european property tour...document name and description hereredefine international p.l.c. 77 sa &...

European Property Tour

September 2013

2 Document name and description here 2 Redefine International P.L.C.

Contents

Page

• The journey to date 03

• Income focused property investment 04

• Relative positioning in UK & SA markets 05 – 11

• Addressing market perceptions 12

• Corporate and portfolio objectives 13 – 15

• Property portfolio 16 – 37

• Financial highlights 38 – 41

• Looking forward 42


£127.5m capital raising

to strengthen balance

sheet

October 2012

Ciref plc

is rebranded as

Redefine International

20

40

60

80

100

120

140

160

180

200

220

240

260

280

300

320

340

360

380

400

420

440

Mar

ket

Cap

£m

RDI Market Cap


completes reverse take-

over of Wichford P.L.C. &

is admitted to Premium

Segment of Official List

Corovest International

Real Estate Fund

founded as an open

ended property

investment fund

Ciref plc makes initial

investment into

Wichford P.L.C.

Initial investment into

Cromwell Property

Group, Australia

Redefine Properties

International Ltd is listed

on JSE & becomes

Redefine International’s

largest shareholder

2002

July 2010 May 2006 December 2009

December 2009 2008 September 2010

August 2011 September 2013

The journey to date

Redefine Properties

increases shareholding

in Ciref plc to over 50%

Ciref plc is listed on AIM

with Redefine Properties

acquiring an initial 18%

shareholding


Income focused property investment

• Portfolio and strategy focused on income within tightly defined business segments

• Each business segment supported by specialist and proven asset management teams

• Diversification provides exposure to different sources of income

• Ability to allocate capital to performing business segments

• Policy to distribute at least 90% of distributable earnings (UK REIT compliant)

• Targeted distribution growth of CPI +1% to 2% p.a. through sustainable expansion

• Development exposure to be limited but creating value through asset management is a core strategy


Relative positioning (UK market)

CLS

Development Stabilised

Primary

High yielding

Helical

Bar

plc


Relative positioning (SA market)

Development Stabilised

Primary

High yielding


SA & UK REIT Analysis

- 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000

SA Market Caps (Rm)

- 100 200 300 400 500 600 700 800

UK Market Caps (£m)

Intu

Growthpoint

Capital & Counties

Redefine Properties

Hyprop

Capital

Resilient

NEPI

Fountainhead


Acucap

Fortress

Vukile

Emira

Sycom

Investec

Rockcastle

Rebosis

Delta

Hospitality

Arrowhead

Dipula

Premium

Ascension

Octodec

Vunani

Vividend

Synergy

Mas

Annuity

Land Securities

British Land

Hammerson

Intu

Capital & Counties

Derwent London

SEGRO

Great Portland

Shaftesbury

Songbird

LMS

Grainger

St. Modwen

Workspace

Unite

Big Yellow

Hansteen

Quintain

CLS

Helical Bar


Max

LXB Retail

Primary Health

Development Securities

Mucklow

Safestore

MedicX

Assura

Condor

Conygar

Sirius

Alpha Pyrenees


Relative share price performance

20.00

25.00

30.00

35.00

40.00

45.00

50.00

Aug 2

012

Aug 2

012

Aug 2

012

Sep 2

012

Sep 2

012

Oct 20

12

Oct 20

12

No

v 2

012

No

v 2

012

De

c 2

012

De

c 2

012

Jan 2

01

3

Jan 2

01

3

Jan 2

01

3

Feb

201

3

Feb

201

3

Ma

r 201

3

Ma

r 201

3

Apr

20

13

Apr

20

13

Ma

y 2

01

3

Ma

y 2

01

3

Jun 2

01

3

Jun 2

01

3

Jul 201

3

Jul 201

3

Jul 201

3

Aug 2

013

Aug 2

013

Share

price (

pence)

Redefine International FTSE All Share FTSE 250 FTSE 350 Real Estate

65.7%

36.7%

18.4%

16.3%

Source: Bloomberg


Forecast dividend yields (UK)

Source: Peel Hunt Forecasts (1 September 2013)

Note: Intu dividend yield c4.9%

-

1%

2%

3%

4%

5%

6%

7%

8%

Me

dic

X (

n/r

)

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Premium / (discounts) to NAV (UK)

(100%)

(80%)

(60%)

(40%)

(20%)

-

20%

40%

Ca

pital &

Co

unties

Me

dic

X (

n/r

)

Ha

nste

en

Hold

ings

PH

P

Work

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define

Shaft

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De

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on

St. M

odw

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at

Po

rtla

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SE

GR

O

Un

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Assura

(n

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Lan

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Intu

Pro

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Quin

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ecurities

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Siriu

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Alp

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Note: Intu discount to NAV c(20% )


Forecast gearing (UK)

-

20%

40%

60%

80%

100%

120%

140%

160%

180%

Song

bird

PH

P

Siriu

s R

eal E

sta

te

Gra

inger2

Intu

Pro

pe

rtie

s

He

lica

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ar

Quin

tain

Safe

sto

re

Ca

pital &

Re

gio

na

l

CL

S

Re

define

Un

ite

British

Lan

d

SE

GR

O

Ha

nste

en

Hold

ings

Lo

ndo

nM

etr

ic P

ropert

y

St. M

odw

en

Work

spa

ce

De

ve

lop

men

t S

ecurities

La

nd S

ecuri

tie

s

Ma

x P

rop

ert

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roup

Ha

mm

ers

on

Shaft

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Gre

at

Po

rtla

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ond

on

Big

Ye

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Ca

pital &

Co

unties


Notes: (1) Gearing reflects net debt /equity (2) Intu gearing c98%


Addressing market perceptions

Structure too complex

• Redefine International to be dual listed on the JSE, dual company structure to be removed

• Conversion to a UK REIT

• Management to be internalised

Diversification

• Focused on income returns

• Ability to allocate capital to performing segments

• Strong support from income focused investors

Secondary property portfolio

• Portfolio quality being improved

• Reduced cost of capital allowing investment into higher growth assets

• Conversion of vacant offices to higher value uses and recycling capital

Indifferent track record

• Global financial crisis largely past

• Wichford debt successfully restructured

• Portfolio rationalised and improved

High risk

• Leverage reduced

• Portfolio improved

• Board and management strengthened


Corporate objectives

Short Term

• Complete inward listing

• REIT conversion

• Manco internalisation

• Senior appointments

• FTSE All share and FTSE 250 index inclusions (£580m entry level for FTSE 250)

• EPRA index inclusion

• Further reduce cost of capital

• Sustainable distribution growth of CPI +1% - +2% p.a. compound

• Share re-rating based on a sustainable dividend yield

• Relevant player in UK listed market

Medium Term

• Alternative sources of flexible and cost efficient capital

• Global player with Redefine Properties Long Term


Portfolio objectives

Stable Income

• Further sales of non-core assets

• Focus on fewer and higher quality assets with greater emphasis on the South East

• Reposition assets with higher value alternative uses

• Move into higher growth sectors or locations

• Continued focus on income and occupancy protection

• Capital expenditure projects at Birchwood and Harrow to enhance asset quality and

value

• Rebranding of centres and development of additional sources of income

• Opportunistic acquisition of good quality, high yielding centres

UK Retail

• Focus to remain on branded, limited service hotels in Greater London

• Capital expenditure and refurbishment programme largely complete

• Capitalise on management expertise

• Exposure to be limited to 15% - 20% of total assets

Hotels


Portfolio objectives (cont.)

• Recycle capital into income producing investments

• Redevelop older but well located assets

• Obtain planning permissions for higher value alternative uses

• Work with tenants looking to expand

• Ancillary income (advertising, commercialisation, managed parking)

Development

opportunities

• Co-ordinate strategy with Redefine Properties

• Liquid currency if required for deal making

• Positive diversification

Cromwell

Europe

• Enhance income security through lease extensions and indexation

• Deliver asset management opportunities from CMC acquisition

• Sale of smaller non-core assets

Europe

Stephen Oakenfull


Europe

• VBG restructuring completed delivering 19% cash on cash

returns

• CMC acquisition successfully completed

• Portfolio quality enhanced through recent acquisitions and the

sale of smaller non-core assets

• Cashflow growth supported by inflation-linked leases

The European portfolio continues to be a highly cash

generative investment supported by strong covenants

on index-linked leases

0.6

2.3

0.7 0.5 0.2

10.0

1.3 1.0 1.0

9.5

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022+

Lease expiry profile Gross rent (£m)

85.6%

6.1%

8.3%

Germany £23.1m

Switzerland £1.7m

The Netherlands

£2.2m

Gross rental income

UK Stable Income

Stephen Oakenfull and Vedran Kosoric

The Observatory, Chatham


UK Stable Income

• Occupancy increased to 96.8% despite challenging market

• Evidence of increased occupier demand from small to medium

private sector occupiers

• Inflation remains above target supporting cashflow growth from

index linked leases

• Opportunities to redevelop well located assets and recycle

capital in progress

The portfolio has and continues to be restructured to

provide exposure to high quality covenants, index-

linked leases and an increasing focus on Greater

London and the South East

0.1

0.8 1.2

1.5

0.4

2.4

1.1

6.4

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022+


52.4%

10.6%

7.5%

29.5%

Government £7.4m

Petrol Filling Stations £1.5m

Kwik Fit £1.1m

Other £4.2m

Gross rental income


Harrow residential conversion

• Planned conversion of vacant office site to residential led mixed use scheme

• Site value enhanced through land assembly and successful planning application for 238 private residential units and approximately

30,000 sqft of commercial space

• Partnered with Metropolitan Housing Trust to agree the provision of 49 affordable units


St Anne House, Croydon

• Former Home Office government building and legacy Wichford asset originally built in 1960’s

• Asset management strategy to convert now obsolete offices into hotel and residential units

• Secured planning permission and agreed 20 year lease with hotel operator and £10m pre-sale of residential apartments

St Anne House

Westfield / Whitgift Centre

Note: All pictures are architect's impressions

UK Retail

Mike Watters and Nick Gregory

Grand Arcade Shopping Centre, Wigan


UK Retail

• Valuations stabilised +1.0% vs IPD Shopping Centres (-4.9%)

• Net income +1.58% vs IPD (-1.9%)

• Footfall (-2.6%) vs Experian (-3.8%)

• Sales +2.0% (BRC index +1.1%)

• Occupancy 95.9% up 0.7%

• 8 new leases signed +14,000 sqft net increase

• Key letting to Nandos at St Georges, Harrow

• Improvements in key operating metrics

• Continued investment and asset management

initiatives have been reflected in income and value

stability

2.2

0.8 0.4

2.5

1.2

0.4 0.4 0.7

3.9

8.1

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022+


36.1%

19.3%

12.9%

6.7%

4.5%

20.6% Wigan £7.4m

Coventry £3.9m

Birchwood £2.6m

Seaham £1.4m

Crewe £0.9m

Harrow £4.2m

Gross rental income


UK Retail portfolio

• St George’s Shopping Centre, Harrow

• Valued at £57.5 million (pre refurbishment/re-letting)

• 212,000 sq ft

• Vue Cinemas, Fitness First, H&M, Boots, T.K. Maxx, Prezzo, Pizza Express, Nandos

• Leisure focused retail scheme

• Grand Arcade Shopping Centre, Wigan

• Valued at £76.4 million

• 470,000 sq ft

• Debenhams, M&S, BHS, Monsoon, Next, T.K. Maxx

• Dominant city centre modern scheme

• West Orchards Shopping Centre, Coventry


• 210,000 sq ft

• Debenhams, M&S, Body Shop, WH Smith, KFC

• Dominant city centre scheme


UK Retail portfolio (cont)

• Birchwood Shopping Centre, Warrington


• 400,000 sq ft

• ASDA, Aldi, Argos, Home Bargains, New Look, QVC

• Retail park

• Byron Place Shopping Centre, Seaham


• 115,000 sq ft

• ASDA, Argos, Farmfoods, Peacocks, Wilkinson

• Retail park

• Delamere Place Shopping Centre, Crewe


• 180,000 sq ft

• BHS, Arriva

• Redevelopment


Seaham

• Dominant value and convenience centre anchored by ASDA

• Scheme five years old with opportunities for further investment

• Retail demand has driven Redefine International to progress development extension

• Currently in pre-application discussions with the supportive Durham Council

Options to extend

within existing

ownership


The changing face of retail

• The retail environment is undergoing structural change but is definitely not dead

• The internet has not destroyed retail, rather it has changed consumer behaviour

Understanding the impact of online retailing

• The internet is fundamentally an analytical past time and

shopping is an emotional and social experience

• The most successful retailers have embraced the “omni-

channel” experience and use it to drive sales e.g. John Lewis

and Apple

• Pure-play (internet only) retailers are finding a world without

“bricks and mortar” limits sales, i.e. these retailers will start to

acquire physical space to grow their brands

The perfect storm

• Years of carefree spending in the 1980s - 1990s and

careless spending in the 2000s pushed the retail

investment and development market to unsustainable

levels

• This was followed by the “perfect storm” with worldwide

economic problems, volatile commodity prices, negative

UK wage inflation, changing consumer habits, high

consumer debt and retailer insolvencies (often driven by

poor corporate management rather than a vulnerable retail

model)

• But retail from a consumer and investor perspective

remains an attractive proposition if the strategy is correct


Commercialisation

• Leveraging our experience to introduce high quality retail operations and complimentary uses

• Unique modular kiosks to reduce capex risk in the event of tenant default

• High quality commercialisation to drive additional income

Before After


Focused capital expenditure

• Economic use of capex to deliver the look and feel of a new

shopping centre

• New double height shop fronts

• New ceilings, lighting, pilasters and entrance to create a fresh

look

• “Soft re-launch” in Autumn 2013 including a well researched

new brand to ensure the correct “tone of voice”

• Focused capital expenditure to encourage retailers to invest in their stores

• Combined with a tenant and marketing strategy to drive sales turnover

• Strategies targeted at improving retailer sales increasingly important in relation to rental growth

Hotels

Mike Watters

Holiday Inn Express, Southwark


Hotels

• Portfolio strengthened with acquisition of Earls Court Holiday

Inn Express

• Marked increase in trading performance since June 2013

• New InterContinental Group open lobby concept completed at

Holiday Inn Brentford Lock

• Ongoing opportunities to leverage the management platform

• Current acquisition opportunities limited due to pricing and

limited availability

• Development of new product and extension of existing hotels

Focused strategy on limited service branded hotels in

London to capitalise on long-term growth in business

and leisure demand

90.6%

9.4%

Greater London £10.1m

Reading £1.0m

Gross rental income

Brentford Lock, Holiday Inn


Hotel portfolio

• Holiday Inn Brentford Lock

• Valued at £25 million

• 61,064 sq ft rentable area @ £24.56 per sq ft

• 134 bedrooms and 12,743 sq ft meeting room area

• Holiday Inn Express Earls Court



• 150 bedrooms and 226 sq ft meeting room area

• Holiday Inn Express Limehouse



• 150 bedrooms and 159.3 sq ft meeting room area


Hotel portfolio (cont)

• Holiday Inn Express Southwark



• 88 bedrooms

• Holiday Inn Express Park Royal



• 108 bedrooms and 1,371 sq ft meeting room area

• Holiday Inn Express Royal Docks





Hotel portfolio (cont)

• Crowne Plaza, Reading


• 34 047 sq ft rentable area @ £44.06 per sq ft


Cromwell

Mike Watters


Cromwell

• Record operating profit for FY2014 of A$102.4m

• FY2014 EPS guidance of 8.3 cents (+8.8%)

• FY2014 DPS guidance of 7.5 cents (+3.4%)

• Gearing reduced to 46% LTV

• A$641m of acquisitions provide significant opportunities

• Recent ASX 200 inclusion

• Opportunity to expand funds management

• Redefine Group to maintain a 25% - 30% shareholding

Cromwell has delivered exceptional income and

capital growth and remains well positioned to

outperform their A-REIT peer group

28%

25%

23%

20%

3% Queensland

£5.3m

Victoria £4.7m

ACT £4.4m

New South Wales £3.8m

Other £0.6m

Gross rental income

Notes:

(1) Cromwell data reflects share of underlying Cromwell portfolio as at 28 February 2013


0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

Dec 2

009

Jan

2010

Fe

b 2

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Ma

r 20

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Ap

r 201

0

Ma

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Jun

2010

Jul 2010

Au

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Se

p 2

010

Oct 201

0

Nov 2

010

Dec 2

010

Jan

2011

Fe

b 2

011

Ma

r 20

11

Ap

r 201

1

Ma

y 2

011

Jun

2011

Jul 2011

Au

g 2

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Se

p 2

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Oct 201

1

Nov 2

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Dec 2

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Jan

2012

Fe

b 2

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Ma

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12

Ap

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Ma

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Jun

2012

Jul 2012

Au

g 2

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Se

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Oct 201

2

Nov 2

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Dec 2

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Jan

2013

Fe

b 2

013

Ma

r 20

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Ap

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Jun

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Jul 2013

Au

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Cro

mw

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Sh

are

Pri

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AU

D

Cromwell Cromwell (GBP) ASX 200 Closing

Cromwell

• Identified as an undercapitalised company at the bottom of the cycle with a strong management team

• Provided strategic support as a cornerstone shareholder and underwriter to raise growth capital

• Remain a strategic shareholder (13.7%) together with parent company (12.4%)

Initial acquisition

of 12.97% at

$0.70

Sale of 84.5m

securities between

$0.90 and $0.94

Supported placement

and rights issue at

$0.72 – $0.75

Supported rights

issue at $0.71

Supported

entitlement offer

at $0.68

Supported

capital raising at

$0.79

• Share price (AUD) +40.5% since entry

• Share price (GBP) +49.2% since entry

Share price of $1.04 as at 6 September 2013

Financials


HY2013 results highlights

• Successful £127.5m capital raise and improved capital structure

• Improvements in key operating metrics

• Distributable EPS ahead of post capital raising consensus

• Distributable earnings delivered off a substantially stronger capital base

• Investment of capital raising proceeds yet to be fully reflected

Notes:

(1) Excluding the Delta portfolio

• EPS figures reflect 962,855,467 ordinary shares outstanding as at 28 February 2013 following the capital raise

Operating HY2013 FY2012 Change

Occupancy (by area) 95.9% 95.5% + 0.4 ppt

Indexation 58.4% 52.0% + 6.4 ppt

WAULT(1)

(years) 8.5 8.6 (0.1)

Income HY2013 HY2012 Change

Distributable earnings (£m) 14.4 12.9 + 11.6%

Distributable EPS 1.50 2.23 (32.7%)

Dividend per share 1.475 2.10 (29.8%)

Financial Position HY2013 FY2012 Change

Adjusted NAV per share 40.29 36.41 +10.7%

Group LTV 51.2% 81.7% (30.5) ppt


39.6 40.7

211.6

76.3

72.3

12.1

47.8

275.9

FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023+

Debt maturity profile (£m)

Debt position

• Group LTV reduced to 51.2% (43.6% excluding the Delta facility)

• See through LTV including share of JVs reduced to 61.9% (56.0% excluding the Delta facility)

• Debt maturity profile significantly enhanced to 8.2 years (excluding the Delta facility)

• Weighted average interest rate reduced to 4.3% (5.0% excluding the Delta facility)

• 99.9% of debt at fixed or capped rates

Note: The Delta facility remains non-recourse to the Group and is subject to an agreed sales process which will be utilised to repay debt

£81.1m remaining

Delta facility to be

sold down

(non-recourse) Discussions

underway to extend

or refinance £173.2m

of debt maturing in

FY2016


Lease expiry profile

• Strong income visibility

• Indexation increased to 58.4% of portfolio rental income

• Exposure to regional offices and Government occupiers significantly reduced

3.0 3.9

2.3

4.5

1.8

12.7

1.7 1.6

6.0

35.1

4.1%

5.4%

3.2%

6.2%

2.4%

17.5%

2.3% 2.3%

8.3%

48.3%

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022+

Lease expiry profile Gross income excl. Cromwell and Delta (£m)

UK Stable Income UK Retail Europe Hotels % of total

Note: Rental income reflects 100% of property assets including joint ventures


Looking Forward

• Finalise proposed corporate restructuring including inward listing

• Progress conversion to a REIT and management internalisation

• Continue to improve the quality of the portfolio and long-term income security and growth potential

• Selective redevelopment and investment into existing assets to support income growth

• Opportunistic approach to new acquisition opportunities

• Continue to recycle capital across the portfolio into performing sectors

• Manage risks (increasing interest rates, asset price bubbles)


Contacts

Mike Watters

Chief Executive Officer, RIPML

t: +44 (0)20 7811 0100

e: [email protected]

Stephen Oakenfull

Chief Operating Officer, RIPML

t: +44 (0)20 7811 0100

e: [email protected]

Redefine International P.L.C.

Top Floor, 14 Athol Street

Douglas

Isle of Man IM1 1JA

t: +44(0)1624 689 589

www.redefineinternational.com

Redefine International Property Management

Limited

2nd Floor, 30 Charles II Street

London SW1Y 4AE

t: +44 (0)20 7811 0100

44 Document name and description here 44 Retail Presentation – May 2013

Additional information


Business segments – portfolio metrics

Group Hotels

Gross asset value £1,099.4m Gross asset value £150.2m

Gross rent £91.4m Gross rent £11.1m

ERV £87.2m ERV £11.1m

Ave. rent per sq. ft 14.31 Ave. rent per sq. ft 38.6

Net intial yield (%) 7.3 Net intial yield (%) 7.0

Occupancy (by area) 97.0% Occupancy (by area) 100.0%

Total area (sq. ft '000) 6,389 Total area (sq. ft '000) 288

No. of assets 150 No. of assets 7

WAULT 8.5 WAULT 10.3

UK Stable Income Europe

Gross asset value £174.8m Gross asset value £372.6m


ERV £13.0m ERV £23.5m

Ave. rent per sq. ft 9.0 Ave. rent per sq. ft 12.9



Total area (sq. ft '000) 1,562 Total area (sq. ft '000) 2,092


WAULT 9.2 WAULT 7.1

UK Retail Cromwell Property Group

Gross asset value £226.3m Gross asset value £175.4m


ERV £20.9m ERV n/a

Ave. rent per sq. ft 12.8 Ave. rent per sq. ft n/a



Total area (sq. ft '000) 1,602 Total area (sq. ft '000) 846


WAULT 11.0 WAULT 6.0

Note: All figures are pro-forma reflecting the portfolio at 28 February 2013 and adjusting for subsequent acquisitions or disposals

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