Granite Real Estate Investment Trust · TSX:GRT.UN
Granite Real Estate Investment Trust — Investor Presentation (August 2019)
24 slides from Granite Real Estate Investment Trust's investor presentation, August 2019
Slide 1: Investor Presentation
Investor Presentation August 2019
Slide 2: Presentation of Certain Information
PRESENTATION OF CERTAIN INFORMATION Unless otherwise indicated in this presentation, all information is presented as of June 30, 2019 and all financial information that is identified as refers to the three month period ending June 30, 2019. For definitions of certain non-IFRS measures used in this p
Slide 3: Granite Overview
GRANITE OVERVIEW • Owner and manager of industrial, warehouse and logistics properties • Operate in nine countries in North America and Europe Description • Creditworthy and diversified tenant base • Magna and its operating subsidiaries are the largest tenant (ratings of A- / A (low) / A3 with stabl
Slide 4: Investment Highlights
INVESTMENT HIGHLIGHTS Global industrial property portfolio Strong track record of profitability and stable cash flow generation • Strategically located in Canada, US and Europe • Consistent growth in annual cash flow since January 2012 • Large scale and mostly single-tenanted properties • Prudent FF
Slide 5: Granite's Evolution
GRANITE’S EVOLUTION Income-Producing Properties Summary Then - December 31, 2011 Now - June 30, 2019 90 15 38 36 Multi-Purpose Special Purpose Multi-Purpose Modern $802M $1,089M $834M Logistics/Distribution $1,966M $1.9B $3.8B Value Value 7 Special Purpose $1,026M 105 94% 11% $1.5B ∼$700M 81 41% 18%
Slide 6: Strategic Priorities
STRATEGIC PRIORITIES • Leverage Granite’s geographic footprint to seek investment opportunities that: • Meet Granite’s investment criteria and disciplined approach • Enhance the quality of the portfolio and cash flow on a long Growth & term basis Diversification • Are accretive to both FFO and AFFO
Slide 7: Portfolio Transformation Strategy
PORTFOLIO TRANSFORMATION STRATEGY Invest Focus on modern facilities that selectively/opportunistically in Target markets with superior meet the demands of E- evolving property types and economic conditions and market Commerce and traditional markets benefiting from fundamentals distribution users te
Slide 8: Recent Transaction Highlights
RECENT TRANSACTION HIGHLIGHTS ∼$1.2B in acquisitions and ∼$0.8B in dispositions during previous 24 months St. Thomas, ON Newmarket, ON Aurora, ON Mississauga, ON Born, Netherlands West Jefferson, OH 2 properties|1.5M SF 7 properties|0.6M SF 2 properties|0.1M SF 2 properties|0.9M SF 1 property|0.3M S
Slide 9: Development as Part of Growth Strategy
DEVELOPMENT AS PART OF GROWTH STRATEGY Leverage our in-house expertise to pursue and execute on development and redevelopment opportunities Target ∼$400M (∼10% of asset value) in capital over the next five years on development Develop properties having state-of-the-art design characteristics meeting
Slide 10: Granite Historical Performance
GRANITE HISTORICAL PERFORMANCE Historical Operating Performance ($M) Distributions and Payout Ratios 91% 82% $240 80% 85% $231 71% 78% 78% 78% $223 $223 $216 $214 71% 69% 68% 68% $203 $2.76 $2.72 $2.60 $188 $190 $187 $185 $2.43 $183 $181 $181 $2.30 $170 $2.21 $2.11 $162 $163 $158 $158 $159 $1.99 $15
Slide 11: Granite Historical Performance
GRANITE HISTORICAL PERFORMANCE Total Return vs TSX Composite & TSX Capped REIT Indices Cumulative Total Return % Annualized Total Return % 220% 25% 194.0% 195% 20% 170% 145% 15% 120% 95% 88.7% 10% 70% 69.3% 45% 5% 20% -5% 0% 1Yr 2Yr 3Yr 5Yr Granite REIT TSX Capped REIT Index TSX Composite Index Gran
Slide 12: Globally Diversified Portfolio
GLOBALLY DIVERSIFIED PORTFOLIO Nine countries/86 properties/35.0 million square feet GERMANY 11 properties 3.5M SF CANADA POLAND 2 properties 27 properties 0.3M SF 6.1M SF ENGLAND 1 property 0.1M SF UNITED STATES CZECH NETHERLANDS REPUBLIC 28 properties 4 properties 1 property 14.8M SF 1.7M SF 0.3M
Slide 13: Portfolio Segmentation by Geography
PORTFOLIO SEGMENTATION BY GEOGRAPHY By Income Producing Property Fair Value By Annualized Revenue $634M 17% $918M 18% $48.0M $41.2M 20% 24% 21% $3.8B $241M 26% $825M $62.6M 36% 38% $88.2M $1,449M By Square Feet By Number of Income-Producing Properties 27 6.0M SF 6.0M SF 18% 17% 18 22% 33% 23% 35.0M
Slide 14: Portfolio Segmentation by Category
PORTFOLIO SEGMENTATION BY CATEGORY Income-Producing Properties by Annualized Revenue Segmented by Category Multi-Purpose Properties 38 Properties 7.1 M SF (∼187K SF/property) $0.83 B Fair Value (∼$117/SF) WALT: 5.2 years $52.8 M Annualized Revenue (∼$7.45/SF) 22% Magna Concentration: 76% Clear Heigh
Slide 15: Lease Expiration Profile
LEASE EXPIRATION PROFILE Lease Expiration by Annualized Revenue Annualized Revenue $241M Overall WALT 6.0 Years Occupancy 99.3% 50 41.4% Canada USA Austria Europe 23.7% 40 Annualized Revenue (C$M) 30 14.8% 20 11.6% 5.4% 10 2.8% 0.3% 0 2019 2020 2021 2022 2023 2024 2025+ % of Annualized Rev. 0.3% 2.8
Slide 16: High Quality Tenant Base
HIGH QUALITY TENANT BASE Annualized Credit Top 10 Tenants GLA %1 WALT Revenue %1 Rating2 Other Tenants Magna 45% 38% 5.7 A (low) Samsung E-Commerce User2 6% 6% 20.0 AA (low) Ace Hardware ADESA 3% 1% 10.1 BB (low) Jet.com Restoration Hardware 3% 3% 8.8 NR Torrid LGI TechLog Ingram Micro 2% 3% 5.5 BBB
Slide 17: Balance Sheet Strength
BALANCE SHEET STRENGTH Capitalization Debt Maturity Profile Unit Price (08/26/2019) $62.26 $600 $500 Units Outstanding 49.4 $500 Market Capitalization $3,101 $400 $400 Credit Facility $0 $300 (C$M) Debentures 3.788% due Jul/21 $250 $300 $250 $250 Debentures 3.873% due Nov/23 $400 Term Loan 1.225% du
Slide 18: Credit Metrics Summary
CREDIT METRICS SUMMARY • The following table was sourced from DBRS’ Canadian Real Estate Peer Comparison dated January 2019. DBRS Canadian Real Estate Peer Comparison1: Peer Group Granite Rank Granite Average Among Peer Group Total Debt to Capital 24.1% 48.4% #1 Total Debt to EBITDA 4.8x 9.3x #1 Cas
Slide 19: Financial Flexibility & Target Long-Term Leverage Ratio
FINANCIAL FLEXIBILITY & TARGET LONG-TERM LEVERAGE RATIO • Strong balance sheet provides pathway for measured growth with potential for further diversification and optimization of the portfolio • Target long term net leverage ratio of ∼35% while maintaining patient and opportunistic approach to acqui
Slide 20: Key Differences Between Granite and Other REITs
KEY DIFFERENCES BETWEEN GRANITE AND OTHER REITs Global footprint including Canada, US, and Europe Unencumbered assets and low leverage Significant liquidity and incremental debt capacity Historically low maintenance capex / tenant improvements / leasing commissions Favorable operating leverage resul
Slide 21: Appendix
APPENDIX 2020 Logistics Drive, Mississauga, ON / Pearson International Airport 21
Slide 22: Canadian Real Estate Debt Peer Comparison
CANADIAN REAL ESTATE DEBT PEER COMPARISON1 Total Debt-to-Capital Total Debt-to-EBITDA 80% 16.0x 70% 14.0x 12.0x 60% 10.0x 50% 8.0x 40% 6.0x 30% 4.0x 20% 2.0x 10% 0.0x Granite has the lowest leverage within DBRS1 universe of Canadian Real Estate entities 1 Source: DBRS Canadian Real Estate Peer Compa
Slide 23: Canadian Real Estate Debt Peer Comparison
CANADIAN REAL ESTATE DEBT PEER COMPARISON1 EBITDA Interest Coverage Distributions/Cash Flow from Operations2 12.0x 120% 10.0x 100% 8.0x 80% 6.0x 60% 4.0x 40% 2.0x 20% 0.0x 0% Granite has leading cash flow coverage metrics among DBRS1 universe of Canadian Real Estate entities 1 Source: DBRS Canadian
Slide 24: Leadership Team
LEADERSHIP TEAM Kevan Gorrie Teresa Neto • President and Chief Executive Officer • Chief Financial Officer • Over 20 years of real estate experience in • Over 30 years of varied business experience, Canada, the United States and Germany. including thirteen years as a CFO for • Previously served as t
Granite Real Estate Investment Trust — Investor Presentation (August 2019) on 6ix