BUILDING ON EXPERIENCE, SHAPING THE FUTURE RioCan Conference Call Presentation – Third Quarter 2019 November 6, 2019
FORWARD LOOKING ADVISORY & NON-GAAP MEASURES FORWARD LOOKING INFORMATION 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 respect to management's beliefs, plans, estimates, and intentions, and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Certain material factors, estimates or assumptions were applied in drawing a conclusion or making a forecast or projection as reflected in these statements and actual results could differ materially from such conclusions, forecasts or projections. The forward looking information contained in this presentation is made as of the date hereof. Additional information on the material risks that could cause our actual results to differ materially from the conclusions, forecast or projections in these statements and the material factors, estimates or assumptions that were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking information can be found in our most recent annual information form and annual report that are available on our website and at www.sedar.com. Except as required by applicable law, RioCan undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. 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 IFRS. The following measures, Funds From Operations (“FFO”), Net Operating Income (“NOI”), Adjusted Earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”), Debt to Adjusted EBITDA, Same Property NOI, Interest Coverage, Debt Service Coverage, Fixed Charge Coverage, and Total Enterprise Value as well as other measures discussed in this presentation, do not have a standardized definition prescribed by IFRS and are, therefore, unlikely to be comparable to similar measures presented by other reporting issuers. Non-GAAP measures should not be considered as alternatives to net earnings or comparable metrics determined in accordance with IFRS as indicators of RioCan’s performance, liquidity, cash flow, and profitability. For a full definition of these measures, please refer to the “Non -GAAP Measures” in RioCan’s Management’s Discussion and Analysis for the quarter ended September 30, 2019. RioCan uses these measures to better assess the Trust’s underlying performance and provides these additional measures so that investors may do the same. Q3 | RioCan | 02
Operational Overview Jonathan Gitlin, President & Chief Operating Officer Q3 | RioCan | 03
OPERATIONAL HIGHLIGHTS Total Portfolio FFO per Unit Major Market Same Property NOI Guidance Same Property NOI for 2020 >3.0% $0.47 $0.47 2.3% 2.1% Q3 2018 Q3 2019 Q3 2018 Q3 2019 Renewal Leasing Spread Committed Occupancy 97.7% for major markets 7.7% for 97.2% 97.0% major markets 7.7% -1.4% Q3 2018 Q3 2019 Q3 2018 Q3 2019 Q3 | RioCan | 04
OPERATIONAL HIGHLIGHTS % of Revenues from Major Markets RENT BREAKDOWN Q3 2019 >90% 88.7% 87.8% 74.1% OF RENT FROM NECESSITY- BASED AND SERVICE-ORIENTED TENANTS Entertainment & Hobby 3.1% Department Movie Theatres Stores & 4.5% Apparel 4% 8.4% since 2007 8% Q2 2019 Q3 2019 Vision since 2007 Grocery / Pharmacy / Liquor / Restaurants 28.0% Furniture & % of Revenues Home from GTA 9.9% Specialty Retailers >50% Personal 49.5% 10.7% 48.6% Services 21.8% Value Retailers 13.6% 6% since 2007 Q2 2019 Q3 2019 Vision Q3 | RioCan | 05
RESIDENTIAL RENTAL LEASING HIGHLIGHTS DEVELOPMENT PROGRESSING WELL eCentral & eCondos • 365 units (78%) leased as of November 5, 2019 with 328 units (70%) occupied as of September 30, 2019 • Rents averaging $3.90 per sf (for market rent units) • Stabilization expected by end of first quarter 2020 • $4.2M gains recognized in the quarter on eCondos Frontier (Phase One) • 204 units (90%) leased as of November 5, 2019 with 176 units (77%) occupied as of September 30, 2019 • Rents averaging $2.50 per sf • Stabilization by the end of 2019 • Zoning approved for four residential towers (up to 840 units) • Construction for Phase Two has begun Q3 | RioCan | 06
DRIVING LONG TERM GROWTH Delivering best-in-class purpose- built rental units and condos along Canada’s most prominent transit corridors, RioCan Living shapes the communities where Canadians shop, live and work. 2,700 units 20,000 43 potential 100% located 2,100 additional currently under in Canada’s potential residential units underway by construction 1 units 1 projects 2021 1 major markets Total Pipeline by Zoning Status (27.4M sf) Application submitted, Zoning approved, 7.1M sf, 13.3M sf, • All development projects are 26% 2 49% located in Canada's six major markets with residential projects accounting for 19.7M square feet or 71.9% of the pipeline • GTA accounts for 64% of the development pipeline Future est. density, 6.9M sf, 25% 1. At 100% of the project 2. Zoned NLA increased by 0.2M sf when compared to Q2 2019 primarily due to the acquisition of the remaining 50% co-ownership interest in eCentral and Yonge Sheppard Centre in Toronto, Ontario, partially offset by development completions. Q3 | RioCan | 07
Financial Overview Qi Tang Senior Vice President & Chief Financial Officer Q3 | RioCan | 08
FUNDS FROM OPERATIONS (“FFO”) & PAYOUT RATIO • FFO per unit of $0.47 in Q3 2019 was flat to FFO per Unit Q3 2018, despite: o $0.47 $0.47 $14.7M lower realized gains due to lower number of marketable securities sold o $1.5M lower capitalized interest mainly as a result of development completions o $1.5M lower lease termination fees Q3 2018 Q3 2019 o $1.3M higher condominium marketing costs • FFO per Unit benefitted from: FFO Payout Ratio * o $12.3M of residential inventory gains Target is to be below 80% o $7.9M of higher NOI from development completions and strategic acquisitions 78.0% 77.4% o $3.5M of higher property management and other fee income o $3.1M of higher same property NOI o $2.0M of lower G&A costs o Unit repurchases (since Q3 2018) Q3 2018 Q3 2019 * For the twelve months ended Q3 | RioCan | 09
BOOK VALUE PER UNIT GROWTH Book value per unit has increased by 4.0% compared to Q3 2018 $27.00 $26.01 $26.00 $25.78 $25.34 $25.13 $25.02 $25.00 $24.00 $23.00 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q3 | RioCan | 10
STRONG NET RENT GROWTH +6.4% $19.49 Average net rent psf of $18.32 $33.96 on active urban intensification projects on 691k sf of committed or in-place leases as of November 5, 2019 Q3 2018 Q3 2019 Net rent CAGR since 2015 ─ 3.5% $20.00 $19.49 $19.07 $19.00 $17.75 $17.59 $18.00 $17.11 $17.00 $16.00 $15.00 1 1 2015 2016 2017 2018 Q3 2019 1. Canadian operations only Q3 | RioCan | 11
DEVELOPMENT PROGRESSING WELL DEVELOPMENT PROGRESSING WELL Key Statistics Development Completions Q1 Q2 Q3 Q3 YTD - Net leasable area completed (in sf) 92,000 269,000 51,000 412,000 - Costs transferred $101.8M $105.0M $48.5M $255.3M Development Expenditures $92.5M $102.5M $135.2M $330.2M Total Pipeline by Zoning Status (27.4M sf) The Trust has Application submitted, recognized $287.7M of 7.1M sf, cumulative fair value Zoning approved 26% gains in connection with and active with Zoning the 4.2M sf of PUD approved, detailed cost projects in this category 13.3M sf, estimates, 4.5M sf 1 which are substantially 49% No significant completed, near fair value gains completion, or under Zoning approved yet recognized construction and active with cost for excess estimates in density progress, 8.8M sf No significant fair value gains yet recognized for excess density despite approved zoning Future est. density, 6.9M sf, 25% 1. Includes 4.2M sf for properties under development (PUD) and 0.3M sf of residential inventory Q3 | RioCan | 12
2019 INVENTORY GAINS DEVELOPMENT PROGRESSING WELL Q2 Q3 Q1 2019 Projection $12.3M $5.1M $7.8M ~$36M Yonge Eglinton Northeast King Portland Windfield Farms Corner (eCondos) Centre (Kingly) Townhomes Q3 | RioCan | 13
FUTURE INVENTORY GAINS – SELECTED PROJECTS Yorkville Project (11YV) Windfield Farms Condos 73% of the 593 units sold as of November 5, 2019. 62% of the 503 units sold as of November 5, 2019. Estimated value creation range of 15%-17% with Estimated value creation range of 17%-20% with first possessions anticipated in Q3 2024 1 first possessions anticipated in Q2 2022 1. Includes value creation from the retail and rental replacement portions of the project Q3 | RioCan | 14
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