RDI.L Regulatory News (RDI)

REDEFINE INTERNATIONAL P.L.C.

("Redefine International" or the "Company")

(Registered number 010534V)

LSE share code: RDI

JSE share code: RPL

ISIN: IM00B8BV8G91

REDEFINE INTERNATIONAL COMPLETES AUK PORTFOLIO ACQUISITION

Redefine International, the opportunistic income focused FTSE 250 UK-REIT, is pleased to announce that it has successfully completed on the acquisition of the second tranche of the Aegon UK ("AUK") portfolio for a purchase price of £204.7 million (£213.2 million including costs).

The total purchase price of the acquisition of the Combined AUK portfolio, including Banbury Cross Retail Park and after adjusting for the disposal of 16 Grosvenor Street, London, (the "Acquisition") was £460.7 million (£480.0 million including costs). To support the funding of the transaction the Company utilised £252.0 million of bank debt, with the balance funded from existing cash resources and the proceeds from the recent £115.0 million equity placement successfully concluded on 23 February 2016. This results in an initial margin on the AUK facility of 1.90 per cent over LIBOR.

The AUK portfolio significantly increases the Company's existing portfolio, adding largely institutional quality properties across which asset management progress has already exceeded initial expectations.

Mike Watters, CEO of Redefine International commented:

"The conclusion of this transformational off-market portfolio acquisition is a considerable achievement, particularly in a market which is highly competitive for such institutional quality assets. Redefine International's portfolio has now increased by approximately 50 per cent to £1.5 billion, whilst a significant, resilient and long term rental stream has been added, supplementing our existing income. The portfolio also presents a range of future opportunities for enhancing rental income and value through active asset management.

We are confident that this acquisition puts Redefine International in a strong position at this point in the property cycle and we are looking forward to updating the market on the early progress made on the asset management plan as we work to integrate the AUK assets into our existing portfolio."

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About Redefine International

Redefine International is an opportunistic, income focused FTSE 250 UK Real Estate Investment Trust (UK-REIT) committed to delivering superior distributions to its shareholders throughout the property cycle, enabled by a diversified portfolio. 

Our income driven total returns are underpinned by a quality and segmented portfolio, together with an efficient capital structure. We are committed to delivering superior distributions to our shareholders, as is evidenced in our proven track record in delivering market-leading dividends throughout the property cycle.

The property portfolio, independently valued at £1.5 billion, is focused in Europe's two strongest economies, being the United Kingdom and Germany, within the retail, commercial and hotel sectors. The portfolio is weighted towards well-located properties across a range of asset classes, which benefit from strong demand and from which we believe we can capture income and value growth by attracting high calibre occupiers on long leases.

We hold a primary listing on the London Stock Exchange and a secondary listing on the Johannesburg Stock Exchange and are included within the FTSE 250 and EPRA indices.

For more information on Redefine International, please refer to the Company's website www.redefineinternational.com. 

Background to Acquisition

· On 7 September 2015 the Company published a circular to announce the conditional acquisition of the AUK Portfolio for an aggregate consideration of £437.2 million (£455.7 million after costs)

· At the same time, it also announced that it had exchanged contracts to acquire Banbury Cross Retail Park for a consideration of £52.5 million (£54.7 million including transaction costs) which completed on that day

· Shareholder approval for the Acquisition was obtained on 25 September 2015

· Tranche 1 of the Acquisition, including Banbury Cross, which comprised ten properties at a purchase price of £256.0 million (£266.8 million including costs), was funded with existing cash resources together with £155.0 million of bank debt. Banbury Cross completed on 7 September 2015 and Tranche 1 completed on 2 October 2015

· In December 2015 the Company announced the successful exchange of 16 Grosvenor Street, London pre-completion of the second tranche of which this property formed part

· Tranche 2 of the Acquisition, which comprised a further nine properties (following the sale of 16 Grosvenor Street, London), completed on 1 March 2016. The reduced purchase price of £204.7 million (£213.2 including costs) was funded through existing cash resources, bank debt and £115.0 million of cash raised through a successful equity placing concluded on 23 February 2016.

Acquisition highlights, excluding 16 Grosvenor Street, London

· The AUK portfolio comprises 19, largely institutional quality assets which have strong property fundamentals and scope for adding capital value through active asset management

· The net initial yield is 5.6 per cent., with a topped up net initial yield (post expiry of rent free periods) of 5.8 per cent and a reversionary yield of 6.0%.

· The portfolio generates an annual passing rent of £28.3 million (increasing to £28.8 million after the expiry of rent free periods) and with an estimated rental value of £29.2 million

· By gross income, 54.8 per cent of the portfolio is comprised of retail properties (principally well-located retail parks), 22.3 per cent offices (principally located in London, the South East and the big six UK cities) and 22.9 per cent industrial (principally three well located distribution centres)

· The weighted average unexpired lease term is 7.7 years to the first break option and 9.8 years to expiry

· Although the portfolio has a high overall occupancy of 96.7 per cent. (by area) a number of asset management opportunities have been identified to reduce voids and associated carrying costs, which will drive both higher income returns and capital values

· Early progress on asset management activities and identification of further value-add opportunities have outperformed management's initial expectations

· The valuation carried out on the portfolio in January 2016 valued the AUK portfolio (excluding 16 Grosvenor Street, London) at £462.1 million, which is a £3.2 million increase on the valuation at the time of the announcement in September 2015.

Figures as at 31 August 2015 excluding Grosvenor Street