PRO Real Estate Investment Trust · TSX:PRV.UN

PRO Real Estate Investment Trust — IPO Roadshow (September 2014)

37 slides from PRO Real Estate Investment Trust's IPO roadshow presentation, Sep 10, 2014

  1. Slide 1: Investor Presentation September 10, 2014

    Investor Presentation September 10, 2014 A preliminary short form prospectus containing important information relating to the securities described in this document has been filed with the securities regulatory authorities in each of the provinces of Canada. A copy of the preliminary short form prosp

  2. Slide 2: Disclaimer

    Disclaimer This presentation has been prepared by PRO Real Estate Investment Trust (the “REIT”) and should be read in conjunction with the preliminary short form prospectus of the REIT dated September 5, 2014 and available on SEDAR at www.sedar.com (the “Preliminary Prospectus”). The information con

  3. Slide 3: Management

    A MANAGEMENT PROREIT

  4. Slide 4: Experienced Management Team

    Experienced Management Team Mark O’Brien Director of Acquisitions James W. Beckerleg Gordon Lawlor, CA Chief Executive Officer Chief Financial Officer Alison Schafer, CPA, CA Director of Finance 4

  5. Slide 5: Track Record of Value Creation

    Track Record of Value Creation  Former senior management team of  CANMARC REIT was a diversified REIT with a CANMARC REIT national portfolio (115 properties with 9.4 million square feet of GLA; eastern Canada focus)  50+ years of collective experience  Acquired by Cominar REIT in 2012 for $1.9 b

  6. Slide 6: Investment Highlights

    Investment Highlights  Experienced management team and board with a proven track record of value creation  Strategic relationship with Lotus Crux enhances geographic expertise in Western Canada and the GTA, and provides a pipeline of future acquisitions and investment opportunities  Portfolio of

  7. Slide 7: Objectives and Strategy

    Objectives and Strategy Objectives Growth Strategies INTERNAL  Capitalize on revenue growth opportunities  Provide stable and growing cash distributions from investments in real estate  Implement operating improvements and preventative properties in Canada maintenance programs  Expand asset base

  8. Slide 8: Strong Governance and Board Independence

    Strong Governance and Board Independence Name Role Experience • Partner at EDEV Real Estate Advisors John Levitt • Chair, Independent Trustee • Former trustee of CANMARC REIT • Former senior management of O&Y Properties Corporation • Founded Lotus Pacific Investments Inc. in 1995 Shenoor Jadavji • T

  9. Slide 9: Strategic Relationship

    Strategic Relationship  Strategic relationship with Lotus Crux enhances geographic expertise and provides a pipeline of future acquisitions and investment opportunities  Lotus Crux is a partnership controlled by Lotus Pacific Investments Inc. and Crux Capital Corporation  Lotus Pacific and Crux,

  10. Slide 10: Portfolio Overview

    A PROREIT PORTFOLIO OVERVIEW = PHARMAPRIX @ {

  11. Slide 11: Eastern Canada Market Overview

    Eastern Canada Market Overview Eastern Canadian Focus on Quebec, Atlantic Canada, and Ontario  Amongst the largest economies in Canada  Represents 64.7% of Canadian GDP ($1.0 trillion) and 70.1% of Canadian population (24.0 million people)  Ontario and Quebec are the two largest Canadian provinci

  12. Slide 12: Eastern Canada Market Overview

    Eastern Canada Market Overview  Large and fragmented real estate markets Capitalization Rate Spreads to National Averages  294 million square feet of office space Basis points (67.6% of Canadian supply) 100  1.2 billion square feet of industrial space (70.6% of Canadian supply) 80  GTA and GMA a

  13. Slide 13: Western Canada Market Overview

    Western Canada Market Overview Increasing exposure to Western Canada (Alberta and British Columbia)  Large, dynamic economies  Represents 31.4% of Canadian GDP ($0.5 trillion) and 25.3% of Canadian population (8.6 million people)  Alberta and British Columbia are the third and fourth largest Cana

  14. Slide 14: Western Canada Market Overview

    Western Canada Market Overview  Large and fragmented real estate markets  129 million square feet of office space (29.8% of Canadian supply)  410 million square feet of industrial space (23.8% of Canadian supply)  Vancouver, Calgary and Edmonton are the three largest real estate markets in Weste

  15. Slide 15: Current Portfolio Overview

    Current Portfolio Overview  9 income-producing commercial properties  Approximately 400,000 square feet of GLA  Platform for growth in REIT’s target markets of Quebec, Atlantic Canada and Ontario Select Property Photos Geographic Locations QC NB NS Quebec City Halifax 3200-3600 Guénette Street 13

  16. Slide 16: Proposed Acquisitions

    Proposed Acquisitions  $65.6 million of acquisitions at a weighted average cap rate of 7.6% Ppty Province Asset Class GLA Occupancy 1 New Brunswick Retail 70,546 100.0% 2 Nova Scotia Retail 61,304 76.5% 3 Nova Scotia Retail 51,650 88.0% 4 New Brunswick Retail 39,870 100.0% 985 Godin Avenue, Quebec

  17. Slide 17: Proposed Acquisitions

    Proposed Acquisitions 1850 Vanier Blvd Bathurst, NB 2466 King George Highway Miramichi, NB 7405 127th Avenue Edmonton, AB 17

  18. Slide 18: Pro Forma Property Locations

    Pro Forma Property Locations QC BC NB NS Quebec AB City Halifax Saint John Montreal ON Ottawa PRO REIT Edmonton Toronto Vancouver Current Portfolio Crux Capital Acquisition Properties Lotus Pacific 18

  19. Slide 19: Diversified Pro Forma Portfolio

    Diversified Pro Forma Portfolio Property Type # of Properties GLA (square feet) Occupancy Office 3 125,407 85.0% Retail 12 432,995 89.9% Industrial 5 261,161 100.0% Commercial Mixed Use 3 224,532 97.5% Total 23 1,044,095 93.5% Base Rent by Asset Class(1) Base Rent by Province(1) Alberta Industrial 7

  20. Slide 20: High Quality Pro Forma Tenant Profile

    High Quality Pro Forma Tenant Profile  Total of 69 tenants  Well diversified by industry sector  Government and national tenants represent 79.8% of base rent  Investment grade tenants represent 56.7% of base rent Base Rent by Tenant Profile(1) Base Rent by Tenant Industry(1)(2) Government Techno

  21. Slide 21: Top Ten Pro Forma Tenants

    Top Ten Pro Forma Tenants Weighted Average % of In-Place GLA # Tenant Remaining Lease Credit Rating(2) Base Rent(1) (square feet) Term (years) 1 10.8% 86,913 13.4 BBB-, BBB 2 8.6% 42,039 9.3 BBB, BBB 3 7.7% 88,840 13.4 4 5.7% 50,732 5.3 Baa2, BBB- 5 5.6% 20,771 7.7 Aa3, A+, AA 6 5.4% 31,805 6.0 Aa2/

  22. Slide 22: Pro Forma Lease Maturity Profile

    Pro Forma Lease Maturity Profile(1)  Overall weighted average occupancy rate of 93.5% with a remaining lease term of 7.6 years  Investment grade tenants have a weighted average remaining lease term of 8.3 years  Represent 56.7% of base rent 60.6%  Staggered lease maturity profile  Not more than

  23. Slide 23: Financial

    A PROREIT — FINANCIAL = PHARMAPRIX @ jj

  24. Slide 24: Sources and Uses of Funds

    Sources and Uses Sources of Funds C$ millions Sources New and assumed mortgages 45.6 Deposits 0.3 Equity – Concurrent Private Placement (Lotus Crux) 5.0 Equity – Class B LP Units (certain property vendors) 4.3 Equity – Public offering 20.0 Total Sources 75.2 Uses Property acquisitions 65.6 Real esta

  25. Slide 25: Pro Forma Financial Information

    Pro Forma Financial Information(1) H1 2014 Normalized, H1 2014 Annualized(2) Adjustments Pro Forma NOI 2,360 4,759 4,974 9,733 G&A (202) (404) (214) (618) Interest and financing costs (1,078) (2,076) (1,363) (3,440) FFO 1,080 2,278 3,397 5,675 Straight line rent (38) (76) - (76) Amortization of fina

  26. Slide 26: Third Party Reports (Acquisitions)

    Third Party Reports (Acquisitions) Appraisals  Appraisals conducted by independent appraisers  Aggregate market value estimated at $69.7 million as at Sept 2, 2014  Includes portfolio premium of 2% to 4%  Aggregate purchase price of $65.6 million (excluding closing costs) Building Condition Asse

  27. Slide 27: Pro Forma Debt Strategy

    Pro Forma Debt Strategy  Debt/GBV of 58.6%  Total debt weighted average rate: 3.89%  Total debt: $82.7 million  Total debt weighted average term: 5.1 years  Interest coverage ratio of 2.9x Debt Composition Debt Maturity Profile(1) (C$ millions ) Type Jun 30, 2014 Proforma Bridge Loan $0.3M $0.0

  28. Slide 28: Management Agreement

    Management Agreement  Competitive and efficient asset management structure  No incentive, disposition, financing, leasing, construction, or development fees  Pre-determined internalization at $500 million of GBV  Non-compete Manager  Labec Realty Advisors Inc. Annual Advisory Fee  0.25% of Adj

  29. Slide 29: Relationship with Lotus Crux

    Relationship with Lotus Crux  Strategic relationship: geographic expertise, future acquisitions and investment opportunities Strategic Partner  Lotus Crux Strategic Investment Agreement Value-add Opportunities  PRO REIT will have an option to participate in value-add opportunities with Lotus Crux

  30. Slide 30: Investment Highlights

    Investment Highlights  Experienced management team and board with a proven track record of value creation  Strategic relationship with Lotus Crux enhances geographic expertise in Western Canada and the GTA, and provides a pipeline of future acquisitions and investment opportunities  Portfolio of

  31. Slide 31: Offering Summary

    A PROREIT OFFERING SUMMARY

  32. Slide 32: Offering Terms

    Offering Terms Issuer PRO Real Estate Investment Trust (PRV.UN: TSX-V) Offering Size $20.0 million Over-Allotment Option 15% (30 days) Indicative Price $2.30 per unit Indicative Yield 9.1% Tax Deferral Estimated 2014 and 2015 tax deferral on distributions of 100% Securities Units. Each unit comprise

  33. Slide 33: Comparables

    A COMPARABLES PROREIT

  34. Slide 34: Comparable REITs

    Comparable REITs (C$ millions, except per unit amounts) Price Market Enterprise Distribution P/AFFO Payout Ratio Debt/ Comparable (4-Sept-14) Capitalization Value Yield (2015E) (2015E) GBV(1) H&R $23.20 $6,728.0 $13,555.8 5.8% 13.9x 80.8% 48.0% Cominar $19.32 $2,465.2 $5,915.8 7.6% 12.9x 98.0% 54.0%

  35. Slide 35: Disclaimer - Comparable REITs

    Disclaimer - Comparable REITs The previous analysis outlines certain market trading statistics of selected publicly traded real estate investment trusts (“REITs” or the “Comparables”). The Comparables are considered to be an appropriate basis for comparison with PRO REIT as they operate in the same

  36. Slide 36: Appendix

    A PROREIT APPENDIX

  37. Slide 37: Pro Forma Portfolio Overview

    Pro Forma Portfolio Overview Property Location Year Built/ Renovated # of Tenants GLA (square feet) Occupancy Office Properties 55 Technology Drive Saint John, NB 1999 1 50,732 100.0% 26-32 Prince Arthur/11-15 Princess Amherst, NS 1957/1974/2008 7 50,681 76.3% 325 Hymus Boulevard Pointe-Claire, QC 1

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