Q3 2017 Investor Presentations ForwardLooking Statements This - - PowerPoint PPT Presentation
Q3 2017 Investor Presentations ForwardLooking Statements This - - PowerPoint PPT Presentation
Q3 2017 Investor Presentations ForwardLooking Statements This presentation contains "forward-looking information" as defined under Canadian securities laws which reflect managements expectations regarding objectives, plans,
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
- f 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 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, 2016 (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”), adjusted cash flow from operations (“ACFO”) and net
- perating 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
- f 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
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U.S. Exposure Through Experienced Platform
Veteran management team with extensive knowledge of the U.S. industrial real estate sector ONLY Canadian REIT focused exclusively on U.S. industrial real estate Unit price and annual distribution of $0.76/unit in U.S. Dollars
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Proven Growth Strategies
ACTIVE INVESTMENT PIPELINE EXPERIENCED INVESTMENT TEAM
EXTERNAL GROWTH
EXTENSIVE INDUSTRY RELATIONSHIPS
JOINT VENTURE AND DEVELOPMENT OPPORTUNITIES WITH ESTABLISHED INSTITUTIONAL PARTNERS
ENTRY INTO NEW U.S. MARKETS STRATEGIC FINANCING CONTRACTUAL RENT INCREASES MAINTAINING CONSISTENTLY HIGH OCCUPANCY
INTERNAL GROWTH
ROLLING RENTS TO MARKETS AT RENEWAL PROPERTY EXPANSION AND DEVELOPMENT
WPT MANAGEMENT PLATFORM
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- AVG. CEILING HEIGHT2
31’
………………………………
- AVG. BLDG. SIZE (SQ. FT.)2
343,000
…………………………………
- AVG. TENANT SIZE (SQ. FT.)2
152,000
……………………………………….
- AVG. ASSET AGE (YEARS)2
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INVESTMENT PROPERTIES
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………………………………
TOTAL SQUARE FEET OF GLA
17.3mm
…………………………………
FAIR VALUE OF INVESTMENT PROPERTIES
$1.0B
……………………………………….
1. As at September 30, 2017 2. Industrial assets only
Expanding U.S. Footprint
1
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- 1. As at September 30, 2017
Minneapolis Houston Dallas Milwaukee Chicago
- St. Louis
Kansas City Salt Lake City Denver Seattle Portland Los Angeles/ Reno Indianapolis Central PA Columbus Cincinnati Atlanta Florida (North, Central, South) Charlotte Nashville Northern NJ Phoenix Baltimore Inland Empire Northern California
West Region East Region Central Region Current Markets Target Markets
*Each blue dot represents 1,000 people Source: U.S. Census Bureau
Memphis Detroit Louisville
Tenant
Industry % of Total Annualized Base Rent1 GLA Occupied (‘000s sq. ft.)1 (%) of Total Portfolio GLA1
General Mills Operations, LLC Consumer Products 6.0% 1,512.6 8.7% Unilever Home & Personal Care Consumer Products 5.2% 1,262.6 7.3% Continental Tire the Americas Consumer Products 5.2% 740.9 4.3% Zulily, LLC E-Commerce 3.9% 737.5 4.3% Keystone Automotive2 Consumer Products 3.5% 580.0 3.3% Fullbeauty Brands, Inc. Consumer Products 3.2% 741.1 4.3% Radial, Inc. E-Commerce 3.0% 543.5 3.1% CEVA Logistics U.S. Inc. Third Party Logistics 2.9% 648.8 3.7% Amazon.com E-Commerce 2.9% 572.0 3.3% Honeywell International Inc. Industrial Products 2.8% 754.0 4.4% Total 38.6% 8,093.0 46.7%
High-Quality Tenant Base
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1. As at September 30, 2017 2. Comprised of two leases with Keystone Automotive Operations, Inc. and Keystone Automotive Industries, Inc.; both wholly-owned subsidiaries of LKQ Corporation.
Prudent Use of Leverage
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3.9 years Weighted average mortgage term to maturity
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3.8% Weighted average effective interest rate
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41.6% Total debt to GBV 3.2x Fixed charge coverage ratio 7.1x Debt to adjusted EBITDA $68.6mm Revolving credit facility availability
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1. As at September 30, 2017 2. Excludes the REIT’s construction debt and revolving credit facility
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Staggered Debt Maturity
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1. As at September 30, 2017 and excludes the REIT’s construction debt and revolving credit facility
0.6 33.9 32.1 87.7 73.7 26.4 53.2 41.0 0.0% 1.0% 2.0% 3.0% 4.0% 5.0%
- 10.0
20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0 100.0 2017 2018 2019 2020 2021 2022 2023 2024 Maturities ($ in Millions)
Debt Maturities by Year
1.4% 11.3% 13.1% 17.6% 13.1% 17.7% 12.2% 13.6%
2017 2018 2019 2020 2021 2022 2023 2024+
Lease Expiration (% of GLA) by Year ¹
4.1 years
Weighted average remaining lease term
Staggered Lease Maturity Schedule
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2
13 21 15 25 19 10 15 Number of Leases Expiring
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1. As at September 30, 2017 2. Includes one month-to-month lease
Upcoming Lease Renewals
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2018 2018
As at 6/30/2017, the REIT had 4 leases totaling 2.1% of the portfolio remaining to be renewed.
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1. As at September 30, 2017 2. Includes one month-to-month lease
2018
13 leases totaling 11.3% of the portfolio expiring in 2018, including:
- Honeywell: 754,000 sq. ft./4.4% of GLA
- The Clorox Company: 364,000 sq. ft./2.1% of GLA
- KGP Logistics: 311,100 sq. ft./1.8% of GLA
- UPS: 300,000 sq. ft./ 1.7% of GLA
2017
2 leases totaling 1.4% of the portfolio expiring in 2017
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2019
21 leases totaling 13.1% of the portfolio expiring in 2019, including:
- CEVA Logistics U.S. Inc: 648,750 sq. ft./3.7% of GLA
- Amazon.com: 572,000 sq. ft./3.3% of GLA
Track Record of Growing Unitholder Value
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1. As at September 30, 2017 Unit price growth from IPO – Sept. 30, 2017
180.1 220.9 144.6 115.5 70 90 110 130 150 170 190 210 230 250 Mar-13 Jun-13 S ep-13 Dec-13 Mar-14 Jun-14 S ep-14 Dec-14 Mar-15 Jun-15 S ep-15 Dec-15 Mar-16 Jun-16 S ep-16 Dec-16 Mar-17 Jun-17 S ep-17 WIR (US $) WIR (CAD$) S &P/ TS X Composit e Index (CAD$) S &P/ TS X Capped REIT Index (CAD$)
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July 2017 Successful Equity Raise
- Net proceeds of approximately
$83mm (inclusive of over-allotment)
- Provided approximately $166mm of
purchase capacity (assuming 50% Debt/GBV)
- Participation from both existing and
new investors
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Plainfield Development Mount Moriah Expansion
- 171,600 sq. ft.
- 32’ clear ceiling height
- Multi-tenant building
- 78,000 sq. ft. leased in Q3
Property Development Expansion
- 47,250 sq. ft.
- 8-year lease extension to
2037
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Interstate Crossroads Distribution Center
Location: Portland, OR Acquired: July 5, 2017 Purchase Price: $56.0mm Square Feet: 492,554 Land Size(Acres): 28.13 Clear Height: 32’ Occupancy: 100%
Interstate Crossroads Distribution Center – Tenants
LKQ Corp (NASDAQ: LKQ) 229,141 Sq. Ft. REIT’s 4th Largest Tenant Staples, Inc. (NASDAQ: SPLS) 263,413 Sq. Ft.
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Apex Distribution Center
Location: Houston, TX Acquired: August 3, 2017 Purchase Price: $40.3mm Year Built: 2005 & 2015 Square Feet: 410,600 Land Size(Acres): 24.76 Clear Height: 28’ - 32’ Occupancy: 86.2% # of Tenants: 5
Apex Distribution Center - Tenants
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Building Two 204,070 sq. ft.
(divisible)
Building One 140,110 sq. ft. Building Three 66,420 sq. ft.
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3000 AM Drive
Location: Quakertown, PA Acquired: September 13, 2017 Purchase Price: $74.3mm Square Feet: 935,540 Land Size(Acres): 76.84 Clear Height: 30’ Occupancy: 100%
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3000 AM Drive – Tenants
Continental Tires the Americas, LLC 740,880 Sq. Ft. REIT’s 3rd Largest Tenant XPO Logistics Supply Chain (NASDAQ: XPO) 194,660 Sq. Ft.
219,257 Sq. ft. Potential Expansion
Compelling U.S. Industrial Market Fundamentals
Source: Cushman & Wakefield Research – Q3 2017
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Source: CBRE Q1 2017 MarketView Snapshot
U.S. Industrial New Construction Deliveries
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Industrial Development Building Momentum
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The construction pipeline is at its highest level this cycle. Despite the increase, supply, and demand remain in relative equilibrium in most markets. Speculative projects account for 121.6 msf (or 69.5%)
- f year-to-date deliveries, and given the tight market, developers continue to break ground.
(Source: Cushman Wakefield US Industrial MarketBeat, Q3 2017)
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)
From a development perspective, nearly 221.6m square feet of new inventory is currently under
- construction. Overall pre-leasing was stronger than the previous quarter, with the pre-leasing rate for
new deliveries at 54.2%.
(Source: JLL Research Report: First Look at Industrial, Q3 2017)
Despite the increase in rents, renewal activity remains robust in second-generation space. With a lack of existing available blocks of space, tenants are willing to lock-in rates by renewing leases or are turning toward new construction. Market Indicators
Source: Cushman & Wakefield Research
Q3 16 Q3 17 Overall Vacancy 5.5% 5.1% Net Absorption 78.5mm 66.5mm Under Construction 214.6mm 233.1mm Weighted Asking Rent (NNN) $5.57 $5.80 Investor Demand Key Driver for Industrial Real Estate Tightening markets and new, higher-quality Class A industrial space drove up asking rents to $6.15 per square foot in Q2 2017, 9.5% higher than the same period a year ago
Industrial Real Estate Stands Out in Sales Growth
U.S. Research Report | Q2 2017 | Industrial Market Outlook | Colliers International
Tenant Demand Continues to Drive Rent Growth
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Tightening markets and new, higher-quality Class A industrial space drove up asking rents to $6.15 per square foot per year in Q2 2017, 9.5% higher than the same time last year. With new development slated to maintain the activity level seen in 2016, the increased amounts of new Class A product hitting the market will likely keep rents at record highs in the coming quarters.
Source: JLL Q2 2017 Industrial Outlook Source: CBRE Q1 2017 U.S Industrial MarketView Snapshot
- $2.0 trillion in global online sales in 2016
accounted for only 8.6% of all retail sales; expected to double in the next 4 years.1
- Over the past 24 months, 22.5% of all U.S.
bulk warehouse/distribution transactions were e-commerce related.1
- Q2 2017 e-commerce sales increased ~16.2%
from the same period in 2016 compared to a total retail sales increase of 4.1%.2
E-Commerce Growth Potential
28 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 2015 2016 2017E 2018E 2019E 2020E
E-Commerce Sales, Global
($, Trillions)
1. Per e-Marketer 2. Per the Q2 2017 US Census Bureau’s ‘Quarterly Retail E-Commerce Sales
Asset and Property Management
Asset Management
- 0.25% of GBV
Property Management (% of revenue)
- 2% on single-tenant industrial
- 3% on multi-tenant industrial
- 4% on office
No disposition, financing, leasing, development
- r incentive fees.
Construction Management
- 5% on non-maintenance capital projects >100,000
Acquisitions
- 1.0% on first $100mm
- 0.75% on next $100mm
- 0.5% over $200mm
No employees directly billed to REIT Term
- Expires April 2023
Automatic internalization at $750 million equity market capitalization
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Research Analyst Coverage
Name Firm Email Phone
Troy MacLean, CFA BMO Capital Markets troy.maclean@bmo.com (416) 359-8366 Dean Wilkinson, CFA CIBC dean.wilkinson@cibc.com (416) 594-7194 Michael Markidis, CFA Desjardins Capital Markets michael.markidis@Desjardins.com (416) 607-3028 Jimmy Shan, CA, MBA GMP Securities jshan@gmpsecurities.com (416) 943-6148 Brad Sturges, CFA iA Securities bsturges@iagto.ca (416) 203-5827 Trevor Johnson, CFA, MBA National Bank Financial trevor.johnson@nbc.ca (416) 869-8511 Neil Downey, CFA, CA, CPA RBC Capital Markets neil.downey@rbccm.com (416) 842-7835 Pammi Bir, CPA, CA, CFA Scotia Capital pammi.bir@Scotiabank.com (416) 863-7218
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Trustee Real Estate/Board Experience Independent Trustee Audit Committee Investment Committee CG&N1 Committee
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
- 30 Years with Welsh Organization
Sarah Kavanagh
- Former 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
Pamela Spackman
- Former President and CEO, Column Canada Financial Corp
- Former Vice-President of Mortgage Investments, Ministry of Finance,
Province of British Columbia
Robert Wolf
Lead Trustee
- Principal, RTW Capital Corporation
- Former CFO, RioCan REIT
(CHAIR) (CHAIR) (CHAIR)
1.Compensation, Governance and Nominating
Board of Trustees
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Scott Frederiksen
Chief Executive Officer P: 612-800-8501 E: stf@wptreit.com