Allied Properties Real Estate Investment Trust · TSX:AP.UN
Allied Properties Real Estate Investment Trust — Q2 2024 Earnings Presentation
59 slides from Allied Properties Real Estate Investment Trust's earnings presentation, Sep 4, 2024
Slide 1: Creativity & Connectivity
CREATIVITY & CONNECTIVITY September 2024 TSX: AP.UN | alliedreit.com
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 Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Q2 2024 Results Update . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Portfolio Overview . . . . . . . . . . . . . . . . . . . . . .
Slide 4: Overview
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Slide 5: Overview
OVERVIEW Allied is a leading owner-operator of distinctive urban workspace in Canada’s major cities with a mission to provide knowledge-based organizations with workspace that is sustainable and conducive to human wellness, creativity, connectivity and diversity 192 $5.9B RENTAL PROPERTIES ENTERPRI
Slide 6: Investment Highlights
INVESTMENT HIGHLIGHTS – At the forefront of urban intensification in Canada's major cities and amenity rich neighborhoods backed by powerful demographic trends – Largest and most concentrated portfolio of economically-productive, underutilized land that affords extraordinary mixed-use intensificati
Slide 7: Portfolio Snapshot
PORTFOLIO SNAPSHOT GLA OF RENTAL PROPERTIES BY NOI (1) BY NOI (1) BY MARKET MARKET SPACE TYPE 8% 6% 12% 8% 12% 5% 41% 50% 33% 43% 82% TORONTO & KITCHENER MONTREAL & OTTAWA TORONTO & KITCHENER MONTREAL & OTTAWA OFFICE RETAIL PARKING CALGARY & EDMONTON VANCOUVER CALGARY & EDMONTON VANCOUVER (1) NOI i
Slide 8: Strategy & Objectives
STRATEGY & OBJECTIVES OWN AND OPERATE STRATEGICALLY COMPLETE THE MOST DISTINCTIVE RECYCLE AND CURRENT MIXED USE URBAN ALLOCATE CAPITAL DEVELOPMENTS WORKSPACES IN TO STRENGTHEN AND LEASE- CANADA’S LARGEST THE BALANCE UP ORGANIC MARKETS SHEET PORTFOLIO ACCELERATE THE ONGOING ESTABLISHMENT OF UPGRA
Slide 9: Q2 2024 Results Update
ALLIED Q2 2024 Results Update
Slide 10: Q2 2024 Financial Performance
Q2 2024 FINANCIAL PERFORMANCE Temporary downward pressure on FFO per Unit and AFFO per Unit as a result of the 400 West Georgia and 19 Duncan transactions. The EBITDA on these assets is expected to increase as they approach stabilization over the next 12 months. Q2 2024 Q2 2023 FFO PER UNIT (1) $0.5
Slide 11: Leasing Performance
LEASING PERFORMANCE Q2 2024 Q2 2023 AVERAGE IN-PLACE NET RENT PER OCCUPIED SQUARE FOOT $25.08 $23.51 RETENTION RATE ON MATURITIES DURING THE PERIOD 58.6% 53.6% RENT GROWTH ON RENEWAL 9.7% 7.6% SUB-LEASE SPACE AS A % OF TOTAL GLA 5.0% 5.8% RENEWED % OF 2025 LEASE MATURITIES 5.7% - 11
Slide 12: Leasing Momentum
LEASING MOMENTUM – Demand for office space is at an inflection point as Allied continues to see positive leasing momentum within its portfolio, with a significant number of executed renewals and new leases in Q2 2024 – Tour count, a leading indicator of leasing activity, is 5% higher in the first ha
Slide 13: New Capital
NEW CAPITAL – Allied has access to attractive sources of capital via its large unencumbered asset pool and monetization of non-core properties at or above IFRS value – Year-to-date, Allied is on track to unlock $400M of low-cost capital which will be used for accretive debt reduction UNDER CONTRACT
Slide 14: Portfolio Overview
“ NS SY AA _ a. ALLIED Portfolio Overview
Slide 15: Preferred Provider of Workspace in the Canadian Urban Market
PREFERRED PROVIDER OF WORKSPACE IN THE CANADIAN URBAN MARKET 192 RENTAL PROPERTIES TOTAL RENTAL PORTFOLIO GLA (3) VALUED AT $8.8 B (1) (Not including Properties Under Development valued at $1.0B 14.9M SF and Investment Properties Held for Sale valued at $0.3B) (1) TORONTO VANCOUVER 5.4 M SF 1.2M SF
Slide 16: Allied Asset Categories
ALLIED ASSET CATEGORIES • Premium brick-and-beam updated to meet the • High-performing new builds, with a classic and • Versatile workspace solutions that align to where needs of the 21st century knowledge workers soulful feel users are on their business journey • A reflection of the beauty and hist
Slide 17: Portfolio Vacancy
PORTFOLIO VACANCY The majority of Allied's vacancy is concentrated in 12 properties 12.9% Over half of Allied’s portfolio VACANCY OVERVIEW OF 6.7% vacancy is concentrated in TOP 12 PROPERTIES Q2 2024 12 properties SQUARE FEET OF VACANCY ~975,000 PERCENT OF TOTAL GLA 6.7% 6.2% PERCENT OF TOTAL VACANC
Slide 18: Average In-Place Net Rent per Occupied Square Foot
AVERAGE IN-PLACE NET RENT PER OCCUPIED SQUARE FOOT URBAN WORKSPACE PORTFOLIO 10-YEAR AVERAGE 3.7% CAGR $26 $25.08 $24 $24.10 $23.10 $22 $21.98 $21.35 $20 $20.36 $19.42 $18 $18.38 $18.51 $17.71 $17.93 $16 $14 $12 $10 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Q2/24 18
Slide 19: Lease Maturities - Urban Workspace
LEASE MATURITIES - URBAN WORKSPACE % OF TOTAL GLA W/A RENTAL RATE ESTIMATED W/A MARKET RATE 25.0% $30.00 $25.42 $25.73 $25.35 $25.21 $25.13 $25.00 20.0% $23.96 $24.02 $23.58 $22.07 $21.61 Weigfhted Average Market Rental Rate WEIGHTED AVERAGE RENTAL RATE $20.00 15.0% % OF TOTAL GLA % of Total GLA $15
Slide 20: Tenant Profile
TENANT PROFILE WEIGHTED AVERAGE % OF RENTAL REMAINING LEASE % OF TOTAL TOTAL PORTFOLIO % OF RENTAL TOP-10 USERS REVENUE (1) TERM (YRS) RENTAL GLA REVENUE BY CATEGORY GOOGLE CANADA CORPORATION 3.6% 8.1 3.2% UBISOFT DIVERTISSEMENTS INC. 3.0% 8.0 3.7% 3.5% 3.2% 1.7% SHOPIFY INC 2.8% 10.0 1.8% 5.4% SOCI
Slide 21: Toronto Portfolio
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Slide 22: Montréal Portfolio
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Slide 23: Vancouver Portfolio
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Slide 24: Calgary Portfolio
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Slide 25: Development Portfolio
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Slide 26: Development
DEVELOPMENT 15% SELF-IMPOSED LIMITATION ALLIED CREATES VALUE BY INTENSIFYING ON DEVELOPMENT THE USE OF UNDERUTILIZED LAND The cost of properties under development as a percentage of total assets on a proportionate basis(1) is limited to 15% 26.7M SF potential GLA which consists of: 14.9M SF of curre
Slide 27: Development Projects
DEVELOPMENT PROJECTS Current developments are expected to generate ~$102M of NOI % OF OFFICE TRANSFER TO ESTIMATED DEVELOPMENT COST TO RENTAL PORTFOLIO ESTIMATED GLA ANNUAL NOI(1) PRE-LEASED COMPLETE THE WELL (1)(3) Q3 2022 – Q4 2024 763,000 $40.4M 98% $2.4M 700 SAINT HUBERT (3) Q3 2023 – Q4 2024 14
Slide 28: Future / Shadow Development Potential
FUTURE / SHADOW DEVELOPMENT POTENTIAL Total potential incremental density within Allied’s portfolio is ~9.9M SF ZONING APPROVAL COMPLETED / IN POTENTIAL INCREMENTAL DENSITY (1) PROGRESS (IN SQUARE FEET) (IN SQUARE FEET) 2,725,000 6,036,823 Le Nordeloc Lot E - (135,000) Adelaide & Spadina (230,000) K
Slide 29: Intensification
INTENSIFICATION Additional unexplored density potential not included in 9.9M SF. Here is an example of this. TORONTO | LIBERTY VILLAGE CASE STUDY Potential for incremental ~1.1M SF of density across commercial and residential assets unlocking ~$300M of equity value 840,000 1,356,484 64 Jefferson 190
Slide 30: Financial Strength
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Slide 31: Financial Targets
FINANCIAL TARGETS – Maintain overall leverage below 35% and net debt—to—EBITDA below 9.0x – Maintain high portion of fixed rate debt over a well-staggered maturity profile – Maintain unencumbered property value at a minimum of 80% of total Investment Property value – Maintain ample liquidity by havi
Slide 32: Debt Structure
DEBT STRUCTURE Allied has a well-structured debt stack and benefits from a low weighted average interest rate $MILLIONS Q2 2024 INTEREST RATE LIQUIDIY (MILLIONS) Q2 2024 LINE OF CREDIT $302.0 CORRA + 170 bps CASH (1) $22.5 TERM LOANS $649.4 3.5% - 4.9% UNDRAWN LINE OF CREDIT (2) $484.8 DEBENTURES $2
Slide 33: Deleveraging Waterfall
DELEVERAGING WATERFALL (1) (1) (1) Net Debt as a multiple of annualized adjusted EBITDA is a non-GAAP measure. See Appendix starting on page 56 for definition. (2) Consists of debt incurred to complete developments and EBITDA contributions as developments are completed. 33
Slide 34: Debt Maturity Schedule
DEBT MATURITY SCHEDULE Manageable and well-laddered debt maturity platform with no more than 20% of debt expiring in any given year(1) $1,000 5.00% 4.42% $900 4.29% 4.29% $800 4.00% 3.48% 3.39% $700 3.12% 3.17% 3.10% 3.08% $600 3.00% INTEREST RATE MILLIONS $500 2.28% $400 2.00% $300 $200 1.00% $100
Slide 35: Maximizing Flexibility While Strengthening the Balance Sheet
MAXIMIZING FLEXIBILITY WHILE STRENGTHENING THE BALANCE SHEET $12.0 100% 93% 89% 87% 90% 83% $10.0 $9.8 $9.8 80% $9.7 $9.5 72% $9.1 $8.8 $8.8 70% 65% $8.5 $8.0 $8.3 57% $7.6 60% BILLIONS 48% $6.5 $6.0 $6.3 50% 40% $5.6 $5.5 40% $4.9 $4.0 $4.2 $4.3 30% $3.7 25% $2.9 20% $2.0 $2.3 $1.6 10% $0.8 $- 0% 2
Slide 36: Sources of Capital
SOURCES OF CAPITAL Allied has various sources of capital, including the following: EQUITY / ASSET SALES DEBT PARTNERSHIPS Capital recycling continues to be a Unsecured debt • Allied will seek to key source of liquidity opportunistically raise • Debentures equity capital when valuation • Strong priva
Slide 37: Market Highlights
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Slide 38: Toronto Market Highlights
TORONTO MARKET HIGHLIGHTS EXPANDING ECONOMY FIXED SUPPLY OF OFFICE SPACE AS CONSTRUCTION HAS DECLINED TO CYCLICAL LOWS (M SF) 3.8% Population Growth in 2023 Source: Colliers 107K Net new jobs in 2023 8.0 7.1 8.3 -69% since 2019 2.9% 2025F-28F Real GDP Growth 5.9 4.8 Source: Conference Board of Canad
Slide 39: Montréal Market Highlights
MONTRÉAL MARKET HIGHLIGHTS EXPANDING ECONOMY FIXED SUPPLY OF OFFICE SPACE AS CONSTRUCTION HAS DECLINED TO CYCLICAL LOWS (M SF) 4.3% Population Growth in 2023 Source: Colliers 81K Net new jobs in 2023 5.3 -94% since 2019 2.2% 2025F-28F Real GDP Growth 4.1 2.7 2.0 1.5 0.3 Source: Conference Board of C
Slide 40: Vancouver Market Highlights
VANCOUVER MARKET HIGHLIGHTS EXPANDING ECONOMY FIXED SUPPLY OF OFFICE SPACE AS CONSTRUCTION HAS DECLINED TO CYCLICAL LOWS (M SF) 3.8% Population Growth in 2023 Source: Colliers 35K Net new jobs in 2023 -28% since 2019 2.7% 2025F-28F Real GDP Growth 5.3 5.9 5.8 5.3 5.2 3.8 Source: Conference Board of
Slide 41: Calgary Market Highlights
CALGARY MARKET HIGHLIGHTS EXPANDING ECONOMY VACANCY RATES CONTINUE TO LOWER FROM 2021 PEAK AS CALGARY DOWNTOWN OFFICE REBOUNDS 3.8% Population Growth in 2023 Source: Colliers 28K Net new jobs in 2023 -4.9% since 2021 32.0% 31.9% 30.1% 3.0% 24.2% 27.0% 27.1% 2025F-28F Real GDP Growth Source: Conferen
Slide 42: Kitchener Market Highlights
KITCHENER MARKET HIGHLIGHTS EXCEPTIONAL TECH PRESENCE 18th ranked market in North America +52% tech job growth rates YoY 10% tech occupations as % of total employment Source: CBRE DRIVING WORKFORCE GROWTH & INNOVATION Top overall growth market in North America for residents in their 20s +21% since 2
Slide 43: Environmental, Social & Governance (ESG)
Environmental, Social & Governance (ESG) 43
Slide 44: ESG Strategy
ESG STRATEGY FOCUS AREAS DECARBONIZATION ENVIRONMENTAL Reducing the environmental impact of our business activities by improving the efficiency and CLIMATE RESILIENCE resilience of our assets. BUILDING PERFORMANCE SOCIAL COMMUNITY IMPACT Enhancing employee and user experience and supporting the comm
Slide 45: ESG 2023 Highlights
ESG 2023 HIGHLIGHTS IMPROVED GRESB SCORE SUPPORTED OVER 1,500 ARTISTS Achieved a GRESB score of 85 for our outstanding investments and Partnered with organizations in Calgary, Toronto and Montreal to 87 for our developments, representing continuous improvement overall. provide affordable workspace f
Slide 46: Environment
ENVIRONMENT FOCUS AREAS STRATEGY HIGHLIGHTS KEY NEXT STEPS • Finalize our near-term NZC target and NZC Our Net Zero Carbon Plan is centered on four pillars: pathways in alignment with SBTi development and redevelopment projects, acquisition DECARBONIZATION due diligence, operational asset decarboniz
Slide 47: Social
SOCIAL FOCUS AREAS STRATEGY HIGHLIGHTS KEY NEXT STEPS • Develop guidelines that support user events to The guiding principles of our community building achieve zero-waste and increase support for initiatives include preserving history, operating with local businesses sensitivity and investing in art
Slide 48: An Integrated Governance Approach
AN INTEGRATED GOVERNANCE APPROACH OVERSIGHT RESOURCES & TOOLS KEY STAKEHOLDERS BOARD OF TRUSTEES EMPLOYEES ESG POLICY Reviews our governance practices regularly and is responsible for overseeing Allied’s ESG Strategy and ESG initiatives, including the integration of sustainability into Allied's over
Slide 49: Property/Neighbourhood Highlights
Property/Neighbourhood Highlights 49
Slide 50: QRC West Phase II
QRC WEST PHASE II • Building off the success of the Queen Richmond Centre West, QRC West – Phase II fronts one of the most connected and trendy downtown retail and cultural neighbourhoods: Queen Street West • The extension of the community favourite will link new office and retail to the distinctive
Slide 51: The Well
THE WELL • The Well is a joint venture development between Allied and RioCan, each 50% owners of the office and retail components of the properties • The property is comprised of 3 office towers connected to a 3-storey retail base • In addition, there are 3 residential towers (not owned by Allied) o
Slide 52: King West Village
KING WEST VILLAGE • Allied first acquired assets in King West Village in 1999 and has continued to expand its portfolio over time • Hosts a daytime population of 43,469, including residents with an average household KING WEST income of $144,566 VILLAGE • Very active area with over 120,000 transit ri
Slide 53: 19 Duncan
19 DUNCAN • 19 Duncan is a joint venture between Allied (95%) and Westbank (5%) completed in 2024 • The property is comprised of the historic, heritage-designated Southam Press Building office podium with a 58-storey rental residential tower • The office component is 100% leased to Thomson Reuters P
Slide 54: La Cité
LA CITÉ • Allied acquired La Cité, formerly Cité du Multimédia, in 2007 • Today, La Cité is undergoing a staged transformation to upgrade select common areas, public realm features and integrate new retail, green space and building amenities to create a distinctive urban workspace experience that pr
Slide 55: Appendix
Appendix ALLIED
Slide 56: Certain Definitions and Non-GAAP Measures
CERTAIN DEFINITIONS AND NON-GAAP 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 57: Adjusted EBITDA, Net Debt, Total Indebtedness
ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (“ADJUSTED EBITDA”) Adjusted EBITDA is a non-GAAP measure calculated on a proportionate basis comprised of earnings before interest expense, income taxes, depreciation and amortization expense (including amortization of improvem
Slide 58: Adjusted Funds from Operations (AFFO)
ADJUSTED FUNDS FROM OPERATIONS ("AFFO") AFFO is a non-GAAP financial measure used by most Canadian real estate investment trusts based on a standardized definition established by REALPAC in the White Paper. AFFO is defined as FFO less amortization of straight-line rent, regular leasing expenditures,
Slide 59: 134 PETER STREET, SUITE 1700 TORONTO, ONTARIO M5V 2H2 T 416.977.9002 F 416.306.8704
134 PETER STREET, SUITE 1700 TORONTO, ONTARIO M5V 2H2 T 416.977.9002 F 416.306.8704 ALLIEDREIT.COM
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