H&r Real Estate Investment Trust · TSX:HR.UN
H&r Real Estate Investment Trust — Investor Presentation (October 2021)
46 slides from H&r Real Estate Investment Trust's investor presentation, Oct 27, 2021
Slide 1: Repositioned for Growth
REPOSITIONED FOR GROWTH Strategic Repositioning INVESTOR PRESENTATION OCTOBER 27, 2021 INVESTOR PRESENTATION OCTOBER 27, 2021 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 multi-residential and industrial properties, surfacing value through asset redevelopment and greenfield development, funded by capital recycling. INVESTOR PRESENTATION OCTOBER 27, 2021 3
Slide 4: Strategic Repositioning Initiatives
STRATEGIC REPOSITIONING INITIATIVES PRIMARIS Tax-free spin-off of Primaris including all of H&R’s enclosed malls to unitholders Disposition of remaining grocery-anchored and essential service retail properties, EXIT RETAIL including ECHO interest Office properties with redevelopment opportunities wi
Slide 5: Strategic Repositioning Benefits
STRATEGIC REPOSITIONING BENEFITS TRANSFORM FROM DIVERSIFIED TO SIMPLIFIED Higher Growth Enhanced Attractive Financial Properties Geography Developments Flexibility Greater exposure to Enhanced major market Attractive development Strong balance sheet higher growth multi- presence in the Greater and r
Slide 6: Transform H&R into a High-Growth Multi-Residential and Industrial Platform
TRANSFORM H&R INTO A HIGH-GROWTH MULTI-RESIDENTIAL AND INDUSTRIAL PLATFORM Investment Properties Investment Properties Investment Properties June 30, 2021 Post Spin-Off 5-Year Target January 1, 2022 Multi- Retail Retail Residential 19% Multi- Industrial 31% 22% Residential 30% Multi-Residential 45%
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 Investment Properties June 30, 2021 Post Spin-Off 5-Year Target January 1, 2022 Alberta 7% Other Alberta Other 24% 18% 23% Gateway U.S. GTA GTA 21% GTA 22% Gateway U
Slide 8: The New H&R Offers Value and Growth
THE NEW H&R OFFERS VALUE AND GROWTH Proforma NAV per Unit Proforma NAV per Unit $22.29 Unit Price1 $16.38 $16.98 Q2/21 IFRS NAV $22.29 $16.38 $5.50 Primaris Distribution² $5.50 Proforma H&R NAV³ $16.98 H&R Repositioned for Growth Unit Price1 Q2/21 IFRS NAV Primaris Proforma H&R Repositioned for Dist
Slide 9: Spin-Off Overview
SPIN-OFF OVERVIEW The Transaction Built • H&R and Healthcare of Ontario Pension Plan (“HOOPP”) to create Canada’s premier enclosed shopping centre REIT, Primaris REIT (“Primaris”) for the New • Independent, third-party appraisals on 100% of properties in order to determine Retail Landscape ownership
Slide 10: Primaris - Strategic Advantages Built for the New Retail Landscape
PRIMARIS - STRATEGIC ADVANTAGES BUILT FOR THE NEW RETAIL LANDSCAPE Built to Grow and Thrive Size and Scale Strategic Capitalization • $3.2B national portfolio of • Debt to Gross Book Value: 29% dominant enclosed shopping • Debt to EBITDA: 5.3x1 centre properties across Canada • Target FFO payout rat
Slide 11: Primaris - Strong Management Team Guided by Independent Board of Trustees
PRIMARIS - STRONG MANAGEMENT TEAM GUIDED BY INDEPENDENT BOARD OF TRUSTEES Industry Years at Industry Years at Experience Primaris Experience Primaris Board of Trustees Avtar Bains Alex Avery Graham Proctor • 30 years as leading property broker with Colliers Chief Executive 20 4 SVP, Asset 20 4 Inter
Slide 12: Primaris - Dufferin Grove Flagship Development Opportunity
PRIMARIS - DUFFERIN GROVE FLAGSHIP DEVELOPMENT OPPORTUNITY • Replacement of surface parking with 3 residential buildings over 2 blocks • West block: 2 residential buildings (20 and 36 storeys) • East block: 1 residential building and podium (16 and 10 storeys) • 1,300 residential rental units and 13
Slide 13: Primaris - Other Excess Density and Substantial Intensification Potential
PRIMARIS - OTHER EXCESS DENSITY AND SUBSTANTIAL INTENSIFICATION POTENTIAL Orchard Park Place D’Orleans Stone Road Mall Sunridge Mall Northland Village Sherwood Park Grant Park Kildonan Place (Kelowna, BC) (Ottawa, ON) (Guelph, ON) (Calgary, AB) (Calgary, AB) (Sherwood Park, AB) (Winnipeg, MB} (Winni
Slide 14: H&R Post Spin
H&R Favourable impact on operating and credit metrics enhancing growth and improving balance sheet POST SPIN Post Spin Key Metrics June 30, 2021 January 1, 2022 Impact Reduce Calgary Office Exposure $1.1 billion $372.5 million Reduce Retail Exposure $4.0 billion $1.8 billion Improve Balance Sheet -
Slide 15: Exit $3.4 Billion of Properties to Fund Development Pipeline
EXIT $3.4 BILLION OF PROPERTIES TO FUND MULTI-RESIDENTIAL AND INDUSTRIAL DEVELOPMENT PIPELINE $1.1 billion $2.3 billion retail properties office properties INVESTOR PRESENTATION OCTOBER 27, 2021 15
Slide 16: Exit Remaining Retail Through Disposition Program
EXIT REMAINING RETAIL THROUGH DISPOSITION PROGRAM SYNCHRONIZED TO MATCH CAPITAL FUNDING REQUIREMENTS $600 million of high-quality $470 million investment in ECHO, Grocery-Anchored and Essential Service Disposition Portfolio $1.1 billion grocery-anchored and single- an attractive grocery-anchored sal
Slide 17: Exit Office Through Dispositions and Redevelopments
EXIT OFFICE THROUGH DISPOSITIONS AND REDEVELOPMENTS Office to be sold Office to be redeveloped $2.3 billion • Up to $2.3 billion of office • $1.4 billion of office of office properties to be sold • 15 properties • Potential for 5,900 residential units • 99.5% occupancy • Toronto, ON $1.4 billion • 4
Slide 18: Rezoning and Redevelopment of Office Properties into Highest and Best Use
REZONING AND REDEVELOPMENT OF OFFICE PROPERTIES INTO HIGHEST AND BEST USE ~5,900 Residential units Advance the rezoning and redevelopment of office properties currently valued at $1.4 billion into upscale multi- residential properties in prime locations within growing markets Burnaby Toronto Toronto
Slide 19: Significant Multi-Residential and Industrial Development Pipeline
SIGNIFICANT MULTI-RESIDENTIAL AND INDUSTRIAL DEVELOPMENT PIPELINE 2022 Construction Starts 2,150 residential units 580,000 industrial GLA Primarily U.S.-based, multi-residential greenfield Vancouver 1,100 units development located in 2023 Construction Starts high growth gateway and Montreal 800 unit
Slide 20: 2022 and 2023 Construction Starts
2022 AND 2023 CONSTRUCTION STARTS 2022 starts 2023 starts Expected Industrial GLA Projected Total Completion (square feet)/ Development Development Property Geography Use Type Ownership Date Residential Units Yield at Cost Budget ($CAD) 1 Mississauga Rd. N Mississauga, ON Industrial Greenfield 100.0
Slide 21: Pipeline of Multi-Residential and Industrial Developments 24+
PIPELINE OF MULTI-RESIDENTIAL AND INDUSTRIAL DEVELOPMENTS 2024+ Industrial GLA(Square feet)/ Property Geography Use Type Residential Units 1 2 1 Kingsway Burnaby, BC Multi-residential Redevelopment 1,100 units 2 310 Front St. W. Toronto, ON Multi-residential Redevelopment 500 units 3 145 Wellington
Slide 22: H&R Strategic Priorities to Drive Growth
H&R STRATEGIC PRIORITIES TO DRIVE GROWTH Class A Property High-Quality Disposition Program Financial Flexibility to Multi-Residential Redevelopment Distribution Facilities Drive Growth Through the Lantower Advance the rezoning Build and expand the Redeploy proceeds from Maintain a strong, flexible p
Slide 23: Increase Class A Multi-Residential Property Exposure
INCREASE CLASS A MULTI-RESIDENTIAL PROPERTY EXPOSURE IN HIGH GROWTH U.S. GATEWAY AND SUNBELT CITIES Targeting increased exposure Highly skilled locally-based to institutional-quality properties property management team in proven high growth markets through acquisition and development INVESTOR PRESEN
Slide 24: Lantower Residential
Lantower Residential - Prime income-producing multi-residential $2.9B properties with attractive growth characteristics¹ Fair Value Multi-Residential Fair Value Number of Units 4.56% by Geography by Geography Weighted Average Cap Rate New York 11% Texas New York 19% 32% 4.9% North Texas Same Propert
Slide 25: Build and Expand the Institutional-Quality Distribution Platform
BUILD AND EXPAND THE INSTITUTIONAL-QUALITY DISTRIBUTION PLATFORM THROUGH ACQUISITION AND DEVELOPMENT INVESTOR PRESENTATION OCTOBER 27, 2021 25
Slide 26: H&R Industrial - High-quality distribution facilities
H&R Industrial - High-quality distribution $1.1B facilities located in key industrial markets Fair Value 8.4M Square feet REIT owned % of industrial Number of sq.ft. Avg lease Credit Ratings Tenant rentals locations (in 000s) TTM (years) (S&P) 5.27% 1 Canadian Tire Corporation 25.8% 2 2,104 5.6 BBB
Slide 27: Maintain a Strong and Flexible Balance Sheet
Maintain a strong and flexible BBB (High) balance sheet with an investment grade credit rating by DBRS Post Spin, January 1, 2022 $4.3B Unencumbered Debt2 to Total Assets Assets1 Lines of Credit Unsecured 3% Term Loans 5% >$1.0B 50.0% Available under Senior Lines of Credit Unsecured Debentures Unith
Slide 28: Target Metrics
TARGET METRICS Target business metrics support value creation strategies Credit Metrics Target Debt / EBITDA <9.2x Debt to Gross Book Value 45-50% Interest Coverage >3.0x Secured Debt / Total Debt <40% Unencumbered Assets / Unsecured Debt >2.0x INVESTOR PRESENTATION OCTOBER 27, 2021 28
Slide 29: Well-Laddered Debt Maturity Schedule
Well-laddered debt maturity schedule H&R Post Spin, January 1, 2022¹ $900 $800 $700 $600 $500 Secured Unsecured 46% 54% $400 $300 $200 $100 $0 2022 2023 2024 2025 2026 2027 2028 2029 2030 Mortgage Payments Unsecured Term Loans Senior Unsecured Debentures 1. Per the REIT’s Financial Statements. INVES
Slide 30: Sustainability at H&R
SUSTAINABILITY AT H&R Sustainability at H&R encompasses the Environmental, Social and Governance (ESG) features that can materially affect the long-term value of our company. We believe that tracking both building performance and corporate metrics provides a better indication of overall achievement
Slide 31: 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 environmental, inline wi
Slide 32: Climate and Resource Efficiency
CLIMATE AND RESOURCE EFFICIENCY In 2020, H&R expanded its reporting H&R’s like-for-like Greenhouse Gas (GHG) market- 4.1 % based emissions decreased by over 10% Reduction in normalized boundary to report utility in 2020 compared to 2019, equivalent to taking emissions intensity in 2019 consumption a
Slide 33: Diversity and Inclusion
DIVERSITY AND INCLUSION We recognize that to be successful in a multi-cultural world, we must embrace and adopt diversity outside of gender, including disability, age, ethnicity, business experience and sexual orientation. Such diversity is important to ensure that H&R can draw on a broad range of a
Slide 34: Governance Practices
GOVERNANCE PRACTICES H&R has established policies governing the tenure and constitution of our Board of Trustees which will enhance diversity and reduce risk for our organization. Management and the Board review H&R’s corporate governance practices regularly to ensure alignment with best practices a
Slide 35: Appendix
APPENDIX 35
Slide 36: River Landing
River Landing Miami, FL Fact Sheet Urban mixed-use property 341,000 sf of retail space 149,000 sf of office space 528 multi-residential rental units 1,000 feet of waterfront on Miami River, adjacent to the Health District, close to downtown Miami Achieved final completion with the second residential
Slide 37: Shoreline Gateway
Shoreline Gateway Long Beach, CA Fact Sheet Land acquired July 16, 2018 H&R ownership: 31.2% 35-storey multi-residential tower consisting of 315 rental units 6,450 sf of retail space Development budget: U.S. $71.1M at H&R’s ownership interest Construction financing: U.S. $41.1M secured at H&R’s owne
Slide 38: Hercules
Hercules San Francisco, CA PHASE II: “The Grand at Bayfront” 232 multi-residential rental units including a state-of-the-art fitness center, bike shop, residents lounge and sporting club. Total development budget of U.S. $31.6 million and construction financing of U.S. $20.7 million has been secured
Slide 39: The Pearl
The Pearl Austin, TX Fact Sheet Multi-residential development site H&R Ownership: 33.3% 383 multi-residential units Expected completion: Q4 2021 Close to major technology employers including Apple, IBM, Oracle and Samsung, as well as the University of Texas at Austin and downtown Austin Development
Slide 40: West Love
West Love Dallas, TX Location Located in West Love mixed-use development with walkable retail and planned office. Proximity to the Dallas core/downtown allows for an easy to commute to numerous regional attractions. 5-minute drive to Southwest Airlines HQ, Dallas Love Field, and Dallas’ largest medi
Slide 41: Midtown Park
Midtown Park Dallas, TX Location Short drive to Preston Hollow Village and North Park Mall, underscoring the affluent renter profile. Adjacent to North Central Express (Hwy 75), benefiting from over 275,000 passing vehicles per day. 5-minute drive to two separate large medical districts. The Project
Slide 42: Bayside
Bayside Largo, FL Location Short drive to one of United States’ top beaches (Clearwater). Adjacent to US Hwy 19, allowing for access to major employment centers across the Tampa MSA. 3-minute drive to Tech Data Corporation, Tampa’s largest public company (#88 on Fortune 500). The Project The project
Slide 43: 3777 Kingsway
3777 Kingsway Burnaby, BC Location H&R has a 50% ownership interest in 3777 Kingsway, which is located along the Kingsway at the intersection with Boundary Rd., directly across from Central Park. The park is 220-acres of green space including walking trails, playgrounds, and other outdoor activities
Slide 44: 145 Wellington St. W.
145 Wellington St. W. Toronto, ON Location 145 Wellington St. W. is located at the junction of Toronto’s Financial and Entertainment Districts The Project In August 2019, H&R submitted a rezoning and site plan approval application for the redevelopment of 145 Wellington St. W., which is currently a
Slide 45: 55 Yonge
55 Yonge Toronto, ON Location 55 Yonge is located in the heart of Toronto’s Financial District. The Project The site encompass approximately 0.37 acres. The REIT submitted a re-zoning application in March 2021 to replace the existing 13-storey office building with a 66-storey residential and office
Slide 46: 310 Front St.
310 Front St. Toronto, ON Location 310 Front St. is located at the junction between Toronto’s Financial and Entertainment Districts The Project In April 2021, H&R submitted a combined a re-zoning application and official plan amendment application for a 69-storey development including retail, reside
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