RDI.L Regulatory News (RDI)

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

RDI REIT P.L.C.

 ("RDI" or the "Company")

(Registered number 010534V)

LSE share code: RDI

JSE share code: RPL

ISIN: IM00BH3JLY32

LEI: 2138006NHZUMMRYQ1745

AVIVA FINANCING FACILITY UPDATE

Four shopping centres, namely Grand Arcade (Wigan), Weston Favell (Northampton), Birchwood (Warrington) and Byron Place (Seaham) are financed by a long-term fixed rate debt facility with Aviva Commercial Finance Limited ("Aviva"). The facility is non-recourse to the Company and has an outstanding principal balance of £144.7 million, a fixed rate of 5.5% per annum and a maturity date in April 2042. The four shopping centres represent approximately 12% of the portfolio by market value.

In the Company's pre-close update on 28 February 2019, it was confirmed that all net operating cashflows after interest costs of approximately £6.5 million (on an annualised basis) were being retained within the facility as a result of the general deterioration in values for UK shopping centres and the resultant increase in the lender's loan to value ("LTV") ratio on this particular facility.

Approximately £11.6 million of cash is currently held and restricted within the facility resulting in a net debt position, after adjusting for break costs, of approximately £136.4 million. The restricted cash reflects cash previously injected into the facility and net operating cashflows that have been retained as a result of the lender's LTV being above 80%.

Due to the ongoing uncertainty around UK shopping centre valuations, as well as concerns over certain key retailers, Aviva has subsequently undertaken a further valuation of the four assets secured by the facility. The latest lender's valuation of £152.5 million reflects a net initial yield of 9.7% and has resulted in a lender's LTV of 89.4% which exceeds the 85% loan to value covenant. The adverse movement in the lender's valuation has been driven almost exclusively by continued upward movements in investment yields. Occupancy (94.5%) and net income across the Aviva portfolio have remained broadly stable since 31 August 2018.

Under the terms of the facility agreement the borrowing entities have until 23 April 2019 to cure the covenant breach which would require a cash cure of approximately £9.4 million (in addition to the restricted cash currently within the facility) or the addition of new collateral to reduce the LTV to below 85%.

In the event the LTV is not reduced to below 85% and/or a consensual sales process is concluded, future net operating cashflows after finance costs will be reduced by approximately £6.5 million annually. Given the long-term fixed rate nature of the loan, material break costs are associated with early repayment. A disposal of one or all of the assets is therefore not expected to result in any equity being realised from the net disposal proceeds. It is however important to note that the loan is non-recourse to RDI and the Company has no obligation to commit any further capital to the Aviva financing structure on any potential disposal of the assets.

As previously announced, the Board will carefully consider the options available to it with respect to long term shareholder value and will remain disciplined in any further capital allocation to the retail sector. The Company and Aviva are engaged in co-operative discussions in respect of the options available under the facility agreement as well as alternative options including a consensual sales process or restructuring of the facility.

The four shopping centres secured by the Aviva facility represented approximately 12% of the overall portfolio by value at 31 August 2018. A disposal would reduce exposure to UK retail to approximately 20% of the portfolio by value (31 August 2018: 29%) as well as reducing the Group's LTV to 44.0% (31 August 2018: 47.3% pro-forma) and the Group's average cost of debt to approximately 3.0% (31 August 2018: 3.4%).

As previously announced in the Company's pre-close update, trading across the wider portfolio remains robust with positive occupational demand and leasing activity across the majority of the portfolio.

Further updates will be provided in due course.

For further information:

Person responsible:

The person responsible for the release of this announcement is Lisa Hibberd

Note to editors:

About RDI

RDI is a UK Real Estate Investment Trust (UK-REIT) committed to becoming the UK's leading income focused REIT. The Company's income-led business model and strategic priorities are designed to offer shareholders superior, sustainable and growing income returns, with a target growth in underlying earnings per share of 3%-5% across the medium term.

Income sustainability is underpinned by a diversified portfolio and tenant base, with no overreliance on any one sector or tenant, together with an efficient capital structure. The secure and growing income stream is 27.0% indexed and has a WAULT of 7.0 years to first break (8.4 years to expiry). This is complemented by an average debt maturity of 6.7 years of which over 95% of interest costs are either fixed or capped. The Company is focused on all aspects impacting shareholder distributions and reports one of the lowest cost ratios in the industry whilst maintaining a low cost of debt.

The Company owns properties independently valued at £1.6bn in the United Kingdom and Germany, Europe's two largest, liquid and transparent property markets. RDI invests in assets with strong property fundamentals spread across UK offices (including London serviced offices), UK logistics, UK shopping centres, UK retail parks, UK hotels and German retail. RDI is well placed to take advantage of the increasing occupier requirement for real estate owners to become high quality service providers, given its scalable operational platforms and nearly a third of the portfolio invested in hotels and London serviced offices.

RDI holds a primary listing on the London Stock Exchange and a secondary listing on the JSE and 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

All figures as at 31 August 2018.