Riocan Real Estate Investment Trust · TSX:REI.UN
Riocan Real Estate Investment Trust — Investor Day (February 2022)
92 slides from Riocan Real Estate Investment Trust's investor day presentation, Feb 23, 2022
Slide 1: Quality. & Growth. RioCan Investor Day 2022
Quality. & Growth. RIOCAN | INVESTOR DAY 2022
Slide 2: Non-GAAP Measures and Forward-Looking Information
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 3: Today's Speakers
T O D AY ’ S S P E A K E R S Jonathan John Dennis Andrew Terri Gitlin Ballantyne Blasutti Duncan Andrianopoulos President and Chief Operating Officer Chief Financial Officer Chief Investment Officer Senior Vice President, Chief Executive Officer People & Brand Oliver Jeff Franca Jennifer Kalliopi Ki
Slide 4: Agenda
Agenda Welcome KIM LEE Vice President, Investor Relations Our strategic JONATHAN GITLIN President and Chief Executive Officer direction JOHN BALLANTYNE Chief Operating Officer EXECUTING OUR STRATEGY JEFF ROSS Senior Vice President, Leasing and Tenant Construction Existing portfolio OLIVER HARRISON S
Slide 5: Our strategic direction
Our strategic direction Jonathan Gitlin PRESIDENT AND CHIEF EXECUTIVE OFFICER RIOCAN | INVESTOR DAY 2022 |5
Slide 6: Quality. Growth.
Quality. Growth. RIOCAN | INVESTOR DAY 2022 |6
Slide 7: Our vision: to create spaces where we can all prosper
OUR VISION To create spaces where we can all prosper |7
Slide 8: At the heart of our strategy is a clear ambition
At the heart of our strategy is a clear ambition RIOCAN | INVESTOR DAY 2022 |8
Slide 9: Our ambition
Our ambition Capitalize on our unique mix of best-in-class properties, embedded development pipeline, and compelling growth prospects to deliver solid performance and maximize unitholder returns 10-12 % annualized total unitholder returns (1) TA R G E T S 4-5% 5-7% annual FFO growth annual distribut
Slide 10: Our strategic pillars
O U R S T R AT E G I C P I L L AR S 1 Reimagine retail 2 Intelligently diversify Enhance 3 customer centrism 4 Grow responsibly RIOCAN | INVESTOR DAY 2022 | 10
Slide 11: Reimagine retail
1 Reimagine retail Commit to, and continue to reimagine, our retail core | 11
Slide 12: Intelligently diversify
2 Intelligently diversify Diversify our asset base, income streams, and overall tenant mix | 12
Slide 13: Enhance customer centrism
Enhance customer centrism 3 Deepen our emphasis on customer centricity by understanding and meeting the needs of our tenants, our joint venture partners and limited partnerships | 13
Slide 14: Grow responsibly
Grow responsibly 4 Focus on enhancing our culture, ESG leadership, and prudent capital management | 14
Slide 15: Grow responsibly
Grow responsibly Focus on ESG - Environment, Social and Governance A culture of excellence Prudent balance sheet management RIOCAN | INVESTOR DAY 2022 | 15
Slide 16: Our position on ESG
Our position on ESG We will lead in ESG by becoming a net positive business We will give back more than we take from the community We will generate long-term value by adopting sustainable strategies Environment Social Governance Reduce carbon footprint Develop sustainable Further strengthen ri
Slide 17: A culture of excellence
A culture of excellence RIOCAN | INVESTOR DAY 2022 | 17
Slide 18: A robust foundation
A robust foundation Supporting our four strategic pillars Reimagine Intelligently Enhance Grow retail diversify customer centrism responsibly S U P P O R T E D B Y A R O B U S T F O U N D AT I O N Reimagine retail. RIOCAN | INVESTOR DAY 2022 | 18
Slide 19: Executing from a position of strength
Executing from a position of strength RIOCAN | INVESTOR DAY 2022 | 19
Slide 20: RioCan by the numbers
R I O C AN B Y T H E N U M B E R S 207 properties (1) ~36M SQ FT aggregate net leasable area ~13.8M zoning approved, surfacing SQ FT value from advanced development pipeline ~$14B total enterprise value *As at December 31, 2021 1 - Includes 194 income producing properties and 13 properties under dev
Slide 21: 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 development portfolio secondary six major 2015/16 markets markets RIOCAN | INVESTOR DAY 2022 | 21
Slide 22: Properties in prime, high-density, transit-oriented areas
Properties in prime, high-density, transit-oriented areas 91% Dense population 203,000 (1) people Strong household incomes $124,000 (1) Last mile hub Ideal to facilitate any consumer behaviour VANCOUVER 6 assets Mixed-use development potential 1.7M SQ FT (2) 4.7% (3) Highest and best use redevelopme
Slide 23: Resilient assets with necessity-based retail anchor tenants
Resilient assets with necessity-based retail anchor tenants 96.8 % occupancy ~85% revenue from strong and stable tenants (1) 1 - Based on annualized net rents as at December 31, 2021 RIOCAN | INVESTOR DAY 2022 | 23
Slide 24: Compelling embedded near-term development pipeline
Compelling embedded near-term development pipeline Significant landbank embedded, high-quality development pipeline Zoning approved Delivering 1.7M SQ (1) FT in the next 24 months 13.8M SQ FT on average over the next 5 years ~0.5M SQ FT * At RioCan’s interest 1 – Includes ~236,000 sq. ft. of condomi
Slide 25: Strong demand drivers for our properties
Strong demand drivers for our properties Increasing Evolving Tight population in retail residential key markets experience supply RIOCAN | INVESTOR DAY 2022 | 25
Slide 26: Our strategic pillars in action
Our strategic pillars in action Existing portfolio with John, Jeff and Oliver Development pipeline with Andrew and John 1 Reimagine retail 2 Intelligently diversify 3 Enhance customer centrism 4 Grow responsibly Financial review Focus on ESG with Dennis with John, Terri and Jennifer RIOCAN | INVESTO
Slide 27: Today's takeaways
Today’s takeaways Clear strategic direction Bold growth objectives Detailed plans for execution A dynamic team RIOCAN | INVESTOR DAY 2022 | 27
Slide 28: Existing portfolio
E X E C U T I N G O U R S T R AT E G Y Existing portfolio John Ballantyne CHIEF OPERATING OFFICER Jeff Ross SENIOR VICE PRESIDENT, LEASING AND TENANT CONSTRUCTION Oliver Harrison SENIOR VICE PRESIDENT, OPERATIONS RIOCAN | INVESTOR DAY 2022 | 28
Slide 29: Best-in-class portfolio
Best-in-class portfolio Optimized portfolio to focus on high-quality, sustainable income 207 ~36M SQ FT properties aggregate net across Canada (1) leasable area *As at December 31, 2021 1 - Includes 194 income producing properties and 13 properties under development RIOCAN | INVESTOR DAY 2022 | 29
Slide 30: Annualized rent from six major markets
91.0 % annualized rent from six major markets (1) VANCOUVER 6 assets 1.7M SQ FT (2) 4.7% (3) UP FROM CALGARY MONTREAL 76.0 16 assets % 18 assets 3.6M SQ FT (2) GREATER 2.3M SQ FT (2) 11.2% (3) EDMONTON TORONTO AREA 4.1% (3) 12 assets 87 assets 2.2M SQ FT (2) 16.5M SQ FT (2) in 2017 6.9% (3) 50.9% (3
Slide 31: Located in prime, in-demand and growing markets
Located in prime, in-demand and growing markets Dense population 154,000 people in 2017 (1) +32% 203,000 (1) people in 2021 Strong $102,000 +22% $124,000 (1) (1) household average household incomes income in 2017 average household income in 2021 1 - Population and average household income within 5km
Slide 32: High quality, necessity based retail revenue
High quality, necessity based retail revenue ~85% Property 96.8 committed occupancy (2) % strong and stable tenants (3) Type (1) z Retail 90.7% Office 7.6% 54.1grocery anchored % 22.1 mixed-use / % Residential 1.7% centres (1) urban (1) (4) 1 - Percentage of annualized contractual gross rent 2 - Tot
Slide 33: Necessity-based retail anchor tenants
Necessity-based retail anchor tenants A curated and diversified tenant base in lockstep with consumer spending patterns 19.9% 14.3% 11.9% 10.6% Grocery, Essential Specialty Value Pharmacy, Personal Retailers Retailers Liquor Services 8.9% 8.0% 7.1% 6.3% 5.9% 3.9% 3.0% 0.2% Furniture Other Quick Appa
Slide 34: Jeff Ross video – why we win
JEFF ROSS VIDEO – why we win
Slide 35: Reimagining our retail core
Reimagining our retail core BUILDING ON STRATEGICALLY INVESTING IN our strong, transit-oriented select properties to enhance locations in Canada’s their SPNOI potential six major markets KEEPING PACE WITH EVOLVING emerging success our retail tenant mix to make factors in retail it more essential, re
Slide 36: Leading the evolving retail landscape
Optimize for an omnichannel Leading the shopping experience evolving Maintain a hyper focus on retail proximity to consumers landscape Focus on strategic leasing to improve merchandising mix Provide high-touch, high-quality tenant/customer service and support RIOCAN | INVESTOR DAY 2022 | 36
Slide 37: Disciplined capital expenditure criteria
Disciplined capital expenditure criteria Strength of location Assess 1 Assess assets across Resiliency of tenant mix SPNOI growth potential Capex requirements five dimensions: Highest and best use of asset 2 Identify FFO growth Identify assets with the NAV maximization highest potentia
Slide 38: To grow SPNOI, we will…
To grow SPNOI, we will… FOCUS EXIT on progressive positions enhancements in weaker of strong performing performing assets assets RIOCAN | INVESTOR DAY 2022 | 38
Slide 39: Enhance properties to best serve our tenants' needs
Enhance properties to best serve our tenants’ needs REVENUE CREATE EXECUTE DRIVE REVENUE ENHANCING CAPEX Increase 150 Entrance % Distinct experience customer traffic RioCan Pedestrian experience Retain tenants INCREASE standards Architecture Attract in average annual spend new tenants 20
Slide 40: Oliver Harrison video – RioCan standard
OLIVER HARRISON VIDEO – RioCan standard
Slide 41: Strategically balance tenant mix
Strategically balance tenant mix TENANT CATEGORY 2026 TARGET Strong and stable Tenants with stable rent-paying ability, strong covenants, and sustained foot-traffic 85-90 % 5-10 % Tenants that drive meaningful traffic and/or Compelling incremental visits to our properties, such as traffic drivers se
Slide 42: Opportunistically diversify tenant mix
Opportunistically diversify tenant mix Focusing on driving growth in our retail core TENANTS THAT MAY COMPLEMENT OUR RETAIL AND MIXED-USE PROPERTIES: Criteria to evaluate opportunities: complementary to existing retail MEDICAL EDUCATIONAL enhancing and additive to the property drive footfalls
Slide 43: Jeff Ross video – Tenant strategy
JEFF ROSS VIDEO – Tenant strategy
Slide 44: Deepen our emphasis on customer centricity
Deepen our emphasis on customer centricity Enhancing the distinctiveness of our value proposition to tenants Remain focused on prime locations Leverage technology to improve tenant in Canada’s six major markets experience and increase efficiency Evolve the appearance and Drive greater traffic to pro
Slide 45: Jeff Ross video – Tenant relationships
JEFF ROSS VIDEO – Tenant relationships
Slide 46: Measuring success
Measuring success Tenant 1 retention Positive occupancy trends Greater proportion of New tenant 2 strong and stable tenants attraction Improved renewal SPNOI growth leasing spreads Resilient 3 tenant mix Increased new leasing spreads Strong customer Increased rent per sq. ft. 4 traffic tre
Slide 47: Tenant panel
TENANT PANEL
Slide 48: Tenant panel
Tenant Richard Dufresne panel PRESIDENT AND CHIEF FINANCIAL OFFICER George Weston Limited Tim Sanderson EXECUTIVE VICE PRESIDENT Jones Lang LaSalle (JLL) MODERATED BY John Ballantyne Jeffrey York CHIEF OPERATING OFFICER PARTNER Farm Boy Inc. RIOCAN | INVESTOR DAY 2022 | 48
Slide 49: Development
E X E C U T I N G O U R S T R AT E G Y Development Andrew Duncan CHIEF INVESTMENT OFFICER John Ballantyne CHIEF OPERATING OFFICER RIOCAN | INVESTOR DAY 2022 | 49
Slide 50: What does that mean to RioCan?
43.1M SQ FT DEVELOPMENT PIPELINE What does that mean to RioCan? | 50
Slide 51: Development is a key driver of future growth and NAV expansion
Development is a key driver of future growth and NAV expansion RIOCAN | INVESTOR DAY 2022 | 51
Slide 52: Compelling development opportunities
Compelling Development relevant image development opportunities 100% ~76% located in Canada’s located in six major markets the GTA ~83% ~70% are residential located on developments transit route *% of total NLA at RioCan’s interest RIOCAN | INVESTOR DAY 2022 | 52
Slide 53: Driving NAV through development
Driving NAV through development In collaboration with trusted partners, RioCan is building visionary and iconic developments that enhance communities in Canada’s major markets 43.1M SQ FT DEVELOPMENT PIPELINE Zoning Active Shovel Underway 13.8M pre-development ready 2.1M SQ (1) 3.1M 2.4M FT SQ FT zo
Slide 54: Development deliveries fueling our five-year plan
Development deliveries fueling our five-year plan 2022 DELIVERY 2023 DELIVERY NLA to be New NLA ~750,000 sq. ft. ~714,000 sq. ft. delivered Incremental cash $28.3M $28.0M NOI (stabilized) (2) in the next 24 months 1.7M SQ (1) FT * At RioCan’s interest 1 - Includes ~236,000 sq. ft. of condominium and
Slide 55: What positions us well for success with our new developments?
C O M P E T I T I V E A D VA N T A G E S What positions us well for success with our new developments? | 55
Slide 56: Significant landbank
C O M P E T I T I V E AD VAN TA G E S Significant landbank 1 embedded, high-quality development pipeline Established development expertise 2 in-house team with deep experience spanning entire development process from entitlement to product delivery Dedicated RioCan Living team 3 focused only on resi
Slide 57: 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 rate yield yield Brio – Calgary, AB Frontier – Ottawa, ON Latitude – Ottawa, ON 3.7% 4.2% 4.9% Strada
Slide 58: John B RioCan Living video
JOHN B RIOCAN LIVING VIDEO
Slide 59: What role does residential play in the development pipeline?
RESIDENTIAL What role does it play in the development pipeline? | 59
Slide 60: Enhancing quality and security of income with residential diversification
We are enhancing the quality and security of income with our diversification into residential RIOCAN | INVESTOR DAY 2022 | 60
Slide 61: Target delivering $55-60M of residential NOI by 2026
Target delivering 55-60M $ of residential NOI by 2026 Development Strategic NOI generated organically Investment through investments into Acquisitions of existing existing assets, delivering residential and/or the highest and best use mixed-use buildings for our properties supplementing development
Slide 62: Accelerating growth through mixed-use developments
Accelerating growth through mixed-use developments Mixed-use residential is an attractive asset class Combines different Retail serves as an Canadian market uses within the same excellent amenity experienced property to create for residents approximately 4% profitable projects CAGR in rental r
Slide 63: What does that mean in terms of development?
R E I M A G I N E R E TA I L What does that mean in terms of development? | 63
Slide 64: Continuing to adapt to the evolving needs of retail
Continuing to adapt to the evolving needs of retail to win today and tomorrow Building on our strong, Leveraging the distinctive transit-oriented locations in RioCan brand to drive customer Canada’s six major markets traffic and attract tenants Continuing to shape Maintaining ESG leadership our prop
Slide 65: What does that mean in terms of development?
I N T E L L I G E N T LY D I V E R S I F Y What does that mean in terms of development? | 65
Slide 66: Diversify asset base, income streams, and tenant mix
Diversify asset base, income streams, and tenant mix Asset base Income streams Grow in residential through: Expand income streams beyond rental mixed-use development income to: acquisition of multi-unit residential leverage management expertise rental properties and maximize profits benefit
Slide 67: What does that mean in terms of development?
CUSTOMER CENTRISM What does that mean in terms of development? | 67
Slide 68: Delivering a distinctive value proposition to our tenants and partners
Delivering a distinctive value proposition to our tenants, joint venture partners and limited partnership investors RIOCAN | INVESTOR DAY 2022 | 68
Slide 69: How are you measuring it?
SUCCESS How are you measuring it? | 69
Slide 70: Measuring success
Measuring success 5-YEAR Asset development timeline Delivering diversification 57% ~ 0.5M SQ (1) FT residential NOI generation of development on average each year ON-TIME over the next 5 years NAV ON-BUDGET creation * At RioCan’s interest 1- Includes the delivery of condominium and townhome pr
Slide 71: Strategy in action
SUCCESS Strategy in action | 71
Slide 72: The Well tour video
THE WELL TOUR VIDEO
Slide 73: Building dynamic and iconic developments with trusted partners
In collaboration with trusted partners, we are building dynamic and iconic developments that enhance communities in Canada’s major markets RIOCAN | INVESTOR DAY 2022 | 73
Slide 74: Financial review
RESPONSIBLE GROWTH Financial review Dennis Blasutti CHIEF FINANCIAL OFFICER RIOCAN | INVESTOR DAY 2022 | 74
Slide 75: Key value drivers
K E Y VAL U E D R I V E R S SPNOI 1 growth Development 2 process and deliveries FFO / UNIT AND Select NAV / UNIT investments GROWTH 3 less dispositions 4 Fee income RIOCAN | INVESTOR DAY 2022 | 75
Slide 76: Strategy to deliver long-term unitholder value
Strategy to deliver long-term unitholder value Reimagine 1 retail Intelligently 2 FFO diversify Distribution Total yield growth unitholder 3 Enhance customer RESILIENT SPNOI return centrism INCOME GROWTH DEVELOPMENT Grow 4 responsibly & INVESTMENT RIOCAN | INVESTOR DAY 2022 | 76
Slide 77: A clear path to compelling Total Unitholder Returns
A clear path to compelling Total Unitholder Returns NAV accretion at constant FFO multiple and capitalization rates 1-2% 2-4% 3% 10-12% 4-5% Distribution Yield (1) SPNOI Development + Investments (2) Annualized TUR (3) 1 - Based on December 31, 2021, price of $22.94; current yield is 4.2%, which wou
Slide 78: Opportunity to deliver outperformance
Opportunity to deliver outperformance Further strengthening of fundamentals can drive multiple expansion Continuously Highest Consistent improve value delivery of portfolio portfolio growth quality mix RIOCAN | INVESTOR DAY 2022 | 78
Slide 79: Fiscal 2021 highlights and 2022 targets
Fiscal 2021 financial and operational highlights and 2022 targets Demonstrates strength and continued resiliency of property portfolio, tenant base and development pipeline 2022 TARGETS 2021 SPNOI growth rate (1) 3% – 4% 3.4% FFO per unit (1) $1.68 – $1.71(2) $1.60 FFO payout ratio (1) 55% – 65% 62.
Slide 80: Driving SPNOI growth
Driving SPNOI growth T W O K E Y FAC TO R S 1 Normalized occupancy Strong growth in 2 commercial rents RIOCAN | INVESTOR DAY 2022 | 80
Slide 81: Positive trends in occupancy
Positive trends in occupancy Our breadth and quality of commercial tenants support growth and resilience COMMITTED COMMERCIAL 97-98 OCCUPANCY RATES % 97.2% 96.8% 95.7% 5-year plan target 2019 2020 2021 RIOCAN | INVESTOR DAY 2022 | 81
Slide 82: Well-positioned portfolio retains and attracts tenants
Well-positioned portfolio retains and attracts tenants BLENDED LEASING SPREADS HIGH blended leasing spread 9.4% 5.0% 6.3% SINGLE 5-year plan target 2019 2020 2021 DIGITS AVERAGE NET RENT PER SQUARE FOOT $19.75 $19.80 $20.16 ~$22.50 average rent per square foot 5-year plan target 2019 2020 2021 RIOCA
Slide 83: Investing in growth
Investing in growth Asset diversification ~$ 500M (1) ~$ 3.0B (1) (2) of average development Income annual deliveries generation development over the spend next 5 years NAV creation * At RioCan’s interest 1 - Includes delivery of condominium and townhome projects 2 - Reflects current IFRS cost
Slide 84: 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 $ 100-200M average run rate per year RIOCAN | INVESTOR DAY 2022 | 84
Slide 85: Disciplined and prudent balance sheet management
Disciplined and prudent balance sheet management CAPITAL STRUCTURE METRICS 5-YEAR TARGET DEC 31, 2021 Adjusted Debt to Adjusted EBITDA (1)(4) 8.0x – 9.0x 9.6x (2) Ratio of Unsecured vs. Secured Debt (1)(4) 70% / 30% 59% / 41% Weighted average to term maturity (3) 5 years 4 years Total Development as
Slide 86: Uniquely positioned to deliver solid financial performance and returns
Uniquely positioned to deliver solid financial performance and compelling Total Unitholder Returns RIOCAN | INVESTOR DAY 2022 | 86
Slide 87: ESG panel
RESPONSIBLE GROWTH ESG John Ballantyne panel CHIEF OPERATING OFFICER Terri Andrianopoulos SENIOR VICE PRESIDENT, PEOPLE & BRAND MODERATED BY Jennifer Suess SENIOR VICE PRESIDENT, GENERAL COUNSEL & CORPORATE SECRETARY Kim Lee VICE PRESIDENT, INVESTOR RELATIONS RIOCAN | INVESTOR DAY 2022 | 87
Slide 88: Concluding remarks
Concluding remarks Jonathan Gitlin PRESIDENT AND CHIEF EXECUTIVE OFFICER RIOCAN | INVESTOR DAY 2022 | 88
Slide 89: Quality. Growth.
Quality. Growth. RIOCAN | INVESTOR DAY 2022 | 89
Slide 90: Clear ambition
Clear ambition RIOCAN | INVESTOR DAY 2022 | 90
Slide 91: Q&A
Q&A RIOCAN | INVESTOR DAY 2022 | 91
Slide 92: 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 DAY 2022
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