wunderlicht investor presentation june 2012 final · cimarex energy company location: tulsa cbd, ok...
TRANSCRIPT
WunderlichJune 2012
Certain statements made as part of this presentation are forward
looking in nature and are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
For a discussion of important factors that could cause actual
results to differ materially from those projected, please see “Risk
Factors” in the Company’s most recent Annual Report on Form
Forward Looking Statements
Factors” in the Company’s most recent Annual Report on Form
10-K and other filings with the Securities and Exchange
Commission, which are available on our website at
www.caplease.com or the SEC’s website at www.sec.gov.
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• Premier owner of
– strong single tenant real estate
– long-term leases
– high credit quality tenants
CapLease Overview
– high credit quality tenants
• Well diversified real estate portfolio by
tenant, property type, geography
• Highest quality assets versus peer group
• National franchise with 17 years of
expertise in net lease investing
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Premier Asset Quality
• High Quality Portfolio
– Diversified, high credit quality, $1.8 billion asset base– 11.6 million square feet 96% occupied– Strongest tenant credit rating among public net lease REITs– Long-term leases create growing earnings and cash flow– Fungible, institutional grade, class A properties located in major markets that will retain
value well beyond initial lease terms
• Conservatively Financed
– 86% of portfolio is financed on long-term fixed rate basis– 86% of portfolio is financed on long-term fixed rate basis
– Long-term fixed rate financing locks in long-term spread
– Substantially all financing is amortizing, non-recourse, and secured by individual assets and not the REIT
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Diverse, high quality portfolio of office, retail, and industrial real estate.
Our Properties
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Our Business Strategy
2012 2011 2010 2009
Acquisitions
Steady growth through
accretive, risk-adjusted
acquisitions and built-to-
suit projects
$86M + $110M+ $40M+ $0
Debt Repayment
Selected sale of debt
portfolio, recourse leverage
reduced by 66% , and debt
amortization
$40M $258M $73M $123M
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Well executed plan since the beginning of the credit crisis
Dividend Steadily increasing dividend $0.26 (ann.) $0.26 $0.245 $0.21
OccupancyMaintain high portfolio
occupancy level with pro-
active approach96% 96% 95% 100%
LeverageReduce leverage through
natural amortization and
targeted debt repayment64% 66% 72% 76%
A+
High Credit Quality Tenants
Top ten tenants are all rated investment grade and have an average credit rating of
Credit Rating¹ No. Of Properties Investment² Pct
Nestle Holdings, Inc. AA 3 $198,225 11.1%
US Government AA+ 7 195,568 11.0%
TJX Companies, Inc. A 1 93,016 5.2%
Aon Corporation BBB+ 1 88,390 5.0%
The Kroger Co. BBB 11 87,882 4.9%
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¹ Reflects actual or implied S&P rating.
² Reflects Company carry value before depreciation and amortization on owned properties.
Investment figures in thousands
As of March 31, 2012.
The Kroger Co. BBB 11 87,882 4.9%
Lowes Companies, Inc. A- 4 85,439 4.8%
Tiffany & Co. A- 1 77,640 4.4%
Invesco Holding Co. Ltd. A- 2 70,019 3.9%
Exelis Inc. BBB- 1 56,747 3.2%
Allstate Insurance Company A+ 2 56,170 3.2%
A+ 33 1,009,096
Industry Wavg. Credit Rating Percent of Total¹
Insurance A 16%
Food & Beverage AA- 16%
Government AA+ 13%
Financial BBB 9%
Grocery BBB 7%
Retail Department Stores A 6%
Building Materials A- 5%
Retail Jewelry A- 5%
Automotive BBB- 4%
Engineering BBB- 4%
Diverse Portfolio
Diverse Tenant Industries and Property Types in Owned Property Portfolio
Office, 50%
GSA (US Gov.), 12%
Retail, 10%
Office/Warehouse,
5%
Industrial,
1% Other, 1%
Engineering BBB- 4%
Healthcare AA- 3%
Communications BBB 3%
Hotel BBB 3%
Energy BBB- 2%
Publishing BBB+ 1%
Retail Drug BBB+ 1%
Other N/A 3%
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¹ Percentages based on investment value as of March 31, 2012. • 64 properties
• Over 11M SF
• Fungible property types
• Well located, predominately
in major markets
Warehouse, 22%
12%7% 6% 8%
8%13%
6%4%
Geographic Diversity
9%
6%
> 12% of total revenue
8 > < 12%
5 > < 8%
4 > < 5%
< 4%
9As of March 31, 2012.
7%
8%
12%13%
7%
28%
5%
10%
15%
20%
25%
30%
R
e
n
e
w
e
Manageable Lease Roll-overs
Down to 4.3% with lease extensions at (Nestle) Breinigsville, PA, (Del Monte) Lathrop, Ca, and (NIH) Bethesda, MD (expected during 2Q12)
7%
1%1%
5%
0%
5%
2012 2013 2014 2015 2016 2017 2018 2019 2020 Thereafter
e
d
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Accretive Investments
Tenant:Cooper Tire &
Rubber Co.Location: Franklin, IN
Credit Rating: BB-
Type: Warehouse
Size: 807,042 SF
Purchase Price: $32.5 million
Purchase Date: December 2010
Lease Term: 10.4 Years
Avg. Cap Rate: 9.2%
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Avg. Cap Rate: 9.2%Escalations: 3.00%
Accretive Investments
Tenants:
Praxair, Inc. (106,449 SF)
Dover Corp (14,005 SF), 3
other tenants (54,581 SF)
Location:The Woodlands, TX
(Houston)
Credit Rating: Praxair (A); Dover (A)
Type: Class A Office (LEED Silver)
Size: 175,035 SF
Purchase Price: $40.45 million
Purchase Date: June 2012
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Purchase Date: June 2012
Lease Term: Approx. 8.40 years
Avg. Cap Rate: 7.9%+Financing Rate: Sub 4.00%
Accretive InvestmentsBuilt-to-suit investment…
Tenant:
Cimarex
Energy
CompanyLocation: Tulsa CBD, OK
Credit Rating: BB+
Type: Office
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Type: Office
Size: 324,324 SF
Expected Purchase Price: $55.0 million
Close Date: July 2011
Expected Completion Date: 1Q2013
Lease Term: 12 Years
Avg Cap Rate : 10% +Escalations: 2.0%
Cap Rate Distribution 2011
20
25
30
35
40
45
1 STANDARD
DEVIATION, 8.18%-1 STANDARD
DEVIATION, 6.25%
MEAN, 7.22%
14
0
5
10
15
20
4.00% 5.00% 6.00% 7.00% 8.00% 9.00% 10.00%
-2 STANDARD
DEVIATIONS, 5.28%
2 STANDARD
DEVIATIONS,
9.15%
CapLease 2011
Cap Rate,
8.7%¹
Source: Real Capital Analytics
Note: Data set consists of single tenant properties, $15M+
¹ Represents our “going-in” cap rate which we compute by dividing the estimated net operating
income of the property for the first year of the lease term by our purchase price.
83.11%80%
90%
6.33%6.0%
7.0%
Strong Dividend Yield
• CapLease has a strong dividend yield with a low FFO payout ratio
• CapLease can increase the dividend over time as debt amortization declines
Strong dividend yield vs. peers Low Est. 2012 FFO payout ratio vs. peers
42.98%
52.78%
63.50%
67.47%
0%
10%
20%
30%
40%
50%
60%
70%
LSE¹ Office REITs All REITs Industrial REITs NNN REITs
5.32%
4.10%
3.78%
3.16%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
LSE NNN REITs All REITs Industrial REITs Office REITs
15Source: KeyBanc Capital Markets as of 05/04/2012. NNN REITs are LXP, NNN, O and
EPR. LSE closing price of $4.11 as of 05/04/2012.
¹ LSE 2012 FFO payout ratio based on mid-point of 2012 FFO guidance.
15.4x 15.4x 15.5x16.1x
12.0x
14.0x
16.0x
18.0x
8.64%
7.96%
7.17%7.01%
7.0%
8.0%
9.0%
10.0%
Compelling Investment
High implied cap rate vs. peers Low 2012 FFO multiple vs. peers
• CapLease trades at an implied cap rate significantly higher than its net lease peers
• CapLease’s stock price trades at a deep discount to NAV
6.8x
0.0x
2.0x
4.0x
6.0x
8.0x
10.0x
12.0x
LSE¹ All REITs Office REITs Industrial REITs NNN REITs
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
LSE Office Sector NNN Reits Industrial REITs
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CapLease offers a compelling investment opportunity at a very attractive valuation
Source: KeyBanc Capital Markets as of 05/04/2012. NNN REITs are LXP (except implied
cap rate), NNN, O and EPR. LSE closing price of $4.11 as of 05/04/2012.
¹ LSE 2012 FFO multiple based on mid-point of 2012 FFO guidance.
•• StableStable property portfolio supports property portfolio supports well covered well covered dividenddividend
•• Compelling investment Compelling investment –– high cap rate high cap rate vs. peer group, even modest multiple expansion will vs. peer group, even modest multiple expansion will
have SIGNIFICANT share price impacthave SIGNIFICANT share price impact
•• Experienced management team aligned with shareholders making Experienced management team aligned with shareholders making prudent prudent capital decisions capital decisions
including raising preferred equity when accretive for new investments and executing share buyincluding raising preferred equity when accretive for new investments and executing share buy--
back when that may be the best investmentback when that may be the best investment
•• New property acquisitions New property acquisitions augmentaugment existing institutional quality property portfolio existing institutional quality property portfolio
•• STRONG pipeline of deals for 2012 with $86 million closed and more to comeSTRONG pipeline of deals for 2012 with $86 million closed and more to come
Compelling Investment
•• STRONG pipeline of deals for 2012 with $86 million closed and more to comeSTRONG pipeline of deals for 2012 with $86 million closed and more to come
•• Great liquidity with CASH on hand, borrowing capability under Wells line and growing cash flows Great liquidity with CASH on hand, borrowing capability under Wells line and growing cash flows
from the portfoliofrom the portfolio
•• Long term, inexpensive, amortizing nonLong term, inexpensive, amortizing non--recourse debt recourse debt lowerslowers risk and risk and buildsbuilds equityequity
•• Even with all of this, shares trade at a Even with all of this, shares trade at a steepsteep discountdiscount to both NAV and peersto both NAV and peers
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