Secure Income REIT Plc 8 September 2016 www.SecureIncomeREIT.co.uk - - PowerPoint PPT Presentation

Secure Income REIT Plc

8 September 2016

www.SecureIncomeREIT.co.uk

2

Disclaimer

The information contained in these slides and communicated verbally to you, including the speech(es) of the presenter(s) and any materials distributed at or in connection therewith (together the “Presentation”) is confidential. Reliance upon the Presentation for the purpose of engaging in any investment activity may expose an individual to a significant risk of losing all of the property or other assets

• invested. If any person is in any doubt as to the contents of the Presentation, they should seek independent advice from a person who is authorised for the purposes of the Financial Services and Markets

Act 2000, as amended (the “FSMA”) or otherwise suitably authorised if in another jurisdiction and who specialises in advising on investments of this kind. Any investment decision should not be made based on the content of the Presentation but be made solely on the basis of the announcement of the transaction to be published by Secure Income REIT Plc (the “Company”). The contents of the Presentation shall not be taken as any form of commitment on the part of any person to proceed with any transaction. The Presentation has been prepared by, and is the sole responsibility of, the Company. No undertaking, representation, warranty or other assurance, expressed or implied, is made or given by or on behalf

• f Stifel Nicolaus Europe Limited (“Stifel”), the Company or Prestbury Investments LLP (the “Investment Adviser”) or any of their respective shareholders, directors, employees, advisers, agents or affiliates
• r any other person as to the fairness, accuracy or the completeness of the information or opinions contained herein, and to the extent permitted by law, no responsibility or liability is accepted by any of

them for any such information or opinions. Notwithstanding the aforesaid, nothing in this paragraph shall limit or exclude liability for any representation or warranty made fraudulently. The Presentation has not been approved by the Financial Conduct Authority (the “FCA”) and does not constitute, or form part of, an admission document, listing particulars, a prospectus or a circular relating to the Company, nor does it constitute, or form part of, any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for any ordinary shares in the Company (the “Ordinary Shares”). Further, neither the Presentation nor any part of it, or the fact of its distribution, shall form the basis of, or be relied upon in connection with, or act as any inducement to enter into, any contract for Ordinary Shares. Any investment in Ordinary Shares should only be made on the basis of definitive documentation in final form. The Presentation contains illustrative returns based on certain assumptions relating to an extended future period and, accordingly, there is no guarantee that actual returns, if any, can be achieved at or near the levels set out in this Presentation. The estimates and assumption underlying the illustrative returns are inherently uncertain, are based on events that have not taken place and are subject to economic, competitive and other uncertainties and contingencies beyond the Company’s control. The illustrative returns have been prepared by the Company and should be read in conjunction with the assumptions included in this Presentation. It is emphasised that the illustrative returns, which are unaudited, do not constitute any form of forecast, whether of cash, profit or otherwise. Past performance is not a reliable indicator of future results. The value of shares or income from them may go down as well as up. The Presentation may not be copied, reproduced or further distributed, in whole or in part, to any other person, or published, in whole or in part, for any purpose without the prior written consent of the Company and is being made available on a strictly confidential basis. This Presentation has been prepared in relation to, and may only be considered in connection with, the proposed transaction that is outlined in this Presentation and more fully in the announcement made by the Company on 8 September 2016. The Presentation is being distributed in the United Kingdom only to, and is directed only at persons whose ordinary activities involve them in acquiring, holding, managing and disposing of investments as principal or agent for the purposes of their business and who have professional experience in matters relating to investments and are “qualified investors” as defined in section 86(7) of FSMA being persons falling within the meaning of Article 2(1)(e) of the Prospectus Directive (Directive 2003/71/EC) and who are also persons that: (i) have professional experience in matters relating to investments, being “Investment Professionals” (as defined in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order (the “FPO”)) or (ii) are “High Net Worth Companies” (as defined in Article 49(2) of the FPO). Persons who do not fall within either of these definitions should not rely on the Presentation nor take any action based upon it but should instead return it immediately to the Company. The Presentation is exempt from the general restriction in section 21 of the FSMA relating to the communication of invitations or inducements to engage in investment activity on the grounds that it is made only to certain categories of persons. The distribution of the Presentation in jurisdictions other than the United Kingdom may be restricted by law and persons into whose possession the Presentation comes should inform themselves about and

• bserve any such restrictions. In particular, neither the Presentation nor any copy of it should be distributed, directly or indirectly, by any means (including electronic transmission) to any persons in

Canada, Japan, Australia or the Republic of South Africa. The Presentation should not be distributed in or into the United States of America (or any of its territories or possessions) (together the “US”). The Ordinary Shares have not been, and will not be, registered under the US Securities Act of 1933, as amended or under the securities laws of any other jurisdiction, and are not being offered or sold (i) directly or indirectly, within or into the US, Canada, Japan, Australia or the Republic of South Africa or (ii) to, or for the account or benefit of, any US persons or any national, citizen or resident of the US, Canada, Japan, Australia or the Republic of South Africa.

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Disclaimer (cont’d)

The Company has not been approved by the Swiss Financial Market Supervisory Authority (FINMA) as a foreign collective investment scheme pursuant to Article 120 of the Swiss Collective Investment Schemes Act of June 23, 2006 (“CISA”). The securities proposed to be sold will be distributed in, into or from Switzerland (i) exclusively to regulated qualified investors as defined in Article 10(3)(a) and (b)

• f the CISA (“Regulated Qualified Investors”), and/or otherwise in a manner which does not constitute distribution within the meaning of the CISA, its implementing ordinance and guidelines and (iii) not in a

manner which constitutes a public offering within the meaning of Article 652a or 1156 of the Swiss Code of Obligations (“CO”). The securities proposed to be sole will not be listed on the SIX Swiss Exchange (“SIX”) or on any other stock exchange or regulated trading facility in Switzerland. This Presentation has been prepared without regard to the disclosure standards for prospectuses under the CISA. Article 552a or 1158 CO or the listing rules of SIX or any other exchange or regulated trading facility in Switzerland. This Presentation may be distributed or made available in, into or from Switzerland (i) only to Regulated Qualified Investors and/or otherwise in a manner which does not constitute distribution within the meaning of the CISA, its implementing ordinance and guidelines, and (ii) not in a manner which constitutes a public offering within the meaning of Article 652A or 1156 CO

• r the listing rules of SIX or any other exchange or regulated trading facility in Switzerland. This Presentation may be distributed or made available in, into or from Switzerland (i) only to Regulated Qualified

Investors and/or otherwise in a manner which does not constitute distribution within the meaning of the CISA, its implementation, ordinance and guidelines, and (ii) not in a manner which constitutes a public offering within the meaning of Article 652A or 1156 CO. Neither this Presentation nor any other offering or marketing material relating to the Company securities proposed to be sold have been or will be filed with, or approved by, any Swiss regulatory authority. The investor protection offered to investors of interests in collective investment schemes under the CISA does not extend to acquirers of the securities proposed to be sold. The securities proposed to be sold shall not be offered, sold, transferred or delivered, directly or indirectly, in the Netherlands, except to qualified investors (gelwalificaerde beleggers) within the meaning of section 1.1 of the Financial Supervision Act (Wet op het financiael toezicht) as amended from time to time. The Company is under no obligation to update or keep current the information contained in this Presentation or to correct any inaccuracies which may become apparent, and any opinions expressed in or are subject to change without notice. Neither the Company nor any of its directors, officer, employees or advisers accept any liability whatsoever for any loss howsoever arising from any use of this Presentation or its contents or otherwise arising in connection therewith. The Presentation contains forward looking statements. These statements relate to the future prospects, developments and business strategies of the Company. Forward looking statements are identified by the use of such terms as “believe”, “could”, “envisage”, “estimate”, “potential”, “intend”, “may”, “plan”, “will”, “should”, “expect”, “anticipate”, “predict”, “target” or variations or similar expressions, or the negative thereof. The forward looking statements contained in the Presentation are based on current expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by those statements. If one or more of these risks or uncertainties materialise, or if any underlying assumptions prove incorrect, the Company’s actual results may vary materially from those expected, estimated or projected. Given these risks and uncertainties, certain of which are beyond the Company’s control, potential investors should not place any reliance

• n forward looking statements. These forward looking statements speak only as at the date of the Presentation. Except as required by law, the Company undertakes no obligation to publicly release any

update or revisions to the forward looking statements contained in the Presentation to reflect any change in events, conditions or circumstances on which any such statements are based after the time they are made. Stifel, which is authorised and regulated in the United Kingdom by the FCA, is acting as bookrunner and nominated adviser connection with the matters referred to herein, and will not be responsible to anyone other than the Company for providing the protections afforded to its clients, nor for providing advice in relation to the contents of the Presentation or any transaction or arrangement referred to herein. Apart from the responsibilities and liabilities, if any, which may be imposed on Stifel by the FSMA or the regulatory regime established thereunder Stifel accepts no responsibility whatsoever, and makes no representations or warranty, express or implied, in relation to the contents of the Presentation, including the accuracy, completeness or verification or for any other statement made or purposed to be made by it, or on behalf of it, the Company, the directors, the Investment Adviser or any other person in connection with the Company, the Ordinary Shares or the matters referred to herein, and nothing in the Presentation is or shall be relied upon as a promise or representation in this respect, whether as to the past or future. Stifel accordingly disclaims all and any liability whether arising in tort, contract or

• therwise (save as referred to above), which it might otherwise have in respect of the Presentation or any such statement.

• A specialist in long term income streams from real estate investments offering shareholders an

attractive and growing dividend and TSR

• The only sector agnostic UK REIT investing only in real estate let on long leases, it has the longest

weighted average unexpired lease term of any large UK REIT

• Managed by an experienced Board and the strongly aligned Prestbury team with over £100m

invested in the Company and over 30 years’ experience in real estate investment and financing

Secure Income REIT Plc

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• £1.38¹ billion portfolio of healthcare and leisure assets
• Exceptional income security, with weighted average unexpired lease term of 23 years, and

financially strong tenants

• Highly predictable returns and growth from fixed and upwards only, uncapped RPI linked rental

uplifts and long term fixed rate debt

• Maiden quarterly dividend paid in August 2016: annualised at 11.75p per share; 3.9% yield on June

EPRA NAV

Snapshot

Strong balance sheet, well positioned for growth

5

¹External valuation of existing portfolio at 30 June 2016 (GBP/EUR exchange rate of €1:£0.8278 on £85.6m of German Investment Property)

30 June 2016 Results

• EPRA NAV as at 30 June 2016 of 300.2 pence per share, up 6.2% over the six month period
• Adjusted EPRA EPS¹ up 86% from 2.9p in six months to 31 December 2015 to 5.4p per share: positive impact of

degearing and lower financing costs

• Net loan to value ratio of 59.5%, down from 61.0% at 31 December 2015 and 80.0% at listing in June 2014
• Portfolio valuation up 2.1% since 31 December 2015 to £1.38 billion; net initial yield 5.3% and equivalent yield 6.3%

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30 June 2016 Unaudited 31 December 2015 Audited % change

EPRA Net Asset Value £541.5m £510.1m ↑ 6.2% EPRA Net Asset Value per share 300.2 282.8p ↑ 6.2% Adjusted EPRA EPS¹ 5.4p 2.6p Net Loan to Value ratio 59.5% 61.0% ↓ 2pp

258.5p 275.3p 282.8p 300.2p

220 240 260 280 300 320

Dec-14 Jun-15 Dec-15 Jun-16 69.7% 61.5% 61.0% 59.5%

55% 60% 65% 70% 75%

Dec-14 Jun-15 Dec-15 Jun-16

EPRA NAV per share Net LTV Adjusted EPRA EPS

¹ Adjusted to exclude the increase in rental income above cash rents received as a result of the accounting requirement to spread the impact of fixed rental uplifts over the lease term ² Pro forma figures adjusted for completion of the sale of Madame Tussauds and the refinancing of the Group’s entire debt, both of which occurred after the relevant balance sheet date

² ²

(0.3p) 2.9p 5.4p

(2.0p) 0.0p 2.0p 4.0p 6.0p

H1 2015 H2 2015 H1 2016

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The Proposition: acquisition of 55 Travelodge hotels and share placing

A highly complementary acquisition in line with Company strategy

• The portfolio:
• Investment portfolio of 55 Travelodge hotels
• 7% initial yield, increasing SIR rents by an expected £13.7m upon acquisition
• 27 years weighted average unexpired lease term on FRI leases with upwards only uncapped RPI linked rent

reviews

• Sourced as an off market transaction – key factor was prior ownership of Travelodges by Prestbury joint venture
• Total cost of £196.2m (including property acquisition costs) satisfied through:
• A placing of up to approx £140 million at pro forma EPRA NAV of 298.6p to raise £137.5m net of expenses

 Management and Board investing £5.4m at the Placing Price

• New non-recourse M&G debt facility at c. 31% LTC; expected fixed rate of c.2.75%; interest only for seven year

term; credit approved and in advanced stages of documentation

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Key benefits of the Transaction

• Shareholder return enhancing:

 dividend increasing by 14% from 3.9% to 4.5%¹ yield on 30 June EPRA NAV and the Placing Price respectively  distributions anticipated to grow at 6.5%¹ CAGR over six years  total shareholder return over six years estimated at c. 11%¹

• Improved diversification with Travelodge Hotels Limited representing 15% of enlarged portfolio rent and

12% of pro forma gross asset value

• Further reduction of gearing with Net LTV reducing from 59.5% to 56.0%

¹See assumptions on page 23 of this presentation

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Travelodge Covenant

A leading brand and recently refurbished estate

Travelodge Hotels Limited

• Strong market position with 18m customers, 525 hotels and over 39,000 rooms at 31

December 2015

• Brand recognition by over 90% of the UK population
• Strong growth since 2012 investment by new shareholder consortium, with results for the

year ended 31 December 2015 showing:

• revenue up 12.6% to £559.6m from £497.2m in 2014
• EBITDA up 58.8% to £105.1m from £66.2m in 2014
• RevPAR (revenue per available room) up 11.7% like for like, compared to overall UK

hotel market of 4.2%

• £100m modernisation programme completed in 2015 refurbishing c. 35,000 rooms including

all hotels in the target portfolio and substantial investment in yield management system,

• nline platform and marketing, driving improved financial results and significantly improved

customer satisfaction

• Moody’s B3 and S&P B- ratings following April 2016 issue of £390m seven year bonds

completely refinancing existing group debt at lower cost

• Owned by a consortium of investors comprising GoldenTree Asset Management, Avenue

Capital Group and Goldman Sachs Group with certain members of the Travelodge management team holding 10.4% of the company via its equity incentive programme

UK hotels market

• Long term track record of growth in UK hotel market: CAGR of 2.7% in

RevPAR over the last decade, notwithstanding the 2007-9 recession

• Value branded sector comprised c. 19% of UK hotel supply in 2014

compared to c. 24% in France and c. 33% in US, implying scope for further growth

Edinburgh Central

Travelodge Portfolio

Inflation linked, long term income from one of the UK’s leading budget hotel brands

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1 Employs RPI swap curve at 30 August 2016 2 By number of rooms and hotels operated

• 55 Hotels with 3,096 rooms, spread across England and Scotland
• 68.6% freehold / virtual freehold
• average lot size: £3.5m
• 27 year weighted average unexpired lease term
• no lease shorter than 22 years
• no break clauses
• Five yearly RPI upwards only rent reviews
• £192.6m contract price and estimated £13.7m1 initial income at completion;

yield of 7.0% 1 expected to rise to 7.3% 1 in October 2017

• Each hotel let to Travelodge Hotels Ltd – the UK’s second largest budget

hotel brand2 and its biggest independent brand with 525 hotels and over 39,000 rooms

• Range of yields on Travelodge transactions over the past nine months of

4.2% to 6.0% (analysis overleaf)

Freehold 60% 999 yrs 9% 100-165 yrs 7% 80-95 yrs 17% 40-80 yrs 7%

Tenure (by value) Property type (by value)

City centre 30% Edge of town 18% City roadside 24% Roadside 28%

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Comparable Transactions

Sale Type Rooms Reported sale price (£m) Yield (%)

Jul-16 Travelodge London Liverpool Street Investment 142 42.3 4.6 Jun-16 Travelodge Royal Scot - Kings Cross Investment 408 70.0 4.2 Apr-16 Travelodge Sites Portfolio (Weston-super-Mare, Andover, Stirling, Kings Lynn) Forward Funding 302 19.8 6.0 Mar-16 Travelodge Hackney Investment 80 13.5 5.9 Jan-16 Travelodge Crawley Investment 110 42.5 5.8 Dec-15 Travelodge Sunbury M3 Hotel Investment 131 13.0 4.7 Dec-15 Travelodge Teddington Investment 113 13.7 4.6 Proposed Acquisition 3,096 192.6 7.0 This table includes a sample of illustrative Travelodge transactions that the Company is aware of. It does not purport to show all the transactions involving Travelodge properties.

North 5% East Midlands 9% West Midlands 4% South East 35% South West 16% North West 15% Scotland 16%

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Travelodge Portfolio Analysis

Attractive portfolio diversified by location, type and value

Lot size (by value) Location (by value) Location (by rent)

£14-20m 26% £5-8m 25% £3-5m 27% £0-3m 22%

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Travelodge Portfolio Returns

Six year portfolio IRR¹,² estimate RPI Assumptions RPI Curve +1% Base case: RPI curve RPI curve –1% Zero or lower RPI 6% 16.3% 15.1% 13.9% 11.3% 6.5% 14.8% 13.5% 12.3% 9.7% 7.0% 13.3% 12.1% 10.8% 8.2% 7.5% 12.0% 10.7% 9.5% 6.8%

There is no certainty that these estimated returns will be achieved

1 Above analysis is of portfolio level returns before central and administrative costs 2 See assumptions 1, 4 and 6 on page 23 of this presentation

Assumed net initial yield at 30 September 2022 valuation

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Travelodge Portfolio

Manchester Central Glasgow Central Oxford Peartree Nottingham Riverside

40% 45% 50% 55% 60% 1,200 1,300 1,400 1,500 1,600 1,700 1,800 1,900 Sep-16 Sep-17 Sep-18 Sep-19 Sep-20 Sep-21 Sep-22

£m

Portfolio Valuation (£m) Net LTV (%)

15 There is no certainty that these illustrative projections will be achieved

c.50% Net LTV by March 2020 - accelerated by c.24 months

Illustrative Portfolio Valuation and Net LTV at Constant Valuation Yield¹

Impact of transaction

• Immediate reduction in net

LTV from June 2016 59.5% to 56.0%

• Accelerates timing to

achieve c.50% net LTV by c.24 months

• Cost of new debt expected

to be fixed at drawdown – estimated at 2.75% reducing weighted average fixed rate from 5.2% pa to 5.1% pa

• Covenant headroom

consistent with existing facilities

• New lender - competitive

process with strong interest from institutional and bank lenders

1 See assumptions 1, 2, 3, 4, 5 and 6 on page 23 of this presentation

Contracted uplifts drive valuation growth at constant yields, reducing gearing

10 12 14 16 18 20 Sep-16 Sep-17 Sep-18 Sep-19 Sep-20 Sep-21 Sep-22

Distributions per share (pence) RPI Swap Curve Zero or lower RPI growth RPI Swap Curve + 100 bps

7.0% 6.5% 4.3%

16

Distribution Policy offering highly visible dividend growth

Geared returns drive an attractive and growing income profile

Distribution Policy

• Following completion of placing and

acquisition, distribution to increase to annualised 13.3p per share: first increased payment in Q1 2017

• Following distribution of enhanced net

income, dividend yield of c.4.5% on Placing Price of 298.6p

• Illustrative 6 year dividend growth CAGR

(2016-2022) of 6.5% on base case assumptions¹

• Pay-out ratio higher of 1x earnings cover

and minimum REIT pay-out²

There is no certainty that these illustrative returns will be achieved

6 yr CAGR Oct 2016 – 22 Source: RPI swap curve, company data

Illustrative growth in distributions on range of RPI assumptions

¹ See all assumptions on page 23 of this presentation

2 IFRS rent smoothing currently flatters earnings so is excluded from cover calculation

Merlin 34% Ramsay 49% Orpea 2% Travelodge 15% Merlin UK assets 28% Ramsay Hospitals 52% Orpea: London Psychiatric Hospital 3% Travelodge Hotels 12% 17

Enlarged Portfolio

Multi sector portfolio underpinned by strong tenant covenants

 Enlarged portfolio total rent £92.4m from key operating assets with income security from strong operating businesses underpinning £1.57bn1 of property value

• 49% of rent guaranteed by Ramsay Health Care Limited: £9.3bn

market capitalisation ASX 50 company and one of the top 5 private hospital operators in the world

• 34% of rent guaranteed by Merlin Entertainments Plc, FTSE 100

company with £5.0bn market capitalisation: second largest visitor attractions company in the world and largest in Europe

• 15% of rent guaranteed by Travelodge Hotels Ltd, a well-

capitalised business with 2015 revenues of £560m and £105.1m EBITDA; one of the UK’s top two budget hotel brands

• 2% of rent guaranteed by Orpea SA, mental health and aged care

specialists, listed on Euronext with £4.1bn market capitalisation

• 58% of rent subject to fixed annual uplifts, 42% to RPI

Post Acquisition: £1.57bn Portfolio Value1

Sources: Bloomberg market data as at 07 September 2016 using GBP/AUD exchange rate of A$1:£0.5729 and GBP/EUR exchange rate of €1:£0.8425

1 External valuation of existing portfolio at £1,378.5m at 30 June 2016 (GBP/EUR exchange rate of €1:£0.8278 on £85.6m of German Investment Property) plus £192.6m

Travelodge acquisition at cost excluding purchase costs Merlin German assets 5%

Post Acquisition: £92.4m rent

298.6 320.3 338.3 357.2 379.0 405.4 431.1 12.3 27.2 42.9 59.5 77.3 96.8

100 200 300 400 500 600 Pro forma 30-Sep-17 30-Sep-18 30-Sep-19 30-Sep-20 30-Sep-21 30-Sep-22 Accumulated dividends (pence) EPRA NAV per share (pence)

Enlarged Portfolio anticipated to deliver attractive total shareholder returns

18

¹See all assumptions on page 23 of this presentation Pence per share NET LTV 56% 54% 53% 51%

49% 48% 46%

Estimated Base Case TSR assuming constant valuation yields and base case RPI curve¹

There is no certainty that these illustrative projections will be achieved

Total Shareholder Return Scenarios

Attractive growth prospects on steady state portfolio basis

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TSR (Sept 2016 – Sep 2022)1 Property Valuation Yield (net) RPI Curve +1% Base case: RPI curve RPI curve –1% Zero or lower RPI

• 50 bps

14.3% 13.7% 13.0% 11.4%

• 25 bps

12.9% 12.3% 11.5% 9.9% Base case 5.4% 11.5% 10.9% 10.1% 8.4% +25bps 10.2% 9.5% 8.7% 7.0% +50 bps 8.9% 8.2% 7.4% 5.6% Base Case

• Base case 10.9% TSR from 30 September 2016 to 30 September 2022 assuming investment at Placing

price and final valuation at EPRA NAV

• Assumes a constant valuation yield of 5.4% on the combined portfolio

There is no certainty that these illustrative returns will be achieved

1 See all assumptions on page 23 of this presentation

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Conclusion

 Strong, growing dividend at c.4.5%¹ annualised yield on Placing price  On steady state, highly predictable illustrative six year annual Total Shareholder Return of c. 11%¹  Defensive portfolio underpinned by high quality long term income  Strongly aligned management team with a long term proven track record and experienced board  Firm intention to seek further growth opportunities

¹See assumptions on page 23 of this presentation

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Placing Summary

Issuer

 Secure Income REIT Plc  Ticker: SIR  UK REIT, traded on AIM

Placing Price

 Placing of up to 46,885,466 ordinary shares raising gross proceeds of £140.0 million  Placing Price of 298.6 pence per share in line with pro forma NAV per share

Timetable

 Placing opens: 8 September 2016  Placing closes: 1pm on 3 October 2016  Admission and settlement: 6 October 2016

Offer Structure

 Non pre-emptive placing to qualified institutional investors  Outside the US in reliance on Regulation S  Following Admission, the Placing Shares will rank pari passsu with existing shares

Contact Details

Stifel Nicolaus Europe Limited Mark Young 020 7710 7633 David Arch 020 7710 7616 Peter Lees 020 7710 7490 Tom Yeadon 020 7710 7480 Neil Winward 020 7710 7460 Rob Tabor 020 7710 7669

Appendices

Assumptions

1. Employs RPI swap curve at 30 August 2016, averaging increases of 3.1% per annum over the period 2. Constant valuation yield at 30 June 2016 external valuation for existing portfolio and valuation yield at purchase for Travelodge portfolio 3. Only fixed uplifts on Ramsay leases, ignores potential for open market uplifts 4. Completion of Travelodge acquisition on 30 September 2016 otherwise no purchases or sales of properties or lease variations 5. Constant Euro exchange rate of €1:£0.8278 6. Fixed rate of Travelodge acquisition debt assumed at 2.75% p.a – to be fixed at completion on basis of 7 year swap rate assumed for these purposes to be 0.75% 7. Incentive fee arrangements currently in place are not amended at the Independent Directors’ 2017 review 8. Valuation shift on sensitised valuation scenarios occur on last day of calculation period 9. Management contract continues on current terms for four months from expiry in June 2022 10. Earnings cover based on the adjusted earnings to exclude increase in rental income from rental smoothing IFRS adjustment 11. Completion of placing on 30 September and revaluation at EPRA NAV on 30 September 2022 12. The Placing comprises the issue of 46,885,466 ordinary shares at 298.6 pence per share If the gross proceeds of the Placing total less than £140 million, but exceed £117.1 million the Company may consider completing the Transaction using existing cash reserves. In these circumstances the illustrative returns in this announcement would change. On the basis of a Placing size of £117.1m and using the assumptions above, the illustrative pro forma EPRA NAV on completion

• f the Transaction would be 298.8 pence per share, the LTV 57.4%, the base case annual Total Shareholder Return over six

years would be 11.2% whilst the expected dividend yield on the Placing Price would increase to 4.6% and the dividend would be expected to grow at a compound rate of 6.3% over the six years following completion of the Transaction.

23

24

The Healthcare Portfolio

 19 private hospitals valued at £809.6m at 30 June 2016 representing 59% of current portfolio value generating £45.6m

• f passing rent

 Well located throughout England  Key operating assets representing 61%1 of Ramsay’s UK

• perations

 Let on individual fully repairing and insuring leases with a current term to expiry of 21 years without break clauses  Rent increases by a fixed 2.75% per annum throughout the lease term in May each year and potential open market rent catch up at landlord’s option in 2017 and 5 yearly thereafter  Guaranteed by Ramsay Health Care Limited

Ramsay

Healthcare Portfolio Net Initial Yield of 5.2% as at 30 June 2016

1 By number of UK assets: Ramsay operates 36 medical facilities in the UK (Annual Report 2015) of which 5 are treated as forming part of a single hospital in the

company’s portfolio.

 Let to a UK subsidiary of Groupe Sinoué on a fully repairing and insuring lease for 28 years  Central London’s only private psychiatric hospital – located in Lisson Grove, near Marylebone station  Rent increase of 3.0% in May each year  Guaranteed by Orpea SA  Valued at £40.0m at 30 June 2016, representing 3% of current portfolio value generating £1.9m of passing rent

London Psychiatric Hospital

Ashtead Hospital Duchy Hospital Euxton Hall Hospital Fitzwilliam Hospital Fulwood Hospital Mount Stuart Hospital Nightingale Hospital North Downs Clinic 2 1 3 4 5 6 7 8 Oaklands Hospital Oaks Hospital Pinehill Hospital Reading Hospital Renacres Hospital Rivers Hospital Rowley Hospital Springfield Hospital 10 9 11 12 13 14 15 16 West Midlands Hospital Winfield Hospital Woodland Hospital Yorkshire Clinic 18 17 19 20

Ramsay Health Care Portfolio London Psychiatric Hospital

20 2 3 4 5 6 8 9 10 11 12 13 14 15 16 17 18 19 1 7 Liverpool Manchester Sheffield London Leeds Cambridge Bristol United Kingdom Birmingham

25

The Leisure Portfolio

4 Germany Hamburg Berlin Munich Hanover Düsseldorf Frankfurt Nuremberg Alton Towers Theme Park and Alton Towers Hotel Thorpe Park Warwick Castle 1 2 3 Heide Park Theme Park and Heide Park hotel 4

Overview

 Valued at £528.8m1 at 30 June 2016 valuation representing 38% of current portfolio generating £31.2m of passing rent2.

• UK:

− Alton Towers Park and Hotel, Thorpe Park, Warwick Castle − Alton Towers and Thorpe Park are 2 of top 3 theme parks in the UK3

• Germany:

− Heide Park attractions and hotel

• Visitor attractions account for 82% of passing rent and

hotels 18%  Individual fully repairing and insuring leases with:

• Average unexpired lease term of 26 years
• Upwards only uncapped RPI-linked rent reviews every

June for the UK portfolio

• Fixed annual increases of 3.34% every July for the German

properties  Guaranteed by Merlin Entertainments Plc

1 Includes £85.6m of German assets valued in Euros and translated at €1 : £0.8278 2 Includes £5.7m of rent from German assets denominated in Euros and translated at €1 : £0.8278 3 The Global Attractions Attendance Report 2014.

Leisure Portfolio Pro forma Net Initial Yield of 5.5%

1 2 3 Liverpool Manchester Sheffield London Leeds Bristol United Kingdom Birmingham Cambridge

26

Travelodge Hotels Limited: Further background (1)

• The listing particulars issued by Travelodge on 21 June 2016 in connection with the group’s £390m bond issue

identified the following key business strengths:

• “Strong market dynamics for growth in Value Hotel Sector
• Strong market position with high brand recognition, scale and extensive diversified network of hotels
• Well invested portfolio with strong quality levels
• Operational improvements and powerful direct distribution model drive strong financial performance
• Tight cost control and low upfront capex leasehold model drive strong profitability and cash flows
• Growing and high quality rooms pipeline
• Experienced management team with a track record of delivering operational and financial improvements”

27

Travelodge Hotels Limited: Further background (2)

• Key financial data extracted from Travelodge listing particulars dated 21 June 2016:

Years ended 31 December 2013 2014 2015

Revenue £432.6m £497.2m £559.6m EBITDA before IFRS rent smoothing £40.5m £66.2m £105.1m EBITDAR £185.1m £215.1m £261.6m Net cash flow from operating activities £35.8m £67.9m £118.1m Post bond issue pro forma: net senior secured debt £342.4m net senior secured debt: EBITDA 3.3x net third party debt £373.5m net third party debt: EBITDA 3.6x cash interest expense £34.3m EBITDA: cash interest expense 3.1x

28

Travelodge Hotels Limited: Further background (3)

• Key performance indicators for Travelodge UK leased estate:

Years ended 31 December 2013 2014 2015

Number of hotels 478 482 494 Rooms available 35,552 35971 36,924 Occupancy 74.3% 75.5% 76.5% Average Daily Rate £39.51 £45.50 £50.19 Rev PAR £29.36 £34.36 £38.39 Rent cover 1.3x 1.4x 1.7x

1 External valuation of existing portfolio at £1,378.5m at 30 June 2016 (GBP/EUR exchange rate of €1:£0.8278 on £85.6m of German Investment Property) plus £192.6m Travelodge

acquisition at cost excluding purchase costs

2 £1.4m of costs relating to the Acquisition, principally legal due diligence and documentation costs, had been incurred by 30 June 2016 and have been charged to the income statement in that

• period. Should the transaction not proceed, £3.0m of payments will be due to the vendors and further due diligence and documentation costs of approximately a further £1.0m would become

due

3 Includes Euro denominated debt of £59.4m translated at €1:£0.8278 4 Other includes trade and other receivables, current tax asset and trade and other payables 5 Based on 180,344,240 shares currently in issue; 227,229,706 shares in issue following Placing

Pro Forma EPRA NAV

29

June 2016 EPRA NAV Placing Debt financing Acquisition Pro forma £m £m £m £m £m Portfolio at Valuation1 1,378.5 192.6 1,571.1 Travelodge transaction costs² (1.4) 1.4

• Fixed Rate Debt3

(909.3) (60.0) (969.3) Prepaid finance fees 13.2 1.3 14.5 Cash 89.6 137.5 58.7 (196.2) 89.6 Rent Deposits

• 1.7

1.7 Other4 (29.1) (29.1) EPRA NAV 541.5 137.5

• (0.5)

678.5 EPRA NAV (p per share) 5 300.2 298.6 Net LTV (%) 59.5% 56.0%

30

30 June 2016 Travelodge Portfolio Blended Net Debt1 £819.7m £60.0m £879.7m Net LTV 59.5% 30.5% 56.0 % Weighted average term to maturity from 30 June 8.0 years 7.0 years 7.7 years Weighted average coupon 5.2% 2.75%² 5.1%

• All debt is non recourse: no Plc assets at risk and portfolio ring-fenced with no cross collateralisation
• No default tests on 61% of total portfolio debt until Sept 2019 and 39% with no LTV default

throughout 7 year term

• New facility covenant headroom consistent with existing debt: day one valuation would need to fall by
• 22% to trigger partial cash trap;
• 31% to trigger full cash trap; and
• 38% to trigger default;
• unlimited LTV cash cure rights; ICR covenants set with significant headroom – able to tolerate
• ver 50% fall in rental income before triggering ICR covenant

Pro Forma SIR Net Debt

1 Includes Euro denominated debt of £59.4m translated at €1:£0.8278 ² Interest rate on Travelodge debt assumed at 2.75% pa – to be fixed at completion on basis of 7 year swap rate assumed for these purposes at 0.75%

31

Earnings and Cash Flow

 Key earnings and cash flow data:

• Portfolio passing rent of £78.5m p.a. as at 30 June 2016 increasing to £92.4m

p.a following Travelodge acquisition

‒

Note: turnover in income statement will “smooth” impact of fixed uplifts with compensating adjustment through property valuation movement

• Interest payable of 5.2% p.a: c.£47.5m p.a. currently; 5.1% pa coupon and c.

£49.2m pa post acquisition

• Administrative expenses principally borne by Prestbury and covered by advisory

fee of 1.25% to 0.75% of EPRA NAV on sliding scale

‒

Post acquisition NAV of £678.5m results in illustrative £8.0m p.a. (£500m at 1.25% + £178.5m at 1.0%)

• Other administrative expenses c.£1.2m p.a. in year to 31 December 2015

expected to increase by c. £0.5m following acquisition

• Tax efficiency of UK REIT structure: no UK tax payable; tax payable on German

net income of c.£0.2m p.a. in year to 31 December 2015

• FRI leases: no capex and minimal property running costs
• Deal related one off costs may arise such as £2.1 million placing costs in March

2016 and £1.4 million of costs relating to Travelodge transaction in June 2016

• No historic accounts cover a full period showing effect of sales and financing

Growing min. 1.6% p.a., average 3.0% p.a. with RPI1

1 Employs RPI swap curve at 30 August 2016, averaging 3.1% per annum

.

Moves in line with EPRA NAV Fixed until Oct-2022

2,000 3,000 4,000 5,000 Nov-2013 Jul-2014 Apr-2015 Dec-2015 Aug-2016 IPO in Nov-2013 38.4% 2.3% 2.6x 2.3x 2.3x 1.0x 1.5x 2.0x 2.5x 3.0x FY-13 FY-14 FY-15

32

Largest Tenants: Financial Track Records

Ramsay Health Care Limited Merlin Entertainments Plc

Market Capitalisation (£m)2 EBITDA (£m)1 Net Debt / EBITDA (x)3

Ramsay Health Care Limited ASX 200 Merlin Entertainments Plc FTSE 100 Sources: Company filings, Bloomberg Note: The information has been extracted from public sources, but has not been independently verified

1 Ramsay EBITDA is reported by the company, defined as “profit from continuing operations before interest, tax, depreciation, amortisation and non-core items”, and is converted to GBP from AUD using a GBP/AUD

exchange rate of A$1:£0.5745 as of 30-Aug-2016. Merlin EBITDA is based on company reported “Underlying EBITDA” for 2008-2015 (in FY 2015 Results for 2015 EBITDA, in 2014 Annual Report for 2010-2014 EBITDA, and in Merlin Prospectus for 2008-2009 EBITDA), and based on “EBITDA excluding exceptional items” for 2007 (Annual Report 2008). Ramsay and Merlin accounts are prepared in compliance with IFRS.

2 Ramsay market capitalisation converted to GBP from AUD using a GBP/AUD exchange rate of A$1 : £0.5745 as of 30-Aug-2016. ASX 200 and FTSE 100 are indexed to Ramsay Health Care Limited and Merlin

Entertainments market capitalisation respectively.

3 Ramsay net debt is calculated as current and non-current interest-bearing loans and borrowings less cash and cash equivalents. Merlin net debt is reported by the company. EBITDA for both Merlin and Ramsay are

provided based on footnote 1. £ 171 £ 203 £ 236 £ 256 £ 296 £ 346 £ 390 £ 411 £ 402 200 400 600 FY-07 FY-08 FY-09 FY-10 FY-11 FY-12 FY-13 FY-14 FY-15 £ 97 £ 145 £ 156 £ 197 £ 236 £ 269 £ 302 £ 335 £ 361 £ 432 £ 636 £ 729 200 400 600 800 FY-05 FY-06 FY-07 FY-08 FY-09 FY-10 FY-11 FY-12 FY-13 FY-14 FY-15 FY-16

Psychiatric Hospital Group (France) Generale de Sante Majority Stake in Groupe Procliff (France) HPM Group Capio Acquisitions Affinity

8.0x 3.1x 2.6x 3.7x 3.4x 2.5x 2.0x 1.6x 1.6x 1.6x 2.6x 2.5x 0.0x 2.0x 4.0x 6.0x 8.0x 10.0x FY-05 FY-06 FY-07 FY-08 FY-09 FY-10 FY-11 FY-12 FY-13 FY-14 FY-15 FY-16

Psychiatric Hospital Group (France) Generale de Sante Acquisitions Majority Stake in Groupe Procliff Affinity Capio HPM Group

5,000 10,000 Aug-2007 Aug-2010 Aug-2013 Aug-2016 813.3% 9.5 %

Defensive Characteristics

33

1 The Global Attractions Attendance Report 2014.

• Key operating assets – a significant and profitable part of each tenant’s business
• Healthcare:
• Ageing UK population has increasingly complex acute care needs, underpinning demand
• NHS resources challenged with demand and public infrastructure does not support seasonal fluctuations in

demand

• Patient choice appears to be embedded in NHS ethos: Ramsay are industry leaders with majority of UK revenues

from NHS

• Planning and regulatory restrictions create barriers to entry
• Benefit of global spread of Ramsay covenant where majority of Ramsay’s assets are owned not leased
• Leisure:
• Two of the UK’s top three theme parks1
• Market trends show growing leisure spending and an expansion of leisure time
• Barriers to entry created by planning restrictions, substantial initial capital investment requirements and long

construction lead times

• Merlin’s global spread and balance of indoor/outdoor attractions and offerings over various age ranges provide

income protection

• Majority of guarantor group assets are owned, not leased

34

Highly Experienced Board: Independent Directors

Experienced Independent Directors Governance Structure Strongly Aligned with Shareholder Interests

 Board structure

• Chairman highly experienced in long lease sector and independent of managers
• 4 independent non-executive directors (including Chairman)
• 3 management representatives on Board (Nick Leslau, Mike Brown and Sandy Gumm) which must be in minority for all meetings

 Senior advisor to KKR and non-executive director at SEGRO Plc since July 2014  Chairman of M&G Real Estate until 2013 and CEO from 1996 to 2012  Past President & board member of British Property Federation  Chartered Surveyor  Non-Executive member of HMRC Risk & Audit Committee  Non-executive Chairman of The Risk Advisory Group  Treasurer to TRH the Prince of Wales and the Duchess of Cornwall 2005 to 2012  Former head of international expatriate tax at KPMG  Chartered Accountant  Senior Advisor to Morgan Stanley & Chairman (and former Co-head) of EMEA Real Estate Investment Banking  Non-Executive Director of Grosvenor Europe & Grosvenor Liverpool Limited and the advisory board of Resolution Real Estate Advisers  Policy Committee member of the British Property Federation, member of the Bank of England Commercial Property Forum  Senior Adviser to Wells Fargo Securities  Chairman of The Prince’s Regeneration Trust. Past President of British Property

• Federation. Past Chairman of

Investment Property Forum  Former Chairman of Bank of England Commercial Property Forum  Former MD & Chairman of Credit Suisse European Real Estate Investment Banking Jonathan Lane Nominations Committee Chair Ian Marcus Remuneration Committee Chair and Senior Independent Director Leslie Ferrar, CVO Audit Committee Chair Martin Moore Chairman

35

A Proven Management Team with 110+ Years Combined Experience

Strong Manager Alignment

 Management team members have a strong track record of long-term investment in the companies they have managed (Burford, Prestbury, Helical Bar, Max Property Group Plc)

 Over 30 years’ real estate experience (Secure Income REIT Plc, Max Property Group Plc, Prestbury Group Plc, Burford Holdings Plc)  Extensive Plc board experience both as executive and non- executive  BSc (Hons) Est Man, FRICS  Over 30 years’ real estate experience in funds and listed companies (Secure Income REIT Plc, Max Property Group Plc, Helical Bar plc, Threadneedle)  BSc (Hons) Land Man, MRICS  Over 20 years’ experience in property finance with extensive Plc board experience (Secure Income REIT Plc, Prestbury Group Plc, Burford Holdings Plc)  9 years with KPMG in Sydney and London  BEc, CA (ANZ)  Over 25 years’ experience as a Chartered Surveyor (Secure Income REIT Plc, Prestbury Group Plc, Jones Lang LaSalle, Hill Samuel Asset Management, MEPC)  MA Hons (Cantab), MRICS  Over 10 years’ experience in property investment, refurbishment and design  BSc (Hons) Est Man, MRICS Nick Leslau Prestbury’s Chairman Mike Brown Prestbury’s CEO Sandy Gumm Prestbury’s COO Tim Evans Prestbury’s Property Director Ben Walford Prestbury’s Senior Surveyor

Overseeing an experienced team of finance, property and administrative staff

25 50 75 100 Dec-1997 Dec-1998 Dec-1999 Dec-2000 Dec-2001 Dec-2002 Dec-2003 Indices Rebased to Prestbury NAV Per Share 36

A Proven Track Record of Delivering Shareholder Returns

Max Properties – Average Total Return of 17.1% p.a. (May-2009 – Sep-2014) vs. Peer Group1

De-listing and disposal of majority

• f portfolio

25% p.a. returns

Prestbury Group Plc: Average Total Returns of 25% p.a. (1997 – 2003) Burford Holdings Plc – Total Returns of 34% p.a. (1987 – 1997)

A B C

Sources: Data compiled from company announcements and annual reports over the following periods: Max Property Group Plc (May 2009 to September 2014); London & Stamford Property Plc (May 2009 to September 2012); Metric Property Investments Plc (March 2010 to September 2012); LXB Retail Properties Plc (October 2009 to September 2014); LondonMetric Property Plc (January 2013 to September 2014); New River Retail Ltd (September 2009 to September 2014); and Conygar Investment Company Plc (May 2009 – September 2014). LondonMetric Property Plc was not listed as a cash shell but created through the merger of London & Stamford Property Plc and Metric Property Investments Plc which were listed in 2007 and 2010 respectively.

 The Prestbury Team has a strong track record including, between them, the management of three listed real estate investment vehicles, Burford Holdings Plc, Prestbury Group Plc and Max Property Group Plc

Prestbury Team Track Record

250 500 750 1,000 1,250 1,500 Dec-1986 Dec-1988 Dec-1990 Dec-1992 Dec-1994 Dec-1996 Rebased to 100 Burford NAV Progression Peers NAV Progression 34% p.a returns 8.2% p.a returns 14.6x 2.0x

NAV per share Distributions Previous Distributions FTSE 350 Real Estate Index

17.1% 15.6% 9.2% 8.2% 6.6% 6.1% 5.1% Max London Metric (Jan-13 - Sep-14) London & Stamford (May-09 to Sep-12) LXB Metric Retail (Mar-10 to Sep-12) NewRiver Retail Conygar Average NAV Total return per Share

37

Management Team Strongly Aligned with Shareholders

 Management Team has among the largest shareholdings in the quoted UK Real Estate sector and intends to remain among the largest following a potential placing  Prestbury exclusively offers all qualifying long lease deals to the Company  Contract term to June 2022 – no renewal rights or termination payment at end of term  Incentive to achieve above target returns via incentive share awards of 20% of above target growth:

• Target is higher of 10% above year end EPRA NAV and EPRA NAV at time of last incentive share award
• Paid in shares subject to lock-in
• Following equity issue, EPRA NAV plus distributions of over 311.6 p per share / £708.0 million to be

exceeded before incentive earned for 2016: not achieved on base case

• Fee arrangements have always included Independent Director review of incentive arrangements in June

2017  Management meets overhead costs and receives advisory fee on sliding scale relative to EPRA NAV: paid in cash quarterly 1.25% p.a. up to £500m, plus 1.0% p.a. between £500m – £1.0bn, plus 0.75% p.a. thereafter