RDI.L Regulatory News (RDI)

RDI REIT P.L.C.

 ("RDI" or the "Company")

(Registered number 010534V)

LSE share code: RDI

JSE share code: RPL

ISIN: IM00BH3JLY32

LEI: 2138006NHZUMMRYQ1745

£34.4m of Strategic Disposals and COVID-19 Update

RDI, the income focused UK Real Estate Investment Trust ("UK-REIT"), is pleased to announce further progress on its strategic disposal programme following the sales of its German DIY retail warehouse portfolio for €34.2million (Group share: €22.8 million) and the Omnibus office building in Reigate for £14.9 million.

German DIY retail warehouse portfolio

The sale of the portfolio, comprising three DIY retail warehouses for €34.2 million (£29.2 million), reflects a 3.5 per cent discount to the 31 August 2019 market values. However, given the transaction structure, the purchaser has taken on the inherent tax liabilities associated with the portfolio.

Two of the properties, Herzogenrath and Schwandorf, were 75 per cent held by RDI with a minority partner holding the residual 25 per cent interest. A third property, in Huckelhoven, was held in joint venture with Menora Mivtachim. The portfolio has been sold by way of a corporate sale of various special purpose vehicle interests and includes the transfer of existing debt facilities with outstanding balances of €19.5 million (Group share: €13.1 million).

The portfolio is let principally to OBI, one of Germany's leading DIY retailers, making up 89.5 per cent of the rental income. The average WAULT across the portfolio is 4.7 years with all leases subject to escalations of between 60 to 75 per cent of CPI.

Following the disposal of the German DIY retail warehouse portfolio, €164.9 million (£140.8 million) of German assets have been sold or exchanged for sale representing approximately 55.0 per cent of the total German retail portfolio.

Omnibus, Reigate

The Omnibus office building in Reigate has been sold for £14.9 million reflecting a discount of 6.3 per cent to the 31 August 2019 market value. The 62,756 sq ft regional office has an occupancy rate of 55.1 per cent and is one of the UK mature assets identified for disposal as part of the Group's strategic disposal programme.

Disposal programme update

As previously announced, contracts were exchanged for the sale of the Bahnhof Center for €91.0 million, reflecting a 2.5 per cent premium to the 31 August 2019 market value. While the position with regards the City of Hamburg's statutory pre-emption right is ongoing, the terms of the original sales contract remain binding whether the asset is acquired by the original purchaser or the City of Hamburg. RDI will continue to benefit from the income returns while the pre-emption position is resolved and until the disposal is completed.

A further £186.4 million of assets, not already sold or exchanged for sale, form part of the Company's strategic disposals plan (including certain UK mature assets) of which approximately £110.0 million are under offer and at various stages of negotiation.

The disposals programme remains focused on delivering the strategic priorities of reducing retail exposure to approximately 20 per cent of the portfolio and strengthening the balance sheet with a revised LTV target of between 30 and 40 per cent.

COVID-19 update

Due to the fast-moving nature of the situation, it is too early to provide any meaningful estimate of the effect on earnings for the current financial year given that the duration and impact of the virus remains highly uncertain.

RDI has been closely monitoring the impact of COVID-19 on travel patterns and specifically hotel bookings. As has been widely reported in the media and by industry benchmark reports over recent weeks, there has been significantly reduced demand for travel which has resulted in a material reduction in occupancy and future bookings across the Group's 13 managed hotels.

Enquiries and sales activity across the London serviced office portfolio are also being closely monitored. Occupancy remains largely unchanged and above 90 per cent currently with existing clients typically operating on 12 month licenses. The immediate impact is therefore likely to be low but reduced enquiries and sales activity in the short term may impact occupancy and income in due course.

The Company has also been made aware of likely enforced retail store closures in Germany for all but essential retailers such as foodstores and chemists. Should this come into effect, our shopping centres and other retail assets will remain open to support these essential retailers, however overall footfall and trading are expected to be impacted by the anticipated store closures of units occupied by discretionary retailers.

Given the disposals activity over the last 12 months, the Company has cash balances of approximately £55.0 million including the net proceeds from the German DIY and Reigate disposals referred to above. In addition, the Group has £25.0 million of undrawn capacity on its revolving credit facility.

The Company has relatively limited debt maturities over the next 12 months, with two facilities totalling £16.1 million maturing over this period.

Contingency planning around potential operational issues and the wellbeing of clients, visitors and staff is of the highest priority and Government guidelines are being closely adhered to.

Mike Watters, CEO at RDI, commented:

"These latest disposals are in line with RDI's stated strategy to further reduce its exposure to retail and focus the portfolio on core assets in the UK market whilst strengthening the balance sheet. We are pleased with progress made to date in addition to our active sales pipeline, although remain cognisant of the unprecedented macro-economic backdrop that has emerged. While it is too early to determine the longer term impact of these exceptional circumstances, we have a highly diversified portfolio and occupier base alongside a healthy cash position, and continue to closely monitor developments."

 For further information:

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 www.rdireit.com