Riocan Real Estate Investment Trust · TSX:REI.UN
Riocan Real Estate Investment Trust — Q1 2024 Earnings Presentation
37 slides from Riocan Real Estate Investment Trust's earnings presentation, May 8, 2024
Slide 1: First Quarter 2024 Investor Presentation
FIRST QUARTER 2024 INVESTOR PRESENTATION MAY 7, 2024 IRREPLACEABLE I D E A L LY ENDURING Lawrence Plaza PORTFOLIO L O C AT E D VA L U E Toronto, ON
Slide 2: Contents
Contents • At a glance About RioCan • Key Takeaways • Favourable supply / demand dynamics RESILIENT INCOME • Portfolio evolution • Compelling attributes Quality • High performing portfolio EMBEDDED PIPELINE • Industry leading development pipeline • Advanced and modular development Growth • Self-fund
Slide 3: RioCan at a glance
RioCan at a glance Committed 97.1% occupancy 188 properties (1) 33M Sq. Ft. aggregate net leasable area 17M Sq. Ft. VANCOUVER pipeline 4 assets 1.1M sq.ft.(2) 4.6% (3) zoned for development BBB CALGARY 16 assets MONTREAL 19 assets 1.9M sq.ft. (2) 3.6M sq.ft. (2) investment grade credit 12.1%(3) EDMO
Slide 4: Key Takeaways - First Quarter 2024
Key Takeaways - First Quarter 2024 ACCELERATED DEMAND FOR HIGH-QUALITY RIOCAN SPACE $0.45 2.3% year-over-year growth on track to achieve annual 97.1% Maintaining high occupancy with retail FUNDS FROM COMMITTED OPERATIONS guidance of $1.79 to $1.82 OCCUPANCY essentially full at 97.9% (“FFO”) PER UNIT
Slide 5: Favourable market dynamics
Favourable market dynamics LONG-TERM MACRO-TRENDS PRESENT MEANINGFUL DEMAND DRIVERS Growing Population / Demand Evolving Retail / Demand Shortage of Supply ◦ Population growth fuels demand for real ◦ Full omni-channel experience combines ◦ Lack of new retail supply exacerbated estate sector online a
Slide 6: RioCan - continually evolving for highest quality portfolio
RioCan - continually evolving for highest quality portfolio ~$1.9B of secondary market assets sold since 2017, strengthening portfolio to fuel long-term growth and mitigate down-side risk Number of properties in Number of enclosed Number of grocery secondary markets shopping centres anchored centres
Slide 7: Major Market Advantage
Major Market Advantage RIOCAN'S MAJOR URBAN CENTRE PRESENCE OUTPACES PEER AVERAGE % of rent from Canada's six major markets 92% 94% 76% 69% 63% 66% N/A(1) 2017 Q1 2024 RioCan Peer Average (includes CRR, CRT, FCR and SRU) 1) Major market exposure not widely disclosed in 2017 Source: Company Q1 2024 d
Slide 8: Dominant Core Toronto position
Dominant Core Toronto position 7.2M SQ. FT. OF OPERATING ASSETS, WITH AN ADDITIONAL 6.4M SQ. FT (1) OF ZONED DENSITY NLA in Metropolitan Toronto (in millions of sq. ft.) (2) RioCan properties within Metropolitan Toronto RioCan First Capital Choice Properties SmartCentres CT Crombie — 5.0 10.0 1) Squ
Slide 9: Located in prime, in-demand and growing markets
Located in prime, in-demand and growing markets COMPELLING DEMOGRAPHIC PROFILE – WITHIN 5KM RADIUS Dense Population Strong Household Income 260,000 $140,000 $102,000 154,000 69% 37% 2017 Q1 2024 2017 Q1 2024 Note: Data updated once a year as annual statistics become available each spring. Source: De
Slide 10: High-quality, necessity-based retail revenue
High-quality, necessity-based retail revenue 97.1% 87.9% Property committed occupancy (2) strong and stable tenants (3) Type (1) z 57.1% 31.6% • Retail: 84.8% grocery anchored mixed-use / • Office: 10.6% centres (4) urban (4) (5) • Residential Rental: 4.6% 1) Percentage of annualized contractual gro
Slide 11: Necessity-based retail anchor tenants
Necessity-based retail anchor tenants A CURATED AND DIVERSIFIED TENANT BASE PROVIDING CONSUMERS CONVENIENT ACCESS TO EVERYDAY NEEDS Grocery / Pharmacy / Essential Goods & Value Liquor Services (1)(2) Retailers 20.4% 24.7% 12.3% Loblaws / Sobeys / Metro / Walmart / Canadian Tire / PetSmart / Bell / D
Slide 12: Demand driven leasing activity and spreads
Demand driven leasing activity and spreads RESILIENT PORTFOLIO DRIVES HIGH PERFORMANCE (1) Retention Ratios Blended Leasing Spreads Average Net Rent PSF 91.5% 91.5% 14.0% 86.7% 87.7% 83.8% $21.83 $21.51 10.7% $20.98 9.0% $20.16 $19.80 6.3% 5.0% 2020 2021 2022 2023 Q1 2024 2020 2021 2022 2023 Q1 2024
Slide 13: Best-in-class residential rental
Best-in-class residential rental INCREASING SCALE PROVIDES STRATEGIC OPTIONS 14 Newly built buildings avg. age: 3 years 3,160 96.2% (2) (1) units occupied 100% CMHC MONTREAL financing at 3 buildings major market 3.35% for 7.5 (3) CALGARY 263 units (1) OTTAWA 2 buildings GREATER 1) Number of units ar
Slide 14: Industry leading development pipeline
Industry leading development pipeline SURFACING VALUE IN PORTFOLIO’S EXCESS DENSITY Development pipeline (in millions sq. ft.) Peer Average: 18M sq.ft 42 39 (1) (1) 23 17 11 1 RioCan SmartCentres First Capital Choice Crombie CT REIT Properties Source: Company disclosures are Q1 2024 except for Smart
Slide 15: Size and scale of modular pipeline provides flexibility to time project starts
Size and scale of modular pipeline provides flexibility to time project starts ADDING VALUE THROUGH EVERY STEP OF THE DEVELOPMENT PROCESS 42.4M SQ FT DEVELOPMENT PIPELINE Zoning application Zoning Shovel Underway (1) submitted approved (1) ready (1) 4.0M SQ FT 14.5M SQ SQ FT 1.7M SQ FT 1.1M FT 21.1M
Slide 16: Lowest payout ratio retains $150 million of free cash flow annually
Lowest payout ratio retains $150 million of free cash flow annually WHILE OFFERING ATTRACTIVE TOP TIER YIELDS 2024 FFO Payout Ratio (1) Distribution and AFFO yield (2) Peer Average: 74% Peer Average (AFFO Yield): 8.0% 8.9% 8.5% 8.6% 8.2% 87% 7.2% 7.0% 8.1% 73% 74% 67% 69% 6.9% 6.7% 62% 6.2% 5.8% AFF
Slide 17: Disciplined and prudent balance sheet management
Disciplined and prudent balance sheet management CAPITAL STRUCTURE METRICS TARGET March 31, 2024 Adjusted Debt to Adjusted EBITDA (1) (2) (3) 8.0x – 9.0x 9.17x Ratio of Unsecured vs. Secured Debt (2) (3) 70% / 30% 55% / 45% Weighted average to term maturity (3) 5.0 years 3.42 years FFO Payout Ratio
Slide 18: Capital Structure
Capital Structure Enterprise Value $14.2B Interest As at Q1 2024 Rate (1) 20% Mortgages Payable $2.6B 3.6% Secured Construction Lines $0.2B 6.4% Total Secured Debt (2) (3) $2.8B 3.7% Unsecured Debentures $3.3B 4.0% 27% Non-Revolving Unsecured Credit Facilities $0.3B 4.4% Revolving Unsecured Operatin
Slide 19: A clear path to Net Debt to EBITDA Target: 8.0x - 9.0x
A clear path to Net Debt to EBITDA Target: 8.0x - 9.0x Q1 2024 Net Debt to EBITDA Breakdown(1) Key Drivers: Residential Inventory ~0.5x (2) ~9.2x • ~ 90% pre-sold condominium and townhouses – provide Target ~0.6x repatriated capital from contracted range 8-9x sales ~1.2x Development ~6.9x • Ramp up
Slide 20: Ample liquidity and laddered debt maturity
Ample liquidity and laddered debt maturity Debt maturity profile as at March 31, 2024 (i) The Trust has an option to The Trust has an option to 2,000 extend $200M of non- redeem $300M Series AI revolving credit facility to unsecured debentures at par 1,800 January 30, 2026 after September 29, 2024 1
Slide 21: Disciplined capital allocation framework
Disciplined capital allocation framework SUPPORTS SELF-FUNDED DEVELOPMENT PIPELINE Trailing twelve months ended March 31, 2024 Working capital,net & other, $54M Capital recycling, Acquisitions & $265M investments (2), $136M Development spend, Debt issuance (1), $230M $376M Change in WC (2), $70M $1.
Slide 22: Embedding best practices in everything we do
Embedding best practices in everything we do SELECT ACHIEVEMENTS ENVIRONMENT SOCIAL GOVERNANCE LEED Platinum Top 100 Employers AA Rating Certified LEED Platinum for the Recognized as one of Greater Achieved an ESG rating upgrade to AA commercial components at The Well - Toronto’s Top 100 Employers (
Slide 23: Leading the way to a net-zero economy
Leading the way to a net-zero economy Committed to reach net-zero greenhouse gas emissions across the value chain by 2050 Near-term Targets With 2019 as the baseline year: RioCan used the SBTi Corporate Net-Zero • Reduce absolute scope 1 and 2 Standard as a framework to guide our emissions by 46.2%;
Slide 24: Appendix: Favourable market dynamics
APPENDIX Favourable market dynamics RIOCAN | INVESTOR PRESENTATION (March 2022) | 24 RIOCAN | INVESTOR PRESENTATION (First Quarter 2024)
Slide 25: Physical stores - the hub of omni-channel
Physical stores - the hub of omni-channel BRICK & MORTAR IS CENTRAL TO SERVING CUSTOMERS HOW, WHERE AND WHEN THEY WANT Distribution Centre Brick & Mortar Store Home Occupancy costs trending higher Located in industrial park Located in heart of community In-store purchase Delivery from store BOPIS (1
Slide 26: Canadian Retail Real Estate Supply Constrained
Canadian Retail Over the last five years newly Real Estate is constructed retail represents Supply only ~1% of existing supply Constrained 0.8% 0.2% With replacement costs for well- 0.9% 0.6% ~17Sq. located retailFt. well over market 0.9% values, supply constraints are In Millions of Sq. Ft. expecte
Slide 27: Canada – a place to grow
Canada – a place to grow Square Feet of Retail IMMIGRATION FUELS DEMAND FOR REAL ESTATE SECTOR per Capita(4) (‘000s) By 2025, Canada will admit 12.5 immigrants per 1,000 residents, 4x more than the 3.0 immigrants per 1,000 residents the United States plans to welcome(1) Number of immigrants to Canad
Slide 28: Retailers continue to expand their physical footprint
Retailers continue to expand their physical footprint Per Bank, President & CEO, “We are building on last year's momentum with a plan for more Loblaw Companies Limited, conversions plus net new stores to add more than 50 additional hard 1Q24 Earnings Transcript, discount stores....with our investmen
Slide 29: Focus Five - large scale projects
APPENDIX Focus Five - large scale projects Note: GFA is square footage at RioCan's interest and number of residential units are at 100% interest RIOCAN RIOCAN | INVESTOR | INVESTOR PRESENTATION PRESENTATION (First (March Quarter 2022) 2024) | 29
Slide 30: RioCan Hall
▪ Currently ~227k sq. ft. of income producing retail in the heart of Toronto’s downtown entertainment district ▪ ~900k sq. ft. of mixed-use density contemplated through two tower development comprising entertainment, retail and office uses as well as ~690 residential units ▪ Status: Zoning approved
Slide 31: RioCan Leaside Centre
▪ Development spanning 8.8 acres in Toronto’s upscale Leaside neighbourhood ▪ A new Eglinton Crosstown LRT station is nearing completion on the site ▪ Zoned for ~1 million sq. ft. of mixed- use density offering ~1,450 residential units, retail, and public spaces ▪ Status: Site Plan Application submi
Slide 32: RioCan Colossus Centre
▪ >60 acre site currently consisting of 571k sq. ft. of income producing retail strategically located at the intersection of HWY 400 and HWY 7 in the rapidly growing Toronto suburb of Vaughn ▪ ~10M sq. ft. of mixed-use density HWY 400 contemplated involving multi-phase HWY 407 development comprising
Slide 33: RioCan Scarborough Centre
▪ Located in The Golden Mile district of Toronto and directly adjacent to the newly constructed transit station of the Eglinton Crosstown LRT ▪ This transit-oriented site contemplates a mixed-use community of high-density residential combined with retail amenities totaling ~4.3M sq. ft. and ~4,900 r
Slide 34: Shoppers World Brampton
▪ Currently ~700k sq. ft. of income producing retail located in Brampton, a growing suburb of Toronto ▪ Site has been designated as the “Uptown Gateway” and is in close proximity to the proposed Hurontario LRT ▪ This will be a multi-phase mixed-use development totaling ~4.1M sq. ft. including ~4,700
Slide 35: Forward-Looking Information
FORWARD-LOOKING INFORMATION All information other than statements of current and historical fact included in this presentation is forward-looking information within the meaning of applicable securities laws. Forward-looking information can generally be identified by the use of forward-looking termin
Slide 36: Non-GAAP Measures
NON-GAAP MEASURES RioCan’s consolidated financial statements are prepared in accordance with IFRS. Consistent with RioCan’s management framework, management uses certain financial measures to assess RioCan’s financial performance, which are not generally accepted accounting principles (GAAP) under I
Slide 37: Head Office
Head Office | RioCan Yonge Eglinton Centre, 2300 Yonge Street, Suite 2200, Box 2386, Toronto, Ontario M4P 1E4 • 1-800-465-2733 • riocan.com RIOCAN | INVESTOR PRESENTATION (First Quarter 2024)
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