INVESTOR PRESENTATION Fourth Quarter 20 16 1 Forward-Looking - - PowerPoint PPT Presentation

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INVESTOR PRESENTATION Fourth Quarter 20 16 1 Forward-Looking - - PowerPoint PPT Presentation

INVESTOR PRESENTATION Fourth Quarter 20 16 1 Forward-Looking Statements This presentation contains "forward-looking information" as defined under Canadian securities laws which reflect managements expectations regarding objectives,


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INVESTOR PRESENTATION

Fourth Quarter 20 16

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This presentation contains "forward-looking information" as defined under Canadian securities laws which reflect management’s expectations regarding objectives, plans, goals, strategies, future growth, results of operations, performance, business prospects and opportunities of WPT Industrial Real Estate Investment Trust (the “REIT"). The words “plans”, “expects”, “scheduled”, “estimates”, “intends”, “anticipates”, “projects”, “believes”, or variations of such words and phrases (including negative variations) or statements to the effect that certain actions, events or results “may”, “will”, “could”, “would”, “might”, “be achieved”, or “continue” and similar expressions identify forward-looking statements. These statements reflect the REIT's current expectations regarding future events and operating performance, the REIT’s future growth potential and other prospects and opportunities, results of

  • perations, 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 are necessarily based on a number of estimates, beliefs and assumptions that are inherently subject to significant business, economic and

competitive uncertainties and contingencies which could cause actual results to differ materially from those that are disclosed in such forward-looking statements. While considered reasonable by management of the REIT as of the date of this presentation, any of these estimates, beliefs or assumptions could prove to be inaccurate, and as a result, the forward-looking statements based on those estimates, beliefs or assumptions could be incorrect. When relying on forward-looking statements to make decisions, the REIT cautions readers not to place undue reliance on these statements, as forward-looking statements involve significant risks and uncertainties and should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not the times at or by which such performance or results will be achieved, if achieved at all. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements, including but not limited to those factors discussed or referenced under the “Risk Factors” section of the REIT’s MD&A and the REIT’s annual information form for the year ended December 31, 2015 (the “AIF”). 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 REIT’s MD&A and the AIF. Certain terms included in this presentation such as funds from operations (“FFO”), adjusted funds from operations (“AFFO”) and net operating income (“NOI”) are used by management to measure, compare and explain the operating results and financial performance of the REIT and are not recognized terms under IFRS, and therefore should not be construed as alternatives to net income (loss) and comprehensive income (loss) or cash flow from operating activities calculated in accordance with IFRS. Management believes these terms are relevant measures in comparing the REIT’s performance to industry data, the REIT’s ability to earn and distribute cash returns to holders of the REIT’s trust units, and the REIT’s ability to meet its ongoing obligations. These terms are defined and reconciled to the most directly comparable measure specified in the REIT’s MD&A. Such terms do not have a standardized meaning prescribed by IFRS and may not be comparable to similarly titled measures presented by other issuers.

Forward-Looking Statements

All currency in U.S. dollars

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U.S. Industrial Market Update

56 20 Inner Park Drive Pontoon Beach, Illinois

GLA: 1,262,648 sq. ft. Ceiling height: 32 feet

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Demand for Industrial remains Strong

Industrial Market Dem and at Highest Level Since 20 0 5

  • U.S. vacancy set a new record low of 5.6%. As U.S. demand

continues to rise and land values soar, major urban areas are running low on options for Class A warehouse space.

(Source: JLL U.S. Investment Outlook Q4 2016)

  • U.S. industrial market expanded for a 27th consecutive quarter,

logging ~47M sq. ft. of positive net absorption in Q4 2016 – the longest such streak in more than 20 years.

(Source: CBRE Marketview Snapshot, Q4 2016)

  • With industrial fundamentals continuing to break records and

absorption outpacing development, we expect that asking rental rates will ascend at a rapid pace in the coming quarters.

(Source: Colliers International Industrial Market Outlook, Q3 2016)

  • E-commerce sales in the U.S. were up 15.1% in Q4 2016 vs. Q4

2015, while total retail sales increased 2.2% in the same period, working to the advantage of industrial markets.

(Source: U.S. Census Bureau New s, February 2017)

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Development Activity

  • Strong tenant demand and a disciplined

approach to development continue to attract investment even during uncertain economic conditions.

(Source: JLL Investment Outlook, Q3 2016)

  • If 100% of the development activity currently in

the pipeline goes unleased; the worst case scenario is the vacancy rate would increase to 6.3%, which is still 15% below the 10 year

  • average. (Source:

CBRE Western US Industrial and Office Conference)

  • The need for more warehouse space as a cost-

savings measure, combined with the need to carry larger inventories in a competitive online sales environment, will keep demand for industrial real estate robust for the foreseeable

  • future. (Source: Colliers International Industrial Market Outlook, Q4 2016)
  • (Source: CBRE Western US Industrial and Office Conference)

Tenant Dem and Exceeds Available Space, Fueling Developm ent

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Growing Rents

Industrial Tenant Dem and Continues to Drive Rents to Record Highs

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WPT Industrial REIT Update

10 0 West Thom as P Echols Drive

Louisville, KY

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

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Unique Investm ent Vehicle

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

  • Specific concentration in U.S.

distribution and logistics market

  • Annual distribution of

$0.76/ unit in U.S. Dollars

  • Managed by WPT Capital

Advisors

  • Experienced management

team with long history in industrial sector

  • Unit price is in U.S. Dollars
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Proven Growth Strategies

Internal Growth:

  • Contractual rent increases
  • Rolling rents to market upon renewals
  • Consistently high occupancy rates across

portfolio

  • Effective asset & property management
  • Strategic debt placement & refinancing
  • Development of vacant land parcels

External Growth:

  • Strong established acquisition team
  • Strong acquisition pipeline
  • Extensive institutional relationships
  • Proven track record of sourcing,

completing and integrating acquisitions Experienced Managem ent Team Delivering Growth & Results

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Acquisitions since IPO (1)

6 76 6 Pontius Rd.

Cincinnati, Ohio

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

$315.5 Million 13

Institutional Quality Properties

7.3 Million Square Feet 41 High-Quality Tenants

(1) As of December 31, 2016.

Strong Track Record of Growth

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Strategically Located in Key Distribution Markets Investment Properties

15.6M

  • sq. ft. of GLA

49

Current Portfolio

1

  • 1. As of December 31, 2016
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State-of-the-Art Assets

Institutional-Quality Portfolio

1

1. As of December 31, 2016 2. Industrial assets only

Average Clear Ceiling Heights

2

Average Asset Age Average Tenant Size

2

31 feet 13 Years 144,0 0 0 sq. ft.

Average Building Size

2

326,0 0 0 sq. ft.

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Stable and Diversified Tenant Mix

High-Quality Tenant Base

Top 10 Tenants*

*As of Decem ber 31, 20 16

Tenant % of Total Annualized Base Rent GLA Occupied (‘0 0 0 s sq. ft.) (%) of Total Portfolio GLA Sector

General Mills Operations, LLC 6.8 % 1,512.6 9.7% Consum er Products Unilever Hom e & Personal Care 5.8 % 1,262.6 8 .1% Consum er Products Zulily, LLC 3.8 % 737.5 4.7% Online Retailer Fullbeauty Brands, Inc. 3.6% 741.1 4.7% Online Retailer Am azon.com 3.3% 572.0 3.6% Online Retailer CEVA Logistics U.S. Inc. 3.3% 648 .8 4.2% Logistics Radial, Inc. 3.1% 543.5 3.5% Online Retailer Essendant Co. 3.1% 654.0 4.2% Consum er Products Honeywell International Inc. 3.1% 754.0 4.8 % Consum er Products KGP Logistics, Inc. 2.9% 311.1 2.0 % Logistics

Total 38 .8 % 7,737.2 49.5%

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Consistent Growth Since IPO

14

$57,351 $67,423 $71,110 $40,000 $50,000 $60,000 $70,000 $80,000 2014 2015 2016

Investment Properties Revenue

$43,318 $50,602 $52,660 $35,000 $40,000 $45,000 $50,000 $55,000 2014 2015 2016

Net Operating Income

$27,523 $30,871 $33,394 $20,000 $24,000 $28,000 $32,000 $36,000 2014 2015 2016

Funds From Operations

$22,568 $28,637 $31,141 $20,000 $24,000 $28,000 $32,000 2014 2015 2016

Adjusted Funds From Operations

Targeting Disciplined and Strategic Growth

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Strong Balance Sheet & Liquidity Position

As of December 31, 2016 Total Debt to GBV 41.8% Weighted Average Effective Interest Rate 3.8% Weighted Average Mortgage Term-to-Maturity 4.3 yrs Interest Coverage Ratio 3.5 times Fixed Charge Coverage Ratio 3.0 times Debt to Adjusted EBITDA 7.5 times AFFO Payout Ratio – YTD 2016 91.6%

$73 Million in Capacity on Revolving Facility at 12/ 31/ 16

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10 0 % Fixed Rate Mortgage Debt with Weighted Average Interest Rate of 3.8 %

Well-Balanced Mortgage Profile

Weighted Average Mortgage Term-to-Maturity

4.3 years

(1) As of December 31, 2016

2,462 33,864 32,072 87,723 73,567 25,762 52,498 8,863 0.0% 1.0% 2.0% 3.0% 4.0% 5.0%

  • 10,000

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

Weighted Average Interest Rate

  • f Scheduled Maturities

Maturities ($ in Thousands)

Mortgage Maturities by Year (1)

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Staggered Lease Maturity Schedule

Balanced Tenant Turnover

Weighted Average Remaining Lease Term

4.1 years

Leases expiring

10 21 22 14 26 8 8 9

(1) As of December 31, 2016.

8.4% 15.4% 13.5% 17.6% 14.4% 8.3% 12.7% 9.7% 0.0% 5.0% 10.0% 15.0% 20.0% 2017 2018 2019 2020 2021 2022 2023 2024+

Lease Expiration (% of GLA) by Year (1)

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2016 Leasing Activity

Track Record of Successful Tenant Retention

99.1% of leases expiring during

the year ended December 31, 2016 were renewed or leased to new tenants.

Occupancy Roll-Forward

Year Ended Decem ber 31, 20 16 (‘0 0 0 s sq. ft.) Occupancy Occupancy at Decem ber 31, 20 15 14,8 8 5.3 98 .6% Expansions 78.4 New leases 197.7 Renewals 2,256.2 Expiries (2,319.6) Acquisitions

711.3

Dispositions (252.5) Early terminations (133.4) Occupancy at Decem ber 31, 20 16 15,423.4 98 .7%

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2017 Lease Expirations

Major Tenants have Significant Capital Investm ents in Properties

As of December 31, 2016, the REIT had 10 leases comprising 8.4% (~1.3M sq. ft.) of the portfolio remaining in 2017 to renew. UPDATE AS OF March 15, 20 17: The REIT has renewed ~83% of its 2017 lease expirations totaling approximately 2.7M

  • sq. ft., including Zulily, Radial, Keystone

and Essendant, leaving 3.6% of the portfolio to be renewed.

  • Exp. 5/ 31/ 17

737,471 sq. ft. 5.0% of GLA

  • Exp. 7/ 31/ 17

654,080 sq. ft. 4.4% of GLA

  • Exp. 4/ 30/ 17

543,512 sq. ft. 3.6% of GLA

  • Exp. 4/ 30/ 17

350,819 sq. ft. 2.4% of GLA

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Capital to Grow

Most Recent Equity Raise & Concurrent Private Placem ent

  • Gross proceeds of $8 4M (inclusive of over-

allotm ent)

  • Provided flexibility to expand in new and

existing m arkets

  • Proceeds provided funds for:
  • Developm ent – Plainfield, IN
  • Value Add Acquisition – Minneapolis, MN
  • Stabilized Acquisition - Colum bus, OH
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Developm ent Project

28 25 Reeves Road Plainfield, IN

  • 10.7 acre development parcel on

existing REIT land

  • 171,600 sq. ft.
  • 32’ ceiling clear height
  • Multi-tenant
  • Scheduled to be completed in Q2 ’17
  • Actively marketing the property to

potential tenants Infill Developm ent Project

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Minneapolis Acquisition

111 – 181 Cheshire Lane Plymouth (Minneapolis), Minnesota

  • 560,378 sq. ft.
  • Built in 1997
  • Acquired at discount to replacement cost
  • 86% occupied at time of acquisition
  • 91% occupied as of 3/ 15/ 2017

Value-Add Acquisition

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Colum bus Acquisition

3360 Southwest Blvd. Grove City (Columbus), Ohio

  • 226,800 sq. ft. modern

front-office/ rear loaded distribution center

  • Built in 2015
  • 32’ foot clear ceiling

heights

  • Cross docked with 20

dock doors

  • 100% occupied by two

Fortune Global 500 companies

  • Occupies 80% of the building
  • Leased through May 31, 2021
  • Recently acquired by Unilever
  • Occupies 20% of the building
  • Leased through March 31, 2026

Stabilized and Accretive Acquisition

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APPENDIX

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Aligned Fee Structure Asset Managem ent

  • 0.25% of GBV

Acquisition

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

No Perform ance Incentives

  • No AFFO hurdle

Property Managem ent (% of revenue)

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

Construction Managem ent

  • 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 developm ent fees No em ployees directly billed to REIT

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Majority-Independent Board with Extensive Real Estate & Financial Experience

Board of Trustees

Trustee Real Estate/ Board Experience Independent Trustee Audit Com m ittee Investm ent Com m ittee CG&N 1 Com m ittee

Milo Arkema

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

  

Louie DiNunzio

  • Senior Vice President of Investments, Cadillac Fairview
  • Chartered Accountant

 

Scott Frederiksen

Chair of the Board

  • CEO, WPT Capital Advisors, LLC &

Welsh Property Trust, LLC

  • 25 years with Welsh organization

Sarah Kavanagh

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

Scotia Capital

  

Stuart H.B. Smith

  • Chairman and Founder, EPIC Realty Partners Inc.
  • Former President and CEO of Oxford Properties Group

  

Charles Swanson

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

  

Robert Wolf

Lead Trustee

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

 

(CHAIR) (CHAIR)

1.Compensation, Governance and Nominating

(CHAIR)