National Platform Positioned for Sustainable Growth

Transcription

1 National Platform Positioned for Sustainable Growth Vista, Calgary, AB Bowling Green, Yellowknife, NT 165 Ontario Street, St. Catharines, ON Investor Relations Presentation May 2017

2 Disclaimer This presentation may contain forward-looking information. All information included in this presentation other than statements of historical fact, is forward-looking information. When used in this presentation, words expect, estimate, project, potential or other similar expressions identify forward-looking information. The forward-looking information included in this presentation relates to, among other things, current expectations of future results, performance, prospects and opportunities, including with respect to the benefits of the acquisition of True North Apartment REIT and properties from affiliates of Starlight Investments Ltd. and affiliates of the Public Sector Pension Investment Board, growth opportunities, payout ratio, market capitalization, mitigation of impact of commodity prices, population growth, results from the high-end renovation program, above guideline increases, opportunities to increase below market rents, results from the sub-metering program, cost savings from management internalization, development and acquisition opportunities, and debt management. This presentation reflects Northview s current beliefs and is based on information currently available to senior management. Forward-looking information is provided for the purpose of presenting information about senior management s current expectations and plans relating to the future and readers are cautioned that such statements may not be appropriate for other purposes. This information is not a guarantee of future performance and is based on Northview s estimates and assumptions, which include, but are not limited to market growth, the general economy, interest rates and real estate conditions are each stable, occupancy rates, results of operations, performance, prospects and opportunities. The forward-looking information is subject to a variety of known and unknown risks and uncertainties, which could cause actual events, results and performance to differ materially from the forward-looking information. Such risks and uncertainties include, but are not limited to, availability of cash flow, risks of unexpected operating results, risks of investment in and development of real property, competition, financing and refinancing risks, changes in economic conditions, changes in interest rates, changes in taxation rules, reliance on key personnel, environmental matters, tenant risks, fluctuations in commodity prices and other risk factors. Northview cautions that this list of factors is not exhaustive. Although the forward-looking information contained in this presentation is based on what Northview believes are reasonable assumptions, there can be no assurance that actual results will be consistent with this forward-looking information. The forward-looking information is provided only as of the date of such information, and Northview, except as required by applicable law, assumes no obligation to update or revise this information to reflect new information or the occurrence of future events or circumstances. Certain measures contained in this presentation do not have any standardized meaning as prescribed by International Financial Reporting Standards ( IFRS ) and, therefore, are considered non-gaap measures. These measures are provided to enhance the reader's overall understanding of financial conditions. They are included to provide investors and management with an alternative method for assessing operating results in a manner that is focused on the performance of operations and to provide a more consistent basis for comparison between periods. These measures include widely accepted measures of performance for Canadian real estate investment trusts; however, the measures are not defined by IFRS. In addition, these measures are subject to the interpretation of definitions by the preparers of financial statements and may not be applied consistently between real estate entities. Please refer to Northview s most recent Management's Discussion & Analysis and Financial Statements for the disclosed financial information and definitions of non-gaap measures and additional GAAP measures, including NOI, FFO, debt to gross book value, and interest coverage contained in this presentation. 2

3 Content Overview Investment Highlights 4 Summary 5 Portfolio Summary Strategic Priorities 7 Key Financial Metrics 16 Appendix Regional Overviews 24 3

4 Investment Highlights TSX Symbol: NVU.UN One of Canada s Largest Multi-Family RElTs Diversified National Platform Successful Execution on Organic Growth and Value Creation Through Development Program Distribution with Attractive Yield For Long Term Investors Seeking Sustainable Yield and Growth 4

5 Summary TSX Symbol: NVU.UN 23,817 Multi-Family Units 1,135,000 Commercial Square Feet 419 Execusuites and Hotel Units Key Statistics Unit Price (1) $21.73 Trust Units Outstanding 55.8 million Market Capitalization (1) $1.2 billion Enterprise Value $3.0 billion Annual Distributions Per Trust Unit $1.63 Distribution Yield 7.5% FFO Payout Ratio (2) 79% Estimated AFFO Multiple 2017 (3) 12.8x (1) Closing price as at May 15, (2) Diluted FFO payout ratio excluding Non-recurring Items based on the most recently completed four fiscal quarters. (3) Source: Scotiabank as at May 15,

6 Portfolio Summary NOI diversified across the country Execusuites & Hotel 3% Commercial 12% Northern Canada 32% Atlantic Canada 13% Residential 85% Western Canada 24% Ontario 26% Québec 5% 23,817 Multi-Family Residential Units 91% Occupancy Note: NOI percentage based on the three months ended March 31, Occupancy based on the first quarter of

7 2017 Strategic Priorities Driving value creation for Unitholders ORGANIC GROWTH MANAGING LEVERAGE STRATEGIC CAPITAL DEPLOYMENT Value Creation Initiatives Ongoing contribution to organic growth Near to Mid-Term Target Ongoing leverage reduction achieved through rising NOI resulting in increased asset values Capital Redeployment Net proceeds from future asset sales will be redeployed into existing markets Same Door NOI Growth Focus on improving occupancy, monthly rents, and expense management across the portfolio Long-Term Target Debt to gross book value of 50% to 55% External Growth Growth through developments and selected acquisitions in strong markets 7

8 1 Progress on Value Creation Initiatives Realizing organic growth (in thousands of dollars, except per unit amounts) Initial Five Year Target Annualized NOI Increase Cumulative Progress (1) Q Progress High-end renovation program 5, Below market rents 5,200 1, Sub-metering program 2, Above guideline increases Total 14,300 3, Initial assumed capitalization rate (2) 5.5% 5.5% 5.5% Estimated value creation 260,000 60,000 10,000 Annualized NOI growth of $2.1 million in 2016 from property management internalization of 7,600 units in Ontario Internalization of remaining 5,100 units expected to be completed by end of 2017 (1) Cumulative progress since November (2) Assumed capitalization rate of 5.5% is based on the 2015 Transaction. 8

9 1 Multi-Family Same Door NOI Growth Successful execution on organic growth 2.0% 0.0% Led by Ontario and Atlantic Canada 0.5% -2.0% -4.0% -6.0% -8.0% -10.0% -12.0% -14.0% Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 9

10 1 Multi-Family Occupancy Stable Balanced portfolio leads to stability in occupancy 96.0% 94.0% 92.0% 90.0% 88.0% 86.0% 84.0% Northern Property REIT Transition Northview Apartment REIT 82.0% Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 10

11 2 Managing Leverage Positioned for growth through managing leverage Higher Asset Value Same door NOI improvements creates asset value increases Cap Rate compression in stronger markets, particularly in Ontario Value Increase from Development Value increase of $9 million (13%) from recently completed 2016 development projects 131 Maxwell Street, Sarnia, ON 11

12 3 Strategic Capital Redeployment Supports external growth opportunities Invest in properties with higher potential NOI and asset value growth Capital redeployment from future asset sales into existing markets External growth in strong and growing markets through developments and acquisitions 50 Tripp Boulevard, Trenton, ON 558 Durham Crescent, Woodstock, ON 72 Devonshire Avenue, Tillsonburg, ON 12

13 3 Growth from Development Highly accretive growth opportunities Development yields 100 to 200 bps higher than acquisition Cap Rates Existing land holdings allows for development pipeline opportunities 331 Historical Units Completed In-house development expertise provides flexibility in development activities Creates value for Unitholders from asset value increase Cobble Hill, Airdrie, AB Vista, Calgary, AB 13

14 3 Execution on Accretive Developments Development activities commenced in Regina, SK Units 7.5% Stabilized Cap Rate Q Commence Date $22 Total Cost million Iqaluit, NU 30 Units 9.5% Stabilized Cap Rate 11 Comm. Sq. Ft. $9 Total Cost thousand million Canmore, AB 140 Units 7.5% Stabilized Cap Rate 40 Beds $23 Total Cost staff housing million 14

15 3 Land Recycling Provides growth opportunities to expand into Ontario Expand our successful in-house development program to Ontario Redeploy capital from portions of land in Western Canada and pursue land for development in strong existing markets, primarily in Ontario 15

16 Key Financial Metrics Strong Financial Base 16

17 Debt to Gross Book Value Stronger balance sheet with reduced leverage positioned for growth 61.0% 60.0% 60.2% Non-core asset sales and equity offering 59.0% 58.0% 57.8% 57.0% 56.0% 55.0% 54.0% 53.0% Q Q Q Q Q Q

18 Strong Coverage Ratios Among the best in the Canadian multi-family REIT sector 3.1x 3.0x 2.9x 2.8x 2.5x 1.6x 1.6x 1.6x 1.5x 1.6x Cap Boardwalk Northview Killam Interrent TM Interest Coverage Ratio (1) (1) Debt Service Coverage Ratio (1) CAR.UN, BEI.UN, NVU.UN, KMP, and IIP.UN based on trailing twelve months as of March 31,

19 Solid Net Debt to EBITDA Excellent financial position among peers 13.2x 12.3x 10.0x 10.3x 10.4x CAP NVU KMP BEI IIP TM Source: BMO REIT Beat (dated May 12, 2017). Estimated Net Debt to EBITDA 2017 includes convertible debentures. 19

20 Lowest AFFO Multiple in the REIT Sector Northview unit price undervalued with opportunities for improvement 26.4x 22.7x 22.4x 18.7x 12.8x BEI IIP CAP KMP NVU TM Source: Scotiabank as at May 15, Estimated AFFO multiple

21 Northview Unit Performance Exceeds Peers Total unitholder return performance TM % 11.3% 21.8% 8.8% 19.5% 8.2% 17.3% 6.2% 7.2% 2.3% S&P/TSX REIT Index 17.6% 4.7% Note: 2016 total unitholder return performance from January 1, 2016 to December 30, total unitholder return performance from January 1, 2017 to May 15,

22 Experienced Management Team Todd Cook President & Chief Executive Officer President & CEO since 2014 Joined Northern Property REIT in 2006, CFO from 2007 to 2011 and President and COO in 2013 Previously CFO of TGS North American REIT from 2003 until the acquisition by The Great-West Life Assurance Company in 2006 Leslie Veiner Chief Operating Officer COO since 2015 Previously President & CEO of True North Apartment REIT since 2012 Previously CFO of TransGlobe Apartment REIT from 2010 to 2012, employed by Chartwell Retirement Residences as SVP Real Estate from 2005 to 2008 and CFO from 2003 to 2005 Travis Beatty Chief Financial Officer CFO since May 2016 Previously CFO of West Valley Energy from 2012 to 2014 Various senior finance roles, including CFO, with OPTI Canada from 2002 to 2011 Bo Rasmussen Vice President, Property Development VP, Property Development since 2011 Joined Northern Property REIT in 2007 as Manager of Construction and Development Previously VP Development for NewNorth Projects Ltd. from 2004 to 2007 Richard Anda Vice President, Business Development VP, Business Development since 2011 Joined Northern Property REIT in 2003, VP, Operations from 2004 to 2011 Previously with Canada Mortgage and Housing Corporation Lizaine Wheeler Vice President, Residential Operations VP, Residential Operations since 2012 Previously SVP Operations at Mainstreet Equity Corp from 2010 to 2012, and senior operations roles with Boardwalk REIT from 1998 to

23 Trustees Committed to Strong Governance Scott Thon, Chair President & CEO, AltaLink L.P. Dennis Hoffman Chair of Audit & Risk Management Committee, Corporate Director Todd Cook President & CEO, Northview Apartment REIT Christine McGinley Chair of Investment Committee, Corporate Director Daniel Drimmer President & CEO, Starlight Group Property Holdings Inc. Terrance McKibbon Former President & CEO, Aecon Group Inc. Kevin Grayston Chair of Governance, Compensation & Nomination Committee, Corporate Director Graham Rosenberg President & Co-CEO, Dental Corporation of Canada Inc. 23

24 Appendix Regional Overviews NOI Diversified Across Canada 24

25 Regional Overview Western Canada Well positioned to be the first choice for new residents when the market recovers Q Q NOI ($millions) multi-family $10.2 $10.3 Total NOI % multi-family 28% 28% Occupancy (%) 81.7% 81.9% AMR ($dollars per month) 971 1,018 Fort Nelson, BC Dawson Creek, BC Grande Prairie, AB BC: 2,588 AB: 4,306 SK: 429 Residential units 7,323 7,241 Commercial square feet 136, ,000 Fort St. John, BC Chetwynd, BC Bonnyville, AB Fort McMurray, AB Nanaimo, BC Abbotsford, BC Prince George, BC Airdrie, AB Calgary, AB Lethbridge, AB Lloydminster, AB Regina, SK Note: Regions with a portfolio of greater than 200 units in BC or 500 units in AB and SK or recent developments are listed. 25

26 Regional Overview Ontario Opportunities for internal and external growth from growing populations Q Q NOI ($millions) multi-family $10.9 $11.3 Total NOI % multi-family 30% 31% Occupancy (%) 95.7% 95.9% AMR ($dollars per month) 1, Residential units 7,700 8,235 Guelph, ON Kitchener-Waterloo, ON Southwestern ON: 4,313 Toronto, ON Eastern ON: 1,660 Toronto and Area: 1,727 Lindsay, ON Peterborough, ON London, ON Sarnia, ON Oshawa, ON Brockville, ON St. Catharines-Niagara, ON Hamilton, ON Note: Regions with a portfolio of greater than 200 units are listed. 26

27 Regional Overview Atlantic Canada Growth opportunities in strong and attractive markets Q Q NOI ($millions) multi-family $4.3 $3.9 Total NOI % multi-family 12% 11% Occupancy (%) 92.1% 92.9% AMR ($dollars per month) Labrador City, NL Gander, NL St. John s, NL Residential units 4,261 4,321 Commercial square feet 225, ,000 Moncton, NB Dieppe, NB Shediac, NB NB: 1,105 NS: 1,286 NL: 1,870 Halifax, NS Dartmouth, NS 27

28 Regional Overview Northern Canada Strong and stable performing region Q Q NOI ($millions) multi-family $8.5 $8.6 Total NOI % multi-family 24% 24% Occupancy (%) 94.1% 94.6% AMR ($dollars per month) 2,049 2,022 Residential units 2,668 2,679 Inuvik, NT Cambridge Bay, NU Gjoa Haven, NU Taloyoak, NU Arctic Bay, NU Pond Inlet, NU Commercial square feet 771, ,000 Yellowknife, NT Igloolik, NU Hall Beach, NU Cape Dorset, NU Clyde River, NU Kimmirut, NU NT: 1,469 NU: 1,199 Iqaluit, NU Pangnirtung, NU 28

29 Regional Overview Québec Opportunity for growth as occupancy improves Q Q NOI ($millions) multi-family $2.1 $2.1 Total NOI % multi-family 6% 6% Occupancy (%) 94.2% 90.7% AMR ($dollars per month) Residential units 2,284 2,285 Montreal, QC Sept-Iles, QC Commercial square feet 3,000 3,000 QC: 2,284 29

30 NorthviewREIT.com Across Canada, Northview s passion is providing our customers with a place to call home Azure, Fort St. John, BC Aurora Heights, Yellowknife, NT Cote Vertu, Montreal, QC