been reduced to 25 per cent in June with
no material impact on collection rates. As previously announced, this is a temporary measure and will be phased out
following the relaxation in lockdown restrictions.

UK Distribution and Industrial

Leasing and asset management activity across the portfolio has remained active with a number of lease extensions, rent
reviews and new lettings in progress. The remaining 168,154 sq ft unit at Link 9, Bicester has been placed under offer
which, if concluded, would bring the distribution and industrial portfolio to full occupancy.

UK Retail portfolio

All retail assets re-opened in full on 22 June 2020 with a limited number of stores remaining closed but expected to re-
open imminently. Footfall has seen a steady increase in recent weeks. Footfall numbers across the retail parks portfolio
for the week ending 22 June 2020 were, on average, 82.9 per cent of footfall compared to the same week last year.

Footfall numbers across the two remaining shopping centres for the week ending 22 June 2020 were, on average, 41.1
per cent of footfall compared to the same week last year.

Occupancy across the UK retail portfolio at the end of May 2020 was unchanged at 98.1 per cent. The impact of recently
announced CVAs and administrations has been limited to five units totalling 38,000 sq ft with a passing rent of £0.8
million p.a. Terms have been agreed with a new tenant on one unit of 6,400 sq ft and there are active discussions with
alternative occupiers on the remaining four units should the terms of the proposed CVAs be unacceptable.


As previously announced, the Board will continue to closely monitor the impact of COVID-19 on the business, its
cashflows and the wider economic and capital markets environment. A decision on the timing of reinstating dividend
payments will be made alongside the full year results to 31 August 2020.

Mike Watters, CEO at RDI, commented:

“Our focus since the start of the COVID-19 crisis has been on the welfare, safety and security of our stakeholders, and
on ensuring that asset values are protected, revenues are carefully managed and costs are minimised. Whilst near-term
visibility remains low, recent trading following an easing of government restrictions has been encouraging and portfolio
occupancy remains high. Furthermore, our assets are weighted towards sectors and locations with long term positive
structural demand characteristics which, once the significant social and economic challenges of the pandemic have been
overcome, should leave us well positioned for the future.”

For further information:

Mike Watters, Stephen Oakenfull                                     Tel: +44 (0) 20 7811 0100

FTI Consulting
UK Public Relations Adviser
Dido Laurimore, Claire Turvey, Ellie Sweeney                        Tel: +44 (0) 20 3727 1000

Instinctif Partners
SA Public Relations Adviser
Frederic Cornet                                                      Tel: +27 (0) 11 447 3030

JSE Sponsor
Java Capital                                                         Tel: + 27 (0) 11 722 3050

7 July 2020

Note to editors:

About RDI

RDI is an income focused UK-REIT with a diversified portfolio invested principally in the UK. The investment approach
is driven by an in depth understanding of occupational demand including the impact of technology, transport and
infrastructure investment. The portfolio has been repositioned in recent years to increase its weighting to London and
the South East and to provide greater exposure to our leading hotel and serviced office operating platforms.

RDI is committed to delivering attractive income led total returns across the real estate cycle. The current strategic
objectives of a lower leverage capital structure and more focused allocation of capital are targeted at delivering an
industry leading and sustainable income return.

RDI is a UK Real Estate Investment Trust (UK-REIT) and holds a primary listing on the London Stock Exchange and
a secondary listing on the JSE. The Company is included within the EPRA, GPR, JSE All Property and JSE Tradeable
Property indices.
For more information on RDI, please refer to the Company's website

Date: 07-07-2020 08:00:00
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