H&r Real Estate Investment Trust · TSX:HR.UN
H&r Real Estate Investment Trust — Q4 2021 Earnings Presentation
26 slides from H&r Real Estate Investment Trust's earnings presentation, Feb 15, 2022
Slide 1: Repositioned for Growth
REPOSITIONED FOR GROWTH INVESTOR PRESENTATION February 2022 INVESTOR PRESENTATION February 2022 1
Slide 2: Caution Regarding Forward-Looking Statements
CAUTION Forward-Looking Statements Certain statements made in this presentation will contain forward‐looking information within the meaning of applicable securities laws (also known as forward‐looking statements) including, among others, statements made or implied relating to H&R Real Estate Investm
Slide 3: Repositioned for Growth
REPOSITIONED FOR GROWTH To be a leading owner, operator and developer of -residential and industrial properties, surfacing value through asset redevelopment and greenfield development, funded by capital recycling. INVESTOR PRESENTATION February 2022 3
Slide 4: Management Committed to Surfacing Value for Unitholders
MANAGEMENT COMMITTED TO SURFACING VALUE FOR UNITHOLDERS TARGET EXECUTION Executing against our Strategic Repositioning Plan to surface Transacted on $4.7 billion of real estate in 2021 and create value for unitholders Accelerating Same-Asset property operating 2022 forecasted Same-Asset property ope
Slide 5: Strategic Repositioning Initiatives Executing Against Plan
STRATEGIC REPOSITIONING INITIATIVES EXECUTING AGAINST PLAN PRIMARIS COMPLETED DEC 31 2021: Tax-free spin-off of Primaris including all of H&R’s SPIN-OUT enclosed malls to unitholders Disposition of remaining grocery-anchored and essential service retail EXIT RETAIL properties, including ECHO interes
Slide 6: Transform H&R into a High-Growth Residential and Industrial Platform
TRANSFORM H&R INTO A HIGH-GROWTH RESIDENTIAL AND INDUSTRIAL PLATFORM Investment Properties Investment Properties December 31, 20211 Sept 30, 2021 Retail Residential 19% Retail Residential 23% 33% 32% Industrial 13% Residential 42% Office Industrial 35% Office Redevelopment 9% Office 10% 26% 1. Inves
Slide 7: Significantly Increase Exposure to the GTA and High Growth U.S. Sunbelt and Gateway Cities
SIGNIFICANTLY INCREASE EXPOSURE TO THE GTA AND HIGH GROWTH U.S. SUNBELT AND GATEWAY CITIES Investment Properties Investment Properties Sept 30, 2021 December 31, 20211 Alberta Alberta 5% Other Other 25% 20% 23% GTA 22% Gateway GTA U.S. 19% 12% Gateway U.S. 24% Sunbelt U.S. 26% Sunbelt U.S. 24% 1. In
Slide 8: Target Business Metrics Support Value Creation Strategies
TARGET BUSINESS METRICS SUPPORT VALUE CREATION STRATEGIES Investment Properties Target Credit Metrics 2021 Target Industrial Payout Ratio as a % of FFO1 51.6% 45-55% Debt / Adjusted EBITDA1 7.2x <9.2x Debt to Total Assets1 46.6% 45-50% Residential Unencumbered Assets / Unsecured Debt 1.95x >2.0x Gat
Slide 9: Exit $3.5 Billion of Office and Retail Properties
EXIT $3.5 BILLION OF OFFICE AND RETAIL PROPERTIES WELL-LOCATED, FULLY-OCCUPIED, INVESTMENT-GRADE TENANTS WITH LONG LEASE TERMS Up to $2.5 billion of office $596 million of high-quality $482 million investment in ECHO, properties with investment-grade grocery-anchored and single- an attractive grocer
Slide 10: Increase Class A Residential Property Exposure
INCREASE CLASS A RESIDENTIAL PROPERTY EXPOSURE IN HIGH GROWTH U.S. GATEWAY AND SUNBELT CITIES Targeting increased Target market Highly skilled locally- exposure to characteristics: based property institutional-quality • Strong population management team properties in proven and employment high growt
Slide 11: Prime income-producing residential properties with attractive growth characteristics
Prime income-producing residential $3.0B properties with attractive growth characteristics Fair Value 4.34% Residential Fair Value Number of Units Weighted Average Cap Rate by Geography by Geography New York 11% Texas 7.8% New York 19% Same Asset property 32% operating income (cash bass) growth¹ Nor
Slide 12: Significant Residential and Industrial Development and Intensification Pipeline
SIGNIFICANT RESIDENTIAL AND INDUSTRIAL DEVELOPMENT AND INTENSIFICATION PIPELINE 2022 Construction Starts 2,150 residential units 575,000 industrial GLA Primarily U.S.-based, residential greenfield Vancouver 1,250 units development located in 2023 & Future Construction Starts high growth gateway and
Slide 13: 2022 + Future Construction Starts
2022 + FUTURE CONSTRUCTION STARTS 2022 starts 2023 starts + future Expected Anticipated Industrial GLA Completion (square feet)/ Property1 Geography Use Type Ownership Acres Date Residential Rental Units Meadowvale Commerce Pk. Mississauga, ON Industrial Greenfield 100.0% 15.4 2023 330,000 GLA Slate
Slide 14: Rezoning of Office and Industrial Properties into Highest and Best Use
REZONING OF OFFICE AND INDUSTRIAL PROPERTIES INTO HIGHEST AND BEST USE Anticipated Current GLA Industrial GLA Expected (Square (Square feet) Approval Property Geography Use Type Feet) /Residential Units Approval Status1 Date 145 Wellington St. W. Toronto, ON Residential Redevelopment 160,146 400 uni
Slide 15: High-Quality Distribution Facilities Located in Key Industrial Markets
HIGH-QUALITY DISTRIBUTION FACILITIES $1.2B Fair Value LOCATED IN KEY INDUSTRIAL MARKETS 8.6M REIT owned Square feet % of industrial Number of sq.ft. Avg lease Credit Ratings Tenant rentals locations (in 000s) TTM (years) (S&P) 1 Canadian Tire Corporation 25.1% 2 2,104 5.1 BBB Stable 2 Finning Intern
Slide 16: Maintain a Strong and Flexible Balance Sheet with an Investment Grade Credit Rating
MAINTAIN A STRONG AND FLEXIBLE BALANCE SHEET BBB (High) by DBRS WITH AN INVESTMENT GRADE CREDIT RATING Unsecured Debt2 to Total Assets3 $4.0B Term Loans Unencumbered 6% Assets4 Senior Unsecured Debentures 51.1% $952M 17% Available under Unitholders’ Lines of Credit $8.9B Equity & Exchangeable 46.6%
Slide 17: Well-Laddered Debt Maturity Schedule
WELL-LADDERED DEBT MATURITY SCHEDULE $900 $800 $700 $600 $500 $400 $300 $200 $100 $0 2022 2023 2024 2025 2026 2027 2028 2029 2030 Mortgage Payments Unsecured Term Loans Senior Unsecured Debentures INVESTOR PRESENTATION February 2022 17
Slide 18: H&R Strategic Priorities to Drive Growth
H&R STRATEGIC PRIORITIES TO DRIVE GROWTH Class A Property High-Quality Disposition Program Financial Flexibility to Residential Redevelopment Distribution Facilities Drive Growth Through the Lantower Advance the rezoning Build and expand the Redeploy proceeds from Maintain a strong, flexible platfor
Slide 19: Our Approach to Sustainability
OUR APPROACH Integrate sustainability priorities into decision making across all stages of an asset’s lifecycle TO SUSTAINABILITY Strategic Planning Acquisitions H&R’s Executive team The Investment Committee identifies and assesses oversees and approves acquisitions material inline with the REIT's s
Slide 20: Sustainability Highlights
SUSTAINABILITY HIGHLIGHTS CLIMATE AND DIVERSITY AND GOVERNANCE RESOURCE EFFICIENCY INCLUSION PRACTICES 4.1 % Reduction in normalized • Utility consumption and • 33% of the Board of Trustees • Tenure for all new Trustees is emissions intensity in 2019 vs. 2018 for H&R Utility emissions reporting boun
Slide 21: Appendix
APPENDIX 21
Slide 22: River Landing / The Pearl
River Landing The Pearl Miami, FL Austin, TX Completed: Q2 2021 EXPECTED COMPLETION: Q1 2022 Urban mixed-use property Residential development site 342,000 sf of retail space H&R Ownership: 33.3% 149,000 sf of office space 383 residential units 528 residential rental units Close to major technology e
Slide 23: Shoreline Gateway / Hercules
Shoreline Gateway Hercules Long Beach, CA San Francisco CA LAND ACQUIRED JULY 16, 2018 - EXPECTED COMPLETION: Q1 2022 PHASE II: “The Grand at Bayfront” EXPECTED COMPLETION: Q1 2022 H&R ownership: 31.2% H&R ownership: 31.7% 35-storey residential tower consisting of 315 rental units 36.2 acres of land
Slide 24: West Love / Bayside / Midtown Park
West Love Bayside Midtown Park. Dallas, TX Largo, FL Dallas, TX CONSTRUCTION IS EXPECTED TO BEGIN IN CONSTRUCTION IS EXPECTED TO BEGIN IN 2022 CONSTRUCTION IS EXPECTED TO BEGIN IN 2022 2022, WITH AN EXPECTED COMPLETION DATE AND AN EXPECTED COMPLETION DATE OF AND AN EXPECTED COMPLETION DATE OF OF 202
Slide 25: 145 Wellington St. W. / 3777 Kingsway
3777 Kingsway 145 Wellington St. W. Burnaby, BC Toronto, ON RE-ZONING AND SITE PLAN APPROVAL IS EXPECTED IN Q2 2022 RE-ZONING AND SITE PLAN APPROVAL IS EXPECTED IN Q3 2023 In August 2019, H&R submitted a rezoning and site plan approval In June 2020, H&R along with its partner, submitted a re-zoning
Slide 26: 55 Yonge / 310 Front St.
55 Yonge 310 Front St. Toronto, ON Toronto, ON RE-ZONING AND SITE PLAN APPROVAL IS EXPECTED IN Q1 2023 OBTAIN APPROVAL FOR RE-ZONING AND SITE PLAN IN Q1 2023 The site encompass approximately 0.37 acres. The REIT submitted a re- In April 2021, H&R submitted a combined a re-zoning application zoning a
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