Riocan Real Estate Investment Trust · TSX:REI.UN
Riocan Real Estate Investment Trust — Q4 2021 Earnings Presentation
49 slides from Riocan Real Estate Investment Trust's earnings presentation, Feb 10, 2022
Slide 1: Quality and Growth - Fourth Quarter 2021 Investor Presentation
QUALITY AND GROWTH February 2022 Fourth Quarter 2021 Investor Presentation
Slide 2: 2021 Highlights
2021 Highlights $598.4M $701.7M NET INCOME OPERATING RioCan's objective: INCOME deliver industry-leading total unitholder return. $1.60 3.4% We accomplish this by leveraging our unique FUNDS FROM SAME PROPERTY mix of quality properties with solid growth OPERATIONS NET OPERATING PER UNIT (1) INCOME G
Slide 3: Why invest in RioCan
Why invest in RioCan Key differentiators support robust total Unitholder return Resilient, necessity based retail Industry-leading development pipeline 01 • Located in Canada’s most in-demand 02 • Advanced zoning entitlements already and growing markets in place • Diversified and defensive tenant mi
Slide 4: RioCan - At a Glance
RioCan - At a Glance
Slide 5: RioCan - located in Canada's most in-demand markets
RioCan - located in Canada’s most in-demand markets Prime, high density, transit-oriented areas where Canadians shop, live and work 91.0% Dense Population 203,000 (1) People Strong Household Incomes $124,000 (1) Last Mile Hub Facilitating all consumer shopping patterns Residential Development 6 asse
Slide 6: RioCan - by the numbers
RioCan - by the numbers 207 36M Sq. Ft. ~14M Sq. Ft. properties across aggregate of zoned density Canada (1) net leasable area surfacing value from ~43M Sq. Ft. pipeline Committed of revenue from ~$14B 96.8% ~ 85% strong and total enterprise value occupancy stable tenants (2) 1) Includes 13 properti
Slide 7: Property mix
Property mix Increasingly mixed-use portfolio by Revenue (1) GROCERY ANCHORED CENTRE (2) 54.1% -0.2% 54.3% MIXED-USE / URBAN (3) 22.1% 0.7% Property 21.4% Type OPEN AIR CENTRE (2) 14.5% -0.3% 14.8% ENCLOSED CENTRE (4) 9.3% -0.2% 9.5% • Retail: 90.7% • Office: 7.6% •2021 • Residential Rental: 1.7% •2
Slide 8: Tenant mix
Tenant mix In lockstep with consumer spending patterns Retailer Category % of Rent Key Brands (i) Grocery / Pharmacy / Liquor (ii) 19.9% Essential Personal Services 14.3% Specialty Retailers 11.9% Value Retailers (ii) 10.6% Furniture & Home 8.9% Other Personal Services 8.0% Quick Service Restaurants
Slide 9: Demand drivers for RioCan properties
Demand drivers for RioCan properties Population Evolving Retail Tight Residential Supply • Canada’s population is forecasted to • Full e-commerce experience combines • Housing demand outstripping supply in grow ~1% by 2025 on a compounded online and physical spaces as major markets, particularly Tor
Slide 10: Physical retail critical to E-Commerce strategy
Physical retail critical to E-Commerce strategy Proximity to consumers enables fulfillment where, when and how they want Distribution Centre Store Home Occupancy costs trending higher Located in industrial park Located in heart of community Store purchase Store delivery Store pickup Retailer Showroo
Slide 11: RioCan - keeping in step with evolving retail landscape
RioCan - keeping in step with evolving retail landscape COVID-19 has fast-tracked the evolution and amplified emerging success factors NEW RETAIL REALITY RIOCAN POSITION RIOCAN INITIATIVES Integrated E-Commerce • Enable retailers to adapt and provide customers • Programs such as RioCan Curbside Coll
Slide 12: Resilient Necessity-based Retail
Resilient Necessity-based Retail
Slide 13: Robust Portfolio Fundamentals
Robust Portfolio Fundamentals Deliver strong financial performance FFO per Unit Same Property NOI 2020 2021 $1.65 3.4% $1.60 $1.60 (1) (1) $1.50 $1.55 (6.5)% 2020 2021 Core FFO/unit (1) FFO/unit FFO/unit (excluding net debt prepayment costs and one-time compensation costs) 1) This is a non-GAAP meas
Slide 14: Positive trends in occupancy
Positive trends in occupancy Breadth and quality of tenants support growth and resilience Committed and In-Place Occupancy Total Commercial Portfolio 96.8% 96.4% 96.1% 96.1% 95.8% 95.7% 95.6% 95.1% 95.1% 94.9% Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Committed In-Place Investor Presentation Q4 2021 |
Slide 15: Well-positioned portfolio retains and attracts tenants
Well-positioned portfolio retains and attracts tenants 4.7 million square feet of new and renewal leases executed at robust leasing spreads 86.7% 83.8% Renewal Retention Leasing 5.4% Ratios Spreads(1) 4.4% 2020 2021 2020 2021 1) Fixed renewals represented 29% and 34% of renewals for 2021 and 2020, r
Slide 16: High performance growth-oriented portfolio
High performance growth-oriented portfolio Building on a strong and stable foundation Average Net Rent (PSF) (1) $23.33 PSF ~3.0% average rent of new leases CAGR (2) signed in 2021 $19.75 $19.80 $20.16 $19.07 $17.59 $17.75 2016 2017 2018 2019 2020 2021 1) Net rent is primarily contractual base rent
Slide 17: Strong base of resilient tenants
Strong base of resilient tenants Providing complementary mix of uses addressing consumer demand Strong & Stable (1) Revenue by Tenant Type Tenants with stable rent-paying ability, strong covenants, and reliable foot traffic. This category is (% billed gross rent) largely comprised of national, neces
Slide 18: Industry-leading Development Pipeline
Industry-leading Development Pipeline
Slide 19: Advanced pipeline with consistent stream of development activity
Advanced pipeline with consistent stream of development activity delivering completed projects in the near-term and beyond ~43.1M Sq. Ft. embedded development pipeline ~13.8M Sq. Ft. zoning approved and in various stages of development(1) Greater Toronto RioCan Hall Toronto, ON RioCan Colossus Area,
Slide 20: De-risked development program of zoning approved projects
De-risked development program comprised of well-located and zoning approved projects ~13.8M Square Feet Zoning Approved • ~100% located in Canada’s six major markets (1) • ~39% located in the GTA (1) Compelling Demographics (2) • ~72% are residential developments (1) • Population: 222,000 • Househol
Slide 21: Established development platform focused on mixed-use residential
Established development platform focused on mixed-use residential Seven purpose-built residential rental buildings completed since 2019 generating ~$18M in estimated NOI (1) upon stabilization eCentral Toronto, ON Frontier and Latitude Ottawa, ON Brio Calgary, AB Pivot Toronto, ON Litho. Toronto, ON
Slide 22: Development in action
Development in action Development completions within next 24 months generate more than $56M in incremental NOI when stabilized Incremental Cash New NLA Delivery Year NOI (1) (Sq. Ft.) (Stabilized, $M) 2021 ~243,000 ~$6.8 Rhythm Ottawa, ON 2022 ~750,000 ~$28.3 2023 ~714,000 ~$28.0 (1) This is a forwa
Slide 23: The Well - A true mixed-use community in King West
The WellTM - 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 ~340k sq. ft of forward-thinking retail providing meaningful experiences and everyday needs 62% PRE-LEASED
Slide 24: 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 ~95% Pre-Sold Sales Sold Out Sold Out ~99% Pre-Sold (399 Units) Statu
Slide 25: 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 U.C. Towns 2 U.C. Tower 2 VergeTM (Phase Two) Verge (Phase One) Sales Sold Out ~90% Pre-Sold ~ 95% Pre-Sold (5) ~ 97% Pre-S
Slide 26: Strong Balance Sheet and Financial Management
Strong Balance Sheet and Financial Management
Slide 27: Capital Structure
Capital Structure Enterprise Value $13.9B Interest (in billions) Q4 2021 Rate (1) Mortgages Payable $2.5B 3.2% 20% Secured Construction Lines $0.3B 1.7% Total Secured Debt (2) (3) $2.8B 3.0% Unsecured Debentures $3.0B 2.8% 29% Non-Revolving Unsecured Credit Facilities $0.7B 3.3% Revolving Unsecured
Slide 28: Capital Structure Metrics
Disciplined and prudent balance sheet management Ample liquidity bolstered by large pool of unencumbered assets (1) (1) (1) Target Q4 2021 Q3 2021 Q4 2020 Liquidity (5) N/A $1.0B $1.1B $1.6B Adjusted Debt to Adjusted EBITDA (5) 8.0x - 9.0x 9.59x 9.97x 9.47x Capital Structure Metrics Adjusted Debt to
Slide 29: Ample liquidity and laddered debt maturity
Ample liquidity and laddered debt maturity Debt Maturities after given effects of recent financing strategy 1,500 Factors in the $250.0M increase in credit limit on the operating Extended the maturity date line of credit that closed on of the revolver in April 2021 February 2, 2022 1,250 200 46 366
Slide 30: Capital recycling surfaces value and funding source
Capital recycling surfaces value and funding source Repatriating equity capital for higher return opportunities Dispositions Closed in Closed, Firm & Conditional (in millions) YTD 2021 as of February 9, 2022(1) Income Producing Properties $658.4M $73.4M PUD $107.7M $24.6M Residential Inventory $82.5
Slide 31: Development pipeline is fully funded
Development pipeline is fully funded A combination of Retained Cash Flow, Project Debt and Dispositions more than funds our expected development spend $150M Asset Dispositions Retained Cash Flow $250M $400M $475M to $525M $150M Retained FFO Property Leverage Funding Source Estimated Annual Developme
Slide 32: Prudent approach to development
Prudent approach to development As at December 31, 2021 Target Properties Under Development (“PUD”) & Residential Inventory $1.7B N/A PUD and Residential Inventory as % of Gross Assets – Per Line of Credit and Credit Facilities 11.0% ~ 10% Agreements (maximum permitted is 15%) Investment in Greenfie
Slide 33: Industry leading ESG Practices
04 Industry leading ESG PRACTICES
Slide 34: 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 35: Appendix and Feature Projects
2329 Yonge St. 2323 Yonge St. 2345 Yonge St. APPENDIX AND FEATURE PROJECTS
Slide 36: Value creation underway
Value creation underway Development pipeline: 60 projects delivering ~43M square feet of NLA Estimated Density (NLA) at RioCan’s Interest # of Residential Air Rights Residential Total projects Commercial (thousands of sq. ft.) Rental Sale Inventory Under construction • 23 projects under Mixed-use re
Slide 37: Value creation underway
Value creation underway Mixed-use Residential Projects Currently Under Construction or Pre-sale NLA (‘000s sq. ft.) # of Cost to date at Total Est. Cost residential RioCan’s at RioCan’s Anticipated RioCan Onwership Total at at RioCan’s units at Interest Interest Inventory gain date of Location % (Pa
Slide 38: RioCan Hall
• Currently ~227k sq. ft of income producing retail in the heart of Toronto’s entertainment district • ~750k sq. ft. of mixed-use density contemplated through two tower development TORONTO, ON RIOCAN HALL Investor Presentation Q4 2021 | RioCan | 38
Slide 39: RioCan Colossus Centre
HWY 400 HWY 407 HWY 7 • >50 acre site currently consisting of 571k sq. ft of income producing retail • ~10M sq. ft. of mixed-use density contemplated involving multi-phase VAUGHAN, ON development RIOCAN COLOSSUS CENTRE Investor Presentation Q4 2021 | RioCan | 39
Slide 40: Verge
• First independent condo launch under RioCan Living banner in partnership with four investors • Retail at grade • Verge (Phase Two) – 95% pre-sold (1)(2) ◦ 17-storey, 335 unit • Verge (Phase One) – 97% pre-sold (1)(2) ◦ 10-storey, 197 unit 1) As of February 9, 2022 2) Based on released units for sa
Slide 41: Yonge Sheppard Centre & Pivot
• ~315k sq. ft. of office • ~305k sq. ft. of retail • 36-storey, 361 unit residential rental - completed TORONTO, ON YONGE SHEPPARD CENTRE & PIVOT Investor Presentation Q4 2021 | RioCan | 41
Slide 42: Frontier and Latitude
Latitude, Phase Two - 27% leased (1) • 20-storey, 209 unit residential rental • Occupancy commenced in Q1 2022 Frontier, Phase One – 96% leased (1) • 23-storey, 228 unit residential rental 1) As of February 9, 2022 GLOUCESTER, ON FRONTIER AND LATITUDE Investor Presentation Q4 2021 | RioCan | 42
Slide 43: Litho.
• 9-storey, 210 unit residential rental • ~28k sq. ft. of retail • ~62% leased (1) • Launched in July 2021 1) As of February 9, 2022 TORONTO, ON LITHO. Investor Presentation Q4 2021 | RioCan | 43
Slide 44: Strada
• 8-storey, 61 unit residential rental • ~6k sq. ft. of retail • Occupancy commenced in Q1 2022 TORONTO, ON STRADA Investor Presentation Q4 2021 | RioCan | 44
Slide 45: Luma
• 9-storey, 168 unit residential rental • ~5K sq. ft. of retail • Expected to commence occupancy in Q2 2022 OTTAWA, ON LUMA Investor Presentation Q4 2021 | RioCan | 45
Slide 46: Rhythm
• 24-storey, 213 unit residential rental • ~10K sq. ft. of retail • Expected to commence occupancy in Q4 2022 OTTAWA, ON RHYTHM Investor Presentation Q4 2021 | RioCan | 46
Slide 47: Forward-Looking Information
FORWARD-LOOKING INFORMATION Certain information included in this presentation contains forward-looking statements within the meaning of applicable securities laws including, among others, statements concerning our objectives, our strategies to achieve those objectives, as well as statements with res
Slide 48: 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 49: RIO*CAN’
RIO*CAN’
RioCan Real Estate Investment Trust — Q4 2021 Earnings Presentation on 6ix