INVESTOR PRESENTATION Third Quarter 2015 Forward-Looking Statements - - PDF document

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INVESTOR PRESENTATION Third Quarter 2015 Forward-Looking Statements - - PDF document

1 INVESTOR PRESENTATION Third Quarter 2015 Forward-Looking Statements Certain statements in this presentation may constitute "forward-looking" statements which involve known and unknown risks, uncertainties and other factors which may


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INVESTOR PRESENTATION

Third Quarter 2015

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Certain statements in this presentation may constitute "forward-looking" statements which involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of WPT Industrial Real Estate Investment Trust (“WPT REIT” or the “REIT"), or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. When used in this presentation, such statements use such words as "may", "would", "could", "will", "intend", "expect", "believe", "plan", "anticipate", "estimate" and other similar terminology. These statements reflect the REIT's current expectations regarding future events and

  • perating performance including the REIT’s ability to invest in private funds and the future prospects and opportunities relating to investment in, or co-investment with, such private

funds, the current or future status of the REIT’s Unitholder Rights Plan Agreement, the REIT’s future growth potential and other prospects and opportunities, results of operations, demographic and industry trends and future legislative and regulatory approaches with respect to matters affecting the REIT and speak only as of the date of this presentation. Forward-looking statements involve significant risks and uncertainties, which include, but are not limited to the factors discussed under “Forward-Looking Statements” and "Risk Factors" in the REIT’s annual information form for the year ended December 31, 2014, the “AIF” and should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not such results will be achieved. Forward looking statements are necessarily broad on a number of estimates and assumptions that, while considered reasonable by management of the REIT as of the date of this presentation, are inherently subject to significant business, economic and competitive uncertainties and contingencies; therefore, the REIT cannot assure investors that actual results will be consistent with these forward-looking statements. These forward-looking statements are made as

  • f the date of this presentation and are expressly qualified in their entirety by this cautionary statement. Subject to applicable securities laws, the REIT assumes no obligation to update
  • r revise them to reflect new events or circumstances.

This presentation does not constitute or form part of any offer for sale or solicitation of any offer to buy or subscribe for any securities nor shall it or any part of it form the basis of or be relied on in connection with, or act as any inducement to enter into, any contract or commitment whatsoever. The information contained in this presentation concerning the REIT and its affiliates does not purport to be all-inclusive or to contain all the information that a prospective purchaser or investor may desire to have in evaluating whether or not to make an investment in the REIT. The information is qualified entirely by reference to the AIF. This presentation includes certain financial measures such as funds from operations (“FFO”), adjusted funds from operations (“AFFO”) and net operating income (“NOI”) that are not measures recognized under International Financial Reporting Standards (“IFRS”) and do not have standardized meanings prescribed by IFRS. FFO, AFFO and NOI are supplemental measures of a Canadian real estate investment trust’s performance and the REIT believes they are relevant measures of the ability of the REIT to earn and distribute cash returns to investors in the Units and to evaluate the REIT’s performance. The IFRS measurement most directly comparable to FFO, AFFO and NOI is net income. Tables reconciling such non- IFRS financial measures are available in this presentation and in the AIF.

Forward-Looking Statements

All currency in U.S. dollars

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Targeting Disciplined but Accretive Growth

ONLY Canadian REIT focused exclusively on U.S. industrial real estate

48 institutional-quality properties benefiting from US economic recovery Distributions in US funds

  • Strong yield as US$ strengthens

Listed on TSX (WIR.U) and OTCQX (WPTIF)

  • 18.5 million Units outstanding1
1As of September 30, 2015
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4 Focused on distribution sub-segment of U.S. industrial real estate market High-quality, stabilized and geographically diverse portfolio in major distribution markets Aligned and experienced management and majority-independent board of trustees Platform for accretive growth in a fragmented market

Investment Highlights

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3003 Reeves Road

Indianapolis, Indiana

GLA: 741,100 sq. ft. Ceiling height: 36 feet

2 3 4 1

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Proven Experienced Management Team

Well-Aligned Manager

Retained Interest

47.3 %

Path to internalization

  • Automatic at $750 million in equity

market capitalization

1105 Northfield Drive

Indianapolis, Indiana

GLA: 526,200 sq. ft. Ceiling height: 32 feet

1As of September 30, 2015

1

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Enhancing Unitholder Value

First distribution increase since IPO:

  • Effective with October 2015 payment
  • Unitholders of record on September 30, 2015
  • $0.0633 per month ($0.0583 previously)
  • Reflects strong performance, positive
  • utlook

Annualized distribution of

$0 .76 per unit

Increase of 8 .6%

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600 Hartman Industrial Crt. Atlanta, Georgia

GLA: 525,600 sq. ft. Ceiling height: 32 feet

Strong and Stable United States Industrial Market

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Increasing Demand for Warehouse and Distribution Space

Strong Market Fundamentals

Substantial E-commerce supply chain growth is driving significant demand for state-of-the-art distribution buildings Non-discretionary household goods Sector is benefiting from US economic recovery Build-to-suit & speculative development activity is occurring Significant tenant investment in properties

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100 West Thomas P Echols Drive

Louisville, KY

GLA: 936,000 sq. ft. Ceiling height: 32 feet

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Strategically Located in Key Distribution Markets Properties

15.1M

  • sq. ft. of GLA

48

Current Portfolio

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State-of-the-Art Warehouse and Distribution Properties

Institutional-Quality Portfolio

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1. As of September 30, 2015 2. Industrial assets only

Average Clear Ceiling Heights

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Average Asset Age Average Tenant Size

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31 feet 13 Years 193,0 0 0 Sq. Ft.

Average Building Size

2

321,0 0 0 Sq. Ft.

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Stable and Diversified Tenant Mix

High-Quality Tenant Base

Top 10 Industrial Tenants*

*As of September 30, 2015

Tenant GLA Occupied (%) of Total Portfolio GLA Remaining Lease Term (Years) Sector General Mills 1,512,552 10.02% 4.67 Consumer Products Unilever 1,262,648 8.36% 7.75 Consumer Products Honeywell 754,000 4.99% 3.25 Consumer Products Fullbeauty Brands, Inc. 741,092 4.91% 5.92 Online Retailer Zulily 737,471 4.88% 1.67 Online Retailer Essendant (Formerly United Stationers) 654,080 4.33% 1.84 Consumer Products CEVA Logistics 648,750 4.30% 0.67 Logistics Amazon.com 572,000 3.79% 3.84 Online Retailer eBay Enterprise (Formerly GSI Commerce) 543,512 3.60% 1.58 Online Retailer Life Science Logistics 394,200 2.61% 4.75 Healthcare 7,820,305 51.79% 4.03

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Financial Overview

6766 Pontius Rd.

Cincinnati, Ohio

GLA: 754,000 sq. ft. Ceiling height: 35 feet

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Consistent Growth Since IPO

(US$,000 except per Unit amounts)

Q3 2015 Q2 2015 Q1 2015 Q4 2014 Q3 2014 Investment properties revenue $ 17,705 $ 17,563 $ 16,386 $ 15,431 $ 15,227 NOI 13,420 13,358 12,452 11,796 11,610 FFO 8,617 8,143 7,990 7,623 7,431 AFFO 7,361 7,156 6,697 6,363 6,234 AFFO per Unit $0.218 $0.212 $0.207 $0.216 $0.212

Property acquisitions made significant contribution

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Strong Balance Sheet & Liquidity Position

As of September 30, 2015 Total Debt to GBV 48.8% Weighted Average Effective Interest Rate 3.8% Weighted Average Mortgage Term-to-Maturity 5.2 yrs Interest Coverage Ratio 3.4 times Fixed Charge Coverage Ratio 2.9 times AFFO Payout Ratio – Q3 2015 82.5%

$28.3 Million in capacity on Revolving Facility

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Capitalizing on Low Interest Rate Environment

Well-Balanced Mortgage Portfolio

Mortgage Maturities by Year Weighted Average Mortgage Term-to-Maturity

5.2 years

539 23,161 1,913 33,295 31,481 87,111 50,011 25,762 52,498 8,863

  • 10,000

20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 100,000 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Maturities ($ in thousands)

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Staggered Lease Maturity Profile

Limited Near-Term Tenant Turnover

Weighted Average Remaining Lease Term

4.0 years

Leases expiring 19 13 16 11 11 8 3 8

12.3% 20.2% 17.4% 7.0% 17.9% 8.6% 2.4% 14.2% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 2015 2016 2017 2018 2019 2020 2021 2022 2023 +

Lease Expiration (% of GLA) by Year

0.0%

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Growth Strategies

6579 West 350 North Indianapolis, Indiana

GLA: 629,200 sq. ft. Ceiling height: 32 feet

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Proven Growth Strategies

Internal Growth:

  • Contractual rent increases
  • Rolling rents to market upon renewals
  • Increased occupancies
  • Effective asset & property management
  • Strategic debt placement & refinancing

External Growth:

  • Strong acquisition pipeline
  • Institutional relationships
  • Proven track record of sourcing,

completing and integrating acquisitions

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19 Focused on distribution sub-segment of U.S. industrial real estate market High-quality, stabilized and geographically diverse portfolio in major distribution markets Aligned and experienced management and majority-independent board of trustees Platform for accretive growth in a fragmented market

Summary

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3003 Reeves Road

Indianapolis, Indiana

GLA: 741,100 sq. ft. Ceiling height: 36 feet

2 3 4 1

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APPENDIX

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Majority-Independent Board with Extensive Real Estate & Financial Experience

Board of Trustees

Trustee Real Estate/Board Experience Independent Trustee Audit Committee CG&N1 Committee

Robert Wolf

Lead Trustee

  • Principal, RTW Capital Corporation
  • Former CFO, RioCan REIT

 

Milo Arkema

  • Independent Consultant
  • Former Accountant, Baker Tilly Virchow Krause, LLP

 

Sarah Kavanagh

  • Commissioner, Ontario Securities Commission
  • Former Vice Chair, Co-Head, Diversified Industry Group,

Scotia Capital

 

Charles Swanson

  • Former VP, Real Estate, bcIMC
  • Former Director, SilverBirch Hotels & Resorts

 

Harry Rosenbaum

  • Founding Principal, Great Gulf Group of Companies
  • Partner, Ashton Wood Homes

 

Andrew Silberstein

  • Partner, Almanac Realty Investors LLC
  • Former CIO and COO of Stoltz Real Estate

Scott Frederiksen

Chair of the Board

  • CEO, Welsh Property Trust LLC
  • 26 years with Welsh organization

(CHAIR) (CHAIR)

1.Compensation, Governance and Nominating

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Aligned Fee Structure Asset Management

  • 0.25% of GBV

Acquisition

  • 1.0% on first $100M
  • 0.75% on next $100M
  • 0.5% over $200M

No Performance Incentives

  • No AFFO hurdle

Property Management (% of revenue)

  • 2% on single-tenant industrial
  • 3% on multi-tenant industrial
  • 4% on office

Construction Management

  • 5% on non-maintenance capital projects >$100,000

Term

  • Initial term of 5 years plus 5 year renewal option
  • Automatic internalization at $750 million equity

market capitalization

Asset and Property Management

No disposition, financing, leasing or development fees No employees directly billed to REIT

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Subsequent Events

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Overview of Recent Strategic Process

  • Favourable market conditions in the U.S. industrial real estate sector, including several recent high-profile transactions
  • Several advisers interviewed and ultimately retained Eastdil & CBRE
  • Considering the value metrics implied by recent transactions and input from the REIT’s advisers, the Board announced

strategic process and formation of a Special Committee in May 2015

  • Unaffected unit price of US$11.49 (20-day VWAP)
  • Special Committee led by Robert Wolf, Lead Independent Trustee
  • Retained RBC Capital Markets to act as special committee adviser
  • Board and Special Committee closely advised by Goodmans LLP to ensure review process complied with proper legal and

ethical standards

  • Process and deliberations overseen by Special Committee, with non-independent trustees abstaining from voting matters

Process Adhered to Corporate Governance Best Practices

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Volatile Market Conditions & Structural Issues Negatively Impacted Process

Market Dynamics

Buyer Type Com m entary

Public REITs

  • Significant uptick in public market volatility

during process

  • Falling share prices impacted cost of equity

Non-Traded REITs

  • Fund flows into NTRs significantly declined
  • Largest player, American Realty Capital, faced

various issues

  • Adverse regulatory changes pending

Sovereign Wealth

  • Constrained by FIRPTA and needed to “club-up”
  • Lengthy & complex syndication difficult to justify

for smaller portfolios

Private Equity

  • Typically require higher returns than can be

generated by REIT’s “core” portfolio

  • Would face significant breakage costs to

recapitalize in-place debt

Traditional Private Buyers

  • Limited appetite to manage the complexities

associated with acquiring a public target REIT Index Relative Perform ance Since May 20 15

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Results of Strategic Process

  • Several expressions of interest were received
  • Proposals received did not align with the board’s view of the REIT’s intrinsic value
  • Board ultimately determined that the transactions involving AIMCo and continuing to execute the REIT’s

long term strategic plan as a public issuer represented the best means of maximizing value for unitholders

  • Board’s conclusion reached after thorough consultation with financial advisers and external counsel

Process Did Not Surface Compelling En Bloc Sale Opportunity

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Overview of AIMCo Transactions

Transaction Provides AIMCo with Exposure to U.S. Industrial along with Proven and Aligned U.S. Investment Platform

WPT Trading Since May 20 15

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Form ation of WPT Capital Advisors

  • Co-owned by AIMCo and Welsh senior management
  • Acquired Welsh management platform
  • Will form private funds that will make value-add and
  • pportunistic investments in U.S. industrial real estate
  • REIT will have ROFO subject to minimum investment

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Acquisition of REIT Units from Welsh Property Trust

  • Purchased ~4.8 mm units at US$11.75, increasing AIMCo’s total position to ~16%
  • Put/ call arrangement for an additional ~4.5 mm units also at US$11.75
  • Subject to removal of unitholder rights plan; allows AIMCo to increase position to ~29%
  • AIMCo subject to 3-year standstill and to 20% voting cap; Welsh reduced board nomination rights

May 18, 2015: Strategic Alternatives Announced January 20, 2016: AIMCo Deal Announced

AIMCo Acquisition Price ($11.75)
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Benefits of AIMCo Transactions

Transaction Delivers Attractive Benefits to Both Unitholders and AIMCo

Transaction Highlights for Unitholders

Validation of Value

  • US$11.75 sale constitutes an endorsement
  • f value by a sophisticated, direct real

estate investor

Access to Pipeline

  • ROFO on high-quality assets stabilized by

WPT Capital funds

  • Opportunity for REIT to earn attractive

returns on diversified investments in WPT Capital funds

Rem oves Alm anac Overhang

  • Replaces finite life, limited size private

equity debt structure at manager with long term, blue chip equity investor with significant access to capital

Transaction Highlights for AIMCo

Investm ent in REIT Access to Platform

  • Core asset exposure
  • Stable income stream
  • Currently under-weight U.S. industrial
  • Interest in WPT Capital provides access to

investment platform

  • Invested in REIT as part of overall

investment to recapitalize and align platform

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The Path Forward

  • Completion of strategic process enables management to focus on key growth initiatives
  • Organic Growth
  • Contractual rent escalations of ~1.4% annually and step-ups to market as tenancies roll
  • Accretive debt refinancing opportunities
  • External Acquisitions
  • Fragmented ~14 B U.S. industrial property market
  • Balance sheet capacity for direct acquisitions
  • Capital recycling and joint ventures
  • Opportunity set expected to expand as market conditions evolve and cost of capital improves
  • Form ation of WPT Capital Funds
  • AIMCo expects to deploy significant capital to U.S. logistics & distribution space
  • REIT will benefit from diversified investment opportunities and co-invest and ROFO rights

Compelling Avenues for Future Growth