building for tomorrow · investor presentation q3 2020 | riocan | 5. percentage of annualized...
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Investor Presentation Q3 2020 | October 2020
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Retail: 90.2%Office: 8.1%Residential: 1.7%
Increasingly Mixed-Use Portfolio
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About RioCanHigh quality portfolio concentrated in Canada’s major markets with a strong, diversified and largely defensive tenant base
~78%of tenants
Providing Strong or Stable Income
1. Based on annualized rental revenues as of Sept. 30, 2020
~42M Sq. Ft.Development Pipeline
Embedded Value Creation
Potential
96.0% Committed Occupancy during
Global Pandemic
With Significant Room to Grow to
Market Rents
Investor Presentation Q3 2020 | RioCan | 2
• High quality, sustainable income given our tenant composition, low enclosed mall exposure and major market concentration
• NAV creation and additional income through scaled development program with in-house expertise and advanced zoning entitlements ahead of peers
• Balance sheet strength and ample liquidity
• Deeply discounted unit price trading at record low FFO multiple despite strong Q3/20 cash rent collection of 93.4% amidst the pandemic
Why Invest in RioCan
Investor Presentation Q3 2020 | RioCan | 3
%
6.0x
9.0x
12.0x
15.0x
18.0x
27/Oct/16 27/Oct/17 27/Oct/18 27/Oct/19 27/Oct/20
Current negative sentiment will shift when health crisis dissipatesHighly compelling investment opportunity
5-year avgFFO Multiple: 13.2x
Dislocated trading price represents tremendous value in RioCan units
Investor Presentation Q3 2020 | RioCan | 4
CurrentFFO Multiple
9.0x1
5-yr AvgFFO Multiple
13.2xVs
9.0x1
1. Priced as of October 27, 2020 based on 1-year forward FFO/unit consensus estimate
% Deep Discount
Concentrated in transit corridors of Canada’s fastest growing major marketsRioCan locations – Where Canadians Live, Work and Shop
Investor Presentation Q3 2020 | RioCan | 5
Percentage of annualized rental revenue as of Q3 2020
Dense Population 201,3261 People
1. Population and average household income within 5Km of RioCan center, respectively; Source: DemoStats – 2020 - Trends, ©2020 Environics Analytics
Strong Household Incomes $117,9181
Last Mile HubIdeal for micro-fulfillment and Buy Online Pick-up In Store
Residential Development PotentialHighest and best use redevelopment addressing rental supply gap
High Quality, Sustainable Income
Q2 2020 Q3 2020
Cash Rent Collection Approved Deferrals
Positive trend through the quarter with 93%2 of tenants currently openRent Collection during COVID-191
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Rent Collection Trend (% billed gross rent)
~6%
~93%~85%
~91%~94%
0.5% 78% of tenants
~61%
~17%
~22%
Rent Collection by Tenant Type (% billed gross rent)
Strong tenantsNational office and essential / necessity / value and specialty retail tenants with strong rent paying ability
Stable tenantsTenants with strong or medium consumer offering combined with good or strong rent paying ability
Potentially Vulnerable tenantsTenants significantly impacted by pandemic and uses or tenants that were of concern prior to pandemic
85% Q3 cash rent collection
97%Q3 cash rent collection
High Quality, Sustainable Income
1. As of October 28, 20202. Based on occupied net leasable area
Complementary necessity-based and value-oriented tenancies mitigate risksStrategic leasing that provides necessities for communities
Investor Presentation Q3 2020 | RioCan | 7
Increasing Exposure
Reducing Exposure
Low Exposure to Declining Retail Concepts
1) Globo Shoes includes Aldo, Call it Spring and Globo2) Reitmans includes Penningtons, RW&CO., Addition Elle and Thyme Maternity3) Stern Group includes Ricki’s, Cleo and Bootlegger4) Laura includes Laura and Melanie Lyne5) Others include Anna Bella, Ascena Group Inc., Brooks Brothers, Chuck E. Cheese,
Coats Co., Davids Tea, Dr. Bernstein Health and Diet Clinic, Garage, Henry’s, Infinity Dental, Jack & Jones, J. Crew, Lucky Brand, Mendocino, Mountain Equipment Co-Operative, Solutions and Swimco.
High Quality, Sustainable Income
Globo Shoes1 0.2% -%L'Aubainerie 0.1% 0.1%Reitmans2 0.9% 0.3%Stern Group3 0.2% 0.1%GNC 0.1% 0.1%Laura4 0.4% -%Moores 0.3% 0.1%Le Chateau 0.1% 0.1%Others5 0.5% 0.1%Total RioCan Exposure 2.8% 0.9%( as of Oct 28, 2020)
Retailers restructuring since March 31, 2020
% of Annualized total rental
revenue
Confirmed closures as % of annualized total rental revenue
Strong leasing activity despite pandemicWell-positioned portfolio retains and attracts tenants
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Retention Ratio
(%)
83.1%89.4% 88.4%
Q1 2020 Q2 2020 Q3 2020
Renewal Leasing Spread
(%)
Blended Leasing Spread
(%)
High Quality, Sustainable Income
NewLeasing Spread
(%)6.7%
19.8%
9.2%
Q1 2020 Q2 2020 Q3 2020
5.3% 4.6% 4.6%
Q1 2020 Q2 2020 Q3 2020
5.6% 5.8% 5.5%
Q1 2020 Q2 2020 Q3 2020
1. Q2 2020 New leasing spread primarily driven by higher concentration of smaller, specialty tenants executing new leases and a pet store releasing space formerly occupied by a value retailer
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RioCan has access to various avenues to generate income and cash flowAdditional sources bolster traditional income stream
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Diversity of asset types:• Mixed-use developments increasingly
expanding our exposure to office and residential NOI
Inherent value in portfolio provides:• Inventory gains through condo /
townhouse developments or through sale of certain development land
• Third-party fees for RioCan expertise
High Quality, Sustainable Income
20.5M SF, 49%
7.3M SF, 17%
14.3M SF, 34%
• ~100% located in Canada’s six major markets
• ~73% located in the GTA
• ~99% of projects are mixed-use residential projects
• ~60% located on transit
• Completed / In development1
~5,400 residential rental units ~2,900 condo/townhouse units
With highest zoning entitlements among peersValue creation through mixed-use development
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Total Pipeline by Zoning Status
Zoning Approved
Zoning Applications Submitted
Future Estimated Density
42MSF
NAV Creation
1. In development includes projects in various stages of development with construction currently underway or starting by 2022
Development is a key driver of future growth and NAV expansion
RioCan’s development program offers multiple benefits
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Enhancing quality and security of income with diversification into residential rental
Yield Enhancement - exampleDevelopmentYield based
on IFRS Cost5.5%
Levered Development
Yield8.3%
Corp Leverage
42%
CHMC financing
1.7%
Residential vs Commercial - exampleResidential Development
Development Yield: 5.5%Cap rate: 3.5%
NAV Growth over Cost57%
Commercial Development
Development Yield: 5.5%Cap rate: 5.0%
NAV Growth over Cost10%
Asset Diversification
NOI Creation
NAV Creation
NAV Creation
Total estimates as of Q3 2020 for five recently completed development projectsProven mixed-use experience and value creation
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$574.9M Total
Estimated Net Project Costs
$32.1M Estimated Stabilized
NOI
$752.3MEstimated
Future Stabilized Value 1
5.6%Estimated Yield on
Total Costs
$203.6MTotal Estimated
Incremental Value Creation2
King and Portland Centre, Toronto
Top 10 most Influential Buildings of the 2010s (Urban Toronto)
ePlace, Toronto
With direct links to two subway linesFrontier, Ottawa
Bathurst College Centre, Toronto
Sage Hills, Calgary
1. Excludes condo gains; 2.Includes $26.2M of condo gains.
NAV Creation
Unlocking the full potential of transit-oriented locations
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RioCan’s selected developments mapped to Toronto transit system
NAV Creation
Under Construction: 2.3M sf
Completed Development: 0.8M sf
Future Development: 28.5M sf
Total (at RioCan’s Interest): 31.6M sf
Legend1
Demographics, 5km radius
Average population1: ~320K
Average household income1: ~$132K
Post-secondary education: ~62%
TTC – Existing
TTC – Under Development
TTC – Station
Planned Rapid Transit Line
Billy Bishop Toronto City Airport
CN Tower
Toronto PearsonInternational Airport
UnionStation
1. Square footage accounts for mixed-used residential development projects throughout the Greater Toronto Area at RioCan’s interest
Strong leasing velocity amidst the pandemicRioCan Living – High Quality Rental Residences
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eCentral, Toronto, ON Frontier, Ottawa, ON Brio, Calgary, AB
• 466 units, 36-storey building
• ~92% leased as of Oct. 28, 2020
• Rents averaging $3.90 per sf (for market rental units)
• Stabilization expected in Q4 2020
• 228 unit, 23-storey building
• 100% of Phase One, Frontier, isleased as of Oct. 28, 2020
• Rents averaging $2.50 per sf
• Phase Two Latitude is under construction with expected completion date in 2021
• 163 unit, 12-storey building
• Despite lease-up commencing in midst of COVID-19 and in Calgary, which has also been impacted by the prolonged oil crisis, ~53% leased as of Oct. 28, 2020
• Rents averaging $2.53 per sf
NAV Creation
Strong pre-sales for condos and townhomes despite the pandemicCondo / Townhouse development and value creation
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Yorkville Condos (11YV)~99% of the 586 units pre-sold as of Oct. 28, 2020 with first possession anticipated in 2024. Estimated inventory gains1 of $65.0M-$71.0M
Windfield Townhomes (U.C. Uptowns) Effectively all 153 units pre-sold as of Oct. 28, 2020 with first possession anticipated in 2022. Estimated inventory gains1 of $5.0M-$5.5M
Windfield Condos (U.C. Tower)~95% of the 503 units pre-sold as of Oct. 28, 2020 with first possession anticipated in 2023. Estimated inventory gains1 of $14.0M-$16.0M
NAV Creation
1. Estimated inventory gains are at RioCan’s interest
Ample liquidity bolstered by large pool of unencumbered assets
Disciplined and prudent balance sheet management
Investor Presentation Q3 2020 | RioCan | 16
Capital Structure MetricsTarget Q3 20201
Liquidity n/a $803MDebt to Adjusted EBITDA <8.0x 9.13x2
Debt to Total Assets 38% - 42% 44.8%Interest Coverage >3.0x 3.22xDebt Service Coverage >2.25x 2.71xFixed Charge Coverage >1.10x 1.06xUnencumbered Assets N/A $8.7BUnencumbered Assets to Unsecured Debt >2.0x 2.21xNOI % from Unencumbered Assets >50% 57.1%Unsecured vs. Secured Debt 60% / 40% 57% / 43%Ratio of Floating Rate Debt to Total Debt <15% 6.4%FFO Payout Ratio <80% 86.2%1. Metrics are calculated based on RioCan’s proportionate share2. Excluding an average development cost balance of $1.4B, debt-to-adjusted
EBITDA would be 7.2x
Balance SheetStrength
APPENDIX AND FEATURE PROJECTS
2323 Yonge St.
2345 Yonge St.
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Development pipeline: 59 projects delivering 42M square feet of NLAValue creation underway
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• 21 projects already under construction and on track for completion in the near to mid-term
• $1.2B invested to-date to drive further income diversification and creating net asset value for the long term
• Only $81.3M of cumulative fair value recognized as of Sept 30, 2020
(thousands of sq. ft.)# of projects Commercial Residential
Rental Air Rights Sale Residential Inventory Total
Under constructionMixed-use residential 10 1,012 862 1,030 211 3,115Greenfield Development 2 432 - - - 432Expansion & Redevelopment 9 114 - - - 114
Subtotal under construction 21 1,558 862 1,030 211 3,661
Approved ZoningMixed-use residential 15 2,612 7,059 - 961 10,632
Zoning applications submittedMixed-use residential 7 667 6,161 - 446 7,274
Total Active Projects 43 4,837 14,082 1,030 1,618 21,567
Future estimated densityMixed-use residential 16 2,092 18,179 0 180 20,451
Total development pipeline 59 6,929 32,261 1,030 1,798 42,018
Estimated Density (NLA) at RioCan's Interest
Projects under construction on track to deliver value creation over the next four years
Value creation underway
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Mixed-used Residential Projects Currently Under Construction
LocationRioCan Ownership
% (Partner)('000s sq.
ft)
Total NLA at Riocan Interest
# of residential
units at 100%
Cost to date at RioCan Interest
Total Est. Cost at RioCan Interest
Inventory gain ($M)
Anticipated date of
Completion
Yonge Sheppard Centre Residential (Pivot) Toronto, ON 100% 258 258 361 $218.3 $237.8 2020Windfield Farm U.C. Towns Oshawa, ON 50% (Tribute) 166 34.0 35.1 $12.9 2020
Dupont Street (Litho) Toronto, ON 50% (Woodbourne) 177 89 210 48.5 77.6 2021Fifth and Third East Village (5th & THIRD) Calgary, AB 100% 754 754 - 114.0 118.2 2021College & Manning (Strada) Toronto, ON 50% (Allied) 108 54 61 30.1 42.2 2021Gloucester - Phase Two (Latitude) Gloucester, ON 50% (Killam) 160 80 209 23.7 45.6 2021
The Well Toronto, ON50% commercial (Allied);
40% residential (Allied/Diamond)
2,615 1,200 na 517.0 888.4 2021 - 2023
Elmvale Acres - Phase One (Luma) Ottawa, ON 50% (Killam) 135 68 168 18.0 45.3 2022Windfield Farm U.C. Uptowns Oshawa, ON 50% (Tribute) 153 2.8 30.2 $5.0 - $5.5 2022
Westgate - Phase One (Rhythm) Ottawa, ON 100% 165 165 213 23.0 98.5 2022 - 2023The Well - (FourFifty The Well) Toronto, ON 50% (Woodbourne) 393 196 592 10.1 143.6 2023Windfield Farm U.C. Tower Oshawa, ON 50% (Tribute) 503 13.3 72.6 $14.0 - $16.0 2023
Rental units and retail 80 40 81 15.0 48.4 2024Condominium (11YV) 422 211 586 85.2 258.4 $65.0 - $71.0 2024
Total Under Construction 5,267 3,115 3,303 $1,152.9 $2,142.0 $96.9 - $105.4
Completed Projects
Yonge Eglinton N/E (eCentral & eCondos) Toronto, ON50% condo
(Metropia/Bazis) 712 356 1,089 na na $14.5 2019Gloucester Phase One (Frontier) Gloucester, ON 50% (Killam) 185 93 228 na na na 2019
Office and retail na na na na na naCondominium (Kingly) 421 210 132 na na $11.70 2019
Brentwood Village (Brio) Calgary, AB 50% (Brookfield) 144 72 163 na na na 2020
Total Completed 1,462 731 1,612 na na $26.2
Total Completed and Under Construction 6,729 3,846 4,915 na na $123.1 - $131.6
50% (CD Capital/Metropia)
Projects
($ in millions and thousands of sq. ft.)
King and Portland Center Toronto, ON 50% (Allied)
Yorkville Toronto, ON
HWY 400
HWY 7
RIOCAN COLOSSUS CENTREVAUGHAN, ON
HWY 407
Investor Presentation Q3 2020 | RioCan | 20
RIOCAN COLOSSUS CENTREVAUGHAN, ON
Investor Presentation Q3 2020 | RioCan | 21
• >50 acre site currently consisting of 571k sq. ft of income producing retail
• ~10M sq. ft. of mixed-use density contemplated involving multi-phase development
Investor Presentation Q3 2020 | RioCan | 22
THE WELL TORONTO
• 36-storey, 1.1 million square feet1 of office – 84% pre-leased
• ~420k square feet of retail
• 592-unit residential rental under construction
THE WELL TORONTO
Investor Presentation Q3 2020 | RioCan | 23
YONGE SHEPPARD CENTRE & PIVOTTORONTO
• ~315k sq. ft. of office
• ~305k sq. ft. of retail
• 36-storey, 361 unit residential rental - completed
Investor Presentation Q3 2020 | RioCan | 24
Frontier & LatitudeGloucester
Frontier, Phase 1 – 100% leased• 33-storey, 228 unit residential rental
Latitude, Phase 2 – under construction based on success of Phase 1• 20-storey, 209 unit residential rental
Investor Presentation Q3 2020 | RioCan | 25
LithoToronto
• 8-storey, 210 unit residential rental
• ~30.5k sq. ft. of retail
• Under construction for completion Summer 2021
Investor Presentation Q3 2020 | RioCan | 26
StradaToronto
• 7-storey, 61 unit residential rental
• ~5.6k sq. ft. of retail
• Under construction for completion Spring 2021
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RioCan’s consolidated financialstatements are prepared in accordancewith IFRS. Consistent with RioCan’smanagement framework, managementuses certain financial measures toassess RioCan’s financial performance,which are not generally acceptedaccounting principles (GAAP) underIFRS.
The following measures, Funds FromOperations (“FFO”), Net OperatingIncome (“NOI”), Adjusted Earningsbefore interest, taxes, depreciationand amortization (“AdjustedEBITDA”), Debt to Adjusted EBITDA,Same Property NOI, InterestCoverage, Debt Service Coverage,Fixed Charge Coverage, and TotalEnterprise Value as well as othermeasures discussed in this presentation,do not have a standardized definitionprescribed by IFRS and are, therefore,unlikely to be comparable to similarmeasures presented by other reportingissuers.
NON-GAAPMEASURES
Certain information included in this presentation contains forward-looking statements within the meaning of applicablesecurities laws including, among others, statements concerning our objectives, our strategies to achieve those objectives, aswell as statements with respect to management's beliefs, plans, estimates, and intentions, and similar statementsconcerning 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 projectionas reflected in these statements and actual results could differ materially from such conclusions, forecasts or projections.
Forward-looking information is not a guarantee of future events or performance and, by its nature, is based on RioCan’scurrent estimates and assumptions, which are subject to numerous risks and uncertainties. Such risks and uncertaintiesinclude, but are not limited to, the effects of COVID-19 on the businesses, operations and financial positions of RioCan andits tenants, as well as on consumer behaviors and the economy in general, including the length, spread and severity of thepandemic; the nature and length of the restrictive measures implemented or to be implemented by various levels ofgovernments in Canada; RioCan’s tenants' ability to pay rents as required under their leases; the availability of varioussupport programs that are or may be offered by the various levels of government in Canada and worldwide; domestic andglobal supply chains; timelines and costs related to the Trust’s development projects; the pace of property lease up andrents and yields achieved upon development completion; potential changes in leasing activities, market rents and propertyvaluations; the availability and extent of rent deferrals offered or to be offered by the Trust; domestic and global credit andcapital markets, and the Trust’s ability to access capital on favourable terms or at all, and its ability to maintain its currentcredit ratings; total market return and the dividend yield of the Trust’s Units; and the health and safety of our employees,tenants and people in the communities that our properties serve. For more information on other risks, uncertainties andassumptions that could cause the Trust's actual results to differ from current expectations, refer to the “Risks andUncertainties” section in RioCan’s Third Quarter 2020 MD&A for the period ended September 30, 2020 and in its mostrecent Annual Information Form, available at www.sedar.com and at www.riocan.com.
The forward looking information contained in this presentation is made as of the date hereof. Except as required byapplicable law, RioCan undertakes no obligation to publicly update or revise any forward-looking statement, whetheras a result of new information, future events or otherwise.
FORWARD LOOKINGINFORMATION
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