Riocan Real Estate Investment Trust · TSX:REI.UN
Riocan Real Estate Investment Trust — Q1 2022 Earnings Presentation
59 slides from Riocan Real Estate Investment Trust's earnings presentation, May 10, 2022
Slide 1: Quality and Growth: First Quarter 2022 Investor Presentation
QUALITY AND GROWTH MAY 9, 2022 FIRST QUARTER 2022 INVESTOR PRESENTATION
Slide 2: Executing from a position of strength
Executing from a position of strength RIOCAN | INVESTOR PRESENTATION ( First Quarter 2022) |2
Slide 3: RioCan by the numbers
RIOCAN BY THE NUMBERS 204 properties (1) ~36M SQ FT aggregate net leasable area ~16.8M zoning approved, surfacing SQ FT value from advanced development pipeline $ ~ 15B total enterprise value *As at March 31, 2022 1 - Includes 191 income producing properties and 13 properties under development RIOCA
Slide 4: Successful major market strategy
Successful major market strategy Resulting in a portfolio with improved demographics and growth prospects Sold U.S. Sold properties Focused in Invested in property in Canadian Canada’s six development portfolio secondary major 2015/16 markets markets RIOCAN | INVESTOR PRESENTATION ( First Quarter 20
Slide 5: Located in prime, in-demand and growing markets
Located in prime, in-demand and growing markets Dense 154,000 (1) +32% 203,000 (1) population people in 2017 people in 2021 Strong household $102,000 (1) +22% $124,000 (1) average household incomes income in 2017 average household income in 2021 1 - Population and average household income within 5km
Slide 6: Annualized rent from six major markets
91.7% annualized rent from six major markets (1) VANCOUVER 6 assets 1.7M sq.ft.(2) 4.6% (3) UP FROM CALGARY MONTREAL % 76.0 16 assets 18 assets 3.6M sq.ft. (2) 2.2M sq.ft. (2) 11.3% (3) GREATER EDMONTON 4.0% (3) TORONTO AREA 11 assets 87 assets 2.2M sq.ft. (2) 16.5M sq.ft. (2) in 2017 6.5% (3) 52.0%
Slide 7: High quality, necessity based retail revenue
High quality, necessity based retail revenue 97.0% ~86% Property committed occupancy (2) strong and stable tenants (3) Type (1) z 54.0% 23.2% • Retail: 90.1% • Office: 7.7% grocery anchored mixed-use / • Residential Rental: 2.2% centres (1) urban (1) (4) 1 - Percentage of annualized contractual gros
Slide 8: Necessity-based retail anchor tenants
Necessity-based retail anchor tenants A curated and diversified tenant base in lockstep with consumer spending patterns 20.0% 14.7% 14.2% 10.6% Grocery / Specialty Essential Value Pharmacy / Retailers(1) Personal Retailers Liquor Services 9.1% 7.9% 7.1% 6.4% 5.9% 3.9% 0.2% Furniture Other Quick Appa
Slide 9: Industry Leading ESG
Industry Leading ESG We will lead in ESG by becoming a net positive business We will give back more than we take from the community We will generate long-term value by adopting sustainable strategies Environment Social Governance • Reduce carbon footprint • Develop sustainable • Further strengthen r
Slide 10: Embedding best practices in everything we do
Embedding best practices in everything we do Select Achievements ENVIRONMENT SOCIAL GOVERNANCE 5 Star Rating Top 100 Employers ESG rating upgrade (MSCI2) 2021 GRESB Real Estate Greater Toronto’s Top Employers Improving employee management programs and Assessment - runner-up ranking Competition green
Slide 11: Our Position on Climate
Our Position on Climate Integrate resilience and net-zero criteria into asset management, operations, developments, investments, procurement and leasing processes, tools, accountabilities and decision-making to enhance governance and disclosures, meet evolving stakeholder expectations and protect as
Slide 12: Strong demand drivers for our properties
Strong demand drivers for our properties Increasing Evolving retail Tight population in experience residential key markets supply RIOCAN | INVESTOR PRESENTATION ( First Quarter 2022) | 12
Slide 13: Evolving retail experience
Evolving retail experience The future of Omni-channel retail needs physical stores for customers to shop the way they want Distribution Centre Store Home Occupancy costs trending higher Located in industrial park Located in heart of community In-store purchase Delivery from store BOPIS & Curbside pi
Slide 14: Evolving retail experience
Evolving retail experience Retailers continue to invest in hyper-local placement of store network and proximity to consumers “…when it comes to driving incremental performance. Network optimization Galen Weston, Chairman and is certainly one of them. We're spending more money on new stores and Presi
Slide 15: Q1 2022 Highlights
Q1 2022 Highlights $160.1M $173.9M NET INCOME OPERATING INCOME $0.42 4.1% FUNDS FROM SAME PROPERTY NET OPERATIONS OPERATING INCOME PER UNIT (1) (2) GROWTH (1) $92M $20.23 DEVELOPMENT AVERAGE NET SPENDING (1) RENT(3) $1.3B $9.2B IN AVAILABLE UNENCUMBERED LIQUIDITY (1) (4) ASSETS (1) (4) 1 – Represent
Slide 16: Robust portfolio fundamentals
Robust portfolio fundamentals Deliver strong financial performance FFO per Unit SPNOI Growth (2) Q1 2021 Q1 2022 4.1% $0.42 $0.42 $0.41 $0.37 $0.37 $0.33 (1) (1) Q1 2021 Q1 2022 (4.6)% (1) FFO/unit FFO Adjusted/unit Core FFO/unit 1) Represents a non-GAAP measure. 2) SPNOI - Same Property Net Operati
Slide 17: Positive trends in occupancy
Positive trends in occupancy Breadth and quality of tenants support return to pre-pandemic occupancy levels Committed and In-Place Occupancy Total Commercial Portfolio 97.2% 97.0% 96.8% 96.8% 96.4% 96.4% 96.1% 96.3% 96.3% 96.0% 96.3% 95.8% 96.1% 96.0% 95.7% 95.6% 95.4% 95.1% 95.1% 94.9% Q4 2019 Q1 2
Slide 18: Well-positioned portfolio retains and attracts tenants
Well-positioned portfolio retains and attracts tenants 1.1 million square feet of new and renewal leases executed at robust leasing spreads 88.0% 72.6% Renewal 6.7% Retention Leasing 5.0% Ratios Spreads Q1 2021 Q1 2022 Q1 2021 Q1 2022 8.9% 8.1% New 14.2% 13.5% Blended Leasing Leasing Spreads Spreads
Slide 19: High performance growth-oriented portfolio
High performance growth-oriented portfolio Building on a strong and stable foundation Average Net Rent (PSF) (1) $31.40 PSF ~3.0% average rent of new leases CAGR (2) $19.75 $19.80 $20.16 $20.23 $19.07 $17.75 2017 2018 2019 2020 2021 Q1 2022 1 - Net rent is primarily contractual base rent pursuant to
Slide 20: Q1 2022 highlights and 2022 targets
Q1 2022 financial and operational highlights and 2022 targets Demonstrates strength and continued resiliency of property portfolio, tenant base and development pipeline 2022 TARGETS Q1 2022 Status SPNOI growth (1) 3% - 4% 4.1% FFO per unit (1) $1.68 - $1.71(2) $0.42 FFO payout ratio (1) 55% - 65% 57
Slide 21: Uniquely positioned to deliver compelling Total Unitholder Returns
Uniquely positioned to deliver compelling Total Unitholder Returns RIOCAN | INVESTOR PRESENTATION ( First Quarter 2022) | 21
Slide 22: Our strategic pillars
OUR STRATEGIC PILLARS 1 Reimagine retail 2 Intelligently diversify Enhance 3 customer centrism 4 Grow responsibly RIOCAN | INVESTOR PRESENTATION ( First Quarter 2022) | 22
Slide 23: Reimagining our retail core
Reimagining our retail core BUILDING ON STRATEGICALLY INVESTING IN our strong, transit-oriented select properties to enhance their locations in Canada’s SPNOI potential six major markets KEEPING PACE WITH EVOLVING emerging success our retail tenant mix to make factors in retail it more essential, re
Slide 24: Diversify asset base, income streams, and tenant mix
Diversify asset base, income streams, and tenant mix Asset base Income streams Tenant mix Grow in residential through: Expand income streams beyond Introduction of non-traditional • mixed-use development rental income to: complementary uses: • acquisition of multi-unit • Leverage management • Medica
Slide 25: Deepen our emphasis on customer centricity
Deepen our emphasis on customer centricity Enhancing the distinctiveness of our value proposition to tenants, joint venture partners and limited partnership investors Evolve the appearance and Leverage technology to improve tenant condition of retail assets experience and increase efficiency Drive g
Slide 26: Grow responsibly
Grow responsibly Focus on ESG - Environment, Social and Governance A culture of excellence Prudent balance sheet management RIOCAN | INVESTOR PRESENTATION ( First Quarter 2022) | 26
Slide 27: At the heart of our strategy is a clear ambition
At the heart of our strategy is a clear ambition RIOCAN | INVESTOR PRESENTATION ( First Quarter 2022) | 27
Slide 28: Deliver long-term unitholder value
Deliver long-term unitholder value Our strategy: Reimagine 1 retail Intelligently 2 FFO diversify Distribution Total yield growth Unitholder 3 Enhance customer centrism RESILIENT INCOME SPNOI GROWTH return DEVELOPMENT 4 Grow responsibly & INVESTMENT RIOCAN | INVESTOR PRESENTATION ( First Quarter 202
Slide 29: A clear path to compelling Total Unitholder Returns
A clear path to compelling Total Unitholder Returns 5-Year Objective (YE 2021- YE 2026) 1-2% 2-4% 3% 10-12% NAV accretion at % constant FFO multiple and capitalization rates 4-5 Distribution Yield (1) SPNOI Development + Investments (2) Annualized TUR (3) 1 - Based on December 31, 2021, price of $22
Slide 30: Driving SPNOI growth
Driving SPNOI growth TWO KEY FACTORS 1 Normalized occupancy 2 Strong growth in commercial rents RIOCAN | INVESTOR PRESENTATION ( First Quarter 2022) | 30
Slide 31: Positive trends in occupancy
Positive trends in occupancy Our breadth and quality of commercial tenants support growth and resilience COMMITTED COMMERCIAL OCCUPANCY RATES % 97.2% 95.7% 96.8% 97.0% 97-98 5-year plan target 2019 2020 2021 Q1 2022 RIOCAN | INVESTOR PRESENTATION ( First Quarter 2022) | 31
Slide 32: Leasing spreads and average net rent targets
Well-positioned portfolio retains and attracts tenants BLENDED LEASING SPREADS HIGH blended leasing spread SINGLE 5-year plan target 9.4% 8.9% 5.0% 6.3% DIGITS 2019 2020 2021 Q1 2022 AVERAGE NET RENT PER SQUARE FOOT ~$ 22.50 average rent per square foot $19.75 $19.80 $20.16 $20.23 5-year plan target
Slide 33: Compelling development opportunities
Compelling Development relevant image development opportunities % ~ % 100 78 located in located in Canada’s six major markets the GTA ~ % ~ % 83 70 are residential located on developments transit route *% of total NLA at RioCan’s interest RIOCAN | INVESTOR PRESENTATION ( First Quarter 2022) | 33
Slide 34: Driving NAV through development
Driving NAV through development In collaboration with trusted partners, RioCan is building dynamic and iconic developments that enhance communities in Canada’s major markets 42.6M SQ FT DEVELOPMENT PIPELINE Zoning Active Shovel Underway 16.8M SQ (1) FT pre-development ready 2.2M 2.5M SQ zoning appro
Slide 35: Competitive advantages in development
COMPETITIVE ADVANTAGES 1 Significant landbank embedded, high-quality development pipeline Established development expertise 2 in-house team with deep experience spanning entire development process from entitlement to product delivery Dedicated RioCan Living team 3 focused only on residential ensurin
Slide 36: Strong development track record of above market returns
Strong development track record of delivering above market returns Case study: Five purpose-built residential buildings totaling 871 units Market Average Average capitalization joint venture RioCan Brio – Calgary, AB rate yield yield Frontier – Ottawa, ON Latitude – Ottawa, ON % 3.7 % 4.2 4.9% Strad
Slide 37: Development deliveries fueling our five-year plan
Development deliveries fueling our five-year plan 2022 DELIVERY 2023 DELIVERY NLA to be New NLA ~719,000 sq. ft. ~621,000 sq. ft. Incremental cash NOI delivered (stabilized) (2) $27.4M $26.0M in the next 24 months 1.7M SQ (1) FT * At RioCan’s interest 1 - Includes ~315,000 sq. ft. of condominium and
Slide 38: Self-funding development growth
Self-funding development growth ~$ Retained cash flow 150M per year Supplemented ~$ Project leverage 250M per year with partnerships to support funding and generate fees $ Capital recycling 100-200M average run rate per year RIOCAN | INVESTOR PRESENTATION ( First Quarter 2022) | 38
Slide 39: Capital Structure
Capital Structure Enterprise Value $14.8B Interest (in billions) Q1 2022 Rate (1) Mortgages Payable $2.6B 3.2% 20% Secured Construction Lines $0.4B 2.1% Total Secured Debt (2) (3) $3.0B 3.0% Unsecured Debentures $3.0B 2.8% 27% Non-Revolving Unsecured Credit Facilities $0.7B 3.6% Revolving Unsecured
Slide 40: Disciplined and prudent balance sheet management
Disciplined and prudent balance sheet management CAPITAL STRUCTURE METRICS 5-YEAR TARGET March 31, 2022 Adjusted Debt to Adjusted EBITDA (1)(4) 8.0x – 9.0x 9.5x (2) Ratio of Unsecured vs. Secured Debt (1)(4) 70% / 30% 58% / 42% Weighted average to term maturity (3) 5 years 4 years Total Development
Slide 41: Ample liquidity and laddered debt maturity
Ample liquidity and laddered debt maturity 1,750 Factors in the $250.0M increase in credit limit on the operating line of credit in 1,500 February 2022 & $250.0M Series AF debenture issuance in April 2022 1,250 57 347 1,000 200 500 (in $M) 69 750 1,585 523 309 133 372 Series AF debentures 22 issued
Slide 42: Featured Projects
APPENDIX Featured Projects * square footage and number of residential units are at 100% interest RIOCAN RIOCAN | INVESTOR | INVESTOR PRESENTATION PRESENTATION (First (March Quarter 2022) 2022) | 42
Slide 43: The Well - mixed-use community in Downtown Toronto
TM The Well - A true mixed-use community anchoring King West area of Downtown Toronto ~1.2 million sq. ft. of distinctive office space housing active primarily knowledge-based workers 90% LEASED ~320k sq. ft. of forward-thinking retail providing meaningful experiences and everyday needs 79% PRE-LEAS
Slide 44: RioCan Hall
◦ Currently ~227k sq. ft. of income producing retail in the heart of Toronto’s entertainment district ◦ ~800k sq. ft. of mixed-use density contemplated through two tower development TORONTO, ON RIOCAN HALL RIOCAN | INVESTOR PRESENTATION (First ( FirstQuarter Quarter2022) 2022) | 44 | 44
Slide 45: RioCan Colossus Centre
◦ >50 acre site currently consisting of 571k sq. ft. of income producing retail HWY 400 ◦ ~10M sq. ft. of mixed-use density HWY 407 contemplated involving multi-phase development HWY 7 VAUGHAN, ON RIOCAN COLOSSUS CENTRE RIOCAN | INVESTOR PRESENTATION ( First Quarter 2022) | 45
Slide 46: Verge
◦ First independent condo launch under RioCan Living banner in partnership with four investors ◦ Retail at grade ◦ Verge (Phase One) – 99% pre-sold (1)(2) • 10-storey, 197 unit ◦ Verge (Phase Two) – 97% pre-sold (1)(2) • 17-storey, 335 unit 1) As of May 9, 2022 2) Based on released units for sale TO
Slide 47: Frontier and Latitude
Latitude, Phase Two - 63% leased (1) ◦ 20-storey, 209 unit residential rental ◦ Occupancy commenced in Q1 2022 Frontier, Phase One – 93% leased (1) ◦ 23-storey, 228 unit residential rental 1) As of May 9, 2022 OTTAWA, ON FRONTIER AND LATITUDE RIOCAN | INVESTOR PRESENTATION ( First Quarter 2022) | 47
Slide 48: Litho
◦ 9-storey, 210 unit residential rental ◦ ~32k sq. ft. of retail ◦ ~76% leased (1) ◦ Launched in July 2021 1) As of May 9, 2022 TORONTO, ON LITHO. RIOCAN | INVESTOR PRESENTATION ( First Quarter 2022) | 48
Slide 49: Strada
◦ 8-storey, 61 unit residential rental ◦ ~6k sq. ft. of retail ◦ Occupancy commenced in Q1 2022 ◦ ~62% leased (1) 1) As of May 9, 2022 TORONTO, ON STRADA RIOCAN | INVESTOR PRESENTATION ( First Quarter 2022) | 49
Slide 50: Luma
◦ 9-storey, 168 unit residential rental ◦ ~10K sq. ft. of retail ◦ Expected to commence occupancy in Q2 2022 OTTAWA, ON LUMA RIOCAN | INVESTOR PRESENTATION ( First Quarter 2022) | 50
Slide 51: Rhythm
◦ 24-storey, 214 unit residential rental ◦ ~20K sq. ft. of retail ◦ Expected to commence occupancy in Q4 2022 OTTAWA, ON RHYTHM RIOCAN | INVESTOR PRESENTATION ( First Quarter 2022) | 51
Slide 52: Condo / Townhouse development and value creation
Condo / Townhouse development and value creation Alternate source of income and cash flow providing efficient capital recycling Townhomes Condominiums Condominiums Condominiums U.C. UptownsTM U.C. TowerTM 11 YV Queen & AshbridgeTM Sales Sold Out Sold Out ~99% Pre-Sold ~96% Pre-Sold Status (1) (153 U
Slide 53: Condo / Townhouses high demand for recent launches
Condo / Townhouses high demand for recent launches Pre-sales progressing well with rapid unit sales [Placeholder for Rendering] Townhomes Condominiums Condominiums Condominiums Condominiums TM U.C. Towns 2 U.C. Tower 2 U.C. Tower 3 Verge (Phase Two) Verge (Phase One) Sales Sold Out Sold Out (3) ~44%
Slide 54: Value creation underway - projects under construction
Value creation underway - projects under construction (in thousands of square feet) NLA ('000s) Estimated Density (NLA) at RioCan’s Interest RioCan Ownership Residential Residential Under Anticipated date Commercial Completed (i) Total As at March 31, 2022 Location % (Partner) At 100% Rental Invento
Slide 55: Value creation underway - projects with zoning approval
Value creation underway - projects with zoning approval NLA (‘000s) Estimated Density (NLA) at RioCan’s Interest (in thousands of square feet) RioCan Ownership Residential Residential Active Pre- Development Commercial Shovel Ready Total As at March 31, 2022 Location % (Partner) At 100% Rental Inven
Slide 56: Quality. Growth.
Quality. Growth. RIOCAN | INVESTOR PRESENTATION ( First Quarter 2022) | 56
Slide 57: Forward-looking information
FORWARD-LOOKING INFORMATION All information other than statements of current and historical fact included in this presentation is forward-looking information within the meaning of applicable securities laws. Forward-looking information generally can be identified by the use of forward-looking termin
Slide 58: Non-GAAP measures
NON-GAAP MEASURES RioCan’s consolidated financial statements are prepared in accordance with IFRS. Consistent with RioCan’s management framework, management uses certain financial measures to assess RioCan’s financial performance, which are not generally accepted accounting principles (GAAP) under I
Slide 59: Head Office
Head Office | RioCan Yonge Eglinton Centre, 2300 Yonge Street, Suite 500, Box 2386, Toronto, Ontario M4P 1E4 • 1-800-465-2733 • riocan.com RIOCAN | INVESTOR PRESENTATION ( First Quarter 2022)
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