Riocan Real Estate Investment Trust · TSX:REI.UN
Riocan Real Estate Investment Trust — RBC Unsecured Debt Conference 2013
46 slides from Riocan Real Estate Investment Trust's conference presentation, Dec 3, 2013
Slide 1: RioCan Investor Presentation – RBC Unsecured Debt Conference
TRANSFORMING… RIOCAN INVESTOR PRESENTATION RBC Unsecured Debt Conference December 3, 2013
Slide 2: Forward Looking Statements
Forward Looking Statements 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 resp
Slide 3: One of North America's Largest Retail REITs
One of North America’s Largest Retail REITS 346 83 million sqft total portfolio retail properties in Canada & U.S. 54 million sqft owned $7.1 billion $13.6 billion market cap enterprise value ~7,900 tenancies ~86% revenue generated by national and anchor tenants 3
Slide 4: Objectives
Objectives Dominant, geographically diversified platform Strong operating results and proven track record Maintain and strengthen RioCan’s already conservative balance sheet to build on RioCan’s financial strength and reduce cost of capital with a diversified debt ladder to reduce interest rate risk
Slide 5: Property Portfolio
Property Portfolio GTA BC MB AB SA QC NFLD ON QC NB MA 295 51 CT retail properties retail properties PA 45 million sqft 9.2 million sqft 85.4% 14.6% VA annualized rental annualized rental revenue revenue TX As at September 30, 2013 at RioCan’s interest 5
Slide 6: Property Portfolio – Canada
Property Portfolio – Canada Annualized Rental Revenue by Major Market Rest of Canada, 27.8% Major markets combined, 72.2% BC 6.1% 3.6% Edmonton 3.8% AB QC 8.8% Vancouver Calgary ON 8.4% 41.5% Ottawa Montreal Toronto 6
Slide 7: Property Portfolio – U.S.
Property Portfolio – U.S. Regional Market Strategy & Focus Annualized Rental Revenue by State 2.2% 2.0% 51 21.0% 3.2% NH retail properties 2.8% NY MA CT RI 0.7% 9.2 million sqft PA NJ MD 2.1% WV VA 6.5% 54.9% 1.9% 2.7% TX As at September 30, 2013 at RioCan’s interest 7
Slide 8: Occupancy since 1996
Occupancy since 1996 Historical Occupancy Rates 1996 to Q3 2013 97.7% 97.6% 97.6% 97.4% 97.4% 97.4% 97.1% 97.0% 96.9% 96.9% 96.3% 96.3% 96.1% 95.8% 95.6% 95.4% 95.0% 95.0% 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Q3 2013 8
Slide 9: Objectives
Objectives Dominant, geographically diversified platform Strong operating results and proven track record Maintain and strengthen RioCan’s already conservative balance sheet to build on RioCan’s financial strength and reduce cost of capital with a diversified debt ladder to reduce interest rate risk
Slide 10: Financial Highlights
Financial Highlights Operating FFO* 440 Revenues (in millions of $ except per 1,128 380 276 unit amounts) 988 315 324 882 764 758 2008 2009 2010 2011 2012 Operating FFO* Per Unit 1.52 1.43 1.32 1.33 1.22 2008 2009 2010 2011 2012 Years ended December 31st 2008 2009 2010 2011 2012 * Note: FFO reported
Slide 11: Quarterly Financial Highlights
Quarterly Financial Highlights Revenues* Operating FFO 124 121 124 115 116 (in millions of $ except per 93 97 100 103 106 unit amounts) 85 83 90 301 306 292 283 283 267 274 269 246 234 237 237 216 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2010 2011 2012 2013 Operating FFO Per Unit 0.41 0.41 0.40 0.40 0
Slide 12: Financial Highlights
Financial Highlights Net Operating Income 2007 –2012 Net Operating Income* Q3 2010 – Q3 2013 (in millions of $) 713 622 188 182 188 186 187 551 167 171 172 156 147 148 151 138 452 466 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2010 2011 2012 2013 2008 2009 2010 2011 2012 * At RioCan’s interest 12
Slide 13: Financial Summary
Financial Summary Period Ended September 30, % Change (in millions of $ except per unit amounts) 2013 2012 2013 vs. 2012 Total Revenues - consolidated 2.60% $276 $269 Total Revenues – at RioCan’s interest 3.57% $290 $280 Operating FFO 7.83% $124 $115 Operating FFO per Unit 2.50% $0.41 $0.40 Distribu
Slide 14: Financial Summary – Occupancy and Leasing Profile
Financial Summary Occupancy and Leasing Profile 2013 2012 2011 (thousands of square feet, millions of dollars) Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Committed occupancy 97.0% 96.7% 97.0% 97.4% 97.3% 97.4% 96.9% 97.6% Economic occupancy 95.5% 95.4% 95.8% 95.9% 95.5% 95.5% 95.7% 96.6% NLA leased but not paying rent
Slide 15: Financial Summary – Net Operating Income, Canadian Portfolio
Financial Summary Net Operating Income Canadian Portfolio (thousands of dollars) Three Months Ended September 30, 2013 2013 2012 Increase (decrease) Same Store Number of Properties 260 260 - Committed Occupancy 96.7% 97.1% (0.4%) Economic Occupancy 94.9% 95.0% (0.1%) Net Operating Income Same store1
Slide 16: Financial Summary – Net Operating Income, US Portfolio
Financial Summary Net Operating Income US Portfolio (thousands of dollars) Three Months ended Sept. 30, Increase 2013 2012 (decrease) Base rent – US$ $23,947 $23,766 0.8% Property tax and operating cost recoveries – US$ 7,501 6,791 10.5% Other – US$ 177 230 nm Rental revenue – US$ 31,625 30,787 2.7%
Slide 17: Objectives
Objectives Dominant, geographically diversified platform Strong operating results and proven track record Maintain and strengthen RioCan’s already conservative balance sheet to build on RioCan’s financial strength and reduce cost of capital with a diversified debt ladder to reduce interest rate risk
Slide 18: Conservative Debt Profile
Conservative Debt Profile • Debt‐to‐Total Assets of 44.7% at September 30, 2013; • Total operating lines $429 million with approximately $222 million available at September 30, 2013 • Subsequent to the quarter end, RioCan increased one of its credit facilities by $60 million and is currently in nego
Slide 19: RioCan Capital Structure
RioCan Capital Structure Total Assets – $13.4 Billion Total Enterprise Value* – $13.6 Billion 100% 100% 75% 52.1% 75% 53.0% 50% 2.0% 50% 11.1% 2.1% 10.8% 25% 25% 34.8% 34.1% 0% 0% Book Value* Market Value Common Units - 303 million units outstanding, $7.4 billion market capitalization Preferred Unit
Slide 20: Conservative Debt Structure
Conservative Debt Structure Growth in Asset vs Debt 20
Slide 21: Leverage and Coverage Ratios & Targets
Leverage and Coverage Ratios & Targets 3 Months Rolling 12 Months Targeted Sept. Sept. Sept. Dec. Ratios 30/13 5 30/13 30/13 31/12 Interest coverage ratio1 >2.75x 3.13x 2.88x 2.83x 2.69x Debt service coverage ratio2 >2.25x 2.27 2.14 2.09 1.98 Fixed charge coverage ratio3 >1.1x 1.10 1.07 1.07 1.04 Ne
Slide 22: Modest Leverage, Strong Interest Coverage
Modest Leverage, Strong Interest Coverage • RioCan has consistently adhered to a conservative debt policy even through periods of considerable growth • 60% max permitted under covenant • Interest coverage well in excess of the 1.65x maintenance covenant Leverage Interest Coverage 3.1x 2.9x 2.9x 2.8x
Slide 23: Debt Maturity Schedule
Debt Maturity Schedule Weighted Avg. Interest Rate on Maturing Debt Scheduled principal amortization $ Millions Mortgages payable 3,000 7.00% 2,505 2,500 6.00% 2,000 4.6% 4.7% 4.4% 5.00% 4.1% 3.8% 1,500 4.00% 2.5% 781 878 1,095 1,000 3.00% 579 500 148 2.00% 0 1.00% 2013 2014 2015 2016 2017 Thereafte
Slide 24: Objectives
Objectives Dominant, geographically diversified platform Strong operating results and proven track record Maintain and strengthen RioCan’s already conservative balance sheet to build on RioCan’s financial strength and reduce cost of capital with a diversified debt ladder to reduce interest rate risk
Slide 25: Strong Tenant Relationships
Strong Tenant Relationships 25
Slide 26: Strong Tenant Relationships – Top Canada & US Combined
Strong Tenant Relationships Top 10 Canada & US Combined As at September 30, 2013 Total Area Weighted Avg Annualized Number Of Occupied Remaining Top 10 Tenant Name Rental Locations (Sq. Ft. In Lease Term Revenue 000s) (Yrs) 1 Walmart 3.8% 32 3,874 12.5 2 Canadian Tire Corporation (i) 3.5% 95 2,060 8
Slide 27: Top Tenants – Pro Forma Recently Announced Transactions
Strong Tenant Relationships Top 10 Canada & US Combined – Pro Forma Recently announced Transactions The following pro forma rankings assume the Top 10 Tenant Name successful closings of all the deals mentioned below: (i) Loblaws has entered into an agreement to purchase Shoppers Drug Mart which is s
Slide 28: Strong Tenant Relationships – Top U.S.
Strong Tenant Relationships Top 10 U.S. As at September 30, 2013 Weighted Total Area Annualized Avg Top Number Of Occupied Tenant Name Rental Remaining 10 Locations (Sq. Ft. In Revenue Lease Term 000s) (Yrs) 1 Giant Food Stores/ Stop & Shop (Royal Ahold) 9.9% 21 1,072 12.3 2 Best Buy 3.7% 11 332 6.9
Slide 29: Lease Rollover Profile
Lease Rollover Profile Broadly Distributed Lease Expiries % Square Feet expiring / portfolio NLA Canadian Portfolio As at September 30, 2013 ’000s Square Feet 4,889 3,771 4,167 3,874 1,277 9.4% 10.4% 12.2% 9.7% 3.2% 2013 2014 2015 2016 2017 U.S. Portfolio As at September 30, 2013 ’000s Square Feet 6
Slide 30: Organic Growth – Canadian Portfolio
Organic Growth Canadian Portfolio Ability to add growth through rental renewals with 45% of leases renewing over next five years. • In Q3 2013 achieved renewal rent increases of 11% or $2.08 psf with an average renewal rate of $20.66. • Retention rate of 91.1%. RioCan Lease Maturity Schedule and Ren
Slide 31: Organic Growth – U.S. Portfolio
Organic Growth U.S. Portfolio Ability to add growth through rental renewals with 25% of leases renewing over next five years. • In Q3 2013 achieved renewal rent increases of 5.9% or $1.03 psf with an average renewal rental rate of $18.46 • Maintained a retention rate of 98.4% Square Feet expiring/po
Slide 32: Objectives
Objectives Dominant, geographically diversified platform Strong operating results and proven track record Maintain and strengthen RioCan’s already conservative balance sheet to build on RioCan’s financial strength and reduce cost of capital with a diversified debt ladder to reduce interest rate risk
Slide 33: Extracting Value by Recycling Capital
Extracting Value by Recycling Capital • RioCan had dispositions of $16 million during the quarter and dispositions of $422 million during the year through November 18, 2013. • RioCan has two property dispositions in Canada under firm contract where conditions have been waived pursuant to a purchase
Slide 34: Growth in Canada's Major Markets
Extracting Value by Recycling Capital Growth in Canada’s 6 Major Markets RioCan’s program of recycling capital is to shift the portfolio’s geographic allocation away from low growth markets into Canada’s six high growth major markets. Markets with highest population growth will outperform smaller ma
Slide 35: Objectives
Objectives Dominant, geographically diversified platform Strong operating results and proven track record Maintain and strengthen RioCan’s already conservative balance sheet to build on RioCan’s financial strength and reduce cost of capital with a diversified debt ladder to reduce interest rate risk
Slide 36: Development Activity
Development Activity Development Pipeline Greenfield developments through in‐house capabilities and with partners, such as Trinity, Allied Properties, KingSett Capital, and Canada Pension Plan Investment Board (CPPIB) At September 30, 2013 Total developments comprise 11.7 million square feet, includ
Slide 37: Estimated Spending Summary by Development Category
Development Activity Estimated Spending Summary by Development Category In millions 2013 2014 2015 Future Total Development Greenfield Development $23.6 $53.0 $10.7 $273.9 $361.2 Urban Intensification 1.6 4.9 18.8 407.8 433.1 Expansion & Redevelopment 29.9 75.6 75.3 - 180.8 Total Construction Expend
Slide 38: RioCan & Allied Properties REIT Joint Venture
Development Pipeline RioCan & Allied Properties REIT Joint Venture • RioCan, Allied Properties and Diamond Corp announced in Downtown West November 2012 that they had entered into a joint venture arrangement to acquire the Globe and Mail site in downtown Toronto. In April 2013, the partners also pur
Slide 39: Downtown West – Potential Layout and Vision
Development Pipeline RioCan & Allied Properties REIT Joint Venture Downtown West – Potential Layout and Vision Cabot Circus – Bristol, UK Liverpool One - Liverpool, UK Current vision for the site includes mix use of office retail and residential uses with inspiration drawn from other open air mixed
Slide 40: Target Locations in RioCan's Portfolio
Development Activity Target will open 24 locations in RioCan’s portfolio • First 16 have opened year to date • Four additional stores to open in the fourth quarter of 2013 • Target will be the anchor tenant at RioCan’s St Clair and Weston road project Stockyards • Canada’s first purpose built Target
Slide 41: St. Clair & Weston, Toronto
Development Pipeline St. Clair Anchor Tenant&- Target Weston, Toronto 555,000 sqf. two storey retail – Projected Completion 2014 Development Partners: Trinity and Canada Pension Plan Investment Board (“CPPIB”) 41
Slide 42: Sage Hill, Calgary
Development Pipeline Sage Hill, Calgary • Sage Hill Crossing, a 34 acre greenfield development site in Northwest Calgary. • RioCan will own the development on a 50/50 basis with KingSett Capital. • RioCan acquired the site at a purchase price of $32 million ($16 million at RioCan’s interest). • Deve
Slide 43: RioCan Yonge Eglinton Centre – The Cube
Creating New Cash Flow Sources RioCan Yonge Eglinton Centre –The Cube Proposed Today Location: Toronto, Ontario Intersection: Yonge & Eglinton Total Proposed GLA: 45,000 square feet Design Concept: Urban Retail Construction Start: Q2 2013 Expected Completion: Spring 2015 43
Slide 44: The Sheppard Centre, Toronto
Creating New Cash Flow Sources Today The Sheppard Centre, Toronto Location: Toronto, Ontario Intersection: Yonge & Sheppard Total Proposed GLA: 680,000 square feet Design Concept: Urban Retail Expected Construction Start: Late 2014 Anticipated Completion: 2016 • Plans include substantial renovation
Slide 45: NE Yonge Eglinton – Toronto, Ontario
Creating New Cash Flow Sources NE Yonge Eglinton - Toronto, Ontario Location: Toronto, Ontario Intersection: Yonge & Eglinton Total Proposed GLA: 54,000 square feet Design Concept: Urban Retail Anticipated Completion: 2017 • 1.1 acre site has been approved for redevelopment by the city of Toronto wi
Slide 46: Transforming… RioCan Contact
TRANSFORMING… RioCan Yonge Eglinton Centre 2300 Yonge Street, Suite 500 PO Box 2386 Toronto, Ontario M4P 1E4
RioCan Real Estate Investment Trust — RBC Unsecured Debt Conference 2013 on 6ix