Merchants National Properties, Inc. · OTC:MNPP
Merchants National Properties — Shareholder Meeting (May 2021)
40 slides from Merchants National Properties's shareholder meeting presentation, May 27, 2021
Slide 1: Building on Our Heritage – Annual Meeting of Shareholders
BUILDING ON OUR HERITAGE May 27, 2021 ANNUAL MEETING OF SHAREHOLDERS
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS The information disclosed in this presentation is made as of the date hereof and reflects MNP’s current assessment of its financial performance for the periods reported. Historical results discussed in this presentation are not indicative of future results. This presentati
Slide 3: Annual Meeting Overview
ANNUAL MEETING OVERVIEW ▪ Introduction ➢ James Better – Chairman Remarks ➢ Copies of 2020 Financial Statements are available online ▪ Presentation ➢ Craig Deitelzweig – President & CEO ✓ Asset Overview & 2020 Highlights ➢ Jag Shah – CFO – Financial Update ▪ Polls Close ▪ Q&A Session ▪ Meeting Adjour
Slide 4: 2020 in Review – Positioning for Success
2020 IN REVIEW – POSITIONING FOR SUCCESS ▪ CCC open air center with new vibrancy (Target) ▪ Merchants II/Institutional partners ▪ Well positioned for growth ▪ Incredible Marx Team ▪ New line of credit ▪ Hospitality-Infused office is the future of office 3
Slide 5: 2020 in Review – Positioning for Success
2020 IN REVIEW – POSITIONING FOR SUCCESS ▪ COVID Rent Collections ▪ Health & Wellness Measures ▪ High quality assets ▪ Low debt levels ▪ Steady fee income ▪ Repositionings underway 4
Slide 6: COVID-19 Rent Collection Update
COVID-19 RENT COLLECTION UPDATE ONE YEAR AGO TODAY ▪ April rent collections are at 64% overall: ▪ April rent collections are at 93% overall: ➢ 96% of rents from office tenants ➢ 97% of rents from office tenants ➢ 49% of rents from retail tenants ➢ 88% of rents from retail tenants ▪ Q1 2021 collectio
Slide 7: Dynamic Marx
DYNAMIC MARX ▪ Focused on creating the hospitality-infused office product and experiential retail centers across the portfolio ▪ Well positioned for a post-COVID world ▪ Building a better mousetrap: focused on enhancing tenant & guest experiences, decreasing costs, and increasing rents ▪ Smarter pro
Slide 8: MNP / Marx Recognition
MNP / MARX RECOGNITION 2020 & 2021 POWER 100 7
Slide 9: Marx Fee History
MARX FEE HISTORY Annual Total Fee Revenue $8,000,000 $7,000,000 $6,000,000 $5,000,000 ▪ 8% FEE REVENUE INCREASE FROM 2019 Fee Revenue (EVEN DURING COVID) $4,000,000 $3,000,000 ▪ As of January 2020, Marx resumed $2,000,000 management of CCC. $1,000,000 $- 2017 2018 2019 2020 YEAR New Marx managed pro
Slide 10: Leasing Activity
LEASING ACTIVITY 2019 Full Year Leasing MINIMUM # LEASES RSF ANNUAL RENT NEW 17 166,742 $ 9,460,193 RENEWAL 22 129,176 $ 3,357,403 TOTAL 39 295,918 $ 12,817,596 2020 Full Year Leasing MINIMUM # LEASES RSF ANNUAL RENT NEW 14 194,833 $ 8,786,615 RENEWAL 23 24,451 $ 6,628,481 TOTAL 37 219,284 $ 15,415,
Slide 11: Strong Balance Sheet
STRONG BALANCE SHEET AT 12/31/20 MNP share of mortgages payable(1) $ 141,725,095 Line of credit(2) 21,500,000 ▪ ONLY 16 OF 46 MNP PROPERTIES ENCUMBERED Total debt 163,225,095 MNP share of cash and cash equivalents(3) (45,094,456) ▪ CONSERVATIVE NET DEBT/EBITDA: 1.9X Marketable securities(4) (57,764,
Slide 12: What Is Merchants'
WHAT IS MERCHANTS’ ▪ Holding company focused on real estate in NYC, DC, and ATL (OTC-US: MNPP) ▪ Long-term outlook (Merchants’ incorporated 1928) ▪ Focused on purchasing and operating irreplaceable assets by creating hospitality-infused and dynamic experiences ▪ Merchants’ has interests in 46 proper
Slide 13: MNP Capital Allocation Strategy
MNP CAPITAL ALLOCATION STRATEGY Topic General Guidelines ▪ 50 - 70% of consolidated after tax free cash flow ▪ Minimum dividend of $40 per share with $15 paid in first half Aggregate Distribution ▪ Prefer to increase dividends incrementally rather than swing up and down Target ▪ Balance of distribut
Slide 14: MNP Growth Strategy
MNP GROWTH STRATEGY Driving shareholder value through two paths, we refer to as Merchants’ I & Merchants’ II Merchants’ Core Portfolio Merchants’ Growth Partners (Merchants’ I) (Merchants’ II) ▪ Add-value on existing legacy assets ▪ The goal of this investment vehicle is to provide ➢ Lease-up increa
Slide 15: Focus on Core Markets
FOCUS ON CORE MARKETS MNP Portfolio MNP Portfolio 2019 (# of properties ) (Square footage) NY Metro Other Other 47% 31% 38% NY Metro 67% ATL 1% ATL 2% DC Metro 1% DC Metro 13% 2020 NY Metro 48% Other Other 26% 35% ATL 2% DC Metro DC Metro NY Metro 5% ATL 15% 67% 2% 14
Slide 16: Cross County Center
CROSS COUNTY CENTER Old US Shopping Mall Finds Secret to Survival Big Retailer’s Expansion is Right on ‘Target’ 15
Slide 17: Cross County Center
CROSS COUNTY CENTER ▪ March 2021 comparable sales were +24% vs 2019 ▪ New leases with Target and Cohen’s Fashion Optical; renewals with Chipotle, H&M, Armani, AT&T, Guess, Express ▪ 2021 term sheets or leases out for 74,186 sf 16
Slide 18: Cross County Center
CROSS COUNTY CENTER ▪ Focus on increasing Food & Beverage share ▪ Looking to add medical, educational, and other new tenant groups for added vibrancy ▪ New master plan of Center under development ▪ Goal of creating more dynamic shopping experience ▪ Targeting tenants from weaker centers who want to
Slide 19: Cross County Center
CROSS COUNTY CENTER 18
Slide 20: Cross County Center
CROSS COUNTY CENTER 19
Slide 21: Hospitality-Infused Office
HOSPITALITY-INFUSED OFFICE ▪ Most major corporate users planning return to office between now and Labor Day ▪ Flight to quality ▪ Pace of available sublease space in Manhattan slowing (NGKF) 20
Slide 22: Repositioning Success 2020
REPOSITIONING SUCCESS 2020 21
Slide 23: Grand Central – Penthouse Collection
10 GRAND CENTRAL – PENTHOUSE COLLECTION 22
Slide 24: Grand Central – Setting New Standards
10 GRAND CENTRAL – SETTING NEW STANDARDS 23
Slide 25: 545 Madison Transformation
545 MADISON TRANSFORMATION ▪ Took possession of the Property October 2019 ▪ Marx hands-on management applied ▪ Renewed and expanded tenant GTS for a total of 20,709 RSF ▪ Signed lease with Wells Fargo for vacant retail space for $1.7M in annual base rent ▪ Lobby renovation complete May 2021 ▪ LOI/Le
Slide 26: 545 Madison – Lobby Before
545 MADISON – LOBBY BEFORE 25
Slide 27: 545 Madison – Lobby Renovation
545 MADISON – LOBBY RENOVATION 26
Slide 28: 545 Madison – Lobby Renovation
545 MADISON – LOBBY RENOVATION 27
Slide 29: 545 Madison – Office Space Before
545 MADISON – OFFICE SPACE BEFORE 28
Slide 30: 545 Madison – Pre-Built Renovation
545 MADISON – PRE-BUILT RENOVATION 29
Slide 31: 545 Madison – Pre-Built Renovation
545 MADISON – PRE-BUILT RENOVATION 30
Slide 32: The Herald – Perfecting Office-Hospitality
THE HERALD – PERFECTING OFFICE-HOSPITALTY The Herald – 1307 New York Avenue NW ▪ Property will be the first hospitality-infused office asset in the D.C. office market ▪ Property acquired on April 9th, 2020 for $40.8 Million ($342 PSF), with a 65% LTC loan from Ares Commercial Management ▪ The Sellin
Slide 33: The Herald
THE HERALD smepeee 32 MNP
Slide 34: The Herald – Construction Underway
THE HERALD – CONSTRUCTION UNDERWAY 33
Slide 35: Institutional Partners
INSITUTIONAL PARTNERS Invesco 34 MNP
Slide 36: MNP Dividend Growth
MNP DIVIDEND GROWTH MNPP Historical Dividend 50 50 $50 47.5 40 $40 35 35 Dividend Per Share 30 $30 25 $20 $10 $- 2013 2014 2015 2016 2017 2018 2019 2020 Year Dividend Per Share 35
Slide 37: Building on Our Heritage
BUILDING ON OUR HERITAGE
Slide 38: GAAP vs. Underlying Property Performance
GAAP VS. UNDERLYING PROPERTY PERFORMACE MNP & SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME Year Ended Year Ended December 31, 2020 December 31, 2019 As Audited As Grossed-Up As Audited As Grossed-Up Rental and other income $ 14,233,501 $ 51,306,848 $ 11,201,730 $ 48,203,572 Equity in earnings (loss
Slide 39: MNP Book Value
MNP BOOK VALUE MNP's Book Value Per Share $2,500 $2,000 $1,500 $1,000 $500 $- 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 YEAR 37
Slide 40: Building on Our Heritage
BUILDING ON OUR HERITAGE
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