Investor Presentation. First Quarter 2015

Transcription

1 Investor Presentation First Quarter

2 CAUTIONARY STATEMENTS Today s session and our answers to questions contain statements that constitute forward-looking statements about expected future events and financial and operating results of CAPREIT. These statements represent CAPREIT s intentions, plans, expectations and beliefs as of the date hereof and are subject to certain risks and uncertainties. These statements are based on certain factors and assumptions regarding expected growth, results of operations, performance and business prospects and opportunities. Although such forward-looking statements are based upon assumptions that management believes are reasonable, there can be no assurance that actual results will be consistent with these forward-looking statements and actual results in future periods may differ materially from those expressed or implied by such forward-looking statements. These risks and uncertainties are more fully described in CAPREIT s regulatory filings, including our Annual Information Form and Managements Discussion and Analysis of the Results of Operations and Financial Condition, all of which can be obtained on SEDAR at Investors should not place undue reliance on any such forward-looking statements. Subject to applicable law, CAPREIT does not undertake any obligation to update or revise any forward-looking information. Non-IFRS Financial Measures CAPREIT prepares and releases quarterly unaudited and annual audited (condensed) consolidated financial statements prepared in accordance with International Financial Reporting Standards ( IFRS ). In today s session, and other earnings releases and investor conference calls, as a complement to results provided in accordance with IFRS, CAPREIT also discloses and discusses certain non-ifrs financial measures, including Net Operating Income ("NOI"), Funds From Operations ("FFO") and Normalized Funds From Operations ("NFFO"). These non-ifrs measures are further defined and discussed in the March 31, 2015 Management Discussion and Analysis of the Results of Operations and Financial Condition which, together with the unaudited condensed consolidated interim financial statements for the three months ended March 31, 2015, should be read in conjunction with today s presentation. Since NOI, FFO and NFFO are not measures determined by IFRS, they may not be comparable to similar measures reported by other issuers. CAPREIT has presented such non-ifrs measures as management believes these non-ifrs measures are relevant measures of the ability of CAPREIT to earn and distribute cash returns to Unitholders and to evaluate CAPREIT s performance. A reconciliation of such non-ifrs measures is provided in the Management Discussion and Analysis of the Results of Operations and Financial Condition. These non-ifrs measures should not be construed as alternatives to net income (loss) or cash flow from operating activities determined in accordance with IFRS as an indicator of CAPREIT s performance. 2

3 Profile 3

4 Canada s Landlord of Choice Focus Primary focus on residential rental sector Assets Interests in 41,837 residential suites and sites 35,552 apartment and townhouse suites 6,285 land lease sites in 30 manufactured home communities Listing Listed on Toronto Stock Exchange (symbol CAR.UN) Approx million Trust Units issued & outstanding TSX/S&P REIT Indices Market Cap Market capitalization approx. $3.42 billion as at March 31,

5 Experienced Operating Team The CAPREIT Wa y Innovative programs Staff training Knowledge & experience Hands-on approach Resident communications 5

6 Apartment Advantages 1 Stability Stable cash flow from diverse resident group 2 Predictability Short-term leases, predictable increases 3 Financing Lower cost CMHC-insured mortgage financing 4 Liquid Liquid real estate class 5 Growth Acquisitions at significant discount to replacement cost 6

7 Successful Business Model 1. ACQUIRE Acquire strategic properties & portfolios 2. APPLY Apply operating model to enhance NOI 4. DIVEST Divest non-core properties to invest in growth 3. INVEST Invest capital for maximum returns 7

8 Proven Sales and Marketing Programs 2014 Average Monthly Rents CAPREIT vs. CMHC CAPREIT $ % higher than industry $1, % $1, % $1, % $1, % $ % $ % $ % 8

9 Maximizing Ancillary Revenue $14.7M ~5.8% CAGR $19.5M Other Antenna Cable/Internet Laundry Parking: Commercial Parking: Tenant % increase in 2014 on stabilized properties 9

10 Efficient Operating Platform 46% Increase in Suite Count Only 14% Increase in Head Count +46% 41, % 28,

11 Solid Increase in Cash Distributions 3.4% 12th MONTHLY INCREASE IN MAY 2015 DISTRIBUTION $1.220 per Unit Annualized INCREASE IN 18 YEARS Stable & growing cash distributions 11

12 2014 A Remarkable Year 12

13 2014 Strong Growth Across All Performance Benchmarks Operating Revenues Net Operating Income Same Property Net Operating Income Normalized Funds from Operations NFFO per Unit NFFO payout ratio Up 6.2% Up 11% Up 7.5% Up 15% Up 7.2% 71.5% 13

14 Record Organic Growth Stabilized NOI Growth and NOI Margin by Province 2014 Year Ended December 31, NOI Growth Margin Ontario 7.4% 59.9% Québec 6.0% 55.6% British Columbia 8.8% 65.4% Alberta 10.8% 62.0% Nova Scotia 3.5% 63.7% MHC Portfolio 13.1% 64.4% Total Portfolio 7.5% 60.0% 14

15 Q Strong Performance Continues 15

16 Q Growth Continues Operating Revenues Net Operating Income Same Property Net Operating Income Normalized Funds from Operations Strong NFFO Payout Ratio Effective NFFO Payout Ratio Up 1.9% Up 4.8% Up 5.6% Up 1.9% 77.8% 54.0% 16

17 Organic Growth Continues Three Months Ended March 31, Stabilized Portfolio (% of total) 97.8% 98.5% Strong Stable NOI Margin 57.9% 55.8% Change in Operating Revenues +1.7% Change in Operating Costs -3.1% Increase in Same Property NOI +5.6% Same Property NOI Up 5.6% 17

18 Industry-Leading Occupancy & AMR Portfolio Average Monthly Rents (AMR) and Occupancy (By Sector) As at March31, AMR ($) Occ. (%) AMR ($) Occ. (%) Affordable Mid-tier 1, , Luxury 1, , Average Residential Suites 1, , Average MHC Land Lease Sites Overall Portfolio Average % change in gross rents impacts FFO / NFFO by $0.04 per Unit (Annualized) 18

19 Suite Turnovers and Lease Renewals Three Months Ended March 31, Change in AMR % Turnovers Change in AMR $ % & Renewals (1) $ % % Turnovers & Renewals (1) Suite Turnovers Lease Renewals Weighted Average of Turnovers and Renewals ON and BC Rent Guidelines Increased for 2015 (1) Percentage of suites turned over or renewed during the year based on the total number of residential suites (excluding co-ownerships) held at the end of the period. 19

20 Financial Review 20

21 Solid First Quarter Performance Q Q Operating Revenues $ 129.0M $ 126.5M Net Operating Income $ 74.8M $ 71.4M NFFO $ 43.7M $ 42.9 M NFFO per Unit $ $ NFFO Payout Ratio 77.8% 74.7% Weighted Average Number of Units +2.3% 21

22 Strong Financial Position & Coverage Ratios As at March 31, Total Debt to GBV 44.3% 47.6% Total Debt to Gross Historical Cost 54.2% 57.1% Weighted Average Mortgage Interest Rate 3.60% 3.77% Weighted Average Term to Maturity 6.2yrs 6.3yrs Debt Service Coverage 1.59x 1.58x Interest Coverage 2.82x 2.69x 22

23 Well Positioned Mortgage Portfolio Maturities ($M) $350 $300 $250 $200 $150 $100 $50 Total Mortgage Maturities and Interest Rates Effective weighted average interest rate for maturing mortgages 10 year estimated current market interest rate 2.50% Rate 5.0% 4.0% 3.0% 2.0% 1.0% $ % $251 million in unencumbered properties As at March 31,

24 Solid Liquidity Position Liquidity ($M) $300 Acquisition Capacity of Over $800 Million (Excluding Unencumbered Assets) Equity Offer Debt Ratio 80% $250 $200 Equity Offer Equity Offer Equity Offer Debt / GBV (%) 60% $150 Equity Offer 40% $100 $50 Liquidity ($M) 20% $0 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Liquidity ($M) Bridge Loan ($140M) Debt/GBV (%) 0% Effectively using liquidity to build value As at March 31,

25 Growth Set to Continue 25

26 A Remarkable Track Record Today IPO May ,837 Suites & Sites 2,900 Total Assets Market Cap $6.0 B $3.5 B $0.2 B $0.08 B Employees 831 Less than 20 Local Offices

27 Remarkable Unitholder Return Since IPO 1000% 924% CAPREIT 800% 600% 400% S&P TSX 254% 200% 0% % total Unitholder return in

28 Innovative Growth I-RES IPO in April 2014 $0.7 million gain on asset sale Strong recurring revenue from asset & property management fees $1.2 million in 2014 (eight months) $0.5 million first quarter 2015 Pipeline Agreement to support I-RES growth 1% underwriter s fee on sale of Rockbrook portfolio to I-RES of $0.8 million net of taxes 15.7% CAPREIT retained interest Long-term capital appreciation and dividends 28

29 New Growth Opportunity Partnering in mixed-use developments Looking to combine expertise with other REITs, Real Estate Corporations Strong demand for new rental accommodation CAPREIT owns excess land inventory Developable land on current properties Investigating zoning changes Solid potential ROI and access to target markets Building internal expertise Reviewing opportunities 29

30 Highly Positive Over the Long-Term The Positioning The Financial Strength Capitalizing on a strong and stable sector Strong and flexible balance sheet The Team The Strategy Experienced management team positioned for growth Successful business strategy with proven track record 30

31 Property Portfolio 31

32 Well Diversified Portfolio % of Total Suites and Sites 8% 6% 1% 55% 18% NB 6% NS 4% PEI 2% As at March 31,

33 Well Balanced Portfolio % of Total Suites and Sites MHC Luxury Mid-Tier Affordable 15% 33% 46% 6% Quality portfolio = stable cash flows As at March 31,

34 Regional Overview Ontario Residential Suites as at March 31, % Total NOI 54.0% 54.4% NOI ($000) 40,429 38,826 NOI Margin (%) 57.7% 56.1% Occupancy (%) 99.3% 98.4% Average Monthly Rents ($) 1,150 1,122 34

35 Regional Overview Québec Residential Suites as at March 31, % Total NOI 15.3% 16.2% NOI ($000) 11,470 11,555 NOI Margin (%) 49.9% 50.4% Occupancy (%) 97.0% 97.3% Average Monthly Rents ($)

36 Regional Overview British Columbia Residential Suites as at March 31, % Total NOI 9.9% 9.4% NOI ($000) 7,431 6,710 NOI Margin (%) 67.2% 62.7% Occupancy (%) 99.7% 98.8% Average Monthly Rents ($) 1,060 1,023 36

37 Regional Overview Alberta Residential Suites as at March 31, % Total NOI 8.7% 7.4% NOI ($000) 6,480 5,317 NOI Margin (%) 66.6% 58.4% Occupancy (%) 98.3% 99.0% Average Monthly Rents ($) 1,238 1,176 37

38 Regional Overview Nova Scotia Residential Suites as at March 31, % Total NOI 3.7% 4.3% NOI ($000) 2,764 3,102 NOI Margin (%) 55.4% 60.2% Occupancy (%) 94.3% 93.0% Average Monthly Rents ($) 1,035 1,002 38

39 Regional Overview Saskatchewan Residential Suites as at March 31, % Total NOI 0.9% 0.6% NOI ($000) NOI Margin (%) 59.4% 56.5% Occupancy (%) 94.8% 98.8% Average Monthly Rents ($)

40 Regional Overview Prince Edward Island Residential Suites as at March 31, % Total NOI 0.7% 0.2% NOI ($000) NOI Margin (%) 41.8% 27.0% Occupancy (%) 95.4% 87.5% Average Monthly Rents ($)

41 MHC Portfolio Sites as at March 31, % Total NOI 5.6% 5.7% NOI ($000) 4,197 4,037 NOI Margin (%) 62.5% 62.0% Occupancy (%) 99.3% 97.7% Average Monthly Rents ($)

42 First Quarter