BUILDING THE FOUNDATION FOR THE NEXT CANADIAN “BLUE CHIP” REIT INVESTOR PRESENTATION NEXUS REAL ESTATE INVESTMENT TRUST April 2017
Safe Harbour This presentation is confidential and is being supplied to you solely for your information and may not be reproduced or distributed to any other person or published, in whole or in part, for any purpose. No reliance may be placed for any purpose whatsoever on the information contained in this presentation or the completeness or accuracy of such information. No representation or warranty, express or implied, is given by or on behalf of Nexus REIT (the “REIT”), or its unitholders, trustees, officers or employees or any other person as to the accuracy or completeness of the information or opinions contained in this presentation, and no liability is accepted for any such information or opinions. This presentation contains forward-looking statements which reflect the REIT’s current expectations and projections about future results. Often, but not always, forward- looking statements can be identified by the use of words such as “plans”, “expects” or “does not expect”, “is expected”, “estimates”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the REIT to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained in this presentation. Such forward-looking statements are based on a number of assumptions that may prove to be incorrect, including, but not limited to: the ability of the REIT to obtain necessary financing or to be able to implement its business strategies; satisfy the requirements of the TSX Venture Exchange with respect to the plan of arrangement; obtain unitholder approval with respect to the plan of arrangement; the level of activity in the retail, office and industrial commercial real estate markets in Canada, the real estate industry generally (including property ownership and tenant risks, liquidity of real estate investments, competition, government regulation, environmental matters, and fixed costs, recent market volatility and increased expenses) and the economy generally. While the REIT anticipates that subsequent events and developments may cause its views to change, the REIT specifically disclaims any obligation to update these forward-looking statements. These forward-looking statements should not be relied upon as representing the REIT’s views as of any date subsequent to the date of this presentation. Although the REIT has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forwardlooking statements. The factors identified above are not intended to represent a complete list of the factors that could affect the REIT. This presentation includes industry data and forecasts obtained from independent industry publications, market research and analyst reports, surveys and other publicly available sources and in certain cases, information is based on the REIT’s own analysis and information or its analysis of third-party information. Although the REIT believes these sources to be generally reliable, market and industry data is subject to interpretation and cannot be verified with complete certainty due to limits on the availability and reliability of raw data, the voluntary nature of the data gathering process and other limitations and uncertainties inherent in any statistical survey. Accordingly, the accuracy and completeness of this data is not guaranteed. The REIT has not independently verified any of the data from third party sources referred to in this presentation nor ascertained the underlying assumptions relied upon by such sources. All figures in C$ unless otherwise noted. NEXUS INVESTOR PRESENTATION | APRIL 2017 2
Overview of Nexus Edgefront Real Estate Investment Trust (“ Edgefront ”) Nobel Real Estate Investment Trust (“Nobel”) • • Growth oriented REIT with 16 commercial properties, 15 of which Single tenant, industrial focused REIT with 20 properties located are located in the Greater Montreal Area and one in Ottawa- throughout Canada Gatineau • Portfolio consists of 100% occupied industrial real estate assets • Primary market focus is unique among junior REITs that are care free with contractual rent increases • • Supported by TriWest Capital Partners, one of Canada’s leading Strategic relationship with RFA Capital Partners, a real estate private equity firm which has invested in over $15 billion of private equity firms with ~$1.3 billion in AUM commercial mortgages and real estate since 1996 On February 14, 2017, Edgefront and Nobel announced a merger to create Nexus REIT (“Nexus” ; TSXV:NXR.UN) - a stronger and more diversified REIT The transaction closed on April 3, 2017 with both Edgefront and Nobel unitholders voting overwhelmingly in favour of the transaction • Diversified sector exposure and introduction into new geographic markets • Immediate synergies driven by internalization of experienced management team • Combined portfolio possesses the ability to deliver solid AFFO/unit growth • Robust pipeline of high quality acquisition assets sourced through strategic partner NEXUS INVESTOR PRESENTATION | APRIL 2017 3
Building the Foundation for the Next Canadian “Blue Chip” REIT • High single-digit accretion to AFFO per unit (1) on a stabilized run-rate basis Accretive to both • Accretion driven through G&A synergies, organic growth and a lease-up strategy with respect Unitholders to a quality downtown Montreal office property • Internalization and full integration of a highly experienced management team Synergies from • Synergies realized from the elimination of external asset and property management, as well Internalization of as redundant public company costs Management • Expected G&A synergies of ~$0.9 million on a run-rate basis Enhanced Scale & • Pro forma combined NOI of $21.5 (1) million Attractive Portfolio • 36 properties, with GLA of ~2.1M sq. ft. (2) located across Canada (6 provinces and 1 territory) Characteristics • Greater geographic and sector diversification • Greater Access to Access to a robust acquisition pipeline from RFA Capital and TriWest Capital Partners • Financing and Potential for lower cost of capital via increased access to debt and equity financing Acquisition Pipelines • Greater financing flexibility could provide for more opportunities to pursue growth pipeline • Combined entity has been renamed Nexus REIT (TSXV:NXR.UN) Well Positioned For • Larger combined scale better positions Nexus for the capital markets with potential for Capital Market increased analyst coverage, trading liquidity and broader retail / institutional investor support Opportunities • Graduation to TSX (main board) anticipated in 2017 1) After stabilization of 2045 Stanley 2) Including 100% of GLA from partially owned properties (i.e. 2045 Stanley and 72 Rue Laval) NEXUS INVESTOR PRESENTATION | APRIL 2017 4
Nationwide Asset Base Nexus consists of a diversified portfolio of 36 properties located NOI by Province/Territory (1) across Canada, combining Nobel’s asset diversity with Edgefront’s geographic diversity 3.4% 0.4% 5.9% 6.2% 40.0% 6.4% 2 37.7% AB QC BC SK ON NWT PEI 6 2 3 NOI by Sector (1) 8 7 1 1 4 2 4.9% 2.1% 16.3% 16 Industrial Nobel Properties Retail Office Mixed-Use 20 Edgefront Properties 76.7% Industrial Office Mixed-Use Retail 1) After stabilization of 2045 Stanley NEXUS INVESTOR PRESENTATION | APRIL 2017 5
Balanced Debt Maturities and Lease Expiries (1) Weighted Average Term 3.9 years Principal Repayment Schedule ($M) Weighted Average Interest Rate (1) 3.96% 5 yr Loan Term Rate (2) 2.81% - 3.21% 10 yr Loan Term Rate (2) 3.44% - 3.94% Nobel Mortgages $68.4 Edgefront Credit Facility Edgefront Mortgages $41.1 $26.1 $11.9 $8.6 $6.1 2017 2018 2019 2020 2021 2022+ % of Total 7.3% 5.3% 42.1% 16.1% 3.8% 25.3% Debt Lease Expiry Schedule (Sq. Ft. ‘000s) 736 Nobel Edgefront 325 199 147 145 120 115 64 48 8 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026+ % of Total 2.5% 7.6% 6.3% 10.5% 3.4% 7.7% 0.4% 6.1% 38.6% 17.1% Leased GLA 1) As at December 31, 2016 2) 5 and 10 year GCAN bond yields as at April 7, 2017; Avison Young Debt Market Monitor (April 2017) commercial mortgage spreads NEXUS INVESTOR PRESENTATION | APRIL 2017 6
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