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London serviced offices property tourFebruary 2018
rdireit.com
Itinerary
Time Inspection time
Location Description Hosted by
15:00 30 min Euston Room, Liverpool Street 46 New Broad Street London EC2M 1JH
Presentation:
• Welcome and introduction• Portfolio and sector overview
Mike Watters, Stephen Oakenfull, Adrian Horsburgh – RDI REITGiles Fuchs, CEO, Office Space in Town
15:30 20 min Liverpool Street 46 New Broad Street London EC2M 1JH
Tour of Liverpool Street Georgia Sandom, General ManagerGiles Fuchs, CEO, Office Space in Town
15:50 15 min Transfer by bus to St. Paul's & Farringdon, 20 Little Britain London EC1A 7DH
16:05 20 min St Paul's & Farringdon 20 Little Britain London EC1A 7DH
Tour of St Paul’s & Farringdon Georgia Sandom, General ManagerGiles Fuchs, CEO, Office Space in Town
16:25 25 min Transfer by bus to Monument, 20 St Dunstans Hill, London EC3R 8HL
16:50 10 min State Room, Monument 20 St Dunstans Hill London EC3R 8HL
Q&A session Mike Watters, Stephen Oakenfull, Adrian Horsburgh – RDI REITGiles Fuchs, CEO, Office Space in Town
17:00 20 min Monument 20 St Dunstans Hill London EC3R 8HL
Tour of Monument Amelia Woolley, General ManagerGiles Fuchs, CEO, Office Space in Town
17:30 Monument 20 St Dunstans Hill London EC3R 8HL
Drinks and canapes on The Deck
RDI and Office Space in Town property tour
Welcome
1Earnings accretive acquisition in line with strategic priorities
Transaction summary• Four London serviced offices valued at £161.7m• Existing debt of 45% LTV, in line with strategic
priority to reduce Group leverage • Consideration of approximately £72.5m for
80% interest including transaction costs <1%• £10.3m EBITDA; implied NIY >6%• Average lot size: £40.4m• Anticipated yield on equity >9% Little Britain,
St Paul's & Farringdon
St Dunstans, Monument
Boundary Row, Waterloo
New Broad Street, Liverpool Street
RDI remains buyers of strong property fundamentals
2
Southbank£650 – £800
City Core£500 – £800
Strand£650 – £750
Eastern Fringe£450 – £550
Midtown£500 – £650
Northern Fringe/Shoreditch£450 – £600
North£600 – £800
Higher value Lower value
Cost per desk per monthWaterloo£635 average
Monument£777 average
Liverpool Street£644 average
St Paul’s & Farringdon
£663 average
Deal rationale• Increased allocation of capital to areas of long‑term
economic growth and sectors supported by structural change
• Differentiated serviced office business model• Owned model with a proven sustainable track record• Established and experienced operator with
aligned interests• Uniquely designed and wholly refurbished space• The offering is defined by the premium service
• Asset management opportunities• Scalable platform
• RDI has right of first refusal on future Office Space in Town developments
• Simple integration of future acquisitions and potential repurposing of existing RDI assets
• RDI experienced with investing in operational/serviced real estate
Office Space in Town portfolio provides premium serviced space at mid-market rates
Source: Knight Frank, Flexible Office Services
High quality London serviced office portfolio yielding >6%
Alignment with strategic priorities to continue delivering superior, sustainable and growing income
3
Waterloo
Cannon Street
Wapping
Whitechapel
Moorgate
Fenchurch StreetBlackfriars
Charing Cross
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
Little Britain,St Paul’s & Farringdon
New Broad Street,Liverpool Street
St Dunstans,Monument
Boundary Row,Waterloo
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 average occupancy and enquiry levels underpinned by strong occupier demand
4
• Experienced, high quality management team • Manage six London and five regional serviced
offices, including the four acquired assets• Alignment of interests through
20% co‑investment • Management fee based on % of EBITDA• Non‑compete arrangements and right of first
refusal on future Office Space in Town developments
• Strong cultural fit focused on sustainable income growth
RDI's new partnership with Office Space in TownExperienced operator with strong alignment of interests
HoldCo
PropCo OpCo
80% 20%
Assets
Little Britain, St Paul's & Farringdon
Boundary Row, Waterloo
New Broad Street, Liverpool Street
St Dunstans, Monument
RDI experienced investors in operational/serviced real estate
Ownership structure
Manag
emen
t agreem
ent
5Introducing the Office Space in Town team
Niki FuchsManaging Director
Giles FuchsChief Executive
Amelia WoolleyGeneral Manager, Monument
Roy JonesGeneral Manager, Waterloo
Katie RiceGeneral Manager, St Paul's & Farringdon
Georgia SandomGeneral Manager, Liverpool Street
Simon EastlakeDevelopment Director
Sarah SinglehurstSales Director
Julie WardFinancial Director
Tracey HollowayQuality & Control Director
6Office Space in Town has a long history in serviced offices
RDI and Office Space in Town is a scalable partnership
1979Fuchs family's first serviced office in Northampton
2009Office Space in Town opened for business
2018RDI and Office Space in Town partnership
Top 10 Serviced OfficesIn December 2017, three of the acquired assets were included on Easy Offices' top 10 serviced offices
March 2012Private equity backing
April 2013St Paul's & FarringdonAcquired and fully refurbished
September 2015Monument Acquired and fully refurbished
January 2014London WaterlooAcquired and fully refurbished
April 2012Liverpool Street Acquired and substantially refurbished
7Competitor landscape changing from providing a product to providing high quality serviceOffice Space in Town does not compete 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
8Al
l 4 a
ssets w
ithin 5 minutes walk
of the nearest underground sta
tion
Longevity of incomePrioritising client satisfaction and retention over density and rate
Two of the properties are <10 minutes walk from
new Elizabeth line, Crossrail stations
Well located properties
Premium and personable service
Well designed, innovative spaces
Own the assets and the profit margin
Owned model
Leased model
• Control over use, design and service provisions• Flexibility in density, rates and cost management• Freedom to realise asset management opportunities
• Getting the best price doesn't ensure the best service
• Hi‑tech and reliable IT with no hidden costs
• Each asset uniquely designed• No Office Space in Town branding on buildings• Good sound insulation
9The Office Space in Town offeringNot defined by our physical product, but rather by our premium service
Included for all clients:• Direct access to the hands‑on management team
• Inspiring office space and reliable business facilities
• Quiet, professional and confidential work environment
• Moving in made easy
• Bespoke tailoring of packages and flexible terms to allow for growth and change of client requirements
• Lower upfront costs
• Personalised call answering, message management, mail forwarding and general administration
• 'Access all areas' lounge card
• Regular client socials and community networking
• Cleaning, free UK landline calls and more…
Additional service fee:• High quality IT service, bandwidth and wifi at
a flat rate, with no hidden costs
• Hi‑tech audio‑visual and communications facilities
• Tailored catering options
• Office customisation
• Luxury bedrooms (St Dunstans only)
• Venues and catering for private functions
• Additional support services, e.g. photocopying, dry cleaning, etc
Premium office space
Premium meeting rooms
Shared space:• Kitchen areas
• Breakout areas
• Cafes
• Gym
Physical product Premium and personable service
10Revenue driversPipeline of further asset management and revenue opportunities
Membership/product
Indicative contribution
Description Desks/Clients Pricing Average length
Office/ desk rental(2) 80%
• Private offices with capacity for 1‑60 people
• Flexible terms to allow for growth and change
• Access to all buildings in the portfolio
1,827 desks146 clients(1)
Pricing based per room per month:• £500 – £900+ implied
rate per desk
• Initial contract average 11 months
• Length of stay average 30(1) 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, 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
(1) As of December 2017.(2) Licence fee only.
Afternoon programme
12
Market value: £29.4m
Capital value per sqft: £830
Nearest tube: Liverpool Street
Lettable area: 35,419 sqft
Number of desks: 352
Number of clients: 35
Implied rent per sqft: £63(2)
Average stay(1): 30 months
London Liverpool Street – New Broad Street‘Historic London board game’
Historic performanceOccupancy (%)
919093 96 623640545
644
201620152014 2017 201620152014 2017
Average monthly desk rate (£) licence fees only
Notes
(1) Source: Data as at 31 December 2017.(2) £80 excluding gym.
13London St Paul’s & Farringdon – Little Britain‘Old English culture and English authors’
Occupancy (%)
939590 92 661613577
663
201620152014 2017 201620152014 2017
Average monthly desk rate (£) licence fees only
NotesMarket value: £32.3m
Capital value per sqft: £984
Nearest tube: St Paul's & Farringdon
Lettable area: 36,908 sqft
Number of desks: 328
Number of clients: 27
Implied rent per sqft: £50(2)
Average stay(1): 23 months
(1) Source: Data as at 31 December 2017.(2) £72 excluding gym.
Historic performance
14
Market value: £63.7m
Capital value per sqft: £1,090
Nearest tube: Monument
Lettable area: 58,432 sqft
Number of desks: 694
Number of clients: 58
Implied rent per sqft: £78
Average stay(1): n/a
London Monument – St Dunstans‘Sunseekers Luxury Yachts’
International Property Awards UK 2016Best office interior London
Historic performanceOccupancy (%)
71
90694
777
Average monthly desk rate (£) licence fees only
2016 2017 2016 2017
Notes
(1) Source: Data as at 31 December 2017.Note: St Dunstans only trading since 2015.
15
Increased exposure to long-term economic growth geographies
31 August 2015 Pro forma(1)
Greater LondonMajor cities
33% 39%
29%16%
31 August 2015 Pro forma(1)
UK Shopping centresOther retailCommercialHotels
34%
27%
21%
33%
19%
25%
22%
19%
Outlook and conclusionSustainable and growing income underpinned by strong occupier demand
Medium-term guidance unchanged and continue to target 3% – 5% growth in underlying earnings per share(1) Pro forma reflects the portfolio as at 31 August 2017 adjusted for major transactions post year end.
• Continued delivery against strategic priorities• Relentless focus on superior, sustainable and
growing income
• Portfolio quality and income credentials enhanced
• Reducing LTV
• Office Space in Town, a clear income‑led opportunity to enhance the portfolio
Portfolio quality and income credentials enhanced
Exposure to UK Shopping centres significantly reduced
Q&A
A17
Appendices
18RDI pro 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 96.7% 27.5%
UK Retail Parks 10% 169.9 5 11.4 10.8 5.8% 6.2% 6.0% 7.7 96.2% 4.7%
UK Other Retail 2% 28.3 3 2.3 2.3 7.5% 7.5% 7.8% 16.6 100% —
UK Retail 31% 514.7 14 39.9 40.2 6.3% 6.6% 7.3% 8.4 96.8% 19.4%
UK Offices – Greater London 6% 90.2 3 3.4 4.4 2.8% 3.3% 4.6% 5.1 95.9% 23.7%
UK Offices – Flexible London 10% 161.7 4 10.3 10.3 6.0% 6.0% 6.0% 2.2 94.4% —
UK Offices – Regions 7% 113.6 15 9.6 9.2 6.9% 7.7% 7.6% 3.3 95.8% 23.0%
UK Distribution & Industrial 7% 117.6 4 6.3 7.5 4.8% 5.0% 6.0% 5.0 96.3% —
UK Automotive 3% 42.8 36 2.9 2.3 6.3% 6.3% 5.0% 12.3 100% 100.0%
UK Commercial 33% 525.9 62 32.5 33.7 5.4% 5.7% 6.0% 4.3 95.8% 18.2%
Greater London RBL portfolio 11% 184.4 7 11.9 12.5 6.0% 6.0% 6.4% 8.3 100% —
Edinburgh 2% 39.1 1 2.6 3.0 6.1% 6.1% 7.1% 8.5 100% 3.4%
IHL Hotels – RBL portfolio 5% 75.4 5 6.0 6.0 7.5% 7.5% 7.5% 10.0 100% —
IHL Hotels – Travelodge portfolio 2% 29.0 4 1.6 1.6 5.3% 5.3% 5.3% 21.1 100% 100.0%
Enfield Travelodge 1% 16.1 1 0.7 0.7 4.2% 4.2% 4.2% 29.9 100% 100.0%
UK Hotels 21% 344.0 18 22.8 23.8 6.2% 6.2% 6.5% 10.3 100% 10.5%
Total UK 85% 1,384.6 94 95.2 97.7 5.9% 6.2% 6.6% 7.5 97.2% 16.9%
German Shopping Centres 11% 181.3 3 9.4 10.6 4.2% 4.3% 5.5% 4.8 99.4% 94.5%
German Supermarkets and Retail Parks 4% 68.7 11 4.8 4.9 5.9% 5.9% 6.6% 5.2 96.8% 94.4%
Europe 15% 250.0 14 14.2 15.5 4.7% 4.7% 5.8% 4.9 98.6% 94.5%
Total 100% 1,634.6 108 109.4 113.2 5.7% 6.0% 6.5% 7.1 97.4% 27.0%
As at 31 August 2017, adjusted for major transactions post year end.
19
St Dunstans, Monument EC3R
Boundary Row, Waterloo SE1
Little Britain, St Paul's & Farringdon EC1A
New Broad Street, Liverpool Street EC2M
Market value: £63.7m £36.3m £32.3m £29.4mCapital value per sqft: £1,090 £902 £984 £830Nearest tube: Monument Southwark St Paul's & Farringdon Liverpool StreetLettable area: 58,432 sqft 35,796 sqft 36,908 sqft 35,419 sqftNumber of desks: 694 453 328 352Number of clients: 58 29 27 35Average monthly desk rate(1): (licence fees only)
£777 £635 £663 £644
Implied rent per sqft: £78 £66 £50 £63Occupancy(1): 90% 99% 92% 96%Average stay(1): n/a 30 months 23 months 30 monthsIllustrative opportunities: Shared space
revenuesHotel synergies
Space reconfiguration
Additional desks and conferencing space
Serviced office portfolio summary
(1) Source: Data as at 31 December 2017.
20
• 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
