H&r Real Estate Investment Trust · TSX:HR.UN
H&r Real Estate Investment Trust — Q1 2021 Earnings Presentation
35 slides from H&r Real Estate Investment Trust's earnings presentation, May 14, 2021
Slide 1: Stability, Security & Growth through Quality, Diversification & Scale
STABILITY, SECURITY & GROWTH THROUGH QUALITY, DIVERSIFICATION & SCALE INVESTOR PRESENTATION As at March 31, 2021 unless otherwise noted H&R Real Estate Investment Trust (TSX: HR.UN)
Slide 2: Caution Regarding Forward-looking Statements
Caution Regarding Forward-looking Statements Forward Looking Statements Certain statements made in this presentation will contain forward‐looking information within the meaning of applicable securities laws (also known as forward‐looking statements) including, among others, statements made or implie
Slide 3: Stability, Security & Growth through Quality, Diversification & Scale
Stability, Security & Growth through Quality, Diversification & Scale One of the Largest REITs in Fully Internalized Management Canada with total assets of H&R REIT (Insiders own 6%) $13.2 billion Office(1) Retail(1) Industrial(1) Residential(1) (Primaris) (Lantower Residential) 32 Properties 322 Pr
Slide 4: Q1 2021 Financial Highlights
Q1 2021 Financial Highlights ▪ FFO was $0.40 per Unit vs. $0.42 per Unit in Q4 2020 and $0.45 per Unit in Q1 2020 ▪ AFFO was $0.32 per Unit vs. $0.22 per Unit in Q4 2020 and $0.40 per Unit in Q1 2020 ▪ Payout ratio as a % of AFFO was 53.6% ▪ Bad debt expense for the three months ended March 31, 2021
Slide 5: Properties in Lease-up
Properties in Lease-up ▪ River Landing; Miami, FL ▪ In Q4 2020 and Q1 2021, U.S. $294.3 million and U.S. $118.4 million, respectively, were transferred from properties under development to investment properties ▪ Q1 2021 property operating income (cash basis) was approximately U.S. $0.6 million ▪ An
Slide 6: Portfolio Diversification
Portfolio Diversification Fair Value of Investment Properties(1) By Segment By Region Office Ontario 38% 30% $13.1 $13.1 Industrial Billion 9% Alberta 18% Billion United States Retail 43% 31% Residential 22% Other Canadian Provinces 9% (1) Includes H&R’s proportionate share of equity accounted inves
Slide 7: COVID-19: Rent Collection & Bad Debt Expense
COVID-19: Rent Collection & Bad Debt Expense As of May 7, 2021, H&R’s rent collections are as follows: Share of Q4 2020 Q1 2021 April 2021 (1) (2) (2) (2) (2) Tenant Type Rent Collection Collection Collection Office 44% 100% 99% 99% Retail: Enclosed 20% 87% 89% 81% Other 14% 96% 96% 94% Total Retail
Slide 8: Office Portfolio
Office Portfolio ▪ Total value: $5.1 billion (weighted average cap rate: 6.54%) ▪ Average remaining lease term to maturity: 12.2 years ▪ Occupancy: 99.7% ▪ Revenue from tenants with investment grade ratings: 85.8% Canada United Ontario Alberta Other Subtotal Total States Number of properties 20 4 4
Slide 9: Alberta Office Portfolio
Alberta Office Portfolio ▪ H&R’s office tenants in Alberta are some of the strongest companies in the energy sector with an average remaining lease term of 15.8 years ▪ There are currently no vacancies in H&R’s Alberta Office Portfolio % of H&R's Square feet Same-Asset Property Remaining Your Owners
Slide 10: Retail Portfolio
Retail Portfolio(1) ▪ Total value: $4.0 billion (weighted average cap rate: 6.79%) ▪ Average remaining lease term to maturity: 6.8 years ▪ Occupancy: 90.3% Canada United States Total Ontario Alberta Other Subtotal ECHO Other Subtotal Number of properties 36 17 14 67 238 17 255 322 Square feet (in th
Slide 11: Retail Tenant Sales Mix
Retail Tenant Sales Mix(1) By Gross Rent(2) Full Service Restaurants 2% HBC Entertainment (Casino & Theatre) 2% Automotive 2% Fashion 4% 17% Office/Financial Institutions 6% Food 7% Walmart /Grocery /Liquor/ Cannibis 14% General Merchandise 9% Large format Large format fashion non-fashion 12% 13% Pe
Slide 12: Primaris Enclosed Shopping Centres
Primaris Enclosed Shopping Centres ▪ Certain properties have been forced to close for business throughout the COVID-19 pandemic in order to comply with government mandates. Specific essential service tenants have been able to continue to operate out of these otherwise closed properties. The followin
Slide 13: Top 15 Retail Tenants by Revenue
(1) Top 15 Retail Tenants by Revenue % of rental income H&R owned Average lease from investment Number of sq.ft. term to maturity Credit Ratings (2) (3) Tenant properties locations (in 000’s) (years) (S&P) 1. Giant Eagle, Inc. 3.4% 196 1,627 10.4 Not Rated (4) 2. Lowe's Companies, Inc. 1.7 13 1,346
Slide 14: Industrial Portfolio
Industrial Portfolio(1) ▪ Total value: $1.2 billion (weighted average cap rate: 5.27%) ▪ Average remaining lease term to maturity: 6.2 years ▪ Occupancy: 95.8% Canada United Total(1) Ontario Alberta Other Subtotal States Number of properties 36 19 28 83 3 86 Square feet (in thousands) 4,858 2,030 1,
Slide 15: Canadian Properties Under Development
Canadian Properties Under Development (in thousands of Canadian Dollars) At H&R's Ownership Interest As at March 31, 2021 (in thousands of Canadian dollars) Total Properties Costs Expected Expected Ownership Number of Development Under Remaining Yield Completion Interest Acres Budget Development to
Slide 16: Residential Portfolio
Residential Portfolio(1) ▪ Total value: U.S. $2.3 Billion (weighted average cap rate: 4.57%) ▪ Average age of properties: 6.3 years ▪ Occupancy: 88.4% North Texas Florida Carolina New York California Total Number of properties 9 8 5 1 1 24 Number of residential rental units 2,776 2,743 1,632 936 54
Slide 17: Strategy: Class A properties in U.S. Sun Belt cities
▪ Strategy is to acquire or develop class A properties in U.S. Sun Belt cities where there is strong population and employment growth and to develop properties with partners in Gateway cities 17 STABILITY, SECURITY & GROWTH through QUALITY, DIVERSIFICATION & SCALE
Slide 18: U.S. Properties Under Development
U.S. Properties Under Development (in thousands of U.S. Dollars) At H&R Ownership Interest As at March 31, 2021 (in thousands of U.S. dollars) Total Properties Costs Construction Expected Expected Ownership Number Development Under Remaining to Financing Yield Completion Development Name Interest of
Slide 19: River Landing - Miami, FL
River Landing - Miami, FL ▪ Prime urban mixed-use development ▪ 528 residential rental units ▪ 339,000 sf of urban retail ▪ 125,000 sf of office 19 STABILITY, SECURITY & GROWTH through QUALITY, DIVERSIFICATION & SCALE
Slide 20: River Landing – Miami, FL
River Landing – Miami, FL ▪ 1,000 feet of waterfront on the Miami river ▪ Adjacent to the Health District and close proximity to downtown Miami ▪ In Q4 2020, the retail and office portion of this project, known as “River Landing Commercial”, reached substantial completion and was transferred from pr
Slide 21: Shoreline Gateway - Long Beach, CA
Shoreline Gateway - Long Beach, CA ▪ Land acquired July 16, 2018 ▪ H&R ownership: 31.2% ▪ 35-storey residential tower consisting of 315 residential rental units ▪ 6,450 sf of retail space ▪ Development budget: U.S. $71.1M at H&R’s ownership interest ▪ Construction financing: U.S. $41.1M secured at H
Slide 22: Hercules Bayfront – San Francisco, CA
Hercules Bayfront – San Francisco, CA ▪ H&R ownership: 31.7% ▪ 38.4 acres of land to be developed into a waterfront master planned community which will be surrounded by a future intermodal transit centre ▪ In Q4 2020, Phase 1 known as “The Exchange at Bayfront” consisting of 172 residential rental u
Slide 23: The Pearl - Austin, TX
The Pearl - Austin, TX ▪ H&R ownership: 33.3% ▪ This residential development site is close to major technology employers including ▪ 383 residential rental units Apple, IBM, Oracle and Samsung, as well as ▪ Development budget: U.S. $24.2M and the University of Texas at Austin and construction financ
Slide 24: Esterra Park - Seattle, WA
Esterra Park - Seattle, WA ▪ H&R ownership: 33.3% ▪ This residential development site is part of a larger master planned community and is adjacent to ▪ 263 residential rental units Microsoft Corporation’s headquarters, bus transit and ▪ Development budget: U.S. $31.9M and future light rail which is
Slide 25: Future Intensification Opportunities
Future Intensification Opportunities Office Opportunities: Retail Opportunities: ▪ 3777 & 3791 Kingsway Street, Burnaby, BC ▪ Dufferin Mall, Toronto, ON ▪ 145 Wellington Street W., Toronto, ON ▪ Grant Park, Winnipeg, MB ▪ 53 & 55 Yonge Street, Toronto, ON ▪ Kildonan Place, Winnipeg, MB ▪ 310-320-330
Slide 26: 3777 & 3791 Kingsway – Burnaby, BC
3777 & 3791 Kingsway – Burnaby, BC ▪ In June 2020, H&R along with its partner, submitted a re-zoning application for the east and north portions of its 3777 & 3791 Kingsway sites ▪ The proposal could add over 2,000 residential rental units in four mixed-use high density towers including retail and r
Slide 27: 145 Wellington St. W. – Toronto, ON
145 Wellington St. W. – Toronto, ON ▪ 145 Wellington St. W. is located at the junction of Toronto’s Financial and Entertainment Districts ▪ In August 2019, H&R submitted a rezoning and site plan approval application for the redevelopment of 145 Wellington St. W., which is currently a 13-storey offic
Slide 28: 55 Yonge St. – Toronto, ON
55 Yonge St. – Toronto, ON ▪ 53 & 55 Yonge St., is located in the heart of Toronto’s Financial District ▪ In November 2020, the REIT acquired 53 Yonge St., a five-storey 11,110 square foot office property, for $11.5 million ▪ The two properties encompass approximately 0.37 acres and the REIT submitt
Slide 29: 310 Front St. – Toronto, ON
310 Front St. – Toronto, ON ▪ 310 Front St. is located at the junction between Toronto’s Financial and Entertainment Districts ▪ In April 2021, H&R submitted a combined a re-zoning application and official plan amendment application for a 69-storey mixed use development including retail, residential
Slide 30: Dufferin Grove Village – Toronto, ON
Dufferin Grove Village – Toronto, ON ▪ In July 2019, H&R submitted combined applications for rezoning and for the redevelopment of the surface parking lots, drive-through restaurants and strip plaza that currently occupy the north end of Dufferin Mall to create “Dufferin Grove Village” ▪ The propose
Slide 31: Top 15 Tenants by Revenue
Top 15 Tenants by Revenue(1) Predictable and stable income from long-term leases with high quality investment grade tenants % of Rentals from Average Lease Investment Number of H&R owned Term to Maturity Credit Ratings (2) Tenant Properties Locations sq.ft. (in 000’s) (in years)(3) (S&P) 1. Ovintiv
Slide 32: Limited Lease Rollover
Limited Lease Rollover (1) ▪ Low-risk rollover schedule ▪ Well diversified by property and geography ▪ Average remaining lease term of 9.5 years, one of the longest in the industry Canadian Portfolio (in 000’s sq.ft.) 2,365 Industrial 2,115 1,659 Retail 1,069 Office 770 2021 2022 2023 2024 2025 % of
Slide 33: Strong Balance Sheet
Strong Balance Sheet BBB (High) Unencumbered Available under Interest WAIR(1) WATM(1) Stable Trend by Assets Lines of Credit Coverage DBRS $3.9B $1,412M 3.6% 3.6 years 2.8x Debt(1) to Total Assets Mortgages 29% Unsecured 50% Debentures 15% 47.7% (2) 46.7% 44.6% 44.6% 44.4% 45% Total Unsecured Term C
Slide 34: Mortgages Payable by Operating Segment
Mortgages Payable by Operating Segment Weighted Average Weighted Average Balance Operating Segment: Interest Rate Years to Maturity Outstanding(1) Office 4.0% 2.5 $1,624,670 Retail 3.9% 2.3 637,070 Industrial 4.3% 4.9 303,185 Residential 3.8% 6.4 1,054,619 4.0% 4.0 $3,619,544 (1) Excludes financing
Slide 35: Summary
Summary ▪ One of the largest REITs in Canada with total assets of $13.2 Billion ▪ High quality real estate ▪ Predictable income ▪ Creditworthy tenants ▪ Long-term leases, with contractual rent escalations ▪ High, stable occupancy ▪ Minimal near term lease expiries and debt maturities ▪ Development p
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