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INVESTORPRESENTATION
March 2020
INVESTORPRESENTATIONMarch 2020
INVESTORPRESENTATION
March 2020
Disclaimer
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About this PresentationThis presentation is dated March 25, 2020 and is strictly intended to provide general information about PRO Real Estate Investment Trust (“PROREIT”) and its business. This presentation doesnot constitute an offer to sell or the solicitation of an offer to buy any securities of PROREIT. The information in this presentation is stated as at December 31, 2019, unless otherwise indicated.
Non-IFRS MeasuresPROREIT’s consolidated financial statements are prepared in accordance with International Financial Reporting Standards (“IFRS”). In this presentation, as a complement to resultsprovided in accordance with IFRS, PROREIT discloses and discusses certain non-IFRS financial measures, including Adjusted Funds From Operations (“AFFO”), Funds From Operations(“FFO”), Gross Book Value (“GBV”), debt-to-GBV, Net Operating Income (“NOI”), interest coverage ratio and payout ratios as well as other measures discussed elsewhere in thispresentation. These non-IFRS measures are not defined by IFRS, do not have a standardized meaning and may not be comparable with similar measures presented by other issuers.PROREIT has presented such non-IFRS measures as Management believes they are relevant measures of PROREIT’s underlying operating performance and debt management.Non-IFRS measures should not be considered as alternatives to net income, cash generated from (utilized in) operating activities or comparable metrics determined in accordance withIFRS as indicators of PROREIT’s performance, liquidity, cash flow, and profitability. For a full description of these measures and, where applicable, a reconciliation to the most directlycomparable measure calculated in accordance with IFRS, please refer to the “Non-IFRS and Operational Key Performance Indicators” section in PROREIT’s Management’s Discussion andAnalysis for the year ended December 31, 2019 available on SEDAR at www.sedar.com.
Forward-Looking InformationCertain statements contained in this presentation constitute forward-looking information within the meaning of applicable securities laws. In some cases, forward-looking information can beidentified by such terms such as “may”, “might”, “will”, “could”, “should”, “would”, “occur”, “expect”, “plan”, “anticipate”, “believe”, “intend”, “estimate”, “predict”, “potential”, “continue”, “likely”,“schedule”, or the negative thereof or other similar expressions concerning matters that are not historical facts. Some of the specific forward-looking statements in this presentation include,but are not limited to, statements with respect to PROREIT’s future financial performance; the ability of PROREIT to execute its growth strategies; and PROREIT’s ability to continue payingmonthly distributions and PROREIT’s ability to raise capital. Forward-looking statements are based on a number of assumptions and are subject to a number of risks and uncertainties,many of which are beyond PROREIT’s control, that could cause actual results and events to differ materially from those that are disclosed in or implied by such forward-looking statements.PROREIT’s objectives and forward-looking statements are based on certain assumptions, including that (i) PROREIT will receive financing on favourable terms; (ii) the future level ofindebtedness of PROREIT and its future growth potential will remain consistent with PROREIT’s current expectations; (iii) there will be no changes to tax laws adversely affectingPROREIT’s financing capacity or operations; (iv) the impact of the current economic climate and the current global financial conditions on PROREIT’s operations, including its financingcapacity and asset value, will remain consistent with PROREIT’s current expectations; (v) the performance of PROREIT’s investments in Canada will proceed on a basis consistent withPROREIT’s current expectations; and (vi) capital markets will provide PROREIT with readily available access to equity and/or debt. Additional information about these assumptions and risksand uncertainties is contained under “Risk Factors” in PROREIT’s latest annual information form, and in other filings that PROREIT has made and may make with applicable securitiesauthorities in the future, all of which are or will be available on SEDAR at www.sedar.com.The forward-looking statements contained in this presentation are expressly qualified in their entirety by this cautionary statement. Investors are cautioned not to put undue reliance onforward-looking statements. All forward-looking statements in this presentation are made as of the date of this presentation. PROREIT does not undertake to update any suchforward-looking information whether as a result of new information, future events or otherwise, except as required by law.
Additional InformationInformation appearing in this presentation is a select summary of PROREIT’s business, operations and results. The latest annual information form of PROREIT and its consolidated financialstatements and management’s discussion and analysis thereon for the year ended December 31, 2019 are available on SEDAR at www.sedar.com.
INVESTORPRESENTATION
March 2020
INVESTORPRESENTATION
March 2020
BUILDING A MID-CAP DIVERSIFIED COMMERCIAL REIT IN CANADA
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INVESTORPRESENTATION
March 2020
INVESTORPRESENTATION
March 2020
Section 1. PROREIT AT A GLANCESection 2. PROVEN EXECUTIONSection 3. ROBUST 2019 RESULTSSection 4. POSITIONED FOR GROWTHSection 5. APPENDICES
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INVESTORPRESENTATION
March 2020
INVESTORPRESENTATION
March 2020
PROREIT AT A GLANCE
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SECTION 1.
INVESTORPRESENTATION
March 2020
About PROREIT
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93PROPERTIES
IN 9 PROVINCES
BC: 5AB: 11
SK: 4
MB: 6
ON: 12 QC: 16
NS: 15NB: 23
PEI: 1
Established in 2013, PROREIT owns $635 million of diversified commercial real estate properties in Canada, representing close to 4.6 million square feet of gross leasable area. PROREIT is mainly focused on strong secondary markets in Québec, Atlantic Canada and Ontario, with selective exposure in Western Canada.
Quick Facts(As at December 31, 2019)
Ticker Symbol (TSX)PRV.UN
DRIP Eligible3% bonus units
Tax Deferred Distribution100% (estimated)
Annual Distribution$0.63 (post-consolidation)
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Revenue by Asset Class(12 months ended December 31, 2019)
Retail 38.3%
Industrial 26.3%
Office 20.2%
Commercial Mixed-use 15.2%
(1) One property acquired in March 2020, subsequent to year-end.
(1)
INVESTORPRESENTATION
March 2020
Our Vision
To become a mid-cap diversified Canadian REIT with high-quality commercial real estate in specific segmentsof the industrial, retail, commercial mixed-use and office sectors, recognized for its ability to:
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WITH A CLEAR STRATEGY TO GROW FFO AND NAV
PRODUCESTABLE AND GROWING RETURNS
GROWUNITHOLDER VALUE PER UNIT
INVESTORPRESENTATION
March 2020
INVESTORPRESENTATION
March 2020
PROVEN EXECUTIONSECTION 2.
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INVESTORPRESENTATION
March 2020
Our Growth History
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► 23 properties, 1.0M sq. ft. GLA
► 32 properties, 1.7M sq. ft. GLA
► 39 properties, 2.0M sq. ft. GLA
► 66 properties, 2.7M sq. ft. GLA
A BREAKOUT YEAR► Internalization
of asset management
► Graduation to TSX ► Consolidation
of Units 3:1
PROREIT has consistently paid attractive distributions every month, since January 2014
PROREIT CREATION BY FORMER CANMARC MANAGEMENT► One $6 million
property, 397K sq. ft. GLA
► TSX-V listing (PRV.UN)
► 92 properties, 4.4 M sq. ft. GLA► Acquisitions
of 7 propertiesfor $97.8M
► $57.6M equity offering
► $69.1 million in new equity capital raised
► Acquisition of property management platform
► Achieved $500M asset target
► 84 properties, 3.7M sq. ft. GLA
FOCUSED ON THE FUTURE► 93 properties,
4.6 M sq. ft. GLA
2013 2014 2015 2016 2017 2018 20202019
INVESTORPRESENTATION
March 2020
A Solid Track Record – Seven Years Of Growth
1.628
9.189
18.19022.963
29.639
40.889
57.627
0
10
20
30
40
50
60
2013 2014 2015 2016 2017 2018 2019
1.4040.155
4.4653.568
9.053
14.100
17.435
0
2
4
6
8
10
12
14
16
18
2013 2014 2015 2016 2017 2018 2019
1.4102.944
6.258 7.61910.325
14.340
20.422
0
10
20
30
40
2013 2014 2015 2016 2017 2018 2019
Property Revenues($ Millions)
Net Cash Flows Provided from Operating Activities($ Millions)
Adjusted funds from operations (2)
($ Millions)
Total Assets($ Millions)
Gross Leasable Area (‘000 sq. ft.)
70.2
141.5
203.2258.0
365.9
509.7
634.7
0
100
200
300
400
500
600
700
2013 2014 2015 2016 2017 2018 2019
397
1,044
1,6702,005
2,690
3,703
4,445
0
1,000
2,000
3,000
4,000
5,000
2013 2014 2015 2016 2017 2018 2019
CAGR 81%
CAGR 52%
CAGR 44%
CAGR 50%
CAGR 56%
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1.126
5.758
11.20714.105
18.266
26.049
35.481
0
10
20
30
40
2013 2014 2015 2016 2017 2018 2019
Net Operating Income(2)
($ Millions)
CAGR 78%
(1) 2013 was for 13 months ended(2) Non-IFRS measure. See “Disclaimer – Non-IFRS measure”.
(1) (1) (1)
(1) (1) (1)
INVESTORPRESENTATION
March 2020
Building on Our Strong Momentum
September 2019 Strategic Acquisitions► Acquisitions of 7 institutional quality properties totaling
$97.8 million for total 696,000 square feet of GLA
► Boutique office tower in Ottawa’s business district
► Class-A mixed-used industrial property in Ottawa suburbs
► Five-property light industrial portfolio in Halifax, NS
► Acquisitions significantly strengthen the portfolio and immediately accretive to AFFO per unit(1)
August 2019 Successful Bought-deal► Raised $57.6 million in equity on a bought-deal basis,
including full exercise of over-allotment option
► Largest equity offering in PROREIT’s history
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(1) Non-IFRS measure. See “Disclaimer – Non-IFRS measure”.
INVESTORPRESENTATION
March 2020
Experienced Management Team with Deep Industry
Knowledge
► 70+ years of collective asset management and property management experience
► Former CANMARC REIT team► Sold to Cominar in 2012
for $1.9B (43% annual ROI since IPO)
► Extensive network of real estate and capital markets relationships
► Alignment with unitholders: officers and trustees own 5.5% of outstanding units
► Competitive, objectives-based asset management structure
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James W.
Beckerleg
Chief Executive Officerand Trustee
Gordon Lawlor, CPA, CAExecutive Vice President, Chief Financial Officer and Secretary
Mark O'Brien
Managing Director,Operations
Alison Schafer, CPA, CADirector of Finance
Chris Andrea
PresidentCompass Commercial Realty
INTERNALIZATION OF ASSET MANAGEMENT FUNCTION
COMPLETED ON APRIL 1, 2019 WILL ADD VALUE FOR UNITHOLDERS
INVESTORPRESENTATION
March 2020
Scale Brings Transformational Growth Opportunities
Internalization of Property and Asset Management (2018-2019)
► Increases cash flow and adds value
► Creates significant economies of scale
► Provides additional transparency in accounting and financial reporting
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Increased Scale ► Increases access to larger and higher
quality acquisitions
► Decreases risk with greater diversification and reduced dependency on top tenants
► Increases potential for internal growth: rent increases, densification, etc.
LEVERAGE TO IMPROVE COST OF CAPITAL AND INCREASED GROWTH PER UNIT
INVESTORPRESENTATION
March 2020
INVESTORPRESENTATION
March 2020
ROBUST 2019 FOURTH QUARTER PERFORMANCE
SECTION 3.
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INVESTORPRESENTATION
March 2020
2019 Fourth Quarter Financial Results
CAD $ thousands except for unit amounts
unless otherwise stated
Three months ended
December 31, 2019
Three months ended
December 31, 2018Change YoY %
Total assets $634,737 $509,663 24.5%
Property revenue $17,315 $12,207 41.8%
NOI(1) $10,050 $7,661 31.2%
Same property NOI(1) $6,688 $6,556 2.0%
Debt to Gross Book Value(1) 57.52% 58.63% (1.9)%
Interest Coverage Ratio(1) 2.6x 2.6x -
Net cash flows provided
from operating activities7,937 $5,076 56.4%
FFO(1) $5,017 $3,921 28.0%
AFFO(1) $5,676 $4,234 34.1%
AFFO Payout Ratio (Basic)(1) 110.5% 116.7% (5.3)%
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(1) Non-IFRS measure. See “Disclaimer – Non-IFRS measure”.
INVESTORPRESENTATION
March 2020
2019 Financial Results
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CAD $ thousands except for unit amounts
unless otherwise stated
Year ended
December 31, 2019
Year ended
December 31, 2018Change YoY %
Total assets $634,737 $509,663 24.5%
Property revenue $57,627 $40,889 40.9%
NOI(1) $35,481 $26,049 36.2%
Same property NOI(1) $23,556 $22,700 3.8%
Debt to Gross Book Value(1) 57.52% 58.63% (1.9)%
Interest Coverage Ratio(1) 2.6x 2.6x -
Net cash flows provided
from operating activities$17,435 $14,100 23.7%
FFO(1) $15,296 $12,255 24.8%
AFFO(1) $20,422 $14,340 42.4%
AFFO Payout Ratio (Basic)(1) 106.8% 115.1% (7.2)%
(1) Non-IFRS measure. See “Disclaimer – Non-IFRS measure”.
INVESTORPRESENTATION
March 2020
An Increasingly Diversified Portfolio Over the Last Year
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Base Rent by Asset Class (%)(2)
Retail
Industrial
(2) Based on in-place and committed base rent as of Dec. 31, 2018 and Dec. 31, 2019
Base Rent by Region (%)(2)
36.7
29.2
16.1
18.0
41.8
28.7
15.4
14.1
Office
Commercial Mixed Use
Q4-2019
Maritime Provinces
Ontario
Quebec
Western Canada
Q4-2019
Asset Class Number of Properties Occupancy (%)(1) GLA (sq. ft.)
Retail 49 97.2 1,078,477
Office 10 94.4 492,507
Commercial Mixed-use 8 98.4 723,066
Industrial 25 99.8 2,151,448
Total 92 98.4 4,445,498(1) Based on in-place and committed base rent as of December 31, 2019
Q4-2018 Q4-2018
46.0
27.0
16.5
10.6
43.3
19.5
19.0
18.2
Operational Highlights(As at December 31, 2019)
INVESTORPRESENTATION
March 2020
Top Ten Tenants
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# Tenant % of In-Place Base Rent GLA (sq. ft.) WALT
(years) Credit Rating (1)
1 6.2 104,929 9.6 Baa2/BBB+/na
2 6.0 222,491 7.7 na/BB+/BBB
3 5.5 127,334 5.1 Ba1/BB+/BBB-
4 3.5 81,611 4.7 Aaa/AAA/AAA
5 3.4 66,083 5.3 na/BBB/BBB
6 2.9 98,057 10.0 na
7 2.0 88,840 8.1 na
8 1.7 176,070 5.4 Baa3/BBB-/na
9 1.6 40,901 6.7 na/BB+/BBB
10 1.6 20,219 11.0 Aa2/A+/AH
TOP TEN SUBTOTAL 34.4 1,026,535 7.3OTHER TENANTS 65.6 3,345,810 4.2VACANT 73,153TOTAL 100.00 4,445,498 4.4
(1) Based on annualized in-place and committed base rent at December 31, 2019(2) Source: Moody’s, S&P, and DBRS. Credit rating assigned to tenant or its parent.
Highlights
Top ten tenants account for34.4%of base rent
Eightof the top tentenants are credit rated
Credit quality tenants account for 44.4% of in-place base rent
INVESTORPRESENTATION
March 2020
High-Quality Tenant Profile
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GLA
BASE RENT
2020 2021 2022 2023 2024 2025-2036
► Excellent retention rate: Tenant renewal or replacement rate average above 90% in each of the past five years
► Overall weighted occupancy rate of 98.4% with a weighted average remaining lease term of 5.6 years
► Credit quality tenants have a weighted average remaining lease term of 7.3 years
► Staggered lease maturity profile► Not more than 12.0% of base rent matures in any given lease year
3.3%
11.2% 10.5% 10.5% 7.8%
56.7%
1.7%
10.7% 12.0% 10.3% 9.1%
56.2%
INVESTORPRESENTATION
March 2020
INVESTORPRESENTATION
March 2020
POSITIONED FOR GROWTH
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SECTION 4.
INVESTORPRESENTATION
March 2020
Strategies for Driving Growth and Creating Value
Internal Growth► Nurture existing client
relationship, ensuring tenant retention and growth
► Implement operating improvements and preventative maintenance programs
► Pursue expansion and redevelopment opportunities within the portfolio
► Exploit lease-up opportunities
Strong Balance Sheet► Low cost of debt
► Staggered mortgage and lease maturity profile
► Targeted Debt to GBV ratio
► Access to multiple sources of capital
► Prudent capital management
External Growth► Acquire accretive income-
producing commercial properties in strong secondary markets
► Focus on Class B, high-quality commercial real estate
► Seek properties with selective development, expansion opportunities and geographical diversification
► Pursue off-market opportunities allowing access to unique pipeline
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INVESTORPRESENTATION
March 2020
What Differentiates Us
OUR ABILITY TO IDENTIFY AND BUILD A STABLE, LOW RISK PORTFOLIO WHERE LARGER REITs ARE CURRENTLY DIVESTING
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► Urban markets and regional economic centres outside Central Vancouverand Toronto
► Often higher capitalization rates
► Focus on Central andEastern Canada
► Strong upside as market is transforming
► Our size permits us to be opportunistic
Strong Secondary MARKETS
Selection of High Quality Class B Assets
► Community retail service centres
► Industrial
► Mixed-use Commercial
► Office
Targeting specific SEGMENTS within four SECTORS
INVESTORPRESENTATION
March 2020
Focused on Community-Based Service Centres
► Typically brand grocery or pharmacy anchored► Brand names► Long-term leases► Excellent covenants
► Banks, medical professionals, government services, restaurants
► Upside potential from rent increases, vacancy fill-up and pad development is available
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INVESTORPRESENTATION
March 2020
Focused on Light Industrial Buildings
► Single or multi-tenant, light industrial buildings (typically 22 feet clearance or higher)
► Located on major transportation routes with strategic access to:► Airports► Large cities► Border crossings
► Currently focused on 50,000 sq. ft. to 200,000 sq. ft. buildings where increased occupancy and increased annual revenues are available
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INVESTORPRESENTATION
March 2020
Focused on Mixed-Use Commercial / Office
► Buildings are often in industrial parks► Flex office with loading docks► Retail in industrial buildings (e.g. - décor, wholesale)► Light industrial with office space
► Currently, the right buildings in the right sectors are seeing increasing demand from a growing economy
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INVESTORPRESENTATION
March 2020
Case Studies and Ongoing Opportunities
HALLS CREEK (2016-2017)► New pad development completed
► > 10% Return on invested capital (1)
► 100% leased
► Approximately $140 thousand NOI(1) on annualized basis
ST. MARGARET’S BAY (ONGOING)► 41,500 sq. ft. in development opportunity
KING GEORGE HIGHWAY (2017)► Pad developments complete
► 6,400 sq. ft. of new GLA
► Rogers, Subway and Cara signed
► >9% ROIC on Cara pad, >18% ROIC on Rogers and Subway pads
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OTHER OPPORTUNITIES (ONGOING)► 8150 Trans-Canada Highway, St. Laurent, QC
(pad development)
► 50 Empire Lane, Windsor, NS
(pad development)
► 1455 Mountain Ave., Winnipeg MB
(building expansion)
► 10 Bentall Street, Winnipeg, MB
(vacant land, industrial opportunity)
► 31 Auriga Drive, Ottawa, ON
(potential building expansion)
(1) Non-IFRS measure. See “Disclaimer – Non-IFRS measure”.
INVESTORPRESENTATION
March 2020
Sound and Flexible Capital Structure
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Debt Composition ($ millions)
Operating facilities, term loans $35.5
First mortgages $330.1
Total $365.6
Debt to GBV(1) 57.52%
Total debt $365.6M
Total debt weighted average rate 3.74%
Total first mortgage debt weighted average term
5.4 years
Debt Maturity ProfileAs of December 31, 2019
Debt Maturing During Year
Payments of Principal
0
20
40
60
80
100
120
140
1 year 1-2 years 2-3 years 3-4 years 4-5 years later
$39.9
$16.1
$81.3
$23.6
$129.3
$75.5
(2) Includes line of credit of 30.5MM
(2)
(1) Non-IFRS measure. See “Disclaimer – Non-IFRS measure”.
INVESTORPRESENTATION
March 2020
Why Invest in PROREIT
► Attractive yield and consistent monthly distributions
► Solid track record of growth and unitholder value creation
► Diversified portfolio and high-quality, low-risk tenants with long-term leases
► Experienced management team and solid relationships in the investment banking and lending businesses
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► Increased scale and growing profile to achieve additional synergies
► Acquisition focused
► Opportunistic and well-positioned to benefit from current real estate market transformation
► Clear strategy to grow earnings and net asset value
► Favourable Canadian real estate market in sound and resilient economy
INVESTORPRESENTATION
March 2020
INVESTORPRESENTATION
March 2020
APPENDICES
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SECTION 5.
INVESTORPRESENTATION
March 2020
We’ve Done It Before
► The Former CANMARC REIT
► Diversified REIT with national portfolio
► 143 properties
► Acquired by Cominar in 2012 for $1.9 billion
► 43% compound annual rate of return since IPO, compared to 28% for the REIT index
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0%
25%
50%
75%
100%
May-2010 Jul-2010 Sep-2010 Nov-2010 Jan-2011 Mar-2011 May-2011 Jul-2011 Sep-2011 Nov-2011 Jan-2012
S&P/TSX Capped REIT Index
CANMARC REIT
INVESTORPRESENTATION
March 2020
Compass Commercial Realty Acquisition
HIGHLY STRATEGIC ACQUISITION COMPLETED IN 2018
► Operates autonomously from Halifax headquarters
► Manages 38 third-party properties
► Manages 84 PROREIT properties
► Offices in Halifax, Moncton, Montreal and Oakville
► Significant room for expansion
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INVESTORPRESENTATION
March 2020
2019 Property Additions
TransactionPurchase Price
($millions)Number of Properties
Added GLA(sq. ft.)
Occupancy Rate at Acquisition
Halifax Light Industrial Properties, Nova Scotia $28.1 5 357,824 93%
251 Laurier Avenue West, Ottawa, Ontario $21.2 1 58,203 100%
171 John Savage Avenue, Halifax, Nova Scotia $8.4 1 50,000 100%
500 Palladium Drive, Ottawa, Ontario $48.5 1 279,388 100%
Total Acquisitions $106.2 8 745,415
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INVESTORPRESENTATION
March 2020
2018 Property Additions
TransactionPurchase Price
($millions)Number of Properties
Added GLA(sq. ft.)
Occupancy Rate at Acquisition
1750 Jean-Berchmans-Michaud St. Drummondville, QC (50%) $4.39 1 85,560 100%
Winnipeg, MB Industrial Portfolio $27.3 6 237,430 100%
598 Union St., Frederiction, NB $4.5 1 32,258 100%
Quebec Retail Portfolio $8.95 4 13,606 100%
Ottawa ON Office Portfolio $51.7 5 282,000 97.3%
Saint Hyacinthe, QC light industrial property $10.0 1 176,070 100%
Southwest Ontario Industrial properties $15.4 2 202,000 100%
Total Acquisitions $122.24 20 1,028,924
Total Sales ($0.895) (1) (11,700)
Net Acquisitions $121.34 19 1,017,224
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INVESTORPRESENTATION
March 2020
INVESTORPRESENTATION
March 2020
THANK YOU !
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