H&r Real Estate Investment Trust · TSX:HR.UN
H&r Real Estate Investment Trust — Q1 2022 Earnings Presentation
26 slides from H&r Real Estate Investment Trust's earnings presentation, May 10, 2022
Slide 1: Repositioned for Growth
REPOSITIONED FOR GROWTH INVESTOR PRESENTATION May 2022 1
Slide 2: Caution Regarding Forward-Looking Statements
CAUTION Forward-Looking Statements Certain statements made in this presentation will contain forward‐looking information within the meaning of applicable securities laws (also known as forward‐looking statements) including, among others, statements made or implied relating to H&R Real Estate Investm
Slide 3: Repositioned for Growth
REPOSITIONED FOR GROWTH To be a leading owner, operator and developer of residential and industrial properties, surfacing value through asset redevelopment and greenfield development, funded by capital recycling. 3
Slide 4: Management Committed to Surfacing Value for Unitholders
MANAGEMENT COMMITTED TO SURFACING VALUE FOR UNITHOLDERS TARGET EXECUTION Executing against our Strategic Repositioning Plan to surface Transacted on $4.7 billion of real estate in 2021 and create value for unitholders Accelerating Same-Property net operating income (cash basis)1 Q1 2022 Same-Propert
Slide 5: Strategic Repositioning Initiatives Executing Against Plan
STRATEGIC REPOSITIONING INITIATIVES EXECUTING AGAINST PLAN PRIMARIS COMPLETED DEC 31 2021: Tax-free spin-off of Primaris including all of H&R’s SPIN-OUT enclosed malls to unitholders Disposition of remaining grocery-anchored and essential service retail EXIT RETAIL properties, including ECHO interes
Slide 6: Transform into a High-Growth Residential and Industrial Platform
TRANSFORM INTO A HIGH-GROWTH RESIDENTIAL AND INDUSTRIAL PLATFORM Investment Properties Investment Properties Sept 30, 2021 March 31, 20221 Residential Retail Retail 18% 23% 33% Residential 35% Industrial 14% Office Industrial 35% 9% Office Redevelopment2 Office 9% 24% 1. Investment properties as at
Slide 7: Significantly Increase Exposure to the GTA and High Growth U.S. Sunbelt and Gateway Cities
SIGNIFICANTLY INCREASE EXPOSURE TO THE GTA AND HIGH GROWTH U.S. SUNBELT AND GATEWAY CITIES Investment Properties Investment Properties Sept 30, 2021 March 31, 20221 Alberta Other 5% Other Alberta 21% 25% 20% GTA 23% ` Gateway GTA Gateway U.S. 19% U.S. 12% 23% Sunbelt U.S. 28% Sunbelt U.S. 24% 1. Inv
Slide 8: Target Business Metrics Support Value Creation Strategies
TARGET BUSINESS METRICS SUPPORT VALUE CREATION STRATEGIES Investment Properties Target Credit Metrics Q1 2022 Target Industrial Payout Ratio as a % of FFO1 46.4% 45-55% Debt / Adjusted EBITDA1 7.7x <9.2x Debt to Total Assets1 43.1% 40-50% Residential Unencumbered Assets / Unsecured Debt 2.09x >2.0x
Slide 9: Net Asset Value per Unit of $21.06
NET ASSET VALUE PER UNIT OF $21.06 CAP RATE COMPRESSION AND STRONG RENTAL GROWTH Q4’21 Q1’22 Q1’22 Fair Value IFRS Cap IFRS Cap Adjustments Reasons for Increase Rates Rates (in 000’s) • Residential properties continue to see tremendous demand from investors • Several large transactions in the sunbel
Slide 10: Exit $3.5 Billion of Office and Retail Properties
EXIT $3.5 BILLION OF OFFICE AND RETAIL PROPERTIES WELL-LOCATED, FULLY-OCCUPIED, INVESTMENT-GRADE TENANTS WITH LONG LEASE TERMS Up to $2.4 billion of office $596 million of high-quality $484 million investment in ECHO, properties with investment-grade grocery-anchored and single- an attractive grocer
Slide 11: Increase Class A Residential Property Exposure
INCREASE CLASS A RESIDENTIAL PROPERTY EXPOSURE IN HIGH GROWTH U.S. GATEWAY AND SUNBELT CITIES Targeting increased Target market Highly skilled locally- exposure to characteristics: based property institutional-quality • Strong population management team properties in proven and employment high growt
Slide 12: Prime Income-Producing Residential Properties with Attractive Growth Characteristics
Prime income-producing residential $3.5B properties with attractive growth characteristics Fair Value 3.71% Residential Fair Value Number of Units Weighted Average Cap Rate by Geography by Geography New York 11% New York Texas 31.2% 28% 20% Same-Property net operating income (cash basis) growth Nort
Slide 13: Significant Residential and Industrial Development and Intensification Pipeline
SIGNIFICANT RESIDENTIAL AND INDUSTRIAL DEVELOPMENT AND INTENSIFICATION PIPELINE 2022 Construction Starts 1,661 residential units 586,069 industrial GLA Primarily U.S.-based, residential greenfield Vancouver 1,250 units development located in 2023 & Future Construction Starts high growth gateway and
Slide 14: 2022 + Future Construction Starts
2022 + FUTURE CONSTRUCTION STARTS 2022 starts 2023 starts + future Expected Anticipated Industrial GLA Completion (square feet)/ Property1 Geography Use Type Ownership Acres Date Residential Rental Units Meadowvale Commerce Pk. Mississauga, ON Industrial Greenfield 100.0% 15.4 2023 336,809 GLA Slate
Slide 15: Rezoning of Office and Industrial Properties into Highest and Best Use
REZONING OF OFFICE AND INDUSTRIAL PROPERTIES INTO HIGHEST AND BEST USE Current Anticipated GLA Commercial GLA Expected (Square (Square feet) Approval Property Geography Use Type Ownership Feet) /Residential Units Approval Status1 Date 150,000 GLA/ 145 Wellington St. W. Toronto, ON Residential Redeve
Slide 16: High-Quality Distribution Facilities Located in Key Industrial Markets
HIGH-QUALITY DISTRIBUTION FACILITIES $1.4B Fair Value LOCATED IN KEY INDUSTRIAL MARKETS 8.6M REIT owned Square feet % of industrial Number of sq.ft. Avg lease Credit Ratings Tenant rentals locations (in 000s) TTM (years) (S&P) 1 Canadian Tire Corporation 23.9% 2 2,104 4.8 BBB Stable 2 Finning Intern
Slide 17: Maintain a Strong and Flexible Balance Sheet with an Investment Grade Credit Rating
MAINTAIN A STRONG AND FLEXIBLE BALANCE SHEET BBB (High) by DBRS WITH AN INVESTMENT GRADE CREDIT RATING $4.5B Unencumbered Mortgages Assets4 18% Debt2 to Total Assets3 $829M Available under Lines of Credit $11.4B Senior 51.1% Total Unsecured Debentures Capitalization1 Unitholders’ Equity & 16% 46.6%
Slide 18: Well-Laddered Debt Maturity Schedule
WELL-LADDERED DEBT MATURITY SCHEDULE $800 $700 $600 $500 In millions $ $400 $300 $200 $100 $0 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Mortgage Payments Unsecured Term Loans Senior Unsecured Debentures 18
Slide 19: Strategic Priorities to Drive Growth
STRATEGIC PRIORITIES TO DRIVE GROWTH Class A Property High-Quality Disposition Program Financial Flexibility to Residential Redevelopment Distribution Facilities Drive Growth Grow class A residential Advance the rezoning Build and expand the Redeploy proceeds from Maintain a strong, flexible propert
Slide 20: Our Approach to Sustainability
OUR APPROACH Integrate sustainability priorities into decision making across all stages of an asset’s lifecycle TO SUSTAINABILITY Strategic Planning Acquisitions H&R’s Executive team The Investment Committee identifies and assesses oversees and approves acquisitions material inline with the REIT's s
Slide 21: Sustainability Highlights
SUSTAINABILITY HIGHLIGHTS CLIMATE AND DIVERSITY AND GOVERNANCE RESOURCE EFFICIENCY INCLUSION PRACTICES 4.1 % Reduction in normalized • Utility consumption and • 33% of the Board of Trustees • Tenure for all new Trustees is emissions intensity in 2019 vs. 2018 for H&R Utility emissions reporting boun
Slide 22: Appendix
APPENDIX 22
Slide 23: River Landing, Shoreline, Gateway, Hercules
River Landing Shoreline Gateway Hercules Hercules Phase II Miami, FL Long Beach, CA San Francisco Hercules, CACA Completed: Q2 2021 LAND ACQUIRED JULY 16, 2018 The Pearl PHASE II: “The Grand at Bayfront” Currently in lease-up Austin, TX Currently in lease-up Urban mixed-use property H&R ownership: 3
Slide 24: West Love, Bayside, Midtown Park
West Love Bayside Midtown Park. Dallas, TX Largo, FL Dallas, TX CONSTRUCTION IS EXPECTED TO BEGIN IN CONSTRUCTION IS EXPECTED TO BEGIN IN 2022 CONSTRUCTION IS EXPECTED TO BEGIN IN 2022 2022, WITH AN EXPECTED COMPLETION DATE AND AN EXPECTED COMPLETION DATE OF AND AN EXPECTED COMPLETION DATE OF OF 202
Slide 25: 145 Wellington St. W. and 3777 Kingsway
3777 Kingsway 145 Wellington St. W. Burnaby, BC Toronto, ON RE-ZONING AND SITE PLAN APPROVAL IS EXPECTED IN Q3 2022 RE-ZONING AND SITE PLAN APPROVAL IS EXPECTED IN 2023 In August 2019, H&R submitted a rezoning and site plan approval In June 2020, H&R along with its partner, submitted a re-zoning app
Slide 26: 55 Yonge St. and 310 Front St.
55 Yonge St. 310 Front St. Toronto, ON Toronto, ON RE-ZONING AND SITE PLAN APPROVAL IS EXPECTED IN 2023 OBTAIN APPROVAL FOR RE-ZONING AND SITE PLAN IN 2023 The site encompass approximately 0.37 acres. The REIT submitted a re- In April 2021, H&R submitted a combined re-zoning application zoning appli
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