Allied Properties Real Estate Investment Trust · TSX:AP.UN
Allied Properties Real Estate Investment Trust — Investor Presentation (February 2023)
72 slides from Allied Properties Real Estate Investment Trust's investor presentation, February 2023
Slide 1: Creativity & Connectivity
CREATIVITY & CONNECTIVITY February 2023
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 “Risk Factors
Slide 3: Table of Contents
TABLE OF CONTENTS Investment Highlights . . . . . . . . . . . . . . . . . . . . . . . .4 Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9 Rental Portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23 Development Portfolio. . . . . . . . . . . . . . . .
Slide 4: Investment Highlights
INVESTMENT HIGHLIGHTS – At the forefront of urban intensification in Canada’s major cities – Fully internalized and entrepreneurial management team – Strong growth platform – Strong financial foundation – 25.80% compound annual growth rate on total assets – 10.9% average annual total return 4
Slide 5: Portfolio Growth - Total Assets
PORTFOLIO GROWTH - TOTAL ASSETS (M) 128M 11,910 10,389 9,410 IPO 8,324 11.9B 6,706 5,824 5,214 4,456 3,501 3,933 Q4 2022 3,052 25.8% 2,155 1,583 1,155 809 949 385 503 128 157 267 CAGR(2) (1) IPO 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Value
Slide 6: Focused on Increasing Distribution and Growing NAV per Unit
FOCUSED ON INCREASING OUR DISTRIBUTION AND GROWING OUR NAV PER UNIT OVER TIME ANNUAL DISTRIBUTION PER UNIT(1) NAV PER UNIT $1.80 $60.00 $1.75 $1.70 $1.70 $1.65 $50.00 50.30 50.96 $1.60 48.54 $1.60 $1.56 46.55 $1.53 42.12 $40.00 $1.50 $1.50 $1.46 38.19 35.66 $1.41 33.05 $1.40 $30.00 $1.36 31.04 $1.32
Slide 7: Returns to Unitholders
RETURNS TO UNITHOLDERS TOTAL RETURN INDEX Allied Properties S&P / TSX Total Returns Index S&P / TSX Capped REIT Index $1,700 ALLIED S&P / TSX TOTAL RETURNS INDEX S&P / TSX CAPPED REIT INDEX $1,600 10.9% $1,500 $1,400 $1,300 $1,200 AVERAGE $1,100 $1,000 $900 ANNUAL TOTAL $800 RETURN $700 $600 $500 $4
Slide 8: NOI by Space Type
FOCUSED ON OPERATING DISTINCTIVE URBAN WORKSPACES AND URBAN DATA CENTRES: NOI BY SPACE TYPE (IN $M) $450 OFFICE UDC (1) RETAIL PARKING $400 $17.4 $350 $12.8 $36.4 $13.1 $30.8 $64.1 $25.0 $15.1 $60.6 $300 $55.9 $22.9 $12.9 $53.4 $270.0 $250 $21.6 $12.2 $254.5 $248.6 $19.1 $49.1 $11.1 $9.9 $18.4 $42.8
Slide 9: Strategy
ALLIED Strategy
Slide 10: Consolidation of Urban Office Properties
CONSOLIDATION OF URBAN OFFICE PROPERTIES – Close to core – Distinctive – Lower occupancy costs 10
Slide 11: 500-522 King West, Toronto
500-522 King West Toronto 11
Slide 12: The Landing, Vancouver
The Landing Vancouver 12
Slide 13: 35-39 Front Street East, Toronto
35-39 Front Street East Toronto 13
Slide 14: 14
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Slide 15: 15
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Slide 16: 16
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Slide 17: Y HH
S By AS Y HH ———*' 7 . r / = Mone . bak | ae ° 7 a
Slide 18: Intensification of Urban Office Properties
INTENSIFICATION OF URBAN OFFICE PROPERTIES – Underutilized land – Additional rentable area with low land cost – Value creation 18
Slide 19: Intensification of QRC West
Intensification of QRC West Toronto 19
Slide 20: Intensification of QRC West
Intensification of QRC West Toronto 20
Slide 21: Intensification of The Breithaupt Block
Intensification of The Breithaupt Block Kitchener 21
Slide 22: King Portland Centre
King Portland Centre Toronto 22
Slide 23: Rental Portfolio
ALLIED Rental Portfolio
Slide 24: Preferred Provider of Workspace in the Canadian Urban Market
PREFERRED PROVIDER OF WORKSPACE IN THE CANADIAN URBAN MARKET 199 RENTAL PROPERTIES TOTAL RENTAL PORTFOLIO GLA VALUED AT $8.2B (3) (Not including Assets Held for Sale valued at $1.4B 14.3M SF and Properties Under Development valued at $1.5B) (3) TORONTO VANCOUVER 5.0M SF 1.0M SF ALLIED OCCUPANCY 89.1
Slide 25: Montréal Portfolio
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Slide 26: Toronto Portfolio
TORONTO PORTFOLIO COLLEGE ST. REIT JOINT VENTURE ANCILLARY PARKING N DUFFERIN ST. Little Italy DUNDAS ST. W. BAY ST. UNIVERSITY AVE. SPADINA AVE. CHURCH ST. SHERBOURNE ST. JARVIS ST. PARLIAMENT ST. QUEEN ST. W. RICHMOND ST. W. STRACHAN AVE. RICHMOND ST. E. Corktown ADELAIDE ST. W. YONGE ST. BATHURST
Slide 27: Calgary Portfolio
CALGARY PORTFOLIO _| Central | R Business -[.-- | LLL aves trict —— SAVESW eed 0 SS Boo 27
Slide 28: Vancouver Portfolio
GRANVILLE ST. BR O H U W G Y H 99 BE JE TO AC RV N H ST IS . PA AV C IF ST . E. IC BU TE ST . ST . W 8TH AVE. TH BU U R RL RA O R W D D RA ST ST . . KE ST . D AV H EL IE M ST C . KE N ST RI . C H AR N H H D O S EL AM M ST SO M IL ER N TO ST . AI N ST N . . G LA ST RA N . N D VI ST LL . E ST . Yaleto
Slide 29: Urban Workspace Top-Ten Properties
URBAN WORKSPACE TOP-TEN PROPERTIES NORMALIZED APPRAISED PROPERTY NAME LQA NOI (1) FAIR VALUE CAP RATE PRINCIPAL USERS LE NORDELEC, MONTRÉAL $15,657 $313,380 5.00% Gsoft, Unity Technologies, Yellow Pages Media CITÉ MULTIMÉDIA, MONTRÉAL 14,202 416,010 4.75% Acceo Solutions, Morgan Stanley, Technicolor
Slide 30: NOI by Segment
NOI BY SEGMENT NOI BY USE URBAN DATA URBAN DATA (1) CENTRES (1) CENTRES 16.5% 16.5% MONTRÉAL & OTTAWA URBAN 29.9% WORKSPACE VANCOUVER - RETAIL 8.1% 9.4% CALGARY & URBAN EDMONTON WORKSPACE 5.6% - PARKING 4.5% URBAN WORKSPACE - TORONTO & OFFICE KITCHENER 69.6% 39.9% For the twelve months ending Decemb
Slide 31: Lease Maturities - Urban Workspace
LEASE MATURITIES - URBAN WORKSPACE % OF TOTAL GLA W/A RENTAL RATE ESTIMATED W/A MARKET RATE 25.0% $30.00 $25.90 $25.65 $24.62 $24.41 $23.81 $25.00 $25.50 20.0% $23.90 $24.01 $23.59 $21.06 $20.00 15.0% 13.0% $15.00 10.9% 9.7% 9.5% 10.0% $10.00 7.1% 5.0% $5.00 0.0% $0.00 December 31, 2023 December 31,
Slide 32: Lease Maturities - Montréal and Ottawa
LEASE MATURITIES - URBAN WORKSPACE MONTRÉAL AND OTTAWA % OF TOTAL GLA W/A RENTAL RATE ESTIMATED W/A MARKET RATE 25.0% $25.00 20.0% $19.18 $20.00 $18.29 $18.54 $18.01 $17.24 $17.86 $17.76 $17.75 $16.99 $15.51 15.0% $15.00 13.7% 10.0% $10.00 8.1% 6.9% 5.7% 5.0% 5.0% $5.00 0.0% $0.00 December 31, 2023
Slide 33: Lease Maturities - Toronto and Kitchener
LEASE MATURITIES - URBAN WORKSPACE TORONTO AND KITCHENER % OF TOTAL GLA W/A RENTAL RATE ESTIMATED W/A MARKET RATE 25.0% $40.00 $33.92 $35.00 20.0% $32.81 $30.22 $29.31 $28.98 $28.79 $30.00 $27.08 $26.65 $26.40 $25.00 15.0% $25.06 14.0% 14.0% 11.6% $20.00 10.0% 9.3% $15.00 7.0% $10.00 5.0% $5.00 0.0%
Slide 34: Lease Maturities - Calgary
LEASE MATURITIES - URBAN WORKSPACE CALGARY % OF TOTAL GLA W/A RENTAL RATE ESTIMATED W/A MARKET RATE 25.0% $25.00 $19.99 20.0% $20.00 $18.49 $18.35 17.8% $16.03 15.5% 15.0% $13.94 $15.00 $13.62 $13.26 $12.62 $11.94 $11.03 10.0% $10.00 8.8% 9.1% 7.1% 5.0% $5.00 0.0% $0.00 December 31, 2023 December 31
Slide 35: Lease Maturities - Vancouver
LEASE MATURITIES - URBAN WORKSPACE VANCOUVER % OF TOTAL GLA W/A RENTAL RATE ESTIMATED W/A MARKET RATE 30.0% $41.00 $40.00 26.1% $39.30 $39.11 25.0% $39.00 $38.88 $38.00 20.3% 20.0% $37.00 $36.49 $36.96 $36.08 $36.00 15.0% $35.13 14.0% $35.00 10.5% $34.39 $34.00 10.0% $33.56 $33.40 $33.00 6.0% $32.00
Slide 36: Top-Ten Users Q4 2022
TOP-TEN USERS USER SECTOR % RENTAL REVENUE (1) % TOTAL GLA Media and 49% UBISOFT DIVERTISSEMENTS INC. Entertainment 3.1% 3.8% Telecommunications/ GOOGLE CANADA CORPORATION IT 2.3% 2.3% SOCIÉTÉ QUÉBECOISE DES INFRASTRUCTURES Government 2.0% 2.0% 2003 MORGAN STANLEY SERVICES CANADA Financial Services
Slide 37: Development Portfolio
ALLIED Development Portfolio
Slide 38: Development Pipeline
DEVELOPMENT PIPELINE TRANSFER ESTIMATED % OF OFFICE DEVELOPMENTS TO RENTAL PORTFOLIO ESTIMATED GLA ANNUAL NOI (1) DEVELOPMENT PRE-LEASED 82% THE WELL* (2) Q3 2022 - Q4 2023 763,000 $40.4M 98% ADELAIDE & DUNCAN* Q2 2023 - Q4 2024 230,000 $10.4M 100% BREITHAUPT, PHASE III* Q3 2023 147,000 $5.4M 100% Q
Slide 39: Future/Shadow Development Pipeline
FUTURE/SHADOW DEVELOPMENT PIPELINE Zoning Approval in To Be Place and in Progress Rezoned ESTIMATED ESTIMATED Toronto GLA GLA THE CASTLE 440,000 TORONTO 6,065,093 KING & PETER 790,000 KITCHENER 332,218 KING & SPADINA 430,000 MONTRÉAL 2,163,456 KING & BRANT 240,000 CALGARY 1,436,198 UNION CENTRE 1,33
Slide 40: The Lougheed, Calgary
The Lougheed Calgary 40
Slide 41: Boardwalk-Revillon Building, Edmonton
Boardwalk-Revillon Building Edmonton 41
Slide 42: 400 Atlantic, Montréal
TES EEEes SRE EMEEEIE ae NSARAEERERELEDEL “SSEEEERELELELS 400 Atlantic Montréal
Slide 43: Breithaupt III, Kitchener
Breithaupt III | Kitchener 43
Slide 44: The Well, Toronto
The Well Toronto 44
Slide 45: Adelaide & Duncan, Toronto
Pps. | Jae ATE he | Adelaide & Duncan Toronto
Slide 46: QRC West Phase II, Toronto
QRC West Phase II Toronto 46
Slide 47: KING Toronto
KING Toronto Toronto 47
Slide 48: King & Brant, Toronto
| — King & Brant Toronto 48
Slide 49: 400 West Georgia, Vancouver
400 West Georgia Vancouver 49
Slide 50: Development Completions
ALLIED Development Completions
Slide 51: QRC West, Toronto
QRC WEST, TORONTO This was a pioneering, large-scale intensification project that involved the integratation of two restored heritage buildings with a new, mid-rise office structure. The project commenced in 2010 and was completed in 2015. It is comprised of 345,274 square feet of GLA and is fully l
Slide 52: The Breithaupt Block, Kitchener
THE BREITHAUPT BLOCK, KITCHENER Allied acquired an undivided 50% interest in the property in 2010 and immediately put it into development, completing the first phase in 2014 and the second phase in mid-2016. The property is an equal two-way joint arrangement between Allied and Perimeter Development
Slide 53: 180 John Street, Toronto
180 JOHN STREET, TORONTO Allied acquired the property in 2015. The property was redeveloped and was completed in 2017. It is comprised of 45,631 square feet of GLA and is fully leased. DEVELOPMENT ECONOMICS INVESTMENT LAND COSTS $8,700 HARD & SOFT COSTS 17,500 VALUE UNLEVERED YIELD VALUE CREATION AS
Slide 54: 189 Joseph, Kitchener
189 JOSEPH, KITCHENER 189 Joseph was purchased as part of The Tannery in 2012. The building stood vacant, and was slated to be demolished before Allied proposed the redevelopment and secured Deloitte as the user. The project commenced in late-2015 and was completed mid-2017. It is comprised of 26,46
Slide 55: King Portland Centre, Toronto
KING PORTLAND CENTRE, TORONTO In 2012, Allied entered into an equal two-way joint arrangement with RioCan to develop King Portland Centre. Allied and RioCan each acquired an undivided 50% interest in 642 King W and 620 King W and subsequently put them into development, completing 642 King W in early
Slide 56: 425 Viger, Montréal
425 VIGER, MONTRÉAL In 2004, Allied expanded into Montréal with the purchase of 425 Viger. At the time, the property comprised of 200,000 square feet of GLA and was fully leased. In 2007, Allied purchased the adjacent parking lot with the intention of intensifying the combined property once the main
Slide 57: Risk Management
ALLIED Risk Management
Slide 58: Development
DEVELOPMENT – 15% limitation on development – Pre-leasing – Partial monetization – Financial management – Collaboration 58
Slide 59: Balance Sheet
BALANCE SHEET – Low leverage – Long-term, fixed-rate debt – Net debt as a multiple of adjusted EBITDA ratio of 9.8x – Total indebtedness ratio 35.6% – Interest coverage ratio of 2.8x The above ratios are non-IFRS measures defined in the Appendix on page 68 calculated as at December 31, 2022, Interes
Slide 60: Financial Covenants
FINANCIAL COVENANTS SENIOR UNSECURED DEBENTURES COVENANT THRESHOLD DECEMBER 31, 2022 PRO FORMA INTEREST COVERAGE RATIO Maintain a 12-month rolling consolidated 2.8x pro forma EBITDA of at least 1.65 times pro forma interest expense PRO FORMA ASSET COVERAGE TEST Maintain net consolidated debt below 6
Slide 61: Debt Maturity Chart
DEBT MATURITY CHART MORTGAGES Mortgage Promissory PROMISSORY NOTE Note UNSECURED UnsecuredTERM Debentures LOAN Unsecured UNSECURED Term Loan Consolidated DEBENTURES WA Int Rate W/A INT RATE CONSOLIDATED $1,000,000 5.00% $900,000 4.42% 4.50% $250.0 $800,000 4.00% 3.48% $700,000 3.39% 3.50% 3.17% 3.11
Slide 62: Unencumbered Investment Properties
UNENCUMBERED INVESTMENT PROPERTIES UNENCUMBERED INVESTMENT PROPERTIES(1) % OF INVESTMENT PROPERTIES UNENCUMBERED(1) $10 100% 94% 85% $9 90% $9.1 $8.3 $8 80% 73% 72% $7 68% 70% $6.5 $6 60% BILLIONS 52% $5.5 $5 47% 50% 39% $4 $4.3 40% $3 30% $2.9 21% $2 $2.3 20% 12% $1.6 $1 10% $0.8 $0.4 $0 0% 2013 20
Slide 63: Maximizing Flexibility While Strengthening the Balance Sheet
MAXIMIZING FLEXIBILTY WHILE STRENGTHENING THE BALANCE SHEET UNENCUMBERED INVESTMENT PROPERTIES TOTAL INVESTMENT PROPERTIES(1) UNSECURED DEBT AS % OF TOTAL DEBT $12.0 100% 93% CREDIT RATINGS 87% 90% Investment grade since $10.0 2014 $9.8 80% $9.7 72% $9.1 $8.8 70% 65% $8.0 $8.3 BBB 57% $7.6 60% BILLI
Slide 64: Environmental, Social & Governance (ESG)
Environmental, Social & Governance (ESG) 64
Slide 65: 2021 Performance
2021 PERFORMANCE Improved GRESB Score by Six Points 15.4% 12.4% ENERGY USE INTENSITY (EUI) GREENHOUSE GAS INTENSITY (GHGI) For the 2021 reporting year, we scored 86/100 for our standing investments, a six-point increase from 2020, and 82/100 for our development portfolio, a reduction from our 2019 b
Slide 66: Highlights
HIGHLIGHTS OUTPERFORMED 2024 TARGETS In 2021, we exceeded our 2024 reduction targets for Energy Use Intensity (EUI), Greenhouse Gas Intensity (GHGI) and Water Use Intensity (WUI). ISSUED $1.1 BILLION OF GREEN BONDS In 2021, we announced our Green Financing Framework. In February 2021, we issued our
Slide 67: Massey Hall, Toronto
Massey Hall Toronto 67
Slide 68: Appendix Definitions
ALLIED Appendix Definitions
Slide 69: Certain Definitions and Non-IFRS Measures
CERTAIN DEFINITIONS AND NON-IFRS 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 70: Unencumbered Investment Properties; Adjusted EBITDA
UNENCUMBERED INVESTMENT PROPERTIES Unencumbered investment properties is a non-IFRS measure defined as the value of investment properties which are free and clear of any encumbrances. This is calculated on a proportionate share basis. Management believes unencumbered investment properties is a usefu
Slide 71: Total Indebtedness Ratio
TOTAL INDEBTEDNESS RATIO This is a non-IFRS measure of Allied’s financial leverage, which is calculated on a proportionate basis by taking debt plus outstanding letters of credit divided by total assets. Management considers this metric useful as it indicates Allied’s ability to meet its debt obliga
Slide 72: alliedreit.com
ALLIED 134 PETER STREET, SUITE 1700 TORONTO, ONTARIO M5V 2H2 T 416.977.9002 F 416.306.8704 alliedreit.com 72
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