Investor Presentation November 2018 FORWARD LOOKING STATEMENTS - - PowerPoint PPT Presentation
Investor Presentation November 2018 FORWARD LOOKING STATEMENTS - - PowerPoint PPT Presentation
Investor Presentation November 2018 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
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
- therwise, 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.
A PREMIER DIVERSIFIED REIT
Choice Properties is an owner, manager and developer of a high-quality real estate portfolio
3
4
PORTFOLIO
751
properties
~67 M
square feet
- f GLA
$15.9 B
in Assets
(1) As at September 30, 2018. (2) Based on proportionate share.
(1) (1) (1),(2)
BUSINESS MODEL
Our primary business goal is to carefully accumulate and aggressively manage a diversified portfolio
- f high-quality real estate
assets and to deliver the benefits of real estate
- wnership to our
unitholders
5
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
- ffice 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
- ccupancy and staggered lease
maturities that support debt service
Financial strength, solid balance sheet and investment grade credit rating (“BBB”)
6
KEY INVESTMENT HIGHLIGHTS
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.
7
OUR PORTFOLIO
Number of Properties Square Footage (M) Retail 595 46.6 Industrial 112 16.3 Office 18 3.7 Residential 3 0.2 INCOME PRODUCING 728 ~67 Developments 23 TOTAL 751
*As at September 30, 2018.
(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 100,000 - 499,999; Small Urban: Other areas with population below 99,999.
~72%
- f base rent from large and
medium urban areas
~49%
from VECTOM
~77%
- f base rent in small urban markets is
from Loblaw via long-term leases
8
WELL-LOCATED PROPERTIES CONCENTRATED IN ATTRACTIVE MARKETS Base Rent by Urban Markets(1)(2)
Other Large CMAs 8.1% Ottawa CMA 1.8% Edmonton CMA 6.4% Montreal CMA 6.8% Vancouver CMA 6.9% Calgary CMA 11.1% Toronto CMA 16.3% Large Urban 57.4% Small Urban 27.9% Medium Urban 14.7% Loblaw Small Urban 21.4%
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
9
TOP 10 TENANTS
Top 10 Tenants % of Gross Rental 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, 2018.
10
LONG-TERM LEASES PROVIDE CASH FLOW STABILITY
WALT
TOTAL
7.7 years
LOBLAW
9.5 years
ANCILLARY
4.9 years
*As at September 30, 2018.
’000s sq. ft. of GLA
1% 4% 5% 5% 5% 11% 66%
0% 10% 20% 30% 40% 50% 60% 70%
- 5,000
10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000
2018 2019 2020 2021 2022 2023 2024 & Beyond
LEASE EXPIRY BY YEAR
Loblaw Ancillary % of Portfolio
RETAIL
Strong composition
- f national tenants
Focused on necessity-based retailers with 66% exposure to Loblaw, Canada’s largest food and drug retailer
11
- Grocery stores
- Pharmacies
- Financial services
- Liquor stores
12
RETAIL PORTFOLIO FOCUSED ON NECESSITY BASED TENANTS
11%
OTHER NECESSITY BASED RETAIL E-COMMERCE RESILIENT
- Restaurants / cafes
- Fitness centres
- Personal services
11% 8% Loblaw 66%
*As at September 30, 2018. Based on gross rental revenue.
Edmonton, AB GLA(1): 540K sq. feet Ownership: 50%
13
RETAIL PROPERTIES
Dartmouth, NS GLA(1): 970K sq. feet Ownership: 75% Boucherville, QC GLA(1): 530K sq. feet Ownership: 75% Mississauga, ON GLA(1): 320K sq. feet Ownership: 100%
CARREFOUR DE LA RIVE SUD ERIN MILLS POWER CENTRE SOUTH EDMONTON COMMON DARTMOUTH CROSSING
(1) GLA excludes shadow anchors.
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. 410 BUSINESS CENTRE | Brampton, ON | 300K sq. ft. 3333 JAMES SNOW PKWY | Milton, ON | 635K sq. ft. 2755 190th STREET | Surrey, BC | 407K sq. ft.
OFFICE
Large office buildings in target cities Well-located office properties in the downtown core of some
- f Canada’s largest cities
16
Montreal, QC GLA: 330K sq. ft. Ownership: 100% Major Tenants:
- Jarislowsky Fraser
- McGill University
- Canadian Bank
17
OFFICE PROPERTIES
Toronto, ON GLA: 200K sq. ft. Ownership: 100% Major Tenants:
- Hospital for Sick Kids
- Cancer Care Ontario
Toronto, ON GLA: 600K sq. ft. Ownership: 50% Major Tenants:
- Klick
- Leo Burnett
- Towers Watson
- NORR Limited
Calgary, AB GLA: 580K sq. ft. Ownership: 50% Major Tenants:
- Alta Gas Ltd.
- A.E.S.O.
- MNP
175 BLOOR ST EAST CALGARY PLACE 1010 SHERBROOKE PLACE 525 UNIVERSITY
TRANSFORMATIONAL DEVELOPMENT
Development pipeline provides long-term growth and value creation
18
1.9M sq. ft. $305M invested $474M total investment 3.4M sq. ft. $478M invested $1.2B total investment
78 PROJECTS
0.8M sq. ft. $67M invested $386M total investment 0.6M sq. ft. $76M invested $255M total investment 0.1M sq. ft. $30M invested $60M total investment
REDEVELOPMENT
19
DEVELOPMENT PIPELINE
GREENFIELD INTENSIFICATION TOTAL
45 PROJECTS 4 PROJECTS (2) 7 PROJECTS 22 PROJECTS
(1) As at September 30, 2018. 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.
RESIDENTIAL
0.2M sq. ft. $44M invested $85M total investment 2.1M sq. ft. $261M invested $717M total investment
45 PROJECTS
0.8M sq. ft. $67M invested $386M total investment 0.4M sq. ft. $74M invested $161M total investment 0.7M sq. ft. $76M invested $85M total investment
INDUSTRIAL- GREENFIELD
20
ACTIVE DEVELOPMENT
RETAIL- GREENFIELD RETAIL- INTENSIFICATIONS & REDEVELOPMENT TOTAL
28 PROJECTS 2 PROJECTS 7 PROJECTS 8 PROJECTS
*As at September 30, 2018. Excludes planned future developments.
RESIDENTIAL
21
RETAIL DEVELOPMENT
210K sq. ft. Anchored by Sobeys and Shoppers Drug Mart Canada’s best community 2015 Partner: Hopewell Development
MAHOGANY VILLAGE MARKET | Calgary, AB
22
RETAIL DEVELOPMENT
243K sq. ft. Anchored by Real Canadian Superstore
2332 160 ST | Surrey, BC
23
RETAIL INTENSIFICATION
92K sq. ft. Expected completion date: 2018 Leasing: 97% committed Anchored by Loblaws
16900 TRANSCANADA HWY | Montreal, QC
28 acres 665K sq. ft. 36 foot clear heights Partner: Kylin Developments
24
INDUSTRIAL DEVELOPMENT
2994 PEDDIE RD | Milton, ON
350 units / 3 buildings 330K sq. ft. GLA Land acquired in Q3 2017 Partner: Woodbourne Canada & CentreCourt Developments
25
RESIDENTIAL DEVELOPMENT
390 DUFFERIN ST | Toronto, ON
WALK SCORE: 97 TRANSIT SCORE: 100 BIKE SCORE: 53
421 units 275K sq. ft. GLA Construction Commencement: Q1 2019 Partner: Woodbourne Canada & CentreCourt Developments
26
RESIDENTIAL DEVELOPMENT
39 EAST LIBERTY ST | Toronto, ON
WALK SCORE: 92 TRANSIT SCORE: 100 BIKE SCORE: 74
27
FUTURE DEVELOPMENT PIPELINE
1880 EGLINTON AVE EAST | Toronto, ON 2280 DUNDAS ST. WEST | Toronto, ON 445 NORTH ROAD | Coquitlam, BC
FINANCIAL MANAGEMENT
Choice Properties’ foundation is built upon maintaining a strong balance sheet, financial flexibility, and prudent and disciplined financial management
28
$14 $138 $172 $104 $126 $85 $137 $138 $77 $38 $40
- $207
- $300
$550 $550 $600 $575 $750 $550
- $750
- $100
$175 $625
- 0%
6% 11% 10% 13% 19% 13% 10% 1% 1% 12%
- 5%
$1,500
- $200
$400 $600 $800 $1,000 $1,200 $1,400 $1,600 Revolver Capacity 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 Thereafter Debt Maturing ($M) Mortgages and Construction Loans Current Unsecured Debentures Term Loan Facility % of Debt
- 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)
29
DEBT MATURITY PROFILE
*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). PUBLIC DEBENTURES MORTGAGES AND CONSTRUCTION LOANS TERM LOANS
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
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%
30
SOLID DEBT METRICS
(1) As at September 30, 2018. 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.
- 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
OUTLOOK – CURRENT POSITION
- 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
OUTLOOK – NEAR TERM PRIORITIES