Artis Real Estate Investment Trust Investor Presentation Q3 – 2016 PROPERTIES OF SUCCESS 1
ARTIS REAL ESTATE INVESTMENT TRUST cautionary statement. 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. 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 Additional information about Artis, including risks and uncertainties that could cause actual investors that actual results will be consistent with these forward-looking statements. 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 September 30, 2016 and 2015, our 2015 annual earnings press release dated February 29, 2016, and our audited annual consolidated financial statements for the years ended December 31, 2015, and 2014 which are available on SEDAR at www.sedar.com or on our company website at www.artisreit.com. Artis is based upon what management believes to be reasonable assumptions, Artis cannot assure 415 Yonge Street, Toronto ON TEMENTS FOR ORWA WARD-LO LOOKIN ING G STATE This presentation may contain forward-looking statements. Although the forward-looking statements contained or incorporated by reference herein are For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be 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 September 30, 2016. 2
Greenfield developments at positive spreads to market Retail Accretive refinancing of existing debt Accretive recycling of capital Increasing same property NOI Results driven active asset management 3. INTERNAL GROWTH ARTIS REAL ESTATE INVESTMENT TRUST Industrial Office 2. PRODUCT DIVERSIFICATION 1.GEOGRAPHIC DIVERSIFICATION OUR STRATEGY AND BUSINESS MODEL Stampede Station, Calgary AB Canada and U.S.A. • • • • • • • • 3
ARTIS REAL ESTATE INVESTMENT TRUST 26.2M SF Sept. 30, 2015 Dec. 31, 2015 Sept. 30, 2016 PROPERTIES 255 252 262 SIZE 26.2M SF 27.2M SF Information on this slide is inclusive of Artis’ proportionate share of its joint venture arrangements. GBV $5.7B $5.7B $5.9B OCCUPANCY + COMMITMENTS 95% 95% 94% MADISON 10 MAJOR MARKETS 3 ASSET CLASSES Occupancy plus commitments excludes properties held for redevelopment PHOENIX PORTFOLIO OVERVIEW KELOWNA RETAIL OFFICE INDUSTRIAL TORONTO GTA OTTAWA MEDICINE HAT CALGARY FORT McMURRAY GRANDE PRAIRIE REGINA SASKATOON ESTEVAN DENVER EDSON CRANBROOK EDMONTON NANAIAMO RED DEER METRO VANCOUVER MINNEAPOLIS WINNIPEG 2 COUNTRIES 4
ARTIS REAL ESTATE INVESTMENT TRUST SK AZ 7% MN 17% WI 10% 6% Office ON 11% Pro forma Property NOI for three months ended September 30, 2016, inclusive of Artis’ proportionate share of joint venture arrangements, exclusive of lease termination income, and adjusted for acquisitions and dispositions announced or completed at December 15, 2016. 8333 Greenway, Madison WI US – Other 13% Calgary PORTFOLIO DIVERSIFICATION Retail NOI By Asset Class: NOI By Geographical Region: Industrial 22% 21% 14% Office 57% MB 13% BC 5% AB - Other 4% 5
ARTIS REAL ESTATE INVESTMENT TRUST TENANT DIVERSIFICATION Top Ten Tenants Artis’ top 10 and top 20 tenants account for 11.4% and 19.3% of gross revenue, respectively 601 Tower at Carlson, Minneapolis MN 6 All information above is at September 30, 2016, based on gross revenue in Canadian and US dollars, and excludes properties held for redevelopment
ARTIS REAL ESTATE INVESTMENT TRUST Hudson’s Bay Centre, Denver CO The chart above reflects the percentage of Artis ’ total GLA expiring in the year indicated, 0% 11.0% 5% 9.5% 3% 10.3% 3% 11.3% 6% 5.6% LEASE EXPIRATION SCHEDULE 2020 2019 2018 2017 2016 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% Same Property NOI decreased 0.6% YTD over the same period in 2015 Weighted-average rental increase on renewals YTD was 3.4% exclusive of GLA that has been renewed or committed to new tenants at September 30, 2016 • • Percentage of Portfolio GLA Expiring 7
5.75% Fixed Debt 3.83% 3.47% 3.86% 4.54% 3.45% 4.14% 4.31% ARTIS REAL ESTATE INVESTMENT TRUST 3.64% 1700 Broadway, Denver CO 2.67% Debentures 2.61% 3.75% Variable Debt 2.89% 3.51% 2.54% 4.00% At Sept 30, 2016 (1) : (1) As at Sept 30, 2016 and inclusive of mortgages on joint venture SCHEDULE OF MORTGAGE MATURITIES Weighted-Average Interest Rates is included in fixed debt. arrangements. Variable debt that is covered by interest rate swaps Total Debt to GBV – 52.1% 3.03% Weighted-average interest rate – 3.68% Secured Mortgage Debt to GBV – 40.4% EBITDA Interest Coverage Ratio Q3-16 – 3.24 times Weighted-average term – 3.7 yrs $700 $ 635 $600 $91 Fixed Debt Variable Debt Convertible Debentures Unsecured Debentures $500 $398 $ millions (1) $400 $347 $326 $86 $187 $259 $300 $544 $115 $200 $11 $164 $128 $200 $103 $44 $259 $76 $211 $200 $100 $32 $128 $120 $96 $71 $32 $7 $- 2016 2017 2018 2019 2020 2021 2022 2023 2024+ 8
Centrepoint, Winnipeg MB coverage and loans: GBV 40.2% 41.2% 40.4% N/A Unencumbered assets $1,004 million $1,060 million $1,110 million N/A EBITDA interest 3.09 52.4% 2.98 3.24 Net Debt: EBITDA (1) 8.19 8.49 8.18 LEVERAGE PROFILE ARTIS REAL ESTATE INVESTMENT TRUST (1) Debt at most recent quarter divided by income on an annualized basis Information on this slide is inclusive of Artis ’ proportionate share of its joint venture arrangements Secured mortgages 52.1% 50.2% Debt: GBV Cash and cash equivalents at September 30, 2016: $58.4 million Availability on unsecured credit facilities: $129.4 million Fiscal cal quart rter endin ing: g: Septe tembe ber 30, 2015 2015 Dece cembe ber 31, 2015 ld Threshold Recommended DBRS 2016 2016 ber 30, tembe Septe 2015 Healthy Balance Sheet and Liquidity ≤ 53.0% ≥ 2.25 ≤ 9.25 9
Credit Facilities (3) Series A preferred units - 3,450,000 = $66.0M Series C preferred units - 3,000,000 = $83.4M (US$63.6) Series E preferred units - 4,000,000 = $64.8M Series G preferred units - 3,200,000 = $53.7M (1) At September 30, 2016, inclusive of Artis’ proportionate share of joint ventures (2) Redeemable for cash or units Redeemable for cash only 801 Carlson, Minneapolis MN Equity Carrying Value of Debentures Secured Mortgages and Loans Gross Book Value = $5.9B Other Liabilities Unsecured Trust Units – 149,561,645 = $1,856.1 M Equity Capitalization (1) - 3.753% coupon Amount drawn on credit facilities = $370.6M (rendering – future development) CAPITAL STRUCTURE ARTIS REAL ESTATE INVESTMENT TRUST - due March 2019 = $200.0M Mortgages payable = $2,379.1M Unsecured Credit Facilities (1) Secured Mortgages and Loans (1) out of a total $500.0M credit facilities Convertible Debentures (1) Series G (2) - due June 2018 = $115.4M (US$88.0M) - 5.75% coupon (conversion = US$18.96) Senior Unsecured Debentures (1) Series A (3) (1) 45.3% 5.4% 40.4% 6.3% 2.6% 10 10
(1 ) Inclusive of Artis ’ proportionate share of its joint venture arrangements Pro $342 $553 $553 $0 $100 $200 $300 $400 $500 $600 roperty $509 ty NOI NOI Rev Revenue AFFO per Unit t FFO per Unit 2013 2014 2015 2 2013 2014 2015 2013 (2) 2014 (2) 2015 (2) 2016 (3) 2013 (2) 2014 (2) 2015 (2) 2016 (3 ) (In millions) (In millions) (1) $342 $317 (2) $467 Excluding lease termination and non-recurring other income (3) 2016 numbers are consensus analyst projections from most recent research reports. 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. ARTIS REAL ESTATE INVESTMENT TRUST SELECT FINANCIAL INFORMATION $1.21 $1.41 $1.23 $1.42 $1.30 $1.49 $1.26 $1.51 $1.51 $0.20 $0.70 $1.20 $1.70 $299 (1) 800 5 th Ave, Calgary AB 11
ARTIS REAL ESTATE INVESTMENT TRUST RECENTLY COMPLETED DEVELOPMENT PROJECTS Fourell Business Park, Edmonton, AB Achieved unlevered yield of 7.3% Midtown Business Center, Minneapolis, MN Linden Ridge Shopping Centre, Winnipeg, MB Achieved unlevered yield of 7.6% Achieved unlevered yield of 8.0% 12
ARTIS REAL ESTATE INVESTMENT TRUST $200 MILLION DEVELOPMENT PROJECTS UNDER CONSTRUCTION Target unlevered yield of 7.25% Park Lucero Phase I – Phoenix, AZ Park Lucero Phase II – Phoenix, AZ Park 8Ninety Phase I – Houston, TX Millwright Building – Minneapolis, MN 169 Inverness Drive West – Denver, CO 175 Westcreek – GTA, ON Estimated completion: Q4-16 Estimated completion: Q1-17 Completed in 2016 Estimated completion: Q4-16 Estimated completion: Q4-17 Estimated completion: Q4-16 13
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