Inland Real Estate — Investor Presentation (November 2015)
30 slides from Inland Real Estate's investor presentation, Nov 17, 2015
Slide 1: Forward-Looking Statements
Forward-Looking Statements Certain statements in this presentation constitute "forward-looking statements" within the meaning of the Federal Private Securities Litigation Reform Act of 1995. These forward-looking statements are not historical facts but are the intent, belief or current expectations
Slide 2: IRC Snapshot
As of 9/30/15; includes consolidated assets & unconsolidated assets at 100%; excludes in-process development properties & IPCC JV properties. As of 9/30/15; includes consolidated assets, unconsolidated assets at 100% & assets IRC does not have an ownership interest in, but manages on behalf of a thi
Slide 3: Investment Highlights
Investment Highlights High-Quality, Diversified Portfolio Strong asset quality driven by high occupancy (95.3% leased)1 and consistent cash flows Diverse tenant base includes a mix of national retailers across categories Impressive portfolio demographics: dense populations, high incomes, diverse eco
Slide 4: High Quality, Stable Portfolio
High Quality, Stable Portfolio Ownership strategy based on premise that well-located retail providing everyday goods & services likely to perform well and hold value through economic cycles Over 50% of properties in the total portfolio have a grocery component Solid tenant mix strengthened by nation
Slide 5: Diversified Tenant Base
Diversified Tenant Base In demand, diversified tenant base provides stability (1) Mariano’s-2, Metro Market-1, Rainbow-1, Pick ‘N Save-3, Roundy’s-1 (2) Jewel Osco-9, Dominick’s-2 (1 Dominick’s subleased to independent grocer) (3) TJ Maxx-9, Marshalls-14, Home Goods-2 (4) Dick’s Sporting Goods-6, Go
Slide 6: Strong Market Demographics
Strong Market Demographics 7 IRC’s retail centers are supported by strong demographics / high barriers to entry Notes: Peer property information from SNL as of 5/2015; properties for which address/latitude-longitude and/or SF were not available are excluded; demographics from ESRI , weighted by SF a
Slide 7: Strategic Objectives
Strategic Objectives Generate consolidated same store NOI annual growth of 2% to 3% for 20151; Compares to consolidated same store NOI growth of 2.3% for 20142 Achieve consolidated same store financial occupancy of 92.5% to 93.5% at YE 2015 Enhance portfolio growth and valuation metrics Reduce cost
Slide 8: Portfolio Quality Significantly Improved
9 Portfolio Quality Significantly Improved Notes: (1) Total portfolio with consolidated & unconsolidated at 100%; excludes IPCC assets & GLA sold to owner occupants at Park Square & Lansing Square; GLA data includes SF of ground leases. Rent per SF data is calculated using all base rents at point in
Slide 9: Portfolio Quality Significantly Improved
10 Portfolio Quality Significantly Improved Notes: Excludes IPCC. Parent company – store banners detailed in 4Q11 and 3Q15 financial supplementals. Execution on strategic initiatives is providing benefits: Increased diversity of major tenants; reduced exposure to any single tenant Tenant Name (2) #
Slide 10: Portfolio Quality Assessment
11 Portfolio Quality Assessment Notes: Amounts may not foot due to rounding. Data based on total portfolio as of 6/30/15, excluding IPCC JV assets, Algonquin and Evergreen Promenade, with SF adjustments for ground leases and partial sales completed after 6/30/15. 97% of NOI from Tier 1 & Tier 2 asse
Slide 11: Substantial Presence in Top U.S. MSAs
Substantial Presence in Top 40 U.S. MSAs Top markets’ resiliency, diverse economies, dense populations & healthy incomes support stable cash flows 85% of NOI from top 40 U.S. MSAs1,2 Notes: (1) Total portfolio as of 9/30/15 excluding IPCC JV ; NOI is for 3Q15 and includes IRC pro rata share of PGGM
Slide 12: Dominant REIT in Two of the Top MSAs
Dominant REIT in Two of the Top 20 MSAs IRC has largest retail portfolio in Chicago & Minneapolis MSAs amongst our REIT peers1 Substantial presence positions IRC as “the retail play” in these markets Chicago MSA Minneapolis-St. Paul MSA Note: (1) Based on retail SF and number of assets. Data include
Slide 13: Operating Strategy in Major Markets
Operating Strategy in Major Markets Example: IRC assets in the Cleveland MSA (853,217 SF) 14 Westgate Brunswick Market Center Medina Marketplace Cedar Center North Cedar Center South Creekside Commons Acquire critical mass of properties in target markets Market concentration facilitates multiple lea
Slide 14: Developed Compass Programs to Enhance Non-Anchor Occupancy
Developed Compass Programs to Enhance Non-Anchor Occupancy Compass programs: alliance of resources, discounts, mentors, market information, templates & other tools designed to help tenants grow their small businesses in the right direction 15 Compass goals: Enhance non-anchor occupancy/retention rat
Slide 15: Internal Growth: Positive Rent Spreads
Internal Growth Positive Rent Spreads Nineteen consecutive quarters of positive spreads on new leases 1Q11 through 3Q15 & continued positive leasing spreads on renewals in the total portfolio Strength of locations & limited new development provide leverage in lease negotiations + 14.5% + 10.0% + 10.
Slide 16: Repositioning/Redevelopment Track Record
Value Creation Repositioning/Redevelopment Track Record Case Studies – Asset Redevelopment Projects: Cost ROC 1 Before After Rivertree Court Vernon Hills, IL Theater converted to Gordmans (Phase 1); repositioned Office Depot with Ross, Old Country Buffet with Pier One, Ulta with Shoe Carnival (Phase
Slide 17: Market Demand Driving Increased Redevelopment Activity
Value Creation Market Demand Driving Increased Repositioning/Redevelopment Activity Notes: (1) Return on cost (ROC) is based on projected new capital and related leasing; (2) Completed defined as financially occupied. 18 Projected $21.3M investment for 2015-2016 – close to half the amount invested o
Slide 18: Disciplined Investment Strategy
Disciplined Investment Strategy Pursue grocery, value & necessity-based, multi-anchor retail centers in both primary and strong secondary markets within the Central and Southeastern United States Target Class A assets with prime market position in trade areas with compelling demographics & high barr
Slide 19: Joint Venture Growth Strategies
Joint Venture Growth Strategies Diversify Capital Resources + Expand Platform + Drive Growth Joffco Square (Chicago, IL) Walgreens (Somerset, MA) 20 Note: (1) Excludes assets contributed to the JV by IRC, developments in process and land purchases; includes cost of completed development, Evergreen P
Slide 20: Development Projects: Pulaski Promenade, Evergreen Promenade
Pulaski Promenade, Chicago, IL Infill power center comprising 135,000 SF of GLA Approximately 84% leased Anchors: Marshalls, Ross, Michaels, PetSmart, Shoe Carnival Chicago MSA – 3 mile demographics: Population: 217,083; Average household income: $67,458 Anticipated return on investment: 8.3% IRC-PG
Slide 21: Development Projects: 1300 Meacham Road, Weaverville Plaza
1300 Meacham Road, Schaumburg, IL (Chicago MSA) 4-acres of fully-zoned land to be developed for multi-tenant retail Ground lease or build-to-suit opportunities – leases in negotiation with retail, restaurant and service users Chicago MSA – center 3-mile demographics: Population: 104,657; Average hou
Slide 22: Development Projects
Development Projects 23 Opportunity to Add Completed Centers to Portfolio at Better Than Market Pricing Notes: Return on investment (ROI) is based on net acquisition price. Tanglewood Pavilions, Elizabeth City, NC Regional power center comprising 158,000 SF of GLA Approximately 89% leased Anchors: H
Slide 23: Joint Venture Fee Income
Joint Venture Fee Income IPCC JV: provided ~$16.2M of fee income 2010-2014 PGGM JV: provided ~$8.1M of fee income 2010-2014 Notes: Amounts may not foot due to rounding; not included in this chart are immaterial fees earned from managing development joint ventures. (1) Total JV fee income includes bo
Slide 24: Transaction History
Transaction History Consolidated and Core Asset Based Joint Ventures Over half of core asset acquisitions have been principal to principal; typically get best pricing in private deals Increased capital recycling activity 2013-2015; proceeds from sale of non-core assets invested in properties with gr
Slide 25: Maintaining Ample Liquidity to Fund Strategic Plan
Maintaining Ample Liquidity to Fund Strategic Plan 4Q14: sold 4 million shares of 6.95% Series B Preferred Stock for net proceeds of ~$97 M, used primarily for acquisitions and debt repayment JV partner capital Sale of non-core assets: redeployed proceeds of ~$200M (2013-3Q15) into redevelopments, d
Slide 26: Well-Balanced Debt Maturity Profile
Consolidated Debt Maturities Well-Balanced Debt Maturity Profile 27 Notes: Secured debt includes principal amortization through maturity. Includes $90.2M of secured debt for Algonquin Commons in 2015. Consolidated Debt as of 9/30/15 $240.0 $239.8 Line of Credit Secured Debt $ in Millions Term Loan –
Slide 27: Investment Summary
Investment Summary Assets repositioned with best-in-class retailers Portfolio positioned to provide consistent & dependable income growth Redeveloping assets to meet retailer demand for new stores Reinvigorated portfolio primed for growth Provides enhanced liquidity & flexibility Progress on reducin
Slide 28: Experienced Leadership Team
Experienced Leadership Team Management Inland Tenure Background / Experience Mark Zalatoris President & CEO 30 yrs. Appointed president & CEO April 2008; EVP & COO 2004-2008; SVP & CFO 1994-2004; extensive knowledge of portfolio Brett Brown Executive Vice President & Chief Financial Officer 11 yrs.
Slide 29: Appendix: EBITDA
Appendix 30 Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) EBITDA is defined as earnings (losses) from operations excluding: (1) interest expense; (2) income tax benefit or expense; (3) depreciation and amortization expense; and (4) gain (loss) on non-operating property. We
Slide 30: Appendix: EBITDA
Appendix ‘arings Before interest, Tes, Depreiton and Amortization (EITDA) EBITDA idefine a earings (ose) rom operations exuding: 3) interest exons; (2) come tax Benet or expen (3) deprecation and amortaton expense; an) an ot) on no-operating ‘ropery. We belve EBITDA useful tous nd to an esto 53 supp
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