Primaris Real Estate Investment Trust · TSX:PMZ.UN
Primaris Real Estate Investment Trust — Q4 2022 Earnings Presentation
37 slides from Primaris Real Estate Investment Trust's earnings presentation, Mar 1, 2023
Slide 1: Enclosed Malls. Open Opportunity.
Enclosed Malls. Open Opportunity. Primaris REIT | February 2023
Slide 2: Caution Regarding Forward-Looking Statements
CAUTION Forward-Looking Statements and Future Orientated Financial Information Disclaimer: Certain statements included in this presentation constitute ‘‘forward-looking information’’ or “forward-looking statements” within the meaning of applicable securities laws. The words “will”, “expects”, “plans
Slide 3: Primaris at a glance: key metrics
2 $3.2B $2.7B BBB Stable 91.5% Total Assets Unencumbered Assets Investment Grade Committed Rating Occupancy SF 1 10.9M 31.5% 45% - 50% 5.0x GLA Debt to Total Target FFO Average Debt** to Assets Payout Ratio** Adjusted EBITDA** 1. See Section 10.4 “Capital Structure” of the MD&A. 2. Subsequent to Dec
Slide 4: Canadian Enclosed Evolution
A blank slate to design a best- in-class vehicle to take advantage of the recovery in Canadian Enclosed Evolution enclosed shopping centres Expansion Through Euphoria Retail in Transition Pandemic Growth Retailers conclude Over levered, too bricks & mortar anchors much concentration omnichannel: • c
Slide 5: Primaris Strategic Advantage
Primaris Strategic Advantage Differentiated financial model and a mandate for growth Enclosed Malls. Open Opportunity. Built to Grow and Thrive Size and Scale Proper Capitalization • $3.1B national portfolio of dominant • Debt to Total Assets: 31.5% enclosed shopping centres in growing • Average Deb
Slide 6: Strong Management Team
Experienced Management Team with Significant Real Estate Investment and Strong Management Team Operations Expertise Alex Avery Patrick Sullivan Rags Davloor Leslie Buist Chief Executive President & Chief Chief Financial SVP, Finance Officer Operating Officer Officer 21 5 31 12 36 1 14 4 25-years of
Slide 7: Robust Institutional Operating Platform
Fully Internalized, Scalable Platform With 400 Employees Robust Institutional Operating Platform Across 3 Regional Offices 47 1 22 19 9 Asset Management Finance & Corporate Leasing Legal Treasury 4 6 12 Development & Human Resources Information Construction Technology 1. Excluding site personnel. 7
Slide 8: Dominant Enclosed Shopping Centre Portfolio
Dominant Enclosed Primaris owns and manages regional enclosed shopping Shopping Centre Portfolio centres and open air retail properties across Canada NOI** by Asset Class NOI** by Province BC 16% Industrial, 1% AB 34% Open Air Retail, 8% QC Grocery-Anchored Plaza, 1% 3% Non-grocery Anchored Plaza, 4
Slide 9: Target Markets with Strong Growth Profiles
29.1% Canadian population resides Target Markets with Strong within a 30 minute drive of a Primaris mall 3 Growth Profiles Market Dominant Shopping Centres • Owning and operating shopping centres that constitute the primary retail mode in their markets: • Annual retail sales of at least $80 million
Slide 10: Retailer Affordability Core Focus
Core focus is providing affordable space for retail partners enabling profitability and omnichannel success Retailer Affordability Core Focus Efficient cost structure • Operate with a lower cost structure vs capital intensive super- regional malls 1 • Target GROC ratio of <15% • Total operating cost
Slide 11: Capital Structure Strategy and Targets
Designed to provide significant financial flexibility and create a differentiated investment Capital Structure Strategy and Targets profile among Canadian REITs Committed to maintaining a conservative financial profile Maintain low leverage Maintain staggered and long dated debt maturity profile to
Slide 12: Highly Differentiated Financial Model
Best-in-class structure built with flexibility, optionality and liquidity, enabling minimized Highly Differentiated Financial Model cost of capital Credit Facilities 1 2 2 11% 31.5% 5.0x $2.7B 3.8x BBB Stable Senior Unsecured 2 Debt to Total Average Debt** Unencumbered Unencumbered Investment Grade
Slide 13: Positioned for Growth
Resilience Through Economic Cycles and Poised for Post- Positioned for Growth Pandemic Growth 92.1% 92.2% 92.5% 92.6% 91.8% 92.0% 91.5% 91.5% 90.7% 90.6% 91.0% 89.7% 90.1% 89.4% 89.1% 89.2% 88.1% Committed Occupancy Q1-20 Q2-20 Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 Q4-21 Q1-22 Q2-22 Q3-22 Q4-22 Same Propert
Slide 14: Unique Lease Structure Captures Growth
Unique Lease Structure Lease structure includes built-in inflation protection, cost Captures Growth recovery and long term growth Lease Structure • Long-term contractual net rents + Net Rent • Incremental rent escalation Operating Weakening tenants may • Flow-through operating expense recovery + Exp
Slide 15: Optimal Merchandise Mix with Strong Tenant Financial Health
Tenant financial health Optimal Merchandise Mix with strongest witnessed in over a Strong Tenant Financial Health decade Tenant Mix (% of Gross Rent) Tenant Sales Recovered from Pre-Pandemic Levels Apparel, 19% 111% 111% 111% 107% 107% 104% 105% 102% 101% 97% 97% Personal Services, 16% 93% Food, 8%
Slide 16: Value, Staples and Necessity Type Tenants
Value, Staples and Necessity Creditworthy Top Tenants Create a High Quality Roster of Type Tenants Tenants in the Retail Sector Annualized Annualized Minimum Store WALT² Credit Ratings (S&P / Store WALT² Credit Ratings (S&P / Top Tenant¹ Sector Top Tenants¹ Sector Minimum Rent Rent (% of Count (yrs)
Slide 17: Strong Canadian Retail Tenants
Canadian retail REIT tenants largely dominated by grocery, Strong Canadian Retail Tenants pharmacy and value retailers Common Retailer Other Canadian Retail REITs¹ across 5+ REITs Primaris REIT A B C D E F 1 Canadian Tire Corp. Canadian Tire Corp. Walmart Loblaws/ Shoppers Sobeys/Safeway Loblaws/Sho
Slide 18: Positive Leasing Momentum
Strong Large Format Leasing Year-to-Date Momentum with Positive Leasing Momentum High Quality Tenants Weighted Average For the three months ended GLA Weighted Average Lease Weighted Average Net3 Count Spread on Renewing December 31, 2022 ('000s of SF) term (in years) Rent per OSF Rents 1 CRU New ten
Slide 19: Canadian Consolidation Opportunity
Large opportunity to be the consolidator as institutions contemplate rebalancing, Primaris stands alone as a Canadian Consolidation Opportunity potential buyer Canada’s only enclosed shopping centre REIT • $50 billion of Canadian enclosed shopping centres concentrated to institutional owners • Outsi
Slide 20: Strong Q4 and Full Year 2022 Results
Strong 2022 performance has underlined our commitment to, and confidence in our clear, and focused strategy of acquiring, Strong Q4 and Full Year 2022 Results owning and managing Canadian enclosed shopping centres Debt to Total Assets** (25% - 35%) 1 Reiterate Average Debt** to Adjusted EBITDA** (4.
Slide 21: 2023 Financial Outlook
Management anticipates the following for the year ended 2023 Financial Outlook 2023 Metrics Outlook Description Occupancy 0.8% to 1.0% Portfolio occupancy increase Rental Revenue (Rent Steps) ~$2.1 million Approximately 1% of base rent Higher in 2021 and 2022 than anticipated future run rate due to
Slide 22: NCIB Compounding Capital at a Rapid Pace
A financial model built for measured amount of Indefinite Buybacks funded through Free NCIB Compounding Capital Cash Flow, on a Leverage Neutral Basis at a Rapid Pace Compounding Capital • Leverage remains Highly Lowest Leverage and FCF available for through Unit neutral Differentiated ~$60 million
Slide 23: Rezoning and Entitlement of Excess Land
Low Site Coverage Allows for Rezoning and Entitlement Intensification, Development and/or Subdivision of Land of Excess Land Rezoning and Entitlement Strategy • May pursue JV partner or monetize severed parcel 370 35% Broad Zoning • Create value through low risk, low capital requirement Acres of Lan
Slide 24: Case Study: Dufferin Grove Received Final Approval
Flexibility to Develop and Continue to Surface Value or Case Study: Dufferin Grove Monetize to Maintain Strong Balance Sheet Received Final Approval Development Overview • $600 million intensification and redevelopment of Dufferin Mall’s northernmost parking area • Replace surface parking with +1,20
Slide 25: Board-led ESG Strategic Plan
In early 2023, management and the Board approved our ESG Strategic Plan and 3-year Implementation Roadmap Board-led ESG Strategic Plan CG&N Committee oversees and monitors Primaris' performance against the ESG Strategy • Strategic Plan and Roadmap based on the ESG Materiality Assessment. • Materiali
Slide 26: Investment Proposition
Investment Proposition Implied discount to Net Asset Value** a compelling investment opportunity $21.49 30% Upside Capital Recycling Convert pandemic Occupancy Compounding Increasing Rents to NAV** Opportunities lease concessions Improvements Excess Free Cash Upon Renewal $15.14 1 to market rents Fl
Slide 27: Invest With Us
Invest With Us TICKER: PMZ.UN Internally Managed Strong Institutional S&P/TSX Capped REIT Index and S&P/TSX Independent Board Endorsement Composite Index member Total Assets of $3.2 Billion, BBB Stable Investment Grade Providing Scale and Trading Exchange: TSX Credit Rating Liquidity Contact Info: A
Slide 28: Appendix
Appendix
Slide 29: Guided by Skilled Independent Board of Trustees
Tremendous Strategic Resource: Guided by Skilled Independent Experiential Retailing, Institutional Property Brokerage, Investment Management, REIT Board of Trustees Operations, Financial Strategy, Public Company Reporting, Retail Technology Avtar Bains Louis Forbes Deborah Weinswig • President of Pr
Slide 30: The Canadian Advantage
Canadian retail property landscape differs substantially The Canadian Advantage from the United States Canada US The Canadian Advantage Retail Space per Capita 17 sf per person¹ 23 sf per person¹ 35% less space drives higher sales productivity Immigration Record high immigration targets for Limiting
Slide 31: Devonshire Mall
Devonshire Mall • Regional shopping centre located in Windsor, Ontario within very close proximity to the U.S. border • Built in 1970, last renovated in 2019 • Acquired on January 1, 2022 • Situated on approximately 73 acres Windsor, ON 1 ** SF 97.9% 498,000 Cash NOI Growth 854,000 GLA Committed Tra
Slide 32: Park Place Mall
Park Place Mall • Located at the intersection of 1st Avenue South and Scenic Drive in Lethbridge, Alberta • Built in 1988, expanded in 1996 and most recently renovated in 2017 • Situated on approximately 38 acres Lethbridge, AB ** 1 Cash NOI Growth 473,000 SF 99.3% 253,000 GLA Committed Trade Area P
Slide 33: Orchard Park Shopping Centre
Orchard Park Shopping Centre • Largest regional enclosed mall between the Greater Vancouver Area and Calgary • Built in 1971, last renovated in 2000, 2006/7 and 2021 • Situated on 51 acres Kelowna, BC 1 651,000 SF 98.9% 452,000 GLA Committed Trade Area Population ** Occupancy Cash NOI Growth 1 +6.3%
Slide 34: Well-Staggered Lease Maturity Profile
Well-Staggered Lease Balanced lease profile Maturity Profile 2,000 $45 Weighted Average Net Rent per occupied sq. ft.² $38.55 $40 $32.04 $35 4.5yr $29.94 $29.71 Weighted GLA (in thousands sq. ft.) $26.41 $30 Average Lease $24.58 $25 Term 1,000 $20 $15 $10 $5 — $0 Short-term¹ 2023 2024 2025 2026 2027
Slide 35: Asset List
All Stores Same Store Ownership GLA at Share Site Acres Store # Property Name Location Type Sales 1 Sales Major Tenants Share (SF) at Share Count 1 Volume ($) Productivity ($) Hudson's Bay, Sport Chek, Marshalls, Indigo, H&M, Urban 1 Cataraqui Town Centre Kingston, ON Enclosed 50% 296,834 19.6 111 8
Slide 36: Asset List (cont'd)
Ownership GLA at Share Site Acres Store All Stores Same Store # Property Name Location Type Sales 1 Sales Major Tenants Share (SF) at Share Count 1 Volume ($) Productivity ($) 17 Carry Drive Plaza Medicine Hat, AB Open Air 100% 30,086 2.8 11 Sushi & Thai, CosmoProf 18 Dunmore Plaza Medicine Hat, AB
Slide 37: Enclosed Malls. Open Opportunity.
Enclosed Malls. Open Opportunity. Primaris REIT | February 2023
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