Allied Properties Real Estate Investment Trust · TSX:AP.UN
Allied Properties Real Estate Investment Trust — Q3 2024 Earnings Presentation
51 slides from Allied Properties Real Estate Investment Trust's earnings presentation, November 2024
Slide 1: Creativity & Connectivity
CREATIVITY & CONNECTIVITY November 2024 TSX: AP.UN | alliedreit.com
Slide 2: Forward-looking information
This presentation may contain forward-looking information about future events or Allied’s future performance. This information, by its nature, is subject to risks and uncertainties that may cause actual events or results to differ materially, including those described under the heading "Risks and Un
Slide 3: Table of Contents
TABLE OF CONTENTS Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Q3 2024 Results Update . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Portfolio Overview . . . . . . . . . . . . . . . . . . . . . .
Slide 4: Overview
‘ = o 2 o > e) a askey © Fs — : FA! 7 i (=) Lu a a og
Slide 5: Overview
OVERVIEW Allied is a leading owner-operator of distinctive urban workspace in Canada’s major cities with a mission to provide knowledge-based organizations with workspace that is sustainable and conducive to human wellness, creativity, connectivity and diversity 188 $6.7B RENTAL PROPERTIES ENTERPRI
Slide 6: Investment Highlights
INVESTMENT HIGHLIGHTS – At the forefront of urban intensification in Canada's major cities and amenity rich neighborhoods backed by powerful demographic trends – Largest and most concentrated portfolio of economically-productive, underutilized land that affords extraordinary mixed-use intensificati
Slide 7: Portfolio Snapshot
PORTFOLIO SNAPSHOT GLA OF RENTAL PROPERTIES BY NOI (1) BY NOI (1) BY MARKET MARKET SPACE TYPE 8% 12% 7% 8% 5% 12% 41% 51% 32% 43% 81% TORONTO & KITCHENER MONTREAL & OTTAWA TORONTO & KITCHENER MONTREAL & OTTAWA OFFICE RETAIL PARKING CALGARY & EDMONTON VANCOUVER CALGARY & EDMONTON VANCOUVER (1) NOI i
Slide 8: Strategy & Objectives
STRATEGY & OBJECTIVES 1 2 3 OWN AND OPERATE STRATEGICALLY COMPLETE THE MOST DISTINCTIVE RECYCLE AND CURRENT MIXED USE URBAN ALLOCATE CAPITAL DEVELOPMENTS WORKSPACES IN TO STRENGTHEN AND LEASE- CANADA’S LARGEST THE BALANCE UP ORGANIC MARKETS SHEET PORTFOLIO 4 5 ACCELERATE THE ONGOING ESTABLISHMEN
Slide 9: Q3 2024 Results Update
ALLIED Q3 2024 Results Update
Slide 10: Q3 2024 Financial Performance
Q3 2024 FINANCIAL PERFORMANCE Temporary downward pressure on FFO per Unit and AFFO per Unit as a result of the 400 West Georgia and 19 Duncan transactions. The EBITDA on these assets is expected to increase as they approach stabilization. Q3 2024 Q3 2023 FFO PER UNIT (1) $0.535 $0.598 AFFO PER UNIT
Slide 11: Leasing Performance
LEASING PERFORMANCE Q3 2024 Q3 2023 AVERAGE IN-PLACE NET RENT PER OCCUPIED SQUARE FOOT $25.30 $23.78 RETENTION RATE 60.4% 56.0% RENT (DECLINE) GROWTH ON RENEWAL (1) (6.3)% 3.8% SUB-LEASE SPACE AS A % OF TOTAL GLA 5.8% 5.6% RENEWED % OF 2025 LEASE MATURITIES 15.2% - (1) Excluding a short-term renewal
Slide 12: New Capital
NEW CAPITAL – Allied has access to attractive sources of capital via its large unencumbered asset pool and monetization of non-core properties at or above IFRS value – Year-to-date, Allied is on track to unlock $400M of low-cost capital over 2024 and 2025, which will be used for accretive debt reduc
Slide 13: Portfolio Overview
ALLIED Portfolio Overview
Slide 14: Preferred Provider of Workspace in the Canadian Urban Market
PREFERRED PROVIDER OF WORKSPACE IN THE CANADIAN URBAN MARKET 188 RENTAL PROPERTIES TOTAL RENTAL PORTFOLIO GLA (3) VALUED AT $8.8 B (1) (Not including Properties Under Development valued at $0.9B 14.5M SF and Investment Properties Held for Sale valued at $0.4B) (1) TORONTO VANCOUVER 5.2M SF 1.2M SF A
Slide 15: Allied Asset Categories
ALLIED ASSET CATEGORIES Adaptively re-used light Mid- to high-rise structures Buildings slated for redevelopment industrial structures upgraded purpose built for workspace use. in the next five to 10 years that for office and retail uses. currently offer flexible lease terms. 15
Slide 16: Portfolio Vacancy
PORTFOLIO VACANCY The majority of Allied's vacancy is concentrated in 12 properties. 12.8% VACANCY OVERVIEW OF TOP 12 PROPERTIES Q3 2024 Over half of Allied’s portfolio 7.1% vacancy is concentrated in 12 properties SQUARE FEET OF VACANCY ~1,031,000 PERCENT OF TOTAL GLA 7.1% PERCENT OF TOTAL VACANCY
Slide 17: Average In-Place Net Rent per Occupied Square Foot
AVERAGE IN-PLACE NET RENT PER OCCUPIED SQUARE FOOT URBAN WORKSPACE PORTFOLIO 10-YEAR AVERAGE $28 3.7% CAGR $26 $25.30 $24 $24.10 $23.10 $22 $21.98 $21.35 $20 $20.36 $19.42 $18 $18.38 $18.51 $17.71 $17.93 $16 $14 $12 $10 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Q3/24 17
Slide 18: Lease Maturities - Urban Workspace
LEASE MATURITIES - URBAN WORKSPACE % OF TOTAL GLA W/A RENTAL RATE ESTIMATED W/A MARKET RATE % OF TOTAL GLA W/A RENTAL RATE ESTIMATED W/A MARKET RATE 25.0% $30.00 $25.95 $25.79 $25.99 $25.31 $25.00 20.0% $24.42 $24.15 $24.34 $21.99 $22.76 $20.00 WEIGHTED AVERAGE RENTAL RATE Weighted avera ge renta l
Slide 19: Tenant Profile
TENANT PROFILE WEIGHTED AVERAGE % OF RENTAL REMAINING LEASE % OF TOTAL TOTAL PORTFOLIO % OF RENTAL TOP-10 USERS REVENUE (1) TERM (YRS) RENTAL GLA REVENUE BY CATEGORY GOOGLE CANADA CORPORATION 3.4% 7.8 3.3% 3.1% 2.2% 3.5% UBISOFT DIVERTISSEMENTS INC. 3.0 7.7 3.8 5.3% SHOPIFY INC 2.8 9.7 1.9 6.5% 37.3
Slide 20: Toronto Portfolio
TORONTO PORTFOLIO COLLEGEST. —_¥ DUNDAS ST. W. | y° g g z g@ eo Ee 2 (QUEEN ST. W. & 6 . 2 Garfooo ood z ‘STRACHAN AVE. BATHURST ST. *. St.Lawrence i) Market °° °° Liberty Village < GARDINER EXPRESSWAY SS LAKESHORE BLVD w. DLLs QUEEN'S QUAY WEST 20
Slide 21: Montréal Portfolio
MONTREAL PORTFOLIO xe ~ TR We KTR we Central “7 Business District 21
Slide 22: Vancouver Portfolio
Central Business District” VANCOUVER PORTFOLIO Gastown — o © =—~ Railtown > In is Se ae se ey oe = -s=—s 7 Mt Pleasant 22 H — i a Po Pee ee aan | I
Slide 23: Calgary Portfolio
CALGARY PORTFOLIO | Central | |” - |. - | Business [~~ [~~ ~~ District > ~ Beltline ct 23
Slide 24: Development Portfolio
ALLIED Development Portfolio 24
Slide 25: Development
DEVELOPMENT 15% SELF-IMPOSED LIMITATION ALLIED CREATES VALUE BY INTENSIFYING ON DEVELOPMENT THE USE OF UNDERUTILIZED LAND The cost of properties under development as a percentage of total assets on a proportionate basis(1) is limited to 15% 26.1M SF potential GLA which consists of: 14.5M SF of curre
Slide 26: Development Projects
DEVELOPMENT PROJECTS Current developments are expected to generate ~$102M of NOI % OF OFFICE ESTIMATED ESTIMATED TRANSFER ESTIMATED DEVELOPMENT COST TO TO RENTAL PORTFOLIO ESTIMATED GLA ANNUAL NOI(1) PRE-LEASED COMPLETE THE WELL (1)(3) Q3 2022 – Q4 2024 744,000 $40.4M 98% $3.5M 700 SAINT HUBERT (3)
Slide 27: Future / Shadow Development Potential
FUTURE / SHADOW DEVELOPMENT POTENTIAL Total potential incremental density within Allied’s portfolio is ~9.8M SF POTENTIAL DENSITY FROM ZONING POTENTIAL INCREMENTAL DENSITY (1) COMPLETED OR IN PROGRESS (IN SQUARE FEET) (IN SQUARE FEET) 5,682,621 2,525,765 Le Nordeloc Lot E (127,450) Adelaide & Spadin
Slide 28: Intensification
INTENSIFICATION Additional unexplored density potential not included in 9.8M SF. Here is an example of this. TORONTO | LIBERTY VILLAGE CASE STUDY Potential for incremental ~1.1M SF of density across commercial and residential assets unlocking ~$300M of equity value 840,000 1,356,484 64 Jefferson 190
Slide 29: Financial Strength
mls ALLIED Financial Strength 29
Slide 30: Financial Targets
FINANCIAL TARGETS – Maintain overall leverage below 35% and net debt—to—EBITDA below 9.0x – Maintain high portion of fixed rate debt over a well-staggered maturity profile – Maintain unencumbered property value at a minimum of 80% of total investment property value – Maintain ample liquidity by havi
Slide 31: Debt Structure
DEBT STRUCTURE Allied has a well-structured debt stack and benefits from a low weighted average interest rate $MILLIONS Q3 2024 INTEREST RATE LIQUIDIY (MILLIONS) Q3 2024 LINE OF CREDIT $95.0 Prime + 70 bps or CORRA + 170 bps CASH (1) $18.7 TERM LOANS $649.5 3.5% - 4.9% UNDRAWN LINE OF CREDIT (2) $69
Slide 32: Debt Maturity Schedule
DEBT MATURITY SCHEDULE Manageable and well-laddered debt maturity platform with no more than 20% of debt expiring in any given year(1) $1,000,000 5.00% 4.66% $900,000 4.29% 4.22% $800,000 4.00% $700,000 3.39% 3.11% 3.12% 3.10% INTEREST RATE $600,000 3.00% MILLIONS $500,000 2.28% $400,000 2.00% $300,
Slide 33: Maximizing Flexibility While Strengthening the Balance Sheet
MAXIMIZING FLEXIBILITY WHILE STRENGTHENING THE BALANCE SHEET $12.0 100% 93% 89% 90% 87% 83% $10.0 $9.8 80% $9.7 $9.7 $9.5 72% $9.1 $8.8 $8.8 70% $8.0 65% $8.3 $8.4 $7.6 60% 57% BILLIONS 48% $6.5 $6.0 $6.3 50% $5.6 $5.5 40% 40% $4.9 $4.0 $4.2 $4.3 30% $3.7 25% $2.9 20% $2.0 $2.3 $1.6 10% $0.8 $- 0% 2
Slide 34: Sources of Capital
SOURCES OF CAPITAL Allied has various sources of capital, including the following: EQUITY / ASSET SALES DEBT PARTNERSHIPS Capital recycling continues to be a Unsecured debt • Allied will seek to key source of liquidity opportunistically raise • Debentures equity capital when valuation • Strong priva
Slide 35: Market Highlights
ALLIED Market Highlights
Slide 36: Toronto Market Highlights
TORONTO MARKET HIGHLIGHTS EXPANDING ECONOMY FIXED SUPPLY OF OFFICE SPACE AS CONSTRUCTION HAS DECLINED TO CYCLICAL LOWS (M SF) 3.8% Population Growth in 2023 Source: Colliers 107K Net new jobs in 2023 8.2 7.8 8.2 -74% from 2019 2.9% 2025F-28F Real GDP Growth 5.3 4.9 Source: Conference Board of Canada
Slide 37: Montréal Market Highlights
MONTRÉAL MARKET HIGHLIGHTS EXPANDING ECONOMY FIXED SUPPLY OF OFFICE SPACE AS CONSTRUCTION HAS DECLINED TO CYCLICAL LOWS (M SF) 4.3% Population Growth in 2023 Source: Colliers 81K Net new jobs in 2023 4.4 -98% since 2019 2.2% 2025F-28F Real GDP Growth 3.5 2.5 2.0 Source: Conference Board of Canada 1.
Slide 38: Vancouver Market Highlights
VANCOUVER MARKET HIGHLIGHTS EXPANDING ECONOMY FIXED SUPPLY OF OFFICE SPACE AS CONSTRUCTION HAS DECLINED TO CYCLICAL LOWS (M SF) 3.8% Population Growth in 2023 Source: Colliers 35K Net new jobs in 2023 6.9 -41% since 2019 5.9 6.2 5.7 2.7% 2025F-28F Real GDP Growth 4.4 3.5 Source: Conference Board of
Slide 39: Calgary Market Highlights
CALGARY MARKET HIGHLIGHTS EXPANDING ECONOMY VACANCY RATES CONTINUE TO LOWER FROM 2021 PEAK AS CALGARY DOWNTOWN OFFICE REBOUNDS 3.8% Population Growth in 2023 Source: Colliers -3.8% since 2021 28K Net new jobs in 2023 27.4% 32.0% 31.4% 29.6% 28.2% 25.1% 3.0% 2025F-28F Real GDP Growth Source: Conferen
Slide 40: Kitchener Market Highlights
KITCHENER MARKET HIGHLIGHTS EXCEPTIONAL TECH PRESENCE 18th ranked market in North America +52% tech job growth rates YoY 10% tech occupations as % of total employment Source: CBRE DRIVING WORKFORCE GROWTH & INNOVATION Top overall growth market in North America for residents in their 20s +21% since 2
Slide 41: Environmental, Social & Governance (ESG)
Environmental, Social & Governance (ESG) 41
Slide 42: ESG Strategy
ESG STRATEGY FOCUS AREAS DECARBONIZATION ENVIRONMENTAL Reducing the environmental impact of our business activities by improving the efficiency and CLIMATE RESILIENCE resilience of our assets. BUILDING PERFORMANCE SOCIAL COMMUNITY IMPACT Enhancing employee and user experience and supporting the comm
Slide 43: ESG Highlights
ESG HIGHLIGHTS COMMITTED TO SET SCIENCE-BASED SUPPORTED OVER 1,500 ARTISTS EMISSIONS REDUCTION TARGETS In 2023, Allied provided affordable workspace for over 1,500 artists Allied has committed to set near- and long-term GHG emissions reduction in Calgary, Toronto and Montréal. targets, in line with
Slide 44: Environment
ENVIRONMENT FOCUS AREAS STRATEGY HIGHLIGHTS KEY NEXT STEPS • Finalize Allied's near-term NZC target and NZC Allied's Net Zero Carbon Plan is centered on four pathways in alignment with SBTi. pillars: development and redevelopment projects, DECARBONIZATION acquisition due diligence, operational asset
Slide 45: Social
SOCIAL FOCUS AREAS STRATEGY HIGHLIGHTS KEY NEXT STEPS • Develop guidelines that support user events to The guiding principles of Allied's community building achieve zero-waste and increase support for initiatives include preserving history, operating with local businesses. sensitivity and investing
Slide 46: An Integrated Governance Approach
AN INTEGRATED GOVERNANCE APPROACH OVERSIGHT RESOURCES & TOOLS KEY STAKEHOLDERS BOARD OF TRUSTEES ESG POLICY EMPLOYEES Reviews Allied's governance practices regularly and is responsible for overseeing Allied’s ESG Strategy and ESG initiatives, including the integration of sustainability into Allied's
Slide 47: Appendix
ALLIED Appendix
Slide 48: Certain Definitions and Non-GAAP Measures
CERTAIN DEFINITIONS AND NON-GAAP MEASURES Readers are cautioned that certain terms used in the investor presentation listed below, including any related per Unit amounts, used by Management of Allied to measure, compare and explain the operating results and financial performance of Allied do not hav
Slide 49: Adjusted EBITDA and Net Debt Definitions
ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (“ADJUSTED EBITDA”) Adjusted EBITDA is a non-GAAP measure calculated on a proportionate basis comprised of earnings before interest expense, income taxes, depreciation and amortization expense (including amortization of improvem
Slide 50: Adjusted Funds from Operations
ADJUSTED FUNDS FROM OPERATIONS ("AFFO") AFFO is a non-GAAP financial measure used by most Canadian real estate investment trusts based on a standardized definition established by REALPAC in the White Paper. AFFO is defined as FFO less amortization of straight-line rent, regular leasing expenditures,
Slide 51: 134 PETER STREET, SUITE 1700
134 PETER STREET, SUITE 1700 TORONTO, ONTARIO M5V 2H2 T 416.977.9002 F 416.306.8704 ALLIEDREIT.COM
Allied Properties Real Estate Investment Trust — Q3 2024 Earnings Presentation on 6ix