Investor Presentation November 2018

Transcription

1 Investor Presentation November 2018

2 FORWARD LOOKING STATEMENTS Certain statements contained in this document constitute forward-looking information within the meaning of securities laws. Forward-looking information may relate to Choice Properties REIT s (the Trust ) future outlook and anticipated events or results and may include statements regarding the financial position, business strategy, budgets, litigation, projected costs, capital expenditures, financial results, taxes, plans and objectives of or involving the Trust. Particularly, statements regarding future results, performance, achievements, prospects or opportunities for the Trust or the real estate industry are forward-looking statements. In some cases, forward-looking information can be identified by such terms such as may, might, will, could, should, would, occur, expect, plan, anticipate, believe, intend, estimate, predict, potential, continue, likely, schedule, or the negative thereof or other similar expressions concerning matters that are not historical facts. The Trust has based these forward-looking statements on factors and assumptions about future events and financial trends that it believes may affect its financial condition, results of operations, business strategy and financial needs, including that the Canadian economy will remain stable over the next 12 months, that inflation will remain relatively low, that interest rates will remain stable, that tax laws remain unchanged, that conditions within the real estate market, including competition for acquisitions, will be consistent with the current climate, that the Canadian capital markets will provide the Trust with access to equity and/or debt at reasonable rates when required and that Loblaw will continue its involvement with the Trust. Although the forward-looking statements contained in this document are based upon assumptions that management of the Trust believes are reasonable based on information currently available to management, there can be no assurance that actual results will be consistent with these forward-looking statements. Forward-looking statements necessarily involve known and unknown risks and uncertainties, many of which are beyond the Trust s control, that may cause the Trust s or the industry s actual results, performance, achievements, prospects and opportunities in future periods to differ materially from those expressed or implied by such forward-looking statements. These risks and uncertainties include, among other things, the factors discussed under Enterprise Risks and Risk Management section of the Trust s Report to Unitholders. The forward-looking statements made in this presentation relate only to events or information as of the date on which the statements are made in this document. Except as required by law, the Trust undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. These forward-looking statements are made as of November 7, 2018 and Choice Properties REIT assumes no obligation to update or revise them to reflect new events or circumstances, except as required by law. 2

3 A PREMIER DIVERSIFIED REIT Choice Properties is an owner, manager and developer of a high-quality real estate portfolio 3

4 PORTFOLIO 751 (1) properties ~67 M square feet of GLA (1) $15.9 B in Assets (1),(2) (1) As at September 30, (2) Based on proportionate share. 4

5 BUSINESS MODEL Our primary business goal is to carefully accumulate and aggressively manage a diversified portfolio of high-quality real estate assets and to deliver the benefits of real estate ownership to our unitholders 5

6 KEY INVESTMENT HIGHLIGHTS Size, Scale and Reach Canada s premier REIT comprising of 751 properties spanning ~67M sq. ft. National footprint concentrated in Canada s largest markets Portfolio Stability and Reliability Portfolio focused on necessity-based retail, and high-quality industrial and office assets Strategic relationship with Loblaw Development Potential Backed by a Robust Operating Platform Established operating platform with a proven track record of success Transformational development pipeline providing long-term value creation and growth Well-Positioned Portfolio Supported by Prudent Capital Structure Diversified portfolio with occupancy and staggered lease maturities that support debt service Financial strength, solid balance sheet and investment grade credit rating ( BBB ) 6

7 OUR PORTFOLIO A diversified portfolio with a national footprint concentrated in Canada s largest markets. Offering stability through long-term leases and a strategic relationship with Loblaw Canada s largest retailer. Number of Properties Square Footage (M) Retail Industrial Office Residential INCOME PRODUCING 728 ~67 Developments 23 TOTAL 751 *As at September 30,

8 WELL-LOCATED PROPERTIES CONCENTRATED IN ATTRACTIVE MARKETS ~72% of base rent from large and medium urban areas ~49% from VECTOM ~77% of base rent in small urban markets is from Loblaw via long-term leases Loblaw Small Urban 21.4% Base Rent by Urban Markets (1)(2) Small Urban 27.9% Medium Urban 14.7% Large Urban 57.4% Toronto CMA 16.3% Montreal CMA 6.8% Calgary CMA 11.1% Vancouver CMA 6.9% (1) Base rent for the three months ended September 30, 2018, including straight-line rent. (2) Based on the definitions of Census Metropolitan Area (CMA), from statistics Canada published 2016; Large Urban: CMA with Population above 500,000; Medium Urban: CMA with Population 100, ,999; Small Urban: Other areas with population below 99,999. Other Large CMAs 8.1% Ottawa CMA 1.8% Edmonton CMA 6.4% 8

9 TOP 10 TENANTS High-quality tenant base Income stability through increased exposure to national investment grade tenants Anchored by a strategic relationship with Loblaw Canada s largest retailer % of Gross Rental Top 10 Tenants Revenue Loblaw/Shoppers 56.3 Canadian Tire 2.4 TJX Companies 1.1 Suncor Energy Inc. 0.9 Dollarama 0.7 Staples 0.7 Sobeys 0.6 Lowe s Companies 0.6 GoodLife 0.6 TD Canada Trust 0.5 Total 64.4 *Gross rent for the three months ended September 30,

10 LONG-TERM LEASES PROVIDE CASH FLOW STABILITY LEASE EXPIRY BY YEAR 50,000 45,000 66% 70% 60% WALT 000s sq. ft. of GLA 40,000 35,000 30,000 25,000 20,000 50% 40% 30% TOTAL 7.7 years LOBLAW 9.5 years 15,000 10,000 5,000 1% 4% 5% 5% 5% 11% 20% 10% ANCILLARY 4.9 years & Beyond 0% Loblaw Ancillary % of Portfolio *As at September 30,

11 RETAIL Strong composition of national tenants Focused on necessity-based retailers with 66% exposure to Loblaw, Canada s largest food and drug retailer 11

12 RETAIL PORTFOLIO FOCUSED ON NECESSITY BASED TENANTS OTHER NECESSITY BASED RETAIL E-COMMERCE RESILIENT 8% Loblaw 66% 11% 11% Grocery stores Pharmacies Financial services Liquor stores Restaurants / cafes Fitness centres Personal services *As at September 30, Based on gross rental revenue. 12

13 RETAIL PROPERTIES DARTMOUTH CROSSING CARREFOUR DE LA RIVE SUD ERIN MILLS POWER CENTRE SOUTH EDMONTON COMMON Dartmouth, NS Boucherville, QC Mississauga, ON Edmonton, AB GLA (1) : 970K sq. feet GLA (1) : 530K sq. feet GLA (1) : 320K sq. feet GLA (1) : 540K sq. feet Ownership: 75% Ownership: 75% Ownership: 100% Ownership: 50% (1) GLA excludes shadow anchors. 13

14 INDUSTRIAL High quality and generic product Critical Mass in target markets Readily accommodates a broad range of tenants 14

15 INDUSTRIAL PROPERTIES CREIT DISTRIBUTION PARK Calgary, AB 885K sq. ft JAMES SNOW PKWY Milton, ON 635K sq. ft. 410 BUSINESS CENTRE Brampton, ON 300K sq. ft th STREET Surrey, BC 407K sq. ft. 15

16 OFFICE Large office buildings in target cities Well-located office properties in the downtown core of some of Canada s largest cities 16

17 OFFICE PROPERTIES 525 UNIVERSITY 175 BLOOR ST EAST CALGARY PLACE 1010 SHERBROOKE PLACE Toronto, ON Toronto, ON Calgary, AB Montreal, QC GLA: 200K sq. ft. Ownership: 100% Major Tenants: Hospital for Sick Kids Cancer Care Ontario GLA: 600K sq. ft. Ownership: 50% Major Tenants: Klick Leo Burnett Towers Watson NORR Limited GLA: 580K sq. ft. Ownership: 50% Major Tenants: Alta Gas Ltd. A.E.S.O. MNP GLA: 330K sq. ft. Ownership: 100% Major Tenants: Jarislowsky Fraser McGill University Canadian Bank 17

18 TRANSFORMATIONAL DEVELOPMENT Development pipeline provides long-term growth and value creation 18

19 DEVELOPMENT PIPELINE GREENFIELD INTENSIFICATION REDEVELOPMENT RESIDENTIAL TOTAL 22 PROJECTS 1.9M sq. ft. 45 PROJECTS 4 PROJECTS (2) 7 PROJECTS 0.6M sq. ft. 0.1M sq. ft. 0.8M sq. ft. 78 PROJECTS 3.4M sq. ft. $305M invested $76M invested $30M invested $67M invested $478M invested $474M total investment $255M total investment $60M total investment $386M total investment $1.2B total investment (1) As at September 30, Excludes planned future developments. (2) Includes 3 major mixed use development projects currently in the pre-development phase for which the total investment and density is to be determined. 19

20 ACTIVE DEVELOPMENT RETAIL- GREENFIELD RETAIL- INTENSIFICATIONS & REDEVELOPMENT INDUSTRIAL- GREENFIELD RESIDENTIAL TOTAL 8 PROJECTS 0.2M sq. ft. 28 PROJECTS 2 PROJECTS 7 PROJECTS 0.4M sq. ft. 0.7M sq. ft. 0.8M sq. ft. 45 PROJECTS 2.1M sq. ft. $44M invested $74M invested $76M invested $67M invested $261M invested $85M total investment $161M total investment $85M total investment $386M total investment $717M total investment *As at September 30, Excludes planned future developments. 20

21 RETAIL DEVELOPMENT MAHOGANY VILLAGE MARKET Calgary, AB 210K sq. ft. Anchored by Sobeys and Shoppers Drug Mart Canada s best community 2015 Partner: Hopewell Development 21

22 RETAIL DEVELOPMENT ST Surrey, BC 243K sq. ft. Anchored by Real Canadian Superstore 22

23 RETAIL INTENSIFICATION TRANSCANADA HWY Montreal, QC 92K sq. ft. Expected completion date: 2018 Leasing: 97% committed Anchored by Loblaws 23

24 INDUSTRIAL DEVELOPMENT 2994 PEDDIE RD Milton, ON 28 acres 665K sq. ft. 36 foot clear heights Partner: Kylin Developments 24

25 RESIDENTIAL DEVELOPMENT 390 DUFFERIN ST Toronto, ON 350 units / 3 buildings 330K sq. ft. GLA WALK SCORE: 97 TRANSIT SCORE: 100 BIKE SCORE: 53 Land acquired in Q Partner: Woodbourne Canada & CentreCourt Developments 25

26 RESIDENTIAL DEVELOPMENT 39 EAST LIBERTY ST Toronto, ON 421 units 275K sq. ft. GLA WALK SCORE: 92 TRANSIT SCORE: 100 BIKE SCORE: 74 Construction Commencement: Q Partner: Woodbourne Canada & CentreCourt Developments 26

27 FUTURE DEVELOPMENT PIPELINE 1880 EGLINTON AVE EAST Toronto, ON 445 NORTH ROAD Coquitlam, BC 2280 DUNDAS ST. WEST Toronto, ON 27

28 FINANCIAL MANAGEMENT Choice Properties foundation is built upon maintaining a strong balance sheet, financial flexibility, and prudent and disciplined financial management 28

29 DEBT MATURITY PROFILE Choice Properties continues to maintain a well-balanced debt maturity profile (1) $1.5B unsecured revolving committed credit facility provides liquidity and financial flexibility (matures May 2023) PUBLIC DEBENTURES MORTGAGES AND CONSTRUCTION LOANS TERM LOANS Debt Maturing ($M) $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200 - $1,500 Revolver Capacity 6% $300 11% $550 10% $550 13% $175 $600 19% $625 $575 13% $750 1% 0% $138 $172 1% $207 $104 $126 $85 $137 $138 $77 $14 - $ $ Thereafter Mortgages and Construction Loans Current Unsecured Debentures Term Loan Facility % of Debt 10% $550 Principal $4,725M $1,619M (2) $800M WAIR 3.64% 4.03% (2) Based on BA + Spread WATM 5.4 years 6.1 years 4.4 years 12% $750 5% - $100 *As at September 30, 2018 (1) Graph excludes $387M drawn on Choice Properties $1.5B unsecured revolving committed credit facility (revolver). (2) Proportionate share. Includes $109M of construction loans which are variable interest rate loans (weighted average interest rate of 3.65% as at September 30, 2018). 29

30 SOLID DEBT METRICS Choice Properties (1) Average REIT/REOCs (2) BBB (Mid) BBB (High) COMPARISON Key Credit Metrics Coverage Ratios EBITDA to Interest 3.6x 3.3x Debt Service Coverage 3.1x 2.5x Leverage Ratios Debt to Total Assets 47% 45% > Debt to EBITDA 8.0x (3) 9.0x Secured Debt to Total Debt 21% 35% (1) As at September 30, Ratios exclude one-time non-recurring items. (2) Source: DBRS. Average of H&R, RioCan, First Capital and CT REIT. (3) Normalized EBITDA assuming the CREIT acquisition closed at the beginning of the trailing 12-month period. 30

31 OUTLOOK CURRENT POSITION Stable, defensive portfolio diversified by asset class and geography and anchored by long term leases with Canada s largest retailer Fully integrated management platform with national operating and leasing expertise and in-house development capabilities Strategic relationship with Loblaw that provides secure and growing cash flows and a dedicated source of acquisition opportunities Financial stability with BBB credit rating, staggered debt maturities, strong liquidity position and a large pool of unencumbered assets Well-positioned to navigate the changing retail landscape with a focus on necessity based retail and an established industrial platform Well-positioned to capitalize on urban mixed-use development opportunities and increase exposure to newly built multi-residential rental properties Alignment with major shareholder on a long term approach to value creation 31

32 OUTLOOK NEAR TERM PRIORITIES Organizational integration Portfolio optimization; explore opportunities for net operating income growth Portfolio composition; assess existing portfolio and growth/rationalization opportunities Evaluate existing development pipeline and potential opportunities for intensification and greenfield development Satisfy Loblaw/Shoppers Drug Mart tenant needs and potential acquisition opportunities Assess strategies to further strengthen our balance sheet and improve our payout ratio 32

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