RioCan Real Estate Investment Trust · TSX:REI.UN
RioCan Real Estate Investment Trust — NAREIT 2012
57 slides from RioCan Real Estate Investment Trust's conference presentation, Jul 10, 2012
Slide 1: Investor Presentation 2012: Disciplined Growth
Investor Presentation 2012 DISCIPLINED GROWTH
Slide 2: Forward Looking Statements
Forward Looking Statements Certain information included in this presentation contains forward-looking statements within the meaning of applicable securities laws including, among others, statements concerning our objectives, our strategies to achieve those objectives, as well as statements with resp
Slide 3: One of North America's Largest Retail REITs
One of North America’s Largest Retail REITS 333 80 million retail properties sqft total portfolio in Canada & U.S. 50 million sqft owned $7.6 billion $13 billion market cap enterprise value ~7,280 tenancies ~86% revenue generated by national and anchor tenants 3
Slide 4: Investment Highlights
Investment Highlights Strong, reliable distribution yield provided to investors Stable, dominant, and geographically diversified portfolio of national retail tenants Disciplined growth strategy in Canada and U.S. Conservative balance sheet / financial strength and access to capital Positioned to ben
Slide 5: Property Portfolio
Property Portfolio BC GTA MB AB QC NFLD SA ON QC NB 277 46 MA retail properties retail properties CT 46 million sqft 3.4 million sqft PA 87.2% 12.8% annualized rental annualized rental VA revenue revenue TX As at March 31st 2012 5
Slide 6: Property Portfolio - Canada
Property Portfolio - Canada Annualized Rental Revenue by Market BC 3.7% 6.0% 4.2% Edmonton Vancouver AB QC 9.4% Calgary ON 8.1% 34.6% Ottawa Montreal 34.0% Toronto REST of CANADA As at March 31st 2012 6
Slide 7: Property Portfolio – U.S.
Property Portfolio – U.S. Regional Market Strategy & Focus 2.7% 2.5% 24.4% 9.5% NH NY MA CT RI 0.8% PA MD NJ 2.4% VA 4.1% 49.2% 1.1% 3.1% TX As at March 31st 2012 7
Slide 8: Strong Tenant Relationships
Strong Tenant Relationships 8
Slide 9: Strong Tenant Relationships: Top Canada & US Combined
Strong Tenant Relationships Top 10 Canada & US Combined As at March 31st 2012 Weighted Total Area Annualized Avg Top Number Of Occupied Tenant Name Rental Remaining 10 Locations (Sq. Ft. In Revenue Lease Term 000s) (Yrs) 1 Walmart 4.5% 31 3,610 13.9 2 Canadian Tire Corporation (i) 4.3% 104 2,036 9.8
Slide 10: Strong Tenant Relationships: Top Canada
Strong Tenant Relationships Top 10 Canada As at March 31st 2012 Weighted Total Area Annualized Avg Top Number Of Occupied Tenant Name Rental Remaining 10 Locations (Sq. Ft. In Revenue Lease Term 000s) (Yrs) 1 Canadian Tire Corporation (i) 4.9% 104 2,036 9.8 2 Walmart 4.9% 28 3,194 13.5 3 Famous Play
Slide 11: Strong Tenant Relationships: Top U.S.
Strong Tenant Relationships Top 10 U.S. As at March 31st 2012 Total Area Weighted Avg Annualized Number Of Occupied Remaining Top 10 Tenant Name Rental Locations (Sq. Ft. In Lease Term Revenue 000s) (Yrs) 1 Giant Food Stores/ Stop & Shop (Royal Ahold) 13.6% 20 899 14.1 2 Best Buy 5.3% 9 284 8.3 3 Pe
Slide 12: Lease Rollover Profile
Lease Rollover Profile Broadly Distributed Lease Expiries Canadian Portfolio As at March 31, 2012 ’000s Square Feet % Square Feet expiring / portfolio NLA 4,140 4,213 4,527 3,118 1,933 10.5% 10.7% 11.5% 4.9% 7.9% 2012 2013 2014 2015 2016 U.S. Portfolio As at March 31, 2012 ’000s Square Feet 583 220
Slide 13: Occupancy since 1996
Occupancy since 1996 Historical Occupancy Rates 1996 to Q1 2012 97.7% 97.6% 97.6% 97.4% 97.4% 97.1% 96.9% 96.9% 96.9% 96.3% 96.3% 96.1% 95.8% 95.6% 95.4% 95.0% 95.0% Q1 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 As at March 31st 2012 13
Slide 14: Financial Highlights 2011 & Q1 2012
Financial Highlights 2011 & Q1 2012
Slide 15: Financial Highlights
Financial Highlights • RioCan’s Operating FFO increased by 14% to $103 million for the three months ending March 31, 2012 • Same store and same property NOI during the First Quarter in Canada increased by 1.5% and 1.6%, respectively and in the US, same store and same property NOI during the First Qu
Slide 16: Financial Highlights
Financial Highlights Operating FFO* 380 329 Revenues 315 324 276 (in millions of $ except per unit amounts) 988 882 2007 2008 2009 2010 2011 764 758 720 Operating FFO* Per Unit 1.43 1.29 1.32 1.22 1.33 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 * Note: FFO reported under IFRS for 2010 & 2011,
Slide 17: Quarterly Financial Highlights
Quarterly Financial Highlights Operating FFO 90 93 97 100 103 83 85 83 Revenues 78 (in millions of $ except per unit amounts) 267 274 246 234 237 237 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 213 220 216 2010 2011 2012 Operating FFO Per Unit 0.37 0.37 0.36 0.36 0.35 0.34 0.34 0.33 0.32 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q
Slide 18: Financial Highlights: Net Operating Income
Financial Highlights Net Operating Income 2007 –2011 Net Operating Income Q1 2010 – Q1 2012 (in millions of $) 554 526 466 167 172 452 156 427 147 148 151 138 130 136 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2007 2008 2009 2010 2011 2010 2011 2012 As at March 31st 2012 3 Mos. Ended March 31 18
Slide 19: Distributions to Unitholders
Financial Highlights Distributions to Unitholders Distributions to Unitholders per Unit (in millions of $ except per unit amounts) 1.38 1.38 1.38 367 1.3275 1.36 343 318 297 277 1.13 1.14 1.07 281 285 0.99 1.04 261 207 228 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 Distributions to Unitholder
Slide 20: Financial Summary
Financial Summary Revenues Year Ended December 31, (in millions of $ except per unit amounts) March 31, 2012 2011 2010 Total Revenues $274 $988 $882 Operating FFO $103 $380 $329 Operating FFO per Unit $0.37 $1.43 $1.33 Distributions to unitholders $96 $367 $341 Distributions to unitholders per Unit
Slide 21: Financial Summary: Canadian Portfolio NOI
Financial Summary Net Operating Income 2010 – Q1 2012 Canadian Portfolio (thousands of dollars) 2012 2011 Increase As at March 31, 2012 Net Operating Income Same store1 $131,435 $129,443 1.5% Land use intensification $237 $210 nm Same properties2 $131,672 $129,653 1.6% Acquisitions $8,416 $9 nm Disp
Slide 22: Financial Summary: US Portfolio NOI
Financial Summary Net Operating Income 2010 – Q1 2012 US Portfolio (thousands of dollars) 2012 2011 Increase As at March 31, 2012 (decrease) Base rent – US$ $12,338 $12,273 0.5% Property tax and operating cost recoveries – US$ $3,417 $3,810 (10.3%) Other – US$ $12 $38 nm Rental revenue – US$ $15,767
Slide 23: Conservative Debt Profile
Conservative Debt Profile • Debt‐to‐Total Assets of 46.0% at March 31, 2012; • Total operating lines $429 million with approximately $371 million available at March 31, 2012 • Unencumbered pool has a fair value in excess of $1 billion as a result of the early repayment of $90 million of secured debt
Slide 24: Modest Leverage, Strong Interest Coverage
Modest Leverage, Strong Interest Coverage • RioCan has consistently adhered to a conservative debt policy even through periods of considerable growth • 60% max permitted under covenant • Interest coverage well in excess of the 1.65x maintenance covenant Leverage Interest Coverage 2.9x 2.9x 2.9x 2.6x
Slide 25: Leverage and Coverage Ratios & Targets
Leverage and Coverage Ratios & Targets 3 Months Rolling 12 Months Targeted Mar. 31/12 Mar. 31/11 Mar. 31/12 Mar. 31/11 Ratios Interest coverage ratio1 >2.5x 2.74 2.55 2.49 2.45 Debt service coverage ratio2 >2.0x 2.01 1.91 1.88 1.86 Fixed charge coverage ratio3 >1.1x 1.04 1.01 1.00 0.99 Net operating
Slide 26: Growth Strategy
Growth Strategy
Slide 27: Future Growth Drivers
Future Growth Drivers Acquisitions Organic Development Growth Pipeline Future Growth Drivers Institutional Land Use Relationships Intensification 27
Slide 28: Organic Growth: Canadian Portfolio
Organic Growth Canadian Portfolio Ability to add growth through rental renewals with 45% of leases renewing over next five years. • In Q1 2012 achieved renewal rent increases of 10% or $1.44 psf • Retention rate of 91.2% Square Feet expiring/portfolio NLA Leases Expiring Total Portfolio Cumulative 1
Slide 29: Organic Growth: U.S. Portfolio
Organic Growth U.S. Portfolio Ability to add growth through rental renewals with 23% of leases renewing over next five years. • In Q1 2012 achieved renewal rent increases of 7.2% or $1.18 psf • Maintained a retention rate of 83.1% Square Feet expiring/portfolio NLA Leases Expiring Total Portfolio Cu
Slide 30: Debt Maturity Schedule
Debt Maturity Schedule Scheduled principal amortization Mortgages payable Weighted Avg. Interest Rate on Maturing Debt $ Millions Debentures payable Weighted average interest rate 1,200 8.00% 1,078 1,000 964 7.00% 824 800 5.69% 650 609 5.54% 6.00% 5.33% 616 600 4.95% 4.86% 411 4.73% 5.00% 400 4.53%
Slide 31: Acquisitions Track Record
Acquisitions Track Record – Acquisitions 2011 – Q1 2012 Location Cap Rate RioCan’s Purchase Price (millions) Canada 7.3% 432 United States 7.9% 554 2010 Acquisitions 7.6% $986 Canada 6.4% 506 United States 6.9% 567 2011 Acquisitions 6.6% 1,073 Canada 6.2% 64 United States 6.7% 28 Q1 2012 Acquisition
Slide 32: Development Activity: Target
Development Activity Target will open 23 locations in RioCan’s portfolio RioCan is Target’s largest landlord in world • First 15 locations, • 8 are anticipated to open in Spring 2013 • 7 to open throughout the remainder of 2013 • Target will be the anchor tenant at RioCan’s St Clair and Weston road
Slide 33: Development Activity: Development Pipeline
Development Activity Development Pipeline Greenfield developments through in‐house capabilities and with partners, such as Trinity and Canada Pension Plan Investment Board (CPPIB) At March 31, 2012 • Total developments comprise 8.9 million square feet, including shadow anchors • RioCan’s interest co
Slide 34: Development Pipeline: St. Clair & Weston
Development Pipeline St. Clair & Weston, Toronto 563,000 sqf. two storey retail – Projected Completion 2014 Anchor Tenant - Target Development Partners: Trinity and Canada Pension Plan Investment Board (“CPPIB”) 34
Slide 35: Development Pipeline: Belcourt and Grant Crossing
Development Pipeline RioCan Centre Belcourt, Ottawa RioCan is nearing completion of its 39 acre site at Lowe’s Centre Orleans at Innes Road and Belcourt Boulevard in Ottawa, Ontario into a 398,000 square foot new format retail centre. This joint venture development with our partner, Trinity, is anch
Slide 36: Development Pipeline: East Hills, Jacksonport
Development Pipeline East Hills, Calgary • This 148 acre site located in Calgary, Alberta is currently being developed into a 1.6 million square foot regional new format retail centre. Jacksonport, Calgary Will be developed into a new format retail centre with CPPIB and Trinity and is expected to fe
Slide 37: Development Pipeline: Sage Hill, Windfield Farms
Development Pipeline Sage Hill, Calgary RioCan has waived conditions for the acquisition of Sage Hill Crossing, a 32 acre greenfield development site in Northwest Calgary. The purchase price for the lands, which will be serviced and zoned at the time of closing, will be $32 million ($16 million at R
Slide 38: Canadian Outlet Centre Development
Canadian Outlet Centre Development • In 2011, RioCan entered into an exclusive joint venture for the acquisition, development and leasing of sites across Canada that are suitable for development or redevelopment as outlet shopping centres similar in concept and design to those within the existing Ta
Slide 39: Development Pipeline: Cookstown Outlet Mall
Development Pipeline Cookstown Outlet Mall Purchased in December 2011 with Tanger Factory Outlet Centers. • 161,000 square foot outlet centre with the potential to add a further 160,000 square feet of retail space 39
Slide 40: Tanger Portfolio Examples
Tanger Portfolio Examples 40
Slide 41: Land Use Intensification and Urban Development
Land Use Intensification and Urban Development • Capitalize on trend in Canada’s six high growth markets towards “densifying” existing urban locations, driven by: • Prohibitive costs of expanding infrastructure beyond urban boundaries • Environmental concerns • Maximizing use of mass transit • Gener
Slide 42: Densifying existing urban locations
“Densifying” existing urban locations Yonge Eglinton Centre - Toronto, Ontario • $223 million Acquisition largest acquisitions • launched revitalization and expansion plan to capitalize on area’s residential intensification • significant increases in NOI and occupancy 42
Slide 43: Creating New Cash Flow Sources: The Cube
Creating New Cash Flow Sources RioCan Yonge Eglinton Centre –The Cube Today Location: Toronto, Ontario Intersection: Yonge & Eglinton Total Proposed GLA: 45,000 square feet Design Concept: Urban Retail Construction Start: 2012 Proposed 43
Slide 44: Creating New Cash Flow Sources: Sheppard Centre
Creating New Cash Flow Sources The Sheppard Centre, Toronto Today Location: Toronto, Ontario Intersection: Yonge & Sheppard Total Proposed GLA: 672,854 square feet Design Concept: Urban Retail • Potential for both retail and residential expansion • Fast growing area of North Toronto Examples of near
Slide 45: Creating New Cash Flow Sources: NE Yonge Eglinton
Creating New Cash Flow Sources NE Yonge Eglinton - Toronto, Ontario Location: Toronto, Ontario Intersection: Yonge & Eglinton Total Proposed GLA: 54,000 square feet Design Concept: Urban Retail Anticipated Completion: 2017 Today Proposed 45
Slide 46: Creating New Cash Flow Sources: Dupont
Creating New Cash Flow Sources 740 Dupont - Toronto, Ontario Location: Toronto, Ontario Intersection: 740 Dupont Street Total Proposed GLA: 184,000 square feet Design Concept: Urban Retail Anticipated Completion: 2017 46
Slide 47: Creating New Cash Flow Sources: Bathurst Street
Creating New Cash Flow Sources 420 Bathurst Street, Toronto Location: Toronto, Ontario Intersection: Bathurst & Dundas Total Proposed GLA: 138,000 square feet Design Concept: Urban Retail Construction Start: 2014 47
Slide 48: Urban Intensification: Queen & Portland
Urban Intensification Queen & Portland, Toronto, ON Location: Toronto, Ontario Intersection: Portland & Queen Total Proposed GLA: 91,000 square feet Design Concept: Mixed‐use facility Construction Completed: 2011 After Before 48
Slide 49: Urban Intensification: 1717 Avenue Road
Urban Intensification 1717 Avenue Road, Toronto, ON Location: Toronto, Ontario Intersection: 1717 Avenue Road Total Proposed GLA: 91,000 square feet Design Concept: Mixed‐use facility Construction Completed: 2011 49
Slide 50: Urban Intensification Opportunities in the GTA
Urban Intensification RioCan has a number of Urban Intensification opportunities in the GTA market Sunnybrook Plaza, Toronto, ON • Located at the busy intersection of Bayview Avenue and Eglinton Avenue in midtown Toronto • The site benefits from excellent demographics and is a probable location for
Slide 51: Strong Institutional Relationships
Strong Institutional Relationships • Through the years RioCan has developed strong institutional relationships • Leverage RioCan’s capital to enhance returns and increase scale of investments • Generate additional revenue streams Property and asset management fees • RioCan recently entered into a Jo
Slide 52: Strong Institutional Relationships: RioKim Joint Venture
Strong Institutional Relationships RioKim Joint Venture Brentwood Village • RioCan REIT and Kimco Realty Corporation, a U.S. REIT listed on the NYSE which also focuses on the ownership of shopping centres, each have a 50% interest in RioKim joint venture • Invested over $1.2 billion in 45 properties
Slide 53: Strong Institutional Relationships: CPPIB Joint Venture
Strong Institutional Relationships CPPIB Joint Venture RioCan Centre Burloak ‐ Before • In October 2004, RioCan REIT and CPPIB announced an agreement to acquire premier regional power centres in Canada on a 50/50 basis as a core, long‐term holding strategy • Today, RioCan and CPPIB are partners in o
Slide 54: CPPIB Strategic Alliance: Grandview Corners
Strong Institutional Relationships CPPIB Strategic Alliance Grandview Corners • Acquired in December 2009 on a 50‐50 basis • Unique asset located in the Greater Vancouver Area market of Surrey • Diverse and strong tenant mix • 529,827 sq. ft. anchored by a 217,278 sq. ft. Walmart • RioCan has comple
Slide 55: CPPIB Strategic Alliance: East Hills, Jacksonport
Strong Institutional Relationships CPPIB Strategic Alliance East Hills • RioCan has successfully completed the rezoning requirements for its East Hills development with Trinity, CPPIB and the original vendor in Calgary, Alberta. • The East Hills development consists of three phases. Phase I and III
Slide 56: Investment Highlights
Investment Highlights Dominant platform, geographically diversified Conservative balance sheet / financial strength Strong, reliable distribution yield provided to investors Stable, diversified portfolio of national retail tenants Disciplined growth strategy in Canada and U.S. Positioned to benefit
Slide 57: Disciplined Growth
Investor Presentation 2012 DISCIPLINED GROWTH