Riocan Real Estate Investment Trust · TSX:REI.UN
Riocan Real Estate Investment Trust — Investor Day (April 2015)
89 slides from Riocan Real Estate Investment Trust's investor day presentation, Apr 23, 2015
Slide 1: Investor Day 2015
Investor Day 2015 April 23, 2015 1
Slide 2: Forward Looking Statements
Forward Looking Statements Certain information to be discussed during this management presentation, contains forward-looking statements within the meaning of applicable securities laws including, among others, statements concerning RioCan’s 2015 objectives, RioCan’s strategies to achieve those objec
Slide 3: Edward Sonshine, Chief Executive Officer
Edward Sonshine, O. Ont., Q.C. Chief Executive Officer, RioCan Real Estate Investment Trust 3
Slide 4: Z O < A 6) < * O a fe a ef B &
Z O < A 6) < * O a fe a 5 ef B & Z wa = & wn 7) > Z wa B < eB wo wa a < my ot All
Slide 5: Raghunath Davloor
Raghunath Davloor President and Chief Operating Officer, RioCan Real Estate Investment Trust 5
Slide 6: Caution and Diversification
• Caution and Diversification • Strategic Flexibility • Strong Balance Sheet 6
Slide 7: Today's Retail Environment
Today’s Retail Environment Some sectors are challenging • Target • Competitive forces • Foreign competition • Internet affected retailers 7
Slide 8: Today's Retail Environment
Today’s Retail Environment Other sectors are performing well 8
Slide 9: Today's Retail Environment
Today’s Retail Environment Other sectors are performing well 9
Slide 10: Strength From Strong Tenants
Strength From Strong Tenants Revenues from National and Anchor Tenants 86.4% 10
Slide 11: Strength From Diversity
Strength From Diversity • More than 7,700 tenants • No tenant represents more than 5% of Revenues • Top5: - Loblaws/Shoppers Drug Mart - Walmart - Canadian Tire Corp. - Metro - Cineplex/Galaxy Cinemas 11
Slide 12: Strength From Strong Tenants
Strength From Strong Tenants Canadian Rental Revenues from Canada’s Six Largest Markets 73.3% Expected to grow to more than 80% 57.7% 50% with development completions Dec. 2004 Dec. 2014 12
Slide 13: Experience
Experience Completed Projects 13
Slide 14: Yonge Eglinton Centre
Yonge Eglinton Centre R10 Sea AHEAD OF THE CURVE
Slide 15: Yonge Sheppard Centre
Yonge Sheppard Centre 15
Slide 16: Z O < A 6) < * O a fe a ef B &
Z O < A 6) < * O a fe a 5 ef B & Z wa = & wn 7) > Z wa B < eB wo wa a < my ot All
Slide 17: Jordan Robins
Jordan Robins Senior Vice President, Planning and Development, RioCan Real Estate Investment Trust 17
Slide 18: Z O < A 6) < * O a fe a ef B &
Z O < A 6) < * O a fe a 5 ef B & Z wa = & wn 7) > Z wa B < eB wo wa a < my ot All
Slide 19: RioCan
RioCan • Over 340 shopping centres in Canada • Over 6,000 acres of land built out with 25% coverage 19
Slide 20: Ottawa Edmonton Calgary Vancouver
Ottawa Edmonton Calgary Vancouver 20
Slide 21: Toronto transit map
LONDON-STYLE SURFACE RAIL SUBWAY THAT MOVES THE MOST PEOPLE IN THE SmarttTrack SHORTEST TIME. ACROSS THE ENTIRE CITY. @ ever ne | @ wre pa @ wosriseces rwen eat @ 9 CSB Don Mis a “ines @ x ~T Downsview Park Mathesorv/Airport Corporate Centre Mt Dennis Ellesmere en |} By 2rene oe 8 e = Kipling North
Slide 22: Demand in 2014 proved strong enough to absorb supply
“Demand in 2014 proved strong enough to absorb the market’s greatest amount of new supply in history, while also revealing an equilibrium for rent levels.” Shaun Hildebrand, Senior Vice-President, Urbanation 22
Slide 23: gfe ie he
gfe ie he RIO¥CAN REAL ESTATE INVESTMENT TRUST
Slide 24: Residential Units & GFA Growth Sites
Residential Units & GFA Growth 46 Sites Consolidated 2026: Completion (18,337 Units, 15.12M sf) 4,500,000 4,043,384 4,000,000 3,500,000 3,000,000 Total Incremental 2,500,000 Residential Residential Units 1,000,000 2018: Rent Commencement (396 Units, 336K sf) rit es sr £ SF SF PK KS KF KF LP LF GK HF
Slide 25: 2014 rezoning applications
In 2014 • We submitted 7 rezoning applications • Total potential residential density of 1.7 million square feet • Approximately 2,500 units • An additional 400,000 square feet of net new commercial density 25
Slide 26: 2015 rezoning applications
In 2015 • 19 additional property rezoning applications • 7.5 million square feet of residential density • Approximately 11,000 units • 830,000 square feet of new commercial density 26
Slide 27: 2016 planned applications
In 2016 • Plan to submit 20 property applications • Residential density of 5.9 million square feet • 8,400 units • 1 million square feet of new commercial density 27
Slide 28: What will this new business unit mean to RioCan?
What will this new business unit mean to RioCan? 28
Slide 29: Z O < A 6) < * O a fe a ef B &
Z O < A 6) < * O a fe a 5 ef B & Z wa = & wn 7) > Z wa B < eB wo wa a < my ot All
Slide 30: 30
30
Slide 31: 31
31
Slide 32: Bayview Station
Bayview Station ue en Av ve n u e E a s t n A ew Eg l i nto yvi Ba Bayview Station 32
Slide 33: Bayview Station
ast nue E Bay ve vie ton A wA Bayview Eglin ven Station ue Bayview Station 33
Slide 34: 34
34
Slide 35: 35
35
Slide 36: MLE
MLE AW \
Slide 37: Linn
Linn /// [ELITE [EET TTD i
Slide 38: 38
38
Slide 39: Aan |
Aan | “jell [oe ES TEE ERE \ TEnsrrEees PERT RTITIED EEPPEPEPee Perret EPP oEFEEeECEEEEEE PETE"
Slide 40: Z O < A 6) < * O a fe a ef B &
Z O < A 6) < * O a fe a 5 ef B & Z wa = & wn 7) > Z wa B < eB wo wa a < my ot All
Slide 41: R10 Sea AHEAD OF THE CURVE
R10 Sea AHEAD OF THE CURVE
Slide 42: E8 (Condo)
=| E8 (Condo) Zz < U > Oo 4 42 G Z = E 2
Slide 43: Z O < A 6) < * O a fe a ef B &
Z O < A 6) < * O a fe a 5 ef B & Z wa = & wn 7) > Z wa B < eB wo wa a < my ot All
Slide 44: John Ballantyne
John Ballantyne Senior Vice President, Asset Management, RioCan Real Estate Investment Trust 44
Slide 45: Residential Markets: A Position of Strength
Residential Markets A Position of Strength • Depth of our pipeline • Continuum of sites • Talented development group • Strong balance sheet and management 45
Slide 46: Residential Markets
Residential Markets A Position of Strength 46
Slide 47: Residential Markets: Now we need to execute
Residential Markets A Position of Strength Now we need to execute. 47
Slide 48: Why rental residential as an asset class?
Residential Markets A Position of Strength Why rental residential as an asset class? 48
Slide 49: Why rental residential as an asset class?
Residential Markets Why rental residential as an asset class? House Prices Lifestyle & Location 49
Slide 50: House Prices
Residential Markets Why rental residential as an asset class? House Prices February, 2015 Average price of Toronto detached home ... $1,000,000 50
Slide 51: House Prices
Residential Markets Why rental residential as an asset class? House Prices 675000 625000 Trend (12-Month Moving Average) 575000 GTA average home price 525000 475000 yearly increase of almost 425000 375000 325000 8% 275000 225000 175000 Jan 95 Jan 00 Jan 05 Jan 10 Jan 15 Source: Toronto Real Estate B
Slide 52: House Prices
Residential Markets Why rental residential as an asset class? House Prices 675000 625000 Trend (12-Month Moving Average) 575000 Toronto rental market 525000 475000 vacancy rate is below 425000 375000 325000 2% 275000 225000 175000 Jan 95 Jan 00 Jan 05 Jan 10 Jan 15 Source: Toronto Real Estate Board
Slide 53: House Prices
Residential Markets Why rental residential as an asset class? House Prices 675000 625000 Trend (12-Month Moving Average) 575000 In 2014 condominium units 525000 475000 used as rentals increased by 425000 375000 325000 14,000 275000 225000 175000 Jan 95 Jan 00 Jan 05 Jan 10 Jan 15 Source: Toronto Rea
Slide 54: Lifestyle & Location
Residential Markets Why rental residential as an asset class? House Prices Lifestyle & Location 54
Slide 55: Population Growth Rates
Residential Markets Why rental residential as an asset class? Population Growth Rates Lifestyle & Location Suburbs Downtown Toronto • Between 1991 and 2006, the population 17% growth rate in the suburbs was roughly 17%. 16% 13.7% Over the same period, the growth rate in downtown Toronto was approxim
Slide 56: Z O < A 6) < * O a fe a ef B &
Z O < A 6) < * O a fe a 5 ef B & Z wa = & wn 7) > Z wa B < eB wo wa a < my ot All
Slide 57: Why rental residential for RioCan?
Residential Markets A Position of Strength Why rental residential for RioCan and what will set us apart? 57
Slide 58: The RioCan Advantage
Residential Markets Why rental residential for RioCan and what will set us apart? The RioCan Advantage • Our vast inexpensive urban, transit oriented & underutilized land holdings • The scale to create management efficiencies • Excellent marketing opportunities as Canada’s largest retail landlord 58
Slide 59: Ottawa
Tyinly Grossing) Riccan|onbans So aShonpe: SHOPBETS Caipa= a3t Riocane> Lauren Ga = oo" SilvetlenyiGiouees ter Stolks ata Cyfviilé -- smen ees 7: Sa rapes o. ac Spat sment. e5.9. Eeavar iy & HinaedlgeaulCerire Bayview! | imisi 4 Tunneyaig ¢ A (Cara Portfolio -11910\Bank Street Westgate shopping Cent
Slide 60: Calgary
SpruceMeadows-17ailis R10 Sea AHEAD OF THE CURVE
Slide 61: Toronto
Ps ts ce is x corransit i yanas Great 20184 jonpaane RIO¥CAN REAL ESTATE INVESTMENT TRUST AHEAD OF THE CURVE
Slide 62: Land Holdings
Residential Markets Why rental residential for RioCan and what will set us apart? Lifestyle & Location • Land Holdings - Land costs have increased dramatically - Size of RioCan’s land holdings speaks to the depth of its residential development pipeline. - There are few developers who possess such a
Slide 63: Muted Costs
Residential Markets Why rental residential for RioCan and what will set us apart? Lifestyle & Location • Muted Costs - Low cost of land procurement – land is already owned. - Overall project yields are aided substantially by the low cost of the underlying land. - Intensification replaces old stock w
Slide 64: gfe ie he
gfe ie he RIO¥CAN REAL ESTATE INVESTMENT TRUST
Slide 65: less ba
é iN ii less ba AHEAD OF THE CURVE
Slide 66: Cross Promotion Opportunities
Cross Promotion Opportunities 66
Slide 67: Management Platform and Structures
Residential Markets A Position of Strength Management Platform and Structures 67
Slide 68: Build it and they will come
Residential Markets Management Platform and Structures “Build it and they will come.” 68
Slide 69: Management Platform and Structures
Residential Markets Management Platform and Structures “Build it and they will come.” • An exceptional leasing, marketing and property management team • Giving RioCan optimal levels of flexibility and control 69
Slide 70: Ahead of the Curve
AHEAD OF THE CURVE RIO¥CAN REAL ESTATE INVESTMENT TRUST 70
Slide 71: Z O < A 6) < * O a fe a ef B &
Z O < A 6) < * O a fe a 5 ef B & Z wa = & wn 7) > Z wa B < eB wo wa a < my ot All
Slide 72: Cynthia Devine
Cynthia Devine Executive Vice President and Chief Financial Officer, RioCan Real Estate Investment Trust 72
Slide 73: Z O < A 6) < * O a fe a ef B &
Z O < A 6) < * O a fe a 5 ef B & Z wa = & wn 7) > Z wa B < eB wo wa a < my ot All
Slide 74: Revenue Growth
Revenue Growth $ Millions 1,241 758 10.3% CAGR 2009 2014 74
Slide 75: Operating FFO Growth
Operating FFO Growth $ Millions 517 280 13.0% CAGR 2009 2014 This slide contains reference to Non-GAAP Measures, for a definition of such measures please refer to RioCan’s 2014 Annual Report. 75
Slide 76: Operating FFO Growth per Unit
Operating FFO Growth per Unit $/unit $1.68 $1.63 6.6% CAGR $1.52 $1.43 $1.33 $1.22 2009 2010 2011 2012 2013 2014 This slide contains reference to Non-GAAP Measures, for a definition of such measures please refer to RioCan’s 2014 Annual Report. 76
Slide 77: Z O < A 6) < * O a fe a ef B &
Z O < A 6) < * O a fe a 5 ef B & Z wa = & wn 7) > Z wa B < eB wo wa a < my ot All
Slide 78: Renewals
Renewals Canadian Portfolio RioCan Lease Maturity Schedule and Renewal History $20 6M Retention 5M $18 >90% 4M $16 Renewal 2M 1M $14 +11.4% 0M $12 2008 2009 2010 2011 2012 2013 2014 2015 2019 Square feet renewed/expiring (left axis) Achieved Renewal Rent PSF Expiring Rent PSF 78
Slide 79: Renewals
Renewals Canadian Portfolio RioCan Lease Maturity Schedule and Renewal History $20 6M 5M $18 55% 4M of lease renewals over $16 next five years 2M $14 1M 0M $12 2008 2009 2010 2011 2012 2013 2014 2015 2019 Square feet renewed/expiring (left axis) Achieved Renewal Rent PSF Expiring Rent PSF 79
Slide 80: Improved Interest Coverage
Improved Interest Coverage 3.5x 3.3x 3.0x Target 2.9x 2.8x 2.8x Old Interest Coverage Target 2.7x 2.5x 2.5x 2.5x 2.2x 2.3x 2.0x 2009 2010 2011 2012 2013 2014 This slide contains reference to Non-GAAP Measures, for a definition of such measures please refer to RioCan’s 2014 Annual Report. 80
Slide 81: Debt Maturity Schedule
Debt Maturity Schedule $ Millions 3,000 6.0% 2,500 5.0% 2,000 4.0% Long-term staggered debt maturity profile 1,500 3.0% Low floating 1,000 2.0% debt exposure 500 1.0% 0 0.0% 2015 2016 2017 2018 2019 Thereafter Scheduled principal amortization Mortgages payable Floating Rate Mortgages and Lines of Cr
Slide 82: Z O < A 6) < * O a fe a ef B &
Z O < A 6) < * O a fe a 5 ef B & Z wa = & wn 7) > Z wa B < eB wo wa a < my ot All
Slide 83: Conservative Balance Sheet
Conservative Balance Sheet Debt Assets 14,720 2014 leverage ratio CAGR – 19.2% 5,338 43.8% 3,260 CAGR – 12.6% 6,483 2008 2009 2010 2011 2012 2013 2014 83
Slide 84: Leverage and Coverage Ratios & Targets
Leverage and Coverage Ratios & Targets Dec. 31/14 Dec. 31/13 Targeted Ratios Interest coverage ratio 2.89x 2.83x >3.00x Debt service coverage ratio 2.20x 2.10x >2.25x Fixed charge coverage ratio 1.08x 1.06x >1.1x Net operating debt to operating EBITDA ratio 7.67x 7.24x <6.5x This slide contains refe
Slide 85: Development Activity
Development Activity Current Portfolio – Greenfield and Urban Intensification Projects Calgary Developments GTA Developments Greenfield Developments Greenfield Developments • East Hills • Sage Hill • RioCan Centre Vaughan • Windfield Farms Urban Intensification Urban Intensification • East Village (
Slide 86: Development Projects
Development Projects Yonge Eglinton Northeast Corner, Sage Hill, Calgary, AB Toronto, ON RioCan YEC, Toronto, ON 1860 Bayview, Toronto, ON 86
Slide 87: Development Portfolio: Risk Management Practices
Development Portfolio Risk Management Practices • Staggered Development Pipeline • Multiple Sources of Capital - Debt/Equity - Strategic Relationships - Capital Recycling • Pre-Leasing on Retail Developments • Experience, market research for Residential Projects 87
Slide 88: Disciplined Growth
Disciplined Growth • Geographic Diversification & Stable Property Types - Ensures resilient and steady cashflows • Staggered Development Completions - Manages development risks • Staggered Debt Maturities - Manages interest rate and refinancing risk • Conservative Leverage - Prudent balance sheet ma
Slide 89: Z O < A 6) < * O a fe a ef B &
Z O < A 6) < * O a fe a 5 ef B & Z wa = & wn 7) > Z wa B < eB wo wa a < my ot All
RioCan Real Estate Investment Trust — Investor Day (April 2015) on 6ix