A r t i s R e a l E s t a t e I n v e s t m e n t T r u s t Q 2 - PowerPoint PPT Presentation

A r t i s R e a l E s t a t e I n v e s t m e n t T r u s t Q 2 - 1 9 I n v e s t o r P r e s e n t a t i o n A u g u s t 2 0 1 9

Forward-Looking Information This presentation contains forward-looking statements. For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Particularly, statements regarding the REITs future operation results, performance and achievements, including the implementation of Artis’ new initiatives, are forward-looking statements. Without limiting the foregoing, the words “expects”, “anticipates”, “intends”, “estimates”, “projects”, and similar expressions are intended to identify forward-looking statements. All forward- looking statements in this presentation are made as of August 2019. Artis is subject to significant risks and uncertainties which may cause the actual results, performance or achievements of the REIT to be materially different from any future results, performance or achievements expressed or implied in these forward-looking statements. Such risk factors include, but are not limited to, risks related to the implementation of Artis’ new initiatives, risks associated with real property ownership, availability of cash flow, general uninsured losses, future property acquisitions and dispositions, environmental matters, tax related matters, debt financing, unitholder liability, potential conflicts of interest, potential dilution, reliance on key personnel, changes in legislation and changes in the tax treatment of trusts. Artis cannot assure investors that actual results will be consistent with any forward-looking statements and Artis assumes no obligation to update or revise such forward-looking statements to reflect actual events or new circumstances. All forward-looking statements contained in this presentation are qualified by this cautionary statement. Information in this presentation should be read in conjunction with Artis’ applicable consolidated financial statements and management’s discussion and analysis. Additional information about Artis, including risks and uncertainties that could cause actual results to differ from those implied or inferred from any forward-looking statements in this presentation, are contained in our various securities filings, including our current Annual Information Form, our interim filings dated November 1, 2018, May 9, 2019 and August 1, 2019 our 2018 annual earnings press release dated February 28, 2019, and our audited annual consolidated financial statements for the years ended December 31, 2018 and 2017, which are available on SEDAR at www.sedar.com or on our company website at www.artisreit.com. Q2-19 Investor Presentation www.artisreit.com Page 2

Strategy and Business Model 1 Geographic Diversification • Canada and the United States 2 Asset Diversification • Office • Retail • Industrial 3 Internal Growth • Active NCIB • Results driven active asset management • Increasing same property net operating income • $200 million industrial development pipeline at positive spreads to market 4 Strategic Initiatives AT&T Building, Greater Denver Area, CO • Simplifying the portfolio • Improved operating and financial metrics Q2-19 Investor Presentation www.artisreit.com Page 3

Diversified Commercial Properties BC AB MB SK ON 0.4M sq. ft 1.5M sq. ft 3.8M sq. ft 3.7M sq. ft 4.0M sq. ft MN WI 5.9M 1.7M sq. ft 2 countries sq. ft 3 asset classes CO 8 major markets 0.7M sq. ft 229 properties AZ TX 24.9 million sq. ft. 2.1M $5.5B GBV sq. ft 95% leased 1.0M Office sq. ft Fully Internalized Industrial Management Platform Retail Leased percentage includes commitments on vacant space and excludes properties held for redevelopment and new developments in process. Q2-19 Investor Presentation www.artisreit.com Page 4

Portfolio Diversification Projected 2020/2021 NOI upon Q2-19 Net Operating Income implementation of new initiatives NOI by Geographical Region SK Canada US - Other 6% US 8% 40% WI Canada ON 48% 9% 52% 11% US 60% AZ MB 11% 13% BC 3% Calgary Calgary Office Office AB - Retail 6% 3% MN 15% Other Retail 20% Calgary - Office 13% 20% Office 6% Office 42% 46% Industr Industrial ial 40% 28% Property NOI for three months ended June 30, 2019, inclusive of Artis’ proportionate share of joint venture arrangements. Q2-19 Investor Presentation www.artisreit.com Page 5

Office Asset Class Number of Properties 67 GLA 10.1 million sq. ft. Leased 91% Diversification Major markets in Canada and the US IFRS GBV/IFRS Weighted- $2.8 billion/6.7% Average Cap Rate 2019 YTD Same Property NOI +3.9% Growth 2018 Property NOI (on a $167.2 million proportionate share basis) 525 Junction Road, Madison, WI Historical Same Property NOI Growth (SPNOIG) 7.0% 5.0% 3.0% 1.0% Average SPNOIG 1.0% -1.0% -3.0% Concorde Corporate Centre, Greater Toronto Area, ON -5.0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 YTD 2019 Q2-19 Investor Presentation www.artisreit.com Page 6

Retail Asset Class Number of Properties 50 GLA 3.3 million sq. ft. Leased 94% Diversification Major markets in Canada and the US IFRS GBV/IFRS Weighted- $1.0 billion/6.6% Average Cap Rate 2019 YTD Same Property NOI +1.8% Growth 2018 Property NOI (on a $64.5 million proportionate share basis) Linden Ridge Shopping Centre, Winnipeg, MB Historical Same Property NOI Growth (SPNOIG) 5.0% 4.5% 4.0% 3.5% 3.0% 2.5% 2.1% Average SPNOIG 2.0% 1.5% 1.0% 0.5% 0.0% Woodlands Centre, Fort McMurray, AB -0.5% 2010 2011 2012 2013 2014 2015 2016 2017 2018 YTD 2019 Q2-19 Investor Presentation www.artisreit.com Page 7

Industrial Asset Class Number of Properties 112 GLA 11.5 million sq. ft. Leased 99% Diversification Major markets in Canada and the US IFRS GBV/IFRS Weighted- $1.6 billion/6.0% Average Cap Rate 2019 YTD Same Property NOI +8.2% Growth 2018 Property NOI (on a $83.6 million proportionate share basis) Park Lucero I, Greater Phoenix Area, AZ Historical Same Property NOI Growth (SPNOIG) 12.0% 10.0% 8.0% 5.1% Average 6.0% SPNOIG 4.0% 2.0% Civeo Building, Acheson, AB 0.0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 YTD 2019 Q2-19 Investor Presentation www.artisreit.com Page 8

The Sum of All Parts Share of Number of Same Property IFRS Weighted- IFRS GLA Leased Property NOI Properties NOI Growth YTD Average Cap Rate GBV Office 52% 67 10.1 million sq. ft. 91% 3.9% 6.7% $2.8B Retail 20% 50 3.3 million sq. ft. 94% 1.8% 6.6% $1.0B Industrial 28% 112 11.5 million sq. ft. 99% 8.2% 6.0% $1.6B Other $0.1B TOTAL 100% 229 24.9 million sq. ft. 95% 4.9% 6.4% $5.5B NAV: $15.37 per unit Clearwater Creek Distribution Center, 800 – 5 th Ave, Calgary, AB Twin Cities Area, MN Namao South, Edmonton, AB Q2-19 Investor Presentation www.artisreit.com Page 9

Lease Expiration Schedule Percentage of Portfolio GLA Expiring 20.0% 18.0% 16.0% 13.4% 14.0% 12.0% 9.7% 9.4% 10.0% 9.2% 8.0% 5.8% 6.0% 4.0% 2.0% 0.0% 2019 2020 2021 2022 2023 Same Property NOI Growth YTD: 4.9% (6.0% excluding the Calgary office segment and properties planned for disposition). Weighted-Average Increase in Renewal Rents: 4.0% The chart above reflects the percentage of Artis’ total GLA expiring (excluding properties held for redevelopment, certain co mpleted new developments and new developments in process) exclusive of GLA that has been renewed or committed to new leases at June 30, 2019. Q2-19 Investor Presentation www.artisreit.com Page 10

Leverage Profile DBRS: BBB- Credit Rating Healthy Balance Sheet and Liquidity DBRS Fiscal quarter June 30, 2018 December 31, 2018 June 30, 2019 Recommended ending: Threshold ≤ 53.0% Debt: GBV 49.0% 50.6% 51.9% Secured mortgages and 31.7% 30.6% 29.5% N/A loans: GBV Unencumbered $1.6 billion $1.8 billion $1.9 billion N/A assets Normalized ≥ 2.3 EBITDA interest 3.02 3.04 3.00 coverage ≤ 9.4 Debt: EBITDA 8.8 9.0 8.8 Cash and cash equivalents at June 30, 2019: $104.4 million Availability on unsecured credit facilities at June 30, 2019: $173.6 million Information on this slide is inclusive of Artis’ proportionate share of its joint venture arrangements. Q2-19 Investor Presentation www.artisreit.com Page 11

Unit Price + NAV Metrics Information as of August 2019 Unit Price: $12.00 Distribution per Unit: $0.54 Cash Yield: 4.5% Market Cap: $1.7B Implied Cap Rate: 7.0% 8333 Greenway Boulevard, Middleton, WI Analyst Consensus 2019 Analyst Information per Unit (1) Consensus AFFO FFO Per Unit $1.05 $1.38 Target Price: $12.90 Pay-Out Ratio 51.4% 39.1% Net Asset Value: $14.00 Unit Price Multiple 11.4x 8.7x Artis IFRS NAV: $15.37 Yield 8.8% 11.5% (1) Consensus analyst projections from most recent research reports (Q2-19). Artis does not endorse analyst projections. The above information represents the views of the particular analyst and not necessarily those of Artis. An investor should review the entire report of the analyst prior to making any investment decisions. Q2-19 Investor Presentation www.artisreit.com Page 12