London Serviced Offices Space as a service · Flexible office space (c.7% of Central London) Serviced offices (c.80% of flexible office space) • Providing a high quality and tailored

London Serviced OfficesSpace as a service

Peel Hunt Real Estate Conference1 May 2019

rdireit.com

1

Peel Hunt Real Estate Conference

RDI's partnership with Office Space in TownExperienced operator with strong alignment of interests

Transaction summary and deal rationale• Acquisition of four London serviced offices valued

at £161.7m (January 2018)

• Office Space in Town partnership

• Retained 20% holding in properties

• Management agreement

• Non-compete arrangements and right of first refusals on future OSIT developments

• High quality London serviced office portfolio yielding >6%

• Asset management opportunities

• Scalable operational platform

• Highly cash generative

Ownership structure

HoldCo

PropCo OpCo

80% 20%

Assets

Little Britain, St Paul's & Farringdon

Boundary Row, Waterloo

New Broad Street, Liverpool Street

St Dunstans, Monument

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Amelia WoolleyGeneral Manager, Monument

Roy JonesGeneral Manager, St Paul's & Farringdon

Katie RiceGeneral Manager, Waterloo

Georgia SandomGeneral Manager, Liverpool Street

Simon EastlakeDevelopment Director

Sarah SinglehurstSales Director

Julie WardFinancial Director

Tracey HollowayQuality & Control Director

Niki FuchsManaging Director

Giles FuchsChief Executive

Introducing the Office Space in Town team

2


Exposure to Crossrail and Southbank markets

Strong real estate fundamentalsWell located assets complementing existing portfolio

Waterloo

Cannon Street

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

Office

Hotel

Serviced office

Holiday Inn, Southwark

Coburg HouseNewington House

127 Charing Cross Road

Boundary Row,Waterloo

Little Britain,St Paul’s

New Broad Street,Liverpool Street

St Dunstans,Monument

3


Structural and behavioural change set to continue driving demandJLL expects London flexible workspace to increase from c.7% to over 30% by 2030

• Technology supports mobility

• Millennials will make up 75% of workforce by 2025

• Demanding work-life balance

• More collaborative and creative work environments

Workforce behavioural change One size does not fit all

Deeper potential customer baseShorter leases/licences

Cost efficient

• Allow for space to grow with requirements

• Businesses can be more agile in growth and manage risk more effectively

• From 2019 long leases will be reflected as liabilities on the balance sheet

• Broadening demand

• Corporates are increasingly taking up flexible space

• Creating a presence anywhere

• Traditional office leases continue to shorten (IPD)

• Brexit uncertainty exacerbates demand for shorter term commitment

• Economical for both occupier and landlord

• Avoid set up costs and need for capital investment

• Ability to outsource non-core business activities

Lease accounting changes

4


Landscape changing from product to 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

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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

5


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 month

Waterloo£627 average

Monument£751 average

Liverpool Street£650 average

St Paul’s & Farringdon

£669 average

90

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Delivering a sustainable yield premium

Additional services (incl. meeting room hire,

catering etc.)

£45 – £55 per sqft

Rent generated by traditional

offices

>£20 per sqft

Premium for densification

High proportion of shared and amenity space

150sqft per desk

Traditional offices

c.80sqft per desk

RDI serviced offices

Office Space in Town portfolio provides premium serviced space at mid-market rates

Source: Knight Frank, Flexible Office Services.

c£75 Average net EBITDA per

sqft for flexible space

50sqft per desk

WeWork

6


Continued strong operational performanceAs at 28 February 2019

Longevity of incomeOwning the assets and profit margin

£69.0 (+0.9%) EBITDA per sqft

94.5% (+230bps) Average desk occupancy

63.4% EBITDA as % of total revenue

30 months Average length of stay

£685 (+0.1%) Average desk rate (licence fee only)

£826 (+0.9%) Total revenue per available desk

Performance relative to 31 August 2018.

Positive operational performanceIncome longevity and resilience delivered through asset ownership

Owned model

Leased model(c.20% EBITDA margin)

• Market leading operator with aligned interest

• Service-led approach, consistent 5-star Google ratings

• Quality and personalised service is a key differentiator

• No co-working, lower density, higher amenity space and good sound insulation

• Strong property fundamentals

• Demand remains strong

A7


Appendices

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The Office Space in Town offeringPremium product and service at mid-market rates

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• Fit for purpose design• Natural light• Sound insulation• Industry leading IT• No branding

Premium meeting rooms

High proportion of shared space:• Kitchen areas• Breakout areas• Cafés• Gym• Reception

Physical product Premium and personable service

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Revenue 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

1,826 desks153 clients(1)

Pricing based per room per month:• £500 – £900+ implied rate

per desk

• Initial contract average 12 months

• Average length of stay over 30(1) months

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 £90-95 per head in 2019

Average annual spend:• Over £80 per desk at 100%

occupancy, including call charges

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

Adhoc service fees

3%• Including office customisation, support

services, photocopying, postage, etcPricing per product or service

• n/a

(1) As of February 2019.(2) Licence fee only.

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London Monument – St Dunstans‘Sunseekers Luxury Yachts’

Market value: £66.0m

Capital value per sqft: £1,129

Nearest tube: Monument

Lettable area: 58,432 sqft

Number of desks: 693

Sqft per desk: 84

Number of clients: 55

EBITDA per sqft: £79

Average stay: 24 months

International Property Awards UK 2016Best office interior London

71

2016

90

2017

94

2018

694

2016

777

2017

754

2018

Notes

Data as at 28 February 2019.

Average monthly desk rate (£) licence fees only

Historic performanceOccupancy (%)

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Capital value per sqft: £897

Nearest tube: St Paul's & Farringdon



Sqft per desk: 81


EBITDA per sqft: £58(1)


Serviced office – St Paul's & Farringdon‘Old English culture and English authors’

Roy JonesGeneral Manager, St Paul's & Farringdon

90 93

2016

95

20152014

92

2017

96

2018

661

2016

613

2015

577

2014

663

2017

659

2018

Data as at 28 February 2019.(1) £71 excluding gym area and rent.



12


Serviced office – Waterloo‘Alice in Wonderland’



Nearest tube: Southwark & Waterloo



Sqft per desk: 79


EBITDA per sqft: £71


96

2016

96

2015

81

2014

99

2017

87

2018

606

2016

584

2015

495

2014

639

2017

628

2018

Data as at 28 February 2019.

Katie RiceGeneral Manager, Waterloo



13


Serviced office – Liverpool Street‘Historic London board game’

Georgia SandomGeneral Manager, Liverpool Street



Nearest tube: Liverpool Street



Sqft per desk: 71


EBITDA per sqft: £62(1)


Data as at 28 February 2019. (1) £70 excluding gym.

91

2016

90

2015

93

2014

92

2018

96

2017

623

2016

640

2015

545

2014

641

2018

644

2017

Historic performanceOccupancy (%) Average monthly desk rate (£)

licence fees only


Mike WattersChief Executive Officere: [email protected]

Stephen OakenfullDeputy Chief Executive Officere: [email protected]

Donald GrantChief Financial Officere: [email protected]

Adrian HorsburghProperty Directore: [email protected]

RDI REIT P.L.C.33 Regent StreetLondon SW1Y 4NBt: +44 (0)20 7811 0100

Visit us online

www.rdireit.com

@RDIREIT

RDI REIT

RDI REIT contact details

Documents

London Serviced Offices Space as a service · Flexible office space (c.7% of Central London) Serviced offices (c.80% of flexible office space) • Providing a high quality and tailored