Riocan Real Estate Investment Trust · TSX:REI.UN
Riocan Real Estate Investment Trust — Q3 2022 Earnings Presentation
59 slides from Riocan Real Estate Investment Trust's earnings presentation, Nov 3, 2022
Slide 1: Quality and Growth - Third Quarter 2022 Investor Presentation
QUALITY AND GROWTH NOVEMBER 3, 2022 THIRD QUARTER 2022 INVESTOR PRESENTATION
Slide 2: Executing from a position of strength
Executing from a position of strength RIOCAN | INVESTOR PRESENTATION ( Third Quarter 2022) |2
Slide 3: RioCan by the Numbers
RIOCAN BY THE NUMBERS 198 properties (1) ~35M SQ FT aggregate net leasable area ~17M zoning approved, surfacing SQ FT value from advanced development pipeline $ ~ 13B total enterprise value *As at September 30, 2022 1 - Includes 187 income producing properties and 11 properties under development RIO
Slide 4: Successful major market strategy
Successful major market strategy Resulting in a portfolio with improved demographics and growth prospects Sold U.S. Sold properties Focused in Invested in property in Canadian Canada’s six development portfolio secondary major markets markets RIOCAN | INVESTOR PRESENTATION ( Third Quarter 2022) |4
Slide 5: Located in prime, in-demand and growing markets
Located in prime, in-demand and growing markets Dense 154,000 (1) +36% 209,000 (1) population people in 2017 people in 2022 Strong $102,000 +26% $129,000 (1) (1) household average household incomes income in 2017 average household income in 2022 1 - Population and average household income within 5km
Slide 6: Annualized rent from six major markets
93.0% annualized rent from six major markets (1) VANCOUVER 6 assets 1.7M sq.ft.(2) 4.8% (3) UP FROM CALGARY MONTREAL % 76.0 16 assets 17 assets 3.6M sq.ft. (2) 1.8M sq.ft. (2) 11.5% (3) GREATER EDMONTON 3.5% (3) TORONTO AREA 10 assets 87 assets 2.2M sq.ft. (2) 16.5M sq.ft. (2) in 2017 6.6% (3) 53.1%
Slide 7: High quality, necessity-based retail revenue
High quality, necessity-based retail revenue 97.3% 86.4% Property committed occupancy (2) strong and stable tenants (3) Type (1) z 53.5% 28.5% • Retail: 89.1% • Office: 8.0% grocery anchored mixed-use / • Residential Rental: 2.9% centres (5) urban (4) (5) 1 - Percentage of annualized contractual gro
Slide 8: Necessity-based retail anchor tenants
Necessity-based retail anchor tenants A curated and diversified tenant base in lockstep with consumer spending patterns 19.5% 14.7% 14.2% 10.8% Grocery / Specialty Essential Value Pharmacy / Retailers(1) Personal Retailers Liquor Services 9.3% 8.3% 7.3% 6.1% 5.8% 3.9% 0.1% Furniture Other Quick Appa
Slide 9: RioCan is a Canadian real estate leader in ESG
RioCan is a Canadian real estate leader in ESG Through responsible growth, we enhance our long-standing principle of prudent and intentional capital management, generate long-term value for our unitholders and create spaces where we all can prosper. Three pillars guide RioCan's approach to embedding
Slide 10: Embedding best practices in everything we do
Embedding best practices in everything we do Select Achievements ENVIRONMENT SOCIAL GOVERNANCE Sector Leader 2022 Greenest Employer 1st Among Canadian GRESB 2022 Real Estate Awarded to Canadian employers that lead Peers Assessment - Standing Investments the nation in creating a culture of 2022 GRESB
Slide 11: Our Position on Climate
Our Position on Climate Integrate resilience and net-zero criteria into asset management, operations, developments, investments, procurement and leasing processes, tools, accountabilities and decision-making to enhance governance and disclosures, meet evolving stakeholder expectations and protect as
Slide 12: Our objective: Deliver long-term Unitholder value
Our objective: Deliver long-term Unitholder value 5-Year Targets (YE 2021- YE 2026) Reimagine 1 retail 4 - 5% (1) 5 - 7% (2) 10 - 12% (3) Intelligently 2 FFO Total diversify Distribution yield growth Unitholder 3 Enhance customer centrism RESILIENT INCOME SPNOI GROWTH return DEVELOPMENT 4 Grow respo
Slide 13: Poised to benefit from evolving retail dynamics
Poised to benefit from evolving retail dynamics RIOCAN | INVESTOR PRESENTATION ( Third Quarter 2022) | 13
Slide 14: Strong demand drivers for our properties
Strong demand drivers for our properties Increasing Evolving retail Tight retail & population in experience residential key markets supply RIOCAN | INVESTOR PRESENTATION ( Third Quarter 2022) | 14
Slide 15: Canada - a place to grow
Canada – a place to grow Square Feet of Retail Immigration fuels demand for real estate sector per Capita(4) (‘000s) The Government of Canada seeks to welcome over 430,000 new immigrants each year - the highest levels in its history and 3X more immigrants on per capita basis than the U.S.(1) Number
Slide 16: Physical stores - the hub of omni-channel
Physical stores - the hub of omni-channel Brick & Mortar is central to serving customers how, where and when they want Distribution Centre Brick & Mortar Store Home Occupancy costs trending higher Located in industrial park Located in heart of community In-store purchase Delivery from store BOPIS &
Slide 17: Evolving retail experience
Evolving retail experience Retailers continue to invest in hyper-local placement of store network and proximity to consumers “…when it comes to driving incremental performance. Network optimization Galen Weston, Chairman and is certainly one of them. We're spending more money on new stores and Presi
Slide 18: Demand for physical space continues to grow
Demand for physical space continues to grow Space in major market locations with attractive demographics that facilitate last kilometre delivery, is in high demand. At ICSC Toronto 2022, RioCan conducted a survey to better understand where our tenants see growth for their business and what challenge
Slide 19: Canadian retail real estate supply constrained
Canadian Retail Over the last five years newly Real Estate is constructed retail represents Supply only ~1% of existing supply Constrained 0.9% 0.3% 0.9% With replacement costs for well- 400 1.3% 1.2% 0.6% ~17Sq. located retailFt. well over market values, supply constraints are 360 expected to persi
Slide 20: Major Market, Necessity-based portfolio continues to deliver results
Major Market, Necessity-based portfolio continues to deliver results RIOCAN | INVESTOR PRESENTATION ( Third Quarter 2022) | 20
Slide 21: Q3 2022 Highlights
Q3 2022 Highlights $0.44 $182.5M FUNDS FROM OPERATING OPERATIONS INCOME PER UNIT (1) (2) $3.2M 5.1% NET INCOME SAME PROPERTY NET OPERATING INCOME GROWTH (1) $81M $20.80 DEVELOPMENT AVERAGE NET SPENDING (1) RENT (3) $1.6B $9.0B IN AVAILABLE UNENCUMBERED LIQUIDITY (1) (4) ASSETS (1) (4) 1 – Represents
Slide 22: Robust portfolio fundamentals
Robust portfolio fundamentals Deliver strong financial performance FFO per Unit SPNOI Growth (2) 6.6% $0.44 $0.44 5.1% $0.40 $0.40 (1) (1) $0.39 $0.42 Q3 2021 Q3 2022 Q3 2021 Q3 2022 (1) (1) FFO/unit FFO Adjusted/unit Core FFO/unit 1 - Represents a non-GAAP measure. 2 - SPNOI - Same Property Net Ope
Slide 23: Positive trends in occupancy
Positive trends in occupancy Breadth and quality of tenants support return to pre-pandemic occupancy levels Committed and In-Place Occupancy Total Commercial Portfolio 97.3% 97.2% 97.0% 96.8% 96.8% 96.4% 96.4% 96.7% 96.1% 96.0% 96.3% 96.3% 95.8% 96.2% 95.7% 96.1% 96.0% 95.6% 95.4% 95.1% 95.1% 94.9%
Slide 24: Operations Highlights
Operations Highlights 1.4 million square feet of new and renewed leases executed at robust leasing spreads Retention Ratios Re-opening Blended Leasing Spreads Re-opening 93.3% 89.4% 90.9% 89.2% 90.9% 88.4% 88.0% 10.5% 85.8% 83.1% 8.9% 81.8% 8.1% 7.9% 7.5% 5.6% 5.8% 5.5% 5.4% 72.6% 4.6% 3.8% Q1/20 Q2
Slide 25: High performance growth-oriented portfolio
High performance growth-oriented portfolio Building on a strong and stable foundation Average Net Rent Per Sq.Ft. $24.45 PSF ~3.4% average net rent of new leases CAGR (1) $20.80 $20.16 $19.75 $19.80 $19.07 $17.75 2017 2018 2019 2020 2021 Q3 2022 1 - Compound Annual Growth Rate RIOCAN | INVESTOR PRES
Slide 26: Financial and operational metrics tracking to 2022 targets
Financial and operational metrics tracking to 2022 targets Demonstrates strength and continued resiliency of property portfolio, tenant base and development pipeline 2022 TARGETS YTD Q3 2022 Status SPNOI growth (1) 3% - 4% 5.0% FFO per unit (1) $1.68 - $1.71(2) $1.29 FFO payout ratio (1) 55% - 65% 5
Slide 27: At the heart of our strategy is a clear ambition
At the heart of our strategy is a clear ambition RIOCAN | INVESTOR PRESENTATION ( Third Quarter 2022) | 27
Slide 28: A clear path to compelling Total Unitholder Returns
A clear path to compelling Total Unitholder Returns 5-Year Objective (YE 2021- YE 2026) 1-2% 2-4% 3% 10-12% NAV accretion at % constant FFO multiple and capitalization rates 4-5 Distribution Yield (1) SPNOI Development + Investments (2) Annualized TUR (3) 1 - Based on December 31, 2021, price of $22
Slide 29: Driving SPNOI growth
Driving SPNOI growth TWO KEY FACTORS 1 Normalized occupancy 2 Strong growth in commercial rents RIOCAN | INVESTOR PRESENTATION ( Third Quarter 2022) | 29
Slide 30: Positive trends in occupancy
Positive trends in occupancy Our breadth and quality of commercial tenants support growth and resilience COMMITTED COMMERCIAL OCCUPANCY RATES % 97.2% 95.7% 96.8% 97.3% 97-98 5-year plan target 2019 2020 2021 YTD 2022 RIOCAN | INVESTOR PRESENTATION ( Third Quarter 2022) | 30
Slide 31: Well-positioned portfolio retains and attracts tenants
Well-positioned portfolio retains and attracts tenants BLENDED LEASING SPREADS HIGH blended leasing spread SINGLE 5-year plan target 9.4% 9.0% 5.0% 6.3% DIGITS 2019 2020 2021 YTD 2022 (1) AVERAGE NET RENT PER SQUARE FOOT ~$ 22.50 average rent $20.80 per square foot $19.75 $19.80 $20.16 5-year plan t
Slide 32: Development pipeline offers compelling opportunities
Development Development relevant image pipeline offers compelling opportunities % ~ % 100 78 located in located in Canada’s six major markets the GTA ~ % ~ % 83 70 are residential located on developments transit route *% of total NLA at RioCan’s interest RIOCAN | INVESTOR PRESENTATION ( Third Quarte
Slide 33: Driving NAV through development
Driving NAV through development In collaboration with trusted partners, RioCan is building dynamic and iconic developments that enhance communities in Canada’s major markets 42.4M SQ FT DEVELOPMENT PIPELINE Zoning Active Shovel Underway 16.7M SQ FT (1) pre-development ready 2.2M 2.1M SQ zoning appro
Slide 34: Development program has clear competitive advantages
DEVELOPMENT PROGRAM HAS CLEAR COMPETITIVE ADVANTAGES Significant landbank 1 embedded, high-quality development pipeline on existing IPP with low invested land cost Established development expertise 2 in-house team with deep experience spanning entire development process from entitlement to product d
Slide 35: Strong development track record of delivering above market returns
Strong development track record of delivering above market returns Case study: Five purpose-built residential buildings totaling 871 units Market Average Average capitalization joint venture RioCan Brio – Calgary, AB rate yield yield Frontier – Ottawa, ON Latitude – Ottawa, ON % 3.7 % 4.2 4.9% Strad
Slide 36: Development deliveries fueling our five-year plan
Development deliveries fueling our five-year plan 2022 DELIVERY 2023 DELIVERY Total NLA New NLA ~673,000 sq. ft.(3) ~681,000 sq. ft. Incremental cash NOI delivery (stabilized) (2) $25.2M $30.5M 2022 & 2023 1.7M SQ FT (1) * At RioCan’s interest 1 - Includes ~315,000 sq. ft. of condominium and townhou
Slide 37: Self-funding development growth
Self-funding development growth ~$ Retained cash flow 150M per year Supplemented ~$ Project leverage 250M per year with partnerships to support funding and generate fees $ Capital recycling (1) 100-200M average run rate per year 1 - Between 2022 and 2026, 3,078 condominium or townhouse units either
Slide 38: Capital Structure
Capital Structure Enterprise Value $12.8B Interest (in billions) Q3 2022 Rate (1) Mortgages Payable $2.6B 3.2% 24% Secured Construction Lines $0.4B 4.9% Total Secured Debt (2) (3) $3.0B 3.4% Unsecured Debentures $3.3B 2.9% Non-Revolving Unsecured Credit Facilities $0.7B 3.6% 32% Revolving Unsecured
Slide 39: Disciplined and prudent balance sheet management
Disciplined and prudent balance sheet management CAPITAL STRUCTURE METRICS 5-YEAR TARGET September 30, 2022 Adjusted Debt to Adjusted EBITDA (1) (4) 8.0x – 9.0x 9.3x (2) Ratio of Unsecured vs. Secured Debt (1) (4) 70% / 30% 57% / 43% Weighted average to term maturity (3) 5.0 years 3.6 years (5) Tota
Slide 40: Ample liquidity and laddered debt maturity
Ample liquidity and laddered debt maturity 1,750 Factors in the $250.0M increase in credit limit on the operating line of credit in February 2022 & $250.0M Series AF debenture issuance in April 2022 (1) Includes $209.5M mortgages 1,500 funded in October related to the Series Y repayment October 3, 2
Slide 41: Debt maturities laddered through 2023
Debt maturities laddered through 2023 Q1 Q2 Q3 Q4 YTD 2023 Principal (in $ millions) Non-revolving Credit Facility $ 200.0 $ — $ — $ — $ 200.0 Construction Lines 13.5 36.5 — 32.1 $ 82.1 Mortgages Payables (1) — 106.9 74.4 81.3 $ 262.6 Unsecured Debentures — 200.0 300.0 — $ 500.0 Total $ 213.5 $ 343.
Slide 42: Appendix: Featured Projects
APPENDIX Featured Projects * square footage and number of residential units are at 100% interest RIOCAN RIOCAN | INVESTOR | INVESTOR PRESENTATION PRESENTATION (Third (March Quarter 2022) 2022) | 42
Slide 43: The Well - mixed-use community in downtown Toronto
TM The Well - A true mixed-use community anchoring King West area of Downtown Toronto ~1.2 million sq. ft. of distinctive office space housing active primarily knowledge-based workers ~320k sq. ft. of forward-thinking retail providing meaningful experiences and everyday needs Commercial Leasing Stat
Slide 44: RioCan Hall
◦ Currently ~227k sq. ft. of income producing retail in the heart of Toronto’s entertainment district ◦ ~800k sq. ft. of mixed-use density contemplated through two tower development TORONTO, ON RIOCAN HALL RIOCAN | INVESTOR PRESENTATION (Third ( ThirdQuarter Quarter2022) 2022) | 44
Slide 45: RioCan Colossus Centre
◦ >50 acre site currently consisting of 571k sq. ft. of income producing retail HWY 400 ◦ ~10M sq. ft. of mixed-use density HWY 407 contemplated involving multi-phase development HWY 7 VAUGHAN, ON RIOCAN COLOSSUS CENTRE RIOCAN | INVESTOR PRESENTATION ( Third Quarter 2022) | 45
Slide 46: Verge
◦ First independent condo launch under RioCan Living banner in partnership with four investors ◦ Retail at grade ◦ Verge (Phase One) – 95% pre-sold (1)(2) • 10-storey, 197 unit ◦ Verge (Phase Two) – 93% pre-sold (1)(2) • 17-storey, 335 unit 1 - As of November 3, 2022 2 - Based on released units for
Slide 47: Frontier and Latitude
Latitude, Phase Two - 91% leased (1) ◦ 20-storey, 209 unit residential rental ◦ Occupancy commenced in Q1 2022 Frontier, Phase One – 97% leased (1) ◦ 23-storey, 228 unit residential rental 1 - As of November 3, 2022 OTTAWA, ON FRONTIER AND LATITUDE RIOCAN | INVESTOR PRESENTATION ( Third Quarter 2022
Slide 48: Litho.
◦ 9-storey, 210 unit residential rental ◦ ~32k sq. ft. of retail ◦ ~98% leased (1) ◦ Launched in July 2021 1 - As of November 3, 2022 TORONTO, ON LITHO. RIOCAN | INVESTOR PRESENTATION ( Third Quarter 2022) | 48
Slide 49: Strada
◦ 8-storey, 61 unit residential rental ◦ ~6k sq. ft. of retail ◦ Occupancy commenced in Q1 2022 ◦ ~98% leased (1) 1 - As of November 3, 2022 TORONTO, ON STRADA RIOCAN | INVESTOR PRESENTATION ( Third Quarter 2022) | 49
Slide 50: Luma
◦ 9-storey, 168 unit residential rental ◦ ~11K sq. ft. of retail ◦ Occupancy commenced in Q2 2022 ◦ ~60% leased (1) 1 - As of November 3, 2022 OTTAWA, ON LUMA RIOCAN | INVESTOR PRESENTATION ( Third Quarter 2022) | 50
Slide 51: Rhythm
◦ 24-storey, 214 unit residential rental ◦ ~20K sq. ft. of retail ◦ Expected to commence occupancy in Q4 2022 OTTAWA, ON RHYTHM RIOCAN | INVESTOR PRESENTATION ( Third Quarter 2022) | 51
Slide 52: Condo / Townhouse development and value creation
Condo / Townhouse development and value creation Alternate source of income and cash flow providing efficient capital recycling Condominiums Condominiums Condominiums U.C. TowerTM 11 YV Queen & AshbridgeTM Sold Out ~99% Pre-Sold ~96% Pre-Sold Sales Status (1) (399 Units) (4) (503 Units) (2) (587 Uni
Slide 53: Condo / Townhouses high demand for recent launches
Condo / Townhouses high demand for recent launches Pre-sales progressing well with rapid unit sales [Placeholder for Rendering] Townhomes Condominiums Condominiums Condominiums Condominiums TM U.C. Towns 2 U.C. Tower 2 U.C. Tower 3 Verge (Phase Two) Verge (Phase One) Sales Sold Out Sold Out (3) ~55%
Slide 54: Value creation underway - projects under construction
Value creation underway - projects under construction (in thousands of square feet) NLA ('000s) Estimated Density (NLA) at RioCan’s Interest RioCan Ownership Residential Residential Under Anticipated date Commercial Completed (1) Total As at September 30, 2022 Location % (Partner) At 100% Rental Inv
Slide 55: Value creation underway - projects with zoning approval
Value creation underway - projects with zoning approval NLA (‘000s) Estimated Density (NLA) at RioCan’s Interest (in thousands of square feet) RioCan Ownership Residential Residential Active Pre- Development Commercial Shovel Ready Total As at September 30, 2022 Location % (Partner) At 100% Rental I
Slide 56: Forward-Looking Information
FORWARD-LOOKING INFORMATION All information other than statements of current and historical fact included in this presentation is forward-looking information within the meaning of applicable securities laws. Forward-looking information generally can be identified by the use of forward-looking termin
Slide 57: Non-GAAP Measures
NON-GAAP MEASURES RioCan’s consolidated financial statements are prepared in accordance with IFRS. Consistent with RioCan’s management framework, management uses certain financial measures to assess RioCan’s financial performance, which are not generally accepted accounting principles (GAAP) under I
Slide 58: Quality. Growth.
Quality. Growth. RIOCAN | INVESTOR PRESENTATION ( Third Quarter 2022) | 58
Slide 59: Head Office
Head Office | RioCan Yonge Eglinton Centre, 2300 Yonge Street, Suite 500, Box 2386, Toronto, Ontario M4P 1E4 • 1-800-465-2733 • riocan.com RIOCAN | INVESTOR PRESENTATION ( Third Quarter 2022)
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