Q Conference Call Presentation. October 31, 2018

Transcription

1 Q Conference Call Presentation October 31, 2018

2 FORWARD LOOKING ADVISORY In talking about our financial and operating performance and in responding to your questions we may make forward-looking statements including statements concerning RioCan s objectives, its 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. These statements are based on our current estimates and assumptions and are subject to risks and uncertainties that could cause our actual results to differ materially from the conclusions in these forward-looking statements. In discussing our financial and operating performance and in responding to your questions we will also be referencing certain financial measures that are not generally accepted accounting principle measures ( GAAP ) under IFRS. These measures do not have any 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 flows and profitability. RioCan s management uses these measures to aid in assessing the Trust s underlying core performance and provides these additional measures so that investors may do the same. Additional information on the material risks that could impact our actual results and the estimates and assumptions we applied in making these forward looking statements, together with details on our use of non-gaap financial measures, can be found in the financial statements for the period ended September 30, 2018 and management's discussion and analysis related thereto, as applicable, together with RioCan s current Annual Information Form that are all available on our website and at 2

3 ACCELERATION OF MAJOR MARKETS STRATEGY Closed/Firm/Conditional Dispositions 63% of Disposition Target Disposition Progress as of October 30, 2018 Transaction type Value (M) Closed and Firm $1,074 Conditional/LOI $178 Total to date $1,252 Capitalization Rate 6.49% 3

4 CANADA S URBAN PORTFOLIO Annualized Revenue from the Six Major Markets: 84.1% GTA: Q % Q % 4

5 Q HIGHLIGHTS RELATIVE TO Q Major Markets Same Property NOI ( SPNOI ) Overall SPNOI 2.1% Up 2.8% YTD 1.6% Up 2.3% YTD Major Markets Committed Occupancy 98.0% 97.0% Overall 97.2% Retail Only 98.2% Major Markets Retail FFO Per Unit - $ % Up 3.7% YTD Despite asset sales and development spending 5

6 SAME PROPERTY NOI GROWTH As compared to the first nine months of

7 FUNDS FROM OPERATIONS ( FFO ) & PAYOUT RATIO Increased 2.5% Despite asset sales Same property NOI Growth Highest in RioCan history* Key Drivers Gains from Marketable Security Sales Accretion from NCIB Payout Ratio** Target is to be below 80% FFO per Unit *Excludes Q when RioCan received a one-time settlement from Target ** For the twelve months ended 7

8 DEVELOPMENT PROGRESSING WELL EXAMPLES Office component substantially complete and fully leased. Possession of condo units (pre-sold) in 2019 Condos pre-sold and possession will start in Q4/18. Residential rental marketing to begin soon Marketing to commence in Q4/18, substantial completion and tenant move-in expected in first half of 2019 Substantially complete and fully leased, tenants will commence operations in first half of

9 LEVERAGE METRICS Target <8.0x Target 42% Approximately 1.76x D/EBITDA due to $1.3B development on the Balance Sheet Higher due to timing of dispositions and NCIB program Debt to Adj. EBITDA * 12 months ended Sept. 30, 2018 Debt to Assets Ratio 9

10 STRONG BALANCE SHEET PRUDENT CAPITAL MANAGEMENT & FLEXIBLE CAPITAL STRUCTURE Capital Structure Metrics Target Q3 2018* Leverage 38% - 42% 42.4% Debt/EBITDA <8.0x 7.79x Interest Coverage >3.0x 3.72x Debt Service Coverage >2.25x 3.09x Fixed Coverage CONSISTENTLY ABOVE >1.10x 95% 1.17x Unencumbered Assets N/A $7.9B Unencumbered Assets to Unencumbered Debt >2.0x 2.17x NOI % from Unencumbered Assets >50% 56.6% Unsecured vs. Secured Debt 60%/40% 59%/41% FFO Payout Ratio <80% 78.0% * Coverage and payout ratios calculated on a rolling 12 month basis 10

11 COMMITTED AND IN-PLACE OCCUPANCY Return to historic average 98.0% Major Market Occupancy Narrowing the gap

12 LEASING RESULTS New Leasing $27.83 psf 971,000 square feet in Q >90% of new leasing was completed in major markets >25% increase in average rent psf vs. Q Renewal Leasing 196 renewals totalling 1,469,000 square feet Retention rate of 93.8% in Q % increase when 10 renewals with one anchor tenant are excluded * Excluding ten lease renewals with one anchor tenant 12

13 CANADA S MAJOR MARKET PORTFOLIO WHERE NEW-TO-MARKET TENANTS WANT TO BE 13

14 REDEVELOPMENT PROGRESS BURLINGTON CENTRE Redevelopment, branding, physical space and tenant curation designed to meet the immediate and long term needs of the community and tenants Improved NOI and increased value 14

15 REDEVELOPMENT PROGRESS LAWRENCE SQUARE 15

16 DEVELOPMENT PROGRESS NLA COMPLETED IN 2018 (thousands) YTD Q3 Q2 Q1 Greenfield Development Urban Intensification Expansion & Redevelopment Total $149.6 million of costs transferred to IPP in Q $287.9 million of costs transferred to IPP YTD 654,000 sf of Urban Intensification NLA under development have committed or in-place leases at a weighted average net rent of approximately $32.06 psf 16

17 THE WELL SIGNIFICANT LEASING PROGRESS ON COMMERCIAL COMPONENT Mixed-use, 3.1M sf (at 100%) GTA site with ~425,000 sf retail, 1.1M sf 36 storeys of office and six residential towers with ~1,700 residential units (condo and rental) Completing excavation. Office tower will be back at grade November 2018 Office portion is up to 71% pre-leased Shopify, up to 433,750 sf Index Exchange, up to 200,000 sf Spaces, 125,000 sf 17

18 DEVELOPMENT PROGRESS King Portland Centre Mixed use; office, residential condo, and retail in Toronto Office component was substantially completed in Q Condominium portion (Kingly) is fully presold with profitability exceeding initial expectations. Gains from residential inventory will be recognized in

19 DEVELOPMENT PROGRESS 141,000 sf of grocery anchored urban retail & office in Toronto Substantially complete and fully leased Scotiabank and Sobeys (FreshCo) are expected to open late Q and early 2019 respectively Additional retail tenants include Winners Office tenants include University Health Network and a high profile technology company 19

20 DEVELOPMENT PROGRESS eplace: mixed use, residential condominium, rental residential, and retail at the corner of Yonge & Eglinton in Toronto Will begin marketing ecentral s 466 residential rental units in November 2018 with tenants beginning to pay rent in January 2019 econdo condominium owners will start to take occupancy in late 2018 RioCan will gain economic ownership of the remaining 50% interest of ecentral upon the first occupancy and the transaction is expected to close (purchase price of costs plus $10 million) in Spring

21 DEVELOPMENT PROGRESS Frontier: 23 storey, 228 unit rental residential located adjacent to RioCan Gloucester Silver City Shopping Centre Nearing completion on the first phase of Frontier in Ottawa Anticipate marketing rental units to prospective tenants late 2018 Tenants will start to take occupancy and being paying rent in Spring

22 TREMENDOUS SOURCES OF CASH FLOW & NAV GROWTH SELECTED DEVELOPMENT COMPLETIONS OVER THE NEXT THREE YEARS Yonge & Eglinton Northeast Corner (ecentral) Gloucester Phase I (Frontier) Dupont Street (Litho) King Portland Centre (Kingly) Bathurst College Centre Brentwood Village (Brio) College & Manning (Strada) At RioCan s Interest 2018 Q Est. Completed NLA ( 000s sf) Est. PUD Completions (millions) 2 $299 $279 $305 Annualized stabilized NOI from active projects with detailed costs estimates to be completed between Q and end of 2020 is expected to be approximately $46 million at RioCan's interest. The annualized stabilized NOI of a project is an estimate of stabilized NOI following completion of a project on a full year basis. NOI to be reported for the remainder of 2018 to 2020 will be different from this range, due to the partial year effect in a given year as a result of project completion timing and the effect of property lease up period. 1. Estimated NLA completions are NLA transferred to IPP upon projects completion in each period, which are estimated as 90% of gross floor area (GFA) 2. Estimated PUD cost completions are fully loaded IFRS costs including land that are to be transferred to IPP upon projects completion in each period, net of land and air rights sales for active projects with detailed cost estimates 22

23 DEVELOPMENT PIPELINE As of Sept. 30, 2018 Two-thirds with zoning approved or submitted and nearly 100% is located in the six major markets 23

24 CEO COMMENTS Edward Sonshine, O.Ont., Q.C. Chief Executive Officer 24

25 Edward Sonshine, O.Ont., Q.C. Chief Executive Officer Jonathan Gitlin Chief Operating Officer Qi Tang Senior Vice President & Chief Financial Officer Contact Information RioCan Yonge Eglinton Centre 2300 Yonge Street P.O. Box 2386 Toronto, ON M4P 1E4 (T) or (416)