Allied Properties Real Estate Investment Trust · TSX:AP.UN
Allied Properties Real Estate Investment Trust — Investor Presentation (August 2020)
69 slides from Allied Properties Real Estate Investment Trust's investor presentation, August 2020
Slide 1: Creativity & Connectivity
CREATIVITY & CONNECTIVITY August 2020
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 “Risks and
Slide 3: Table of contents
TABLE OF CONTENTS Investment Highlights . . . . . . . . . . . . . . . . . 4 Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Rental Portfolio . . . . . . . . . . . . . . . . . . . . . . 21 Development Portfolio . . . . . . . . . . . . . . . 38 Development Completions . . . . .
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 – 29% compound annual growth rate on total assets – 14.6% average annual total return 4
Slide 5: Portfolio growth - total assets
PORTFOLIO GROWTH - TOTAL ASSETS (M) 9,155 120M 8,796 8,324 6,706 IPO 5,824 9.2B 5,214 4,456 3,933 3,501 Q2 2020 3,052 2,155 1,583 28.6% 1,155 949 809 503 385 267 128 157 IPO 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Q1 2020 Q2 2020 CAGR Values up to Decembe
Slide 6: Returns to unitholders
RETURNS TO UNITHOLDERS TOTAL RETURN INDEX $1,700 Allied Properties S&P / TSX Total Returns Index S&P / TSX Capped REIT Index 14.6% $1,600 $1,500 $1,400 $1,300 AVERAGE ANNUAL $1,200 TOTAL RETURN $1,100 $1,000 $900 $800 $700 $600 $500 $400 $300 $200 $100 $0 2003 2004 2005 2006 2007 2008 2009 2010 2011
Slide 7: Strategy
ALLIED Strategy
Slide 8: Consolidation of urban office properties
CONSOLIDATION OF URBAN OFFICE PROPERTIES – Close to core – Distinctive – Lower occupancy costs 8
Slide 9: 500-522 King West
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Slide 10: Le Nordelec, Montréal
Le Nordelec Montréal 10
Slide 11: 35-39 Front Street East, Toronto
35-39 Front Street East Toronto 11
Slide 12: 12
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Slide 13: 13
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Slide 14: 14
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Slide 16: Intensification of urban office properties
INTENSIFICATION OF URBAN OFFICE PROPERTIES – Underutilized land – Additional rentable area with low land cost – Value creation 16
Slide 17: Intensification of QRC West
Intensification of QRC West Toronto 17
Slide 18: Intensification of QRC West
Intensification of QRC West Toronto 18
Slide 19: Intensification of The Breithaupt Block
Intensification of The Breithaupt Block Kitchener 19
Slide 20: King Portland Centre
King Portland Centre Toronto 20
Slide 21: Rental Portfolio
ALLIED Rental Portfolio
Slide 22: Rental portfolio properties
RENTAL PORTFOLIO 200 PROPERTIES 14.1M SQUARE FEET VANCOUVER EDMONTON 642,112 SF 297,851 SF MONTRÉAL 6,606,284 SF TORONTO 4,713,242 SF Including Urban Data Centres CALGARY 509,911 SF 1,043,638 SF OTTAWA 231,468 SF KITCHENER 562,802 SF As of June 30, 2020. 22
Slide 23: Montréal portfolio
MONTRÉAL PORTFOLIO Mile-Ex BE RN AR ST D . AV LA E. PA UR RK EN AV TB N E. LV ST D. .U RB ST AI DE . N ST NI . ST S HE . NR RU LA IJ UR U E IER LIE SA AV N I E. NT ST BO E AV SA - U .A IN E RÉ LE T- CO . MB VA AN ST M U TO RD I RO RC JA IN AT VI CQ E Mile End ISE E LL ST LL W Central UE E- .W AT E S
Slide 24: Toronto portfolio
TORONTO PORTFOLIO COLLEGE ST. REIT JOINT VENTURE N DUFFERIN ST. ANCILLARY PARKING DUNDAS ST. W. BAY ST. UNIVERSITY AVE. SPADINA AVE. CHURCH ST. SHERBOURNE ST. PARLIAMENT ST. JARVIS ST. QUEEN ST. W. RICHMOND ST. W. RICHMOND ST. E. STRACHAN AVE. YONGE ST. ADELAIDE ST. W. Queen Richmond BATHURST ST. KI
Slide 25: Calgary portfolio
CALGARY PORTFOLIO CENTRE ST. S 4 AVE SW 5 AVE SW 6 AVE SW Central Business 7 AVE SW District N 8 AVE SW Stephen Ave. 9 AVE SW 10 AVE. SW 11 AVE. SW 12 AVE. SW SE 3 ST. SE OLYMPIC WAY SE 13 AVE. SW E. 2 ST. SW 4 ST. SW 8 ST. SW 1 ST. SW 5 ST. SW AV 1 ST. SE Inglewood 12 Beltline 9A 17 AVE. SW VE .S E
Slide 26: Vancouver portfolio
W G Y H 99 BE JE TO AC RV N H ST IS . PA AV ST CI . E. FI C BU TE ST . ST . TH BU U RR RL O AR W D D RA ST ST . . KE ST . D AV H IE EL ST M CK . E N ST RI . CH AR N H H D O S EL AM M ST SO IL ER . M N TO ST AI N ST N ST . . G LA RA N . N D VI ST LL . E ST . Yaletown RO CA BS M O N BI E ST BE . W AT
Slide 27: Urban workspace top-ten properties
URBAN WORKSPACE TOP-TEN PROPERTIES NORMALIZED APPRAISED PROPERTY NAME LQA NOI FAIR VALUE CAP RATE PRINCIPAL USERS CITÉ MULTIMÉDIA, MONTRÉAL $20,507 $426,970 4.75% Desjardins, Morgan Stanley, SAP Canada 700 DE LA GAUCHETIÈRE, MONTRÉAL 18,021 366,110 5.25% AON Canada Inc, Autorité Régionale de Transpo
Slide 28: Network-dense urban data centres
NETWORK-DENSE URBAN DATA CENTRES NORMALIZED APPRAISED PROPERTY NAME LQA NOI FAIR VALUE CAP RATE PRINCIPAL USERS 151 FRONT W, TORONTO $35,371 $572,050 5.00% Bell, Cologix, Equinix 250 FRONT W, TORONTO 14,015 329,200 5.75% AWS, Cloud Service Provider 905 KING W, TORONTO 4,343 96,860 6.00% Beanfield, C
Slide 29: Connectivity
CONNECTIVITY Source: PeeringDB.com 29
Slide 30: Internet traffic on TorIX
INTERNET TRAFFIC ON TORIX Source: TorIX Website 30
Slide 31: NOI by segment and by use
NOI BY SEGMENT NOI BY USE NOINOI BY SEGMENT BY SEGMENT 16.4% NOINOI BY USE BY USE 16.4% URBAN DATA CENTRES URBAN DATA CENTRES 41.4% TORONTO 10.8% AND CALGARY, 7.2% KITCHENER EDMONTON RETAIL AND VANCOUVER 4.3% PARKING 31.4% Urban Data UrbanCentres Data Centres Calgary,Calgary, Edmonton MONTRÉAL Edmon
Slide 32: Lease maturities - urban workspace
LEASE MATURITIES - URBAN WORKSPACE % OF TOTAL GLA W/A RENTAL RATE ESTIMATED W/A MARKET RATE 25.0% $35.00 $30.00 20.0% $26.39 $26.47 $26.88 $24.14 $25.00 $23.15 $23.19 $20.52 15.0% $20.00 $18.63 $17.76 12.8% $14.35 10.5% 10.0% $15.00 10.0% $10.00 6.0% 5.0% 4.5% $5.00 0.0% $0.00 December 31, 2020 Dece
Slide 33: Lease maturities - Montréal and Ottawa
LEASE MATURITIES - URBAN WORKSPACE MONTRÉAL AND OTTAWA 25.0% % OF SEGMENT GLA W/A IN-PLACE RENTAL RATE ESTIMATED W/A MARKET RENTAL RATE $35.00 $30.00 20.0% $25.00 15.0% $18.89 $20.00 $18.13 $17.80 11.9% $17.14 $17.91 $17.51 $16.80 $14.44 $16.31 $15.00 10.0% 9.0% $11.31 $10.00 5.8% 5.0% 2.9% 3.1% $5.
Slide 34: Lease maturities - Toronto and Kitchener
LEASE MATURITIES - URBAN WORKSPACE TORONTO AND KITCHENER % OF SEGMENT GLA W/A IN-PLACE RENTAL RATE ESTIMATED W/A MARKET RENTAL RATE 25.0% $40.00 $36.73 $35.20 $33.97 $35.00 $32.15 20.0% 18.5% $29.14 $30.00 $26.50 $25.45 $25.00 15.0% $21.83 13.5% $19.80 $20.00 $17.35 10.0% $15.00 7.6% 7.6% $10.00 5.0
Slide 35: Lease maturities - Calgary, Edmonton and Vancouver
LEASE MATURITIES - URBAN WORKSPACE CALGARY, EDMONTON AND VANCOUVER 25.0% % OF SEGMENT GLA W/A IN-PLACE RENTAL RATE ESTIMATED W/A MARKET RENTAL RATE $30.00 $25.61 $24.36 $24.27 $25.00 20.0% $22.78 $23.85 $21.12 $22.41 16.5% $20.00 $19.79 15.0% $14.22 12.6% 12.1% 12.0% $15.00 10.8% 10.0% $12.28 $10.00
Slide 36: Lease maturities - urban data centres
LEASE MATURITIES - URBAN DATA CENTRES 25.0% % OF SEGMENT GLA W/A IN-PLACE RENTAL RATE ESTIMATED W/A MARKET RENTAL RATE $160.00 $137.13 $140.00 $124.66 $133.72 20.0% $118.21 18.5% $120.00 $107.04 $101.36 $108.73 $106.23 $100.00 15.0% $97.88 $96.66 $80.00 11.0% 10.0% $60.00 $40.00 5.0% 4.4% $20.00 2.1
Slide 37: Top-ten users
TOP-TEN USERS USER SECTOR % RENTAL REVENUE (Q2 2020) 49% CLOUD SERVICE PROVIDER Data Centre/IT 4.5% UBISOFT Gaming/IT 2.7% COLOGIX Data Centre/IT 2.4% 2003 EQUINIX Data Centre/IT 2.1% 19.3% SHOPIFY INC. Commerce/IT 1.5% NATIONAL CAPITAL COMMISSION, A CANADIAN CROWN CORPORATION Government 1.4% Q2 202
Slide 38: Development Portfolio
ALLIED Development Portfolio
Slide 39: Active development pipeline
ACTIVE DEVELOPMENT PIPELINE % OF OFFICE % OF OFFICE DEVELOPMENT DEVELOPMENT 2020 ESTIMATED PRE-LEASED 2023 ESTIMATED PRE-LEASED GLA NOI GLA NOI 57% TELUS SKY* 218,000 $8.0M 64% QRC WEST, PHASE II 90,000 TBD — 218,000 $8.0M 90,000 TBD PRE-LEASED % OF OFFICE DEVELOPMENT % OF OFFICE 2021 ESTIMATED PRE-
Slide 40: Future/shadow development pipeline
FUTURE/SHADOW DEVELOPMENT PIPELINE Zoning Approval in Place To Be Rezoned ESTIMATED ESTIMATED Toronto GLA GLA UNION CENTRE 1,129,000 TORONTO 3,211,877 KING & PETER 790,000 MONTRÉAL 1,406,055 ADELAIDE & SPADINA 230,000 CALGARY 1,148,770 2,149,000 OTHER 621,291 6,387,993 ESTIMATED Montréal GLA LE NORD
Slide 41: TELUS Sky, Calgary
TELUS Sky Calgary 41
Slide 42: Adelaide & Duncan, Toronto
Adelaide & Duncan Toronto 42
Slide 43: 400 West Georgia, Vancouver
400 West Georgia Vancouver 43
Slide 44: The Well
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Slide 45: Breithaupt III, Kitchener
Breithaupt III Kitchener 45
Slide 46: QRC West Phase II, Toronto
QRC West Phase II Toronto 46
Slide 47: King & Brant
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Slide 48: KING Toronto
KING Toronto Toronto 48
Slide 49: 720 Beatty, Vancouver
720 Beatty Vancouver 49
Slide 50: Development Completions
ALLIED Development Completions
Slide 51: 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 52: 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 53: 180 John Street, Toronto
180 JOHN STREET, TORONTO Allied acquired the property in 2015. The property was redeveloped and leased in its entirety to Spaces. The project 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
Slide 54: 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 55: 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 56: 425 Viger, Montréal
425 VIGER, MONTRÉAL In 2004, Allied expanded into Montreal 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 57: Risk Management
ALLIED Risk Management
Slide 58: Development
DEVELOPMENT – 15% limitation on development – Pre-leasing – Partial monetization – Financial management – Collaboration 58
Slide 59: Balance sheet
BALANCE SHEET – Low leverage – Long-term, fixed-rate debt – Net debt to EBITDA ratio of 7.6x – Debt ratio 29.3% – Interest coverage ratio of 3.3x Debt in “debt ratio” refers to total debt. See definition appendix for definition of total debt and EBITDA. 59
Slide 60: Financial covenants
FINANCIAL COVENANTS SENIOR UNSECURED DEBENTURES COVENANT THRESHOLD JUNE 30, 2020 PRO FORMA INTEREST COVERAGE RATIO Maintain a 12-month rolling consolidated 3.0x pro forma EBITDA of at least 1.65 times pro forma interest expense PRO FORMA ASSET COVERAGE TEST Maintain net consolidated debt below 29.2%
Slide 61: Debt maturity chart
DEBT MATURITY CHART MORTGAGES UNSECURED TERM LOANS UNSECURED DEBENTURES CONSOLIDATED W/A INTEREST RATE $450,000 $400.0 5.00% $400,000 4.70% $150.0 4.50% 4.37% 4.30% $350,000 4.10% 3.96% $300.0 4.00% $300.0 $300.0 3.55% $300,000 3.39% $250.0 3.11% 3.17% 3.08% $250,000 $242.4 $231.4 3.00% $200.0 $200,
Slide 62: Unencumbered assets
UNENCUMBERED ASSETS UNENCUMBERED ASSET POOL % OF ASSET POOL UNENCUMBERED $7,000,000,000 80% 74% 73% 72% 68% $6.3B 70% $6,000,000,000 $6.0B $5.5B 60% $5,000,000,000 52% 47% 50% $4.3B $4,000,000,000 39% 40% $3,000,000,000 $2.9B 30% $2.3B $2,000,000,000 21% 20% $1.6B 12% $1,000,000,000 10% $782.0M $400
Slide 63: Corporate Social Responsibility
Corporate Social Responsibility
Slide 64: Corporate social responsibility
CORPORATE SOCIAL RESPONSIBILITY “The cities we build have to be sustainable and conducive to human wellness, diversity and creativity. Put differently, they have to elevate and inspire the humanity in all of us.” - MICHAEL EMORY 2020 CSR Report + GRESB Reporting + Aligning with ESG Indices 64
Slide 65: Corporate social responsibility
CORPORATE SOCIAL RESPONSIBILITY 65
Slide 66: Appendix Definitions
ALLIED Appendix Definitions
Slide 67: Certain definitions and non-IFRS measures
CERTAIN DEFINITIONS AND NON-IFRS MEASURES Certain defined terms used in this investor presentation have the following meaning: “EBITDA” EBITDA is a non-IFRS financial measure and should not be considered as an alternative to net income or net income and comprehensive income, cash flow from operating
Slide 68: Total debt and total return definitions
“TOTAL DEBT” Total debt is a non-IFRS financial measure and does not have any standard meaning prescribed by IFRS. As computed by us, total debt may differ from similar computations reported by other Canadian real estate investment trusts and, accordingly, may not be comparable to similar computatio
Slide 69: 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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