Allied Properties Real Estate Investment Trust · TSX:AP.UN
Allied Properties Real Estate Investment Trust — Investor Presentation (May 2022)
76 slides from Allied Properties Real Estate Investment Trust's investor presentation, May 2022
Slide 1: Creativity & Connectivity
CREATIVITY & CONNECTIVITY May 2022
Slide 2: Forward-looking information
This presentation may contain forward-looking information about future events or Allied’s future performance. This information, by its nature, is subject to risks and uncertainties that may cause actual events or results to differ materially, including those described under the heading “Risk Factors
Slide 3: Table of Contents
TABLE OF CONTENTS Investment Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Rental Portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Development
Slide 4: Investment Highlights
INVESTMENT HIGHLIGHTS – At the forefront of urban intensification in Canada’s major cities – Fully internalized and entrepreneurial management team – Strong growth platform – Strong financial foundation – 26.66% compound annual growth rate on total assets – 14.7% average annual total return 4
Slide 5: Portfolio Growth - Total Assets
PORTFOLIO GROWTH - TOTAL ASSETS (M) 11,417 128M 10,389 9,410 8,324 IPO 6,706 11.4B 5,824 5,214 4,456 3,501 3,933 Q1 2022 3,052 26.66 2,155 1,583 1,155 385 503 809 949 % 128 157 267 (1) CAGR(2) IPO 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Q1 2022
Slide 6: Focused on Increasing Our Distribution and Growing NAV per Unit
FOCUSED ON INCREASING OUR DISTRIBUTION AND GROWING OUR NAV PER UNIT OVER TIME ANNUAL DISTRIBUTION PER UNIT(1) NAV PER UNIT $1.80 $60.00 $1.75 $1.70 $1.70 $1.65 $50.00 50.30 50.92 $1.60 48.54 $1.60 $1.56 46.55 $1.53 42.12 $40.00 $1.50 $1.50 $1.46 38.19 35.66 $1.41 33.05 $1.40 $30.00 $1.36 31.04 $1.32
Slide 7: Returns to Unitholders
RETURNS TO UNITHOLDERS TOTAL RETURN INDEX $1,700 ALLIED S&P / TSX TOTAL RETURNS INDEX S&P / TSX CAPPED REIT INDEX $1,600 14.7% $1,500 $1,400 $1,300 $1,200 $1,100 AVERAGE ANNUAL $1,000 TOTAL RETURN $900 $800 $700 $600 $500 $400 $300 $200 $100 $0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Slide 8: NOI by Space Type
FOCUSED ON OPERATING DISTINCTIVE URBAN WORKSPACES AND URBAN DATA CENTRES: NOI BY SPACE TYPE (IN $M) $400 OFFICE UDC RETAIL PARKING $12.3 $350 $12.8 $33.7 $30.8 $13.1 $25.0 $63.4 $60.6 $300 $15.1 $55.9 $22.9 $12.9 $53.4 $21.6 $250 $254.5 $255.1 $12.2 $248.6 $19.1 $49.1 $11.1 $9.9 $18.4 $42.8 $218.6 $
Slide 9: Strategy
ALLIED Strategy
Slide 10: Consolidation of Urban Office Properties
CONSOLIDATION OF URBAN OFFICE PROPERTIES – Close to core – Distinctive – Lower occupancy costs 10
Slide 11: 500-522 King West, Toronto
500-522 King West Toronto 11
Slide 12: The Landing, Vancouver
The Landing Vancouver 12
Slide 13: 35-39 Front Street East, Toronto
35-39 Front Street East Toronto 13
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Slide 15: 15
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Slide 16: 16
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Slide 18: Intensification of Urban Office Properties
INTENSIFICATION OF URBAN OFFICE PROPERTIES – Underutilized land – Additional rentable area with low land cost – Value creation 18
Slide 19: Intensification of QRC West
Intensification of QRC West Toronto 19
Slide 20: Intensification of QRC West
Intensification of QRC West Toronto 20
Slide 21: Intensification of The Breithaupt Block
Intensification of The Breithaupt Block Kitchener 21
Slide 22: King Portland Centre
King Portland Centre Toronto 22
Slide 23: Rental Portfolio
ALLIED Rental Portfolio
Slide 24: Preferred Provider of Workspace in the Canadian Urban Market
PREFERRED PROVIDER OF WORKSPACE IN THE CANADIAN URBAN MARKET 200 RENTAL PROPERTIES TOTAL RENTAL PORTFOLIO GLA VALUED AT $9.3B (3) (Not including 12 Properties Under Development valued at $1.3B) (3) 15.4M SF TORONTO VANCOUVER 5.3M SF INCLUDING URBAN DATA CENTRES 1.0M SF 510K SF ALLIED OCCUPANCY 92.3%
Slide 25: Montreal Portfolio
MONTREAL PORTFOLIO POKD OS RY KS —- > N Central Business District SS > Vieux Montréal ‘Wp | jaa IS
Slide 26: Toronto Portfolio
TORONTO PORTFOLIO COLLEGE ST. i i : DUNDAS ST. W. \- DUFFERIN ST. e SPADINA AVE. CHURCH ST. JARVIS ST. PARLIAMENT ST. SHERBOURNE ST. ‘STRACHAN AVE. * Downtown East: — KING ST. E. BATHURST ST. St.Lawrence | Market °° °° GARDINER E: LAKESHORE BLVD W. iL QUEEN'S QUAY WEST 26
Slide 27: Calgary Portfolio
CALGARY PORTFOLIO eqdeodqeeheye __ | Central |” .. | Business |~ > District Beltline 27
Slide 28: Vancouver Portfolio
VANCOUVER PORTFOLIO Y Centra é Busi: ¥ District Aes pees Yaletown Mt Pleasant 28
Slide 29: Urban Workspace Top-Ten Properties
URBAN WORKSPACE TOP-TEN PROPERTIES NORMALIZED APPRAISED PROPERTY NAME LQA NOI (1) FAIR VALUE CAP RATE PRINCIPAL USERS 1001 BOULEVARD ROBERT- $ 16,739 $373,890 5.25% AON Canada Inc, Autorité Régionale de Transport BOURASSA, MONTRÉAL Métropolitain, Hydro-Québec, National Bank of Canada LE NORDELEC, MO
Slide 30: Network-Dense Urban Data Centres
NETWORK-DENSE URBAN DATA CENTRES NORMALIZED APPRAISED PROPERTY NAME CAP RATE PRINCIPAL USERS LQA NOI(1) FAIR VALUE 151 FRONT W, TORONTO $41,447 $768,260 4.50% Bell, Cologix, Digital Realty, Equinix 250 FRONT W, TORONTO 16,344 359,880 5.25% AWS, Global Technology Provider 905 KING W, TORONTO 4,754 11
Slide 31: Connectivity
CONNECTIVITY Source: PeeringDB.com 31
Slide 32: Urban Data Centres Are a Critical Component of Canada's Communications Infrastructure
OUR URBAN DATA CENTRES ARE A CRITICAL COMPONENT OF CANADA’S COMMUNICATIONS INFRASTRUCTURE UDC NOI EXCLUDING ANCILLARY REVENUE UDC NOI FROM ANCILLARY REVENUE YEAR-OVER-YEAR TRAFFIC TRENDING (GBPS) 65.0 62.7 7.1 60.7 60.0 7.0 1,500 55.9 55.0 5.9 55.6 53.4 53.7 1,250 4.4 50.0 49.1 50.0 2.2 49.0 NOI(1)
Slide 33: NOI by Segment / NOI by Use
NOI BY SEGMENT NOI BY USE 17.4% URBAN DATA 17.4% CENTRES URBAN DATA CENTRES 31.0% 6.0% MONTRÉAL VANCOUVER 9.3% AND OTTAWA RETAIL 5.7% CALGARY, AND 3.4% EDMONTON PARKING Montréal & Ottawa Toronto & Kitchener Calgary, Edmonton Vancouver Urban Data Centres Urban Data Centres Retail Parking Office 39.9%
Slide 34: Lease Maturities - Urban Workspace
LEASE MATURITIES - URBAN WORKSPACE % of Total GLA W/A Rental Rate Estimated W/A Market Rate % OF TOTAL GLA W/A RENTAL RATE ESTIMATED W/A MARKET RATE 25.0% $35.00 $30.78 $29.38 $28.26 $30.00 $30.22 20.0% $26.70 $27.79 $24.95 $26.68 $25.00 $25.77 15.0% $23.15 $20.00 10.30% $15.00 10.0% 9.40% 9.30% 8.8
Slide 35: Lease Maturities - Montréal and Ottawa
LEASE MATURITIES - URBAN WORKSPACE MONTRÉAL AND OTTAWA % OF TOTAL GLA W/A RENTAL RATE ESTIMATED W/A MARKET RATE % of Total GLA W/A Rental Rate Estimated W/A Market Rate 25.0% $35.00 $30.00 20.0% $25.00 15.0% $18.76 $18.90 $20.00 $18.19 $18.08 $17.91 $18.01 $17.82 $17.97 $17.33 $17.54 $15.00 10.0% 8.
Slide 36: Lease Maturities - Toronto and Kitchener
LEASE MATURITIES - URBAN WORKSPACE TORONTO AND KITCHENER % TOTAL % OF of Total GLAGLA W/A Rental W/A RENTAL RATERate Estimated ESTIMATED W/A Market W/A MARKET RATE Rate 25.0% $35.00 $32.91 $29.71 $30.02 $32.23 $28.61 $30.00 20.0% $26.92 $26.95 $26.15 $25.00 $24.87 $24.59 15.0% 13.80% $20.00 12.50% 1
Slide 37: Lease Maturities - Calgary
LEASE MATURITIES - URBAN WORKSPACE CALGARY % OF TOTAL GLA W/A RENTAL RATE ESTIMATED W/A MARKET RATE % of Total GLA W/A Rental Rate Estimated W/A Market Rate 25.0% $25.00 $21.34 $21.81 20.0% $19.09 $20.00 16.20% 16.40% $15.54 $14.65 15.0% $15.00 $14.92 $14.84 $13.72 $13.96 $13.65 10.0% 9.50% $10.00 6
Slide 38: Lease Maturities - Vancouver
LEASE MATURITIES - URBAN WORKSPACE VANCOUVER % OF %TOTAL GLA of Total GLA W/A RENTAL RATERate W/A Rental ESTIMATED W/A MARKET Estimated RATERate W/A Market 30.0% $40.00 $37.87 $37.91 $37.09 $37.35 $37.23 $33.80 $33.51 $35.00 25.0% 23.40% $34.13 $33.07 $30.00 20.0% $28.35 $25.00 15.60% 15.0% $20.00 1
Slide 39: Lease Maturities - Urban Data Centres
LEASE MATURITIES - URBAN DATA CENTRES % of Total GLA W/A Rental Rate Estimated W/A Market Rate % OF TOTAL GLA W/A RENTAL RATE ESTIMATED W/A MARKET RATE $158.75 25.0% $160.00 22.30% $158.75 $136.95 $140.00 $136.68 20.0% $121.10 $120.00 $120.47 $102.19 $100.00 15.0% 13.70% $85.28 $94.90 $80.00 10.70%
Slide 40: Top-Ten Users Q1 2022
TOP-TEN USERS USER SECTOR % RENTAL REVENUE % TOTAL GLA 49% GLOBAL TECHNOLOGY PROVIDER* Data Centre/IT 4.5% 0.7% UBISOFT Gaming/IT 2.5% 3.8% COLOGIX Data Centre/IT 2.4% 0.5% GOOGLE CANADA CORPORATION IT 2.3% 2.4% 2003 EQUINIX Data Centre/IT 2.2% 0.4% 20.7% BELL CANADA Telecommunications 1.5% 0.2% NAT
Slide 41: Development Portfolio
ALLIED Development Portfolio
Slide 42: Active Development Pipeline
ACTIVE DEVELOPMENT PIPELINE % OF OFFICE % OF OFFICE DEVELOPMENT 65% DEVELOPMENT 2022 ESTIMATED PRE-LEASED 2024 ESTIMATED PRE-LEASED GLA NOI GLA NOI THE LOUGHEED 88,000 $1.9M — KING TORONTO* 100,000 $5.5M — THE WELL* (1) 763,000 $40.4M 90% 108 EAST 5TH AVENUE* 102,000 $4.8M 54% BOARDWALK-REVILLON 202
Slide 43: Future/Shadow Development Pipeline
FUTURE/SHADOW DEVELOPMENT PIPELINE Zoning Approval in To Be Rezoned Place and in Progress ESTIMATED ESTIMATED Toronto GLA GLA UNION CENTRE 1,330,000 TORONTO 5,932,795 KING & PETER 790,000 MONTRÉAL 1,967,801 THE CASTLE 460,000 CALGARY 1,435,973 BATHURST STREET VANCOUVER 365,030 ASSEMBLY 318,000 KITCH
Slide 44: The Lougheed, Calgary
3, The Lougheed Calgary 44
Slide 45: Boardwalk-Revillon Building, Edmonton
Boardwalk-Revillon Building Edmonton 45
Slide 46: 400 Atlantic, Montréal
SESE EEIEIEIEHE NRE LELELE] NESEEELELELELE : a, “SS EE UELBLGLELE is 1 400 Atlantic Montréal 46
Slide 47: Breithaupt III, Kitchener
Breithaupt Il ML Kitchener 47
Slide 48: The Well, Toronto
The Well Toronto 48
Slide 49: Adelaide & Duncan, Toronto
Adelaide & Duncan Toronto 49
Slide 50: QRC West Phase II, Toronto
QRC West Phase II Toronto 50
Slide 51: KING Toronto
7 Se i a UNNI KING Toronto Toronto
Slide 52: King & Brant, Toronto
7 SR FF FSET? King & Brant Toronto 52
Slide 53: 400 West Georgia, Vancouver
400 West Georgia Vancouver 53
Slide 54: Development Completions
ALLIED Development Completions
Slide 55: QRC West, Toronto
QRC WEST, TORONTO This was a pioneering, large-scale intensification project that involved the integratation of two restored heritage buildings with a new, mid-rise office structure. The project commenced in 2010 and was completed in 2015. It is comprised of 345,274 square feet of GLA and is fully l
Slide 56: The Breithaupt Block, Kitchener
THE BREITHAUPT BLOCK, KITCHENER Allied acquired an undivided 50% interest in the property in 2010 and immediately put it into development, completing the first phase in 2014 and the second phase in mid-2016. The property is an equal two-way joint arrangement between Allied and Perimeter Development
Slide 57: 180 John Street, Toronto
180 JOHN STREET, TORONTO Allied acquired the property in 2015. The property was redeveloped and was completed in 2017. It is comprised of 45,631 square feet of GLA and is fully leased. DEVELOPMENT ECONOMICS INVESTMENT LAND COSTS $8,700 HARD & SOFT COSTS 17,500 VALUE CAPITALIZED INTEREST & UNLEVERED
Slide 58: 189 Joseph, Kitchener
189 JOSEPH, KITCHENER 189 Joseph was purchased as part of The Tannery in 2012. The building stood vacant, and was slated to be demolished before Allied proposed the redevelopment and secured Deloitte as the user. The project commenced in late-2015 and was completed mid-2017. It is comprised of 26,46
Slide 59: 425 Viger, Montréal
425 VIGER, MONTRÉAL In 2004, Allied expanded into Montréal with the purchase of 425 Viger. At the time, the property comprised of 200,000 square feet of GLA and was fully leased. In 2007, Allied purchased the adjacent parking lot with the intention of intensifying the combined property once the main
Slide 60: King Portland Centre, Toronto
KING PORTLAND CENTRE, TORONTO In 2012, Allied entered into an equal two-way joint arrangement with RioCan to develop King Portland Centre. Allied and RioCan each acquired an undivided 50% interest in 642 King W and 620 King W and subsequently put them into development, completing 642 King W in early
Slide 61: Risk Management
ALLIED Risk Management
Slide 62: Development
DEVELOPMENT – 15% limitation on development – Pre-leasing – Partial monetization – Financial management – Collaboration 62
Slide 63: Balance Sheet
BALANCE SHEET – Low leverage – Long-term, fixed-rate debt – Pro forma net debt as a multiple of adjusted EBITDA ratio of 9.4x(1) – Total indebtedness ratio 33.3% – Interest coverage ratio of 3.4x The above ratios are non-IFRS measures defined in the Appendix on page 72 calculated as at March 31, 202
Slide 64: Financial Covenants
FINANCIAL COVENANTS SENIOR UNSECURED DEBENTURES COVENANT THRESHOLD MARCH 31, 2022 PRO FORMA INTEREST COVERAGE RATIO Maintain a 12-month rolling consolidated 3.6x pro forma EBITDA of at least 1.65 times pro forma interest expense PRO FORMA ASSET COVERAGE TEST Maintain net consolidated debt below 33.1
Slide 65: Debt Maturity Chart
DEBT MATURITY CHART MORTGAGES PROMISSORY NOTE UNSECURED TERM LOAN UNSECURED TERM LOAN(1) Debt DEBENTURES UNSECURED Maturity CONSOLIDATED W/A INT RATE Mortgage Promissory Note Unsecured Debentures Unsecured Term loan (1) Unsecured Term Loan Consolidated WA Int Rate $700 5.00% 4.50% 4.32% $600 $600 $4
Slide 66: Unencumbered Investment Properties
UNENCUMBERED INVESTMENT PROPERTIES UNENCUMBERED INVESTMENT PROPERTIES(1) % OF INVESTMENT PROPERTIES UNENCUMBERED(1) $10 100% 94% 87% $9 $9.3 90% $9.1 $8 80% 73% 72% $7 68% 70% $6.5 $6 60% BILLIONS 52% $5.5 $5 47% 50% 39% $4 $4.3 40% $3 30% $2.9 21% $2 $2.3 20% 12% $1.6 $1 10% $0.8 $0.4 $0 0% 2013 20
Slide 67: Maximizing Flexibility While Strengthening the Balance Sheet
MAXIMIZING FLEXIBILTY WHILE STRENGTHENING THE BALANCE SHEET UNENCUMBERED INVESTMENT PROPERTIES TOTAL INVESTMENT PROPERTIES(2) UNSECURED DEBT AS % OF TOTAL DEBT $10.6 100% 93% CREDIT RATINGS $10 90% $9.7 87% Investment grade $8.8 since 2014 $9.3 $9.1 80% $8 72% $7.6 70% 65% BBB $6.3 60% 57% $6.5 $6 B
Slide 68: Environmental, Social & Governance (ESG)
Environmental, Social & Governance (ESG) 68
Slide 69: ESG Reporting
ESG REPORTING – Allied prepared its Second Annual ESG Report in alignment with the Global Reporting Initiative (GRI) and the Sustainability Accounting Standards Board (SASB) Real Estate Standard. Allied intends to report its progress on its plan to a net zero carbon pathway as well as the Task Force
Slide 70: ESG Strategy
ESG STRATEGY GOALS 2024 TARGETS Energy management Sustainable design standards Energy Use Intensity Reduce the energy consumption at our Build long-term value by integrating sustainable Average Energy Use Intensity (EUI) of 22.6 properties by optimizing systems design and design requirements into al
Slide 71: Massey Hall, Toronto
Massey Hall Toronto 71
Slide 72: Appendix Definitions
ALLIED Appendix Definitions
Slide 73: Certain Definitions and Non-IFRS Measures
CERTAIN DEFINITIONS AND NON-IFRS MEASURES Readers are cautioned that certain terms used in the investor presentation listed below, including any related per Unit amounts, used by Management of Allied to measure, compare and explain the operating results and financial performance of Allied do not hav
Slide 74: Unencumbered Investment Properties; Adjusted EBITDA
line rents on a proportionate basis. The most directly comparable IFRS measure to NOI is Operating Income. Management believes this is a useful measure as it demonstrates the cash generating operating performance of its income producing properties. UNENCUMBERED INVESTMENT PROPERTIES Unencumbered inv
Slide 75: Net Debt, Total Indebtedness Ratio, Interest Coverage Ratio
NET DEBT Net debt is a non-IFRS measure, calculated on a proportionate basis, as debt less cash and cash equivalents. The most directly comparable IFRS measure to net debt is debt. Management considers net debt a useful measure for evaluating debt levels and interest coverage. TOTAL INDEBTEDNESS RAT
Slide 76: alliedreit.com
ALLIED 134 PETER STREET, SUITE 1700 TORONTO, ONTARIO M5V 2H2 T 416.977.9002 F 416.306.8704 alliedreit.com
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