BUILDING ON EXPERIENCE, SHAPING THE FUTURE RioCan Conference Call Presentation – Fourth Quarter 2019 February 20, 2020
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 year ended December 31, 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. Q4 | RioCan | 2
Operational Overview Jonathan Gitlin, President & Chief Operating Officer Q4 | RioCan | 3
STRATEGIC MILESTONES ACHIEVED Total Annualized Rental Revenue % Derived % Derived from Major Markets from GTA 90.1% >90% 85.4% 52.4% >50% 46.8% 2018 2019 Vision Vision 2018 2019 Q4 | RioCan | 4
DIVERSIFIED PORTFOLIO PROVIDES CONSISTENT GROWTH Primarily necessity-based and service-oriented property and tenant mix Property Mix Tenant Mix 74.5% of Rent From Necessity-Based and 62.9% of Rent From Mixed-Use Urban Assets and Service-Oriented Tenants Grocery Anchored Centres Entertainment/Hobby/Electronics/Books 3.1% Department Movie Theatres Stores & 4.4% Apparel 4% 8.4% Enclosed, since 2007 9.9% 8% since 2007 Grocery / Mixed-Use / Urban, Pharmacy / 22.0% Liquor / Restaurants 28.2% Furniture & Open Air Centre, Home 27.2% 9.6% Specialty Retailers Grocery Anchored Personal 10.7% Centre, 40.9% Services 22.0% Value Retailers 13.6% 6% since 2007 No Single Tenant > 5% of Annualized Rental Revenue Q4 | RioCan | 5
OPERATIONAL HIGHLIGHTS Same Property NOI (SPNOI) Growth 4.0% >3.0% 3.0% 2.5% 2.1% 2.0% 1.0% 0.0% 2019 2019 2020 Total Portfolio Major Market Total Portfolio SPNOI Growth Guidance Q4 | RioCan | 6
OPERATIONAL HIGHLIGHTS Retention Ratio Committed Occupancy 97.7% 91.2% 89.4% Major Markets 97.2% 97.1% Committed Occupancy 2018 2019 2018 2019 Renewal Leasing Spread (%) Blended Leasing Spread (%) 9.4% 9.2% 5.0% 2.6% 2018 2019 2018 2019 Q4 | RioCan | 7
RESIDENTIAL RENTAL LEASING HIGHLIGHTS DEVELOPMENT PROGRESSING WELL eCentral & eCondos, Toronto ON • 401 units (86%) leased as of February 19, 2020 • Rents averaging $3.90 per sf (for market rent units) • Stabilization expected by Spring 2020 • $118.7M estimated incremental value creation including inventory gains of $14.5M (100%) and 5.2% development yield Frontier (Gloucester Phase One), Ottawa ON • 220 units (97%) leased as of February 19, 2020 • Rents averaging $2.49 per sf • Phase One is now stabilized • Zoning approved for four residential towers (up to 840 units). Construction for 209-unit Phase Two is underway • $18.7M estimated incremental value creation (at RioCan’s interest) and 5.8% development yield Q4 | RioCan | 8
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 Completed / Under Construction 1 Construction to Start by 2021 1 ~100% of development projects are ~98% of projects are located in Canada’s six major • • 2,700 residential rental units mixed-use residential 2,100 residential rental units • ~920 condo/townhouse units • markets; ~67% located in the GTA projects 2,100 condo/townhouse units Total Development Pipeline (29.0M sf) Zoning applications Highest zoning submitted, entitlements 6.5M sf, 23% amongst peers Zoning approved, 14.6M sf, 50% Future estimated density, 7.9M sf, 27% 1. At 100% of the project Q4 | RioCan | 9
MORE RESIDENTIAL RENTAL UNITS ON THE WAY Mixed-use development in high growth, densely populated, transit-oriented locations in major markets Fifth and Third East Village, Calgary, AB Yonge Sheppard Centre Residential (Pivot), Toronto, ON Phase I Phase II Brentwood Village (Brio), Calgary, AB Gloucester Phase Two (Latitude), Ottawa, ON Q4 | RioCan | 10
FUTURE INVENTORY GAINS 11 YV Condos, Toronto Windfield UC Tower Condos, Oshawa (GTA) 83% of the 593 units sold as of Feb 19, 2020 74% of the 503 units sold as of Feb 19, 2020 Estimated value creation range 1 of 15%-17% Expected value creation range 1 of 17%-20% Winner of Multi-Family Community of the Year Award by the National Association of Home Builders Q4 | RioCan | 11 1. Based on estimated IFRS cost basis including, but not limited to, land and capitalized interest during the development phase
COMMITTED TO ESG Systematically embed environmental, social, and governance (ESG) considerations 2020 Sustainability Report to be Issued in July 2020 Environmental Tenant Engagement GRESB Score Management System Survey 77 % and Utility Data Improved Public Disclosure Score First ever survey of our and achieved a 77% increase Management System top 20 tenants in major markets in survey score over two years 77% of respondents aligned to ISO 14001 would recommend RioCan Habitat 41% Greenhouse Gas (GHG) for Humanity Emissions Verified $ 100,000 donation made and of management in accordance with ISO 14064-3 140 employees volunteered are female their time in Build Days 99% BOMA BEST Sustainability Policies certified of Operations Community, Employee Volunteering, Procurement, >50 properties certified, as spending is from Business Ethics of December 31, 2019 Canadian suppliers Q4 | RioCan | 12
Financial Overview Qi Tang Senior Vice President & Chief Financial Officer Q4 | RioCan | 13
FUNDS FROM OPERATIONS (“FFO”) & PAYOUT RATIO • FFO per Unit of $1.87 , $0.02 higher than the prior year despite: o $0.5B asset sales in 2019 and the full year dilutive effect of nearly $1.0B asset sales in 2018 o $37.7M lower gains due to lower volume of marketable securities sold and lower dividend income o $5.0M lower capitalized interest due to development completions o $2.2M higher marketing costs on new residential inventory projects • FFO per Unit benefitted from: o $37.3M residential inventory gains and NOI from residential rental business o $12.3M SPNOI o $9.2M lower G&A costs (primarily due to higher severance costs in 2018) o $8.4M higher income from equity-accounted investments primarily due to transaction gains FFO per Unit FFO Payout Ratio Target is to be $1.87 77.9% 76.9% below 80% $1.85 2018 2019 2018 2019 Q4 | RioCan | 14
BOOK VALUE PER UNIT GROWTH Book value per unit has increased by 4.0% compared to Q4 2018 $27.00 $26.14 $26.01 $26.00 $25.78 $25.34 $25.13 $25.00 $24.00 $23.00 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q4 | RioCan | 15
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