building on experience, shaping the future · 2019-03-26 · building on experience, shaping the...

BUILDING ON EXPERIENCE, SHAPING THE FUTURE RioCan Investor Presentation – Fourth Quarter 2018

March 2019

RioCan’s consolidated financial statements are prepared in accordance with IFRS. Consistent with RioCan’s management framework, management uses certain financial

measures to assess RioCan’s financial performance, which are not generally accepted accounting principles (GAAP) under IFRS.

The following measures, RioCan’s Proportionate Share (or Interest), Funds From Operations (“FFO”), Net Operating Income (“NOI”), Adjusted Earnings before interest,

taxes, depreciation and amortization (“Adjusted EBITDA”), Debt to Adjusted EBITDA, Same Property NOI, Interest Coverage, Debt Service Coverage, Fixed Charge

Coverage, and Total Enterprise Value as well as other measures discussed in this presentation, do not have a 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 flow, and profitability. For a full definition of these measures, please refer to the “Non-GAAP Measures” in RioCan’s Management’s Discussion and

Analysis for the year ended December 31, 2018. RioCan uses these measures to better assess the Trust’s underlying performance and provides these additional measures so

that investors may do the same.

NON-GAAP MEASURES

RioCan data and statistics are based on year ended December 31, 2018 information. Certain slides contain a peer comparison that is based on the respective issuer’s reported

information as at December 31, 2018. Peer group includes: First Capital Realty Corp. (FCR), SmartCentres REIT (SRU), Choice Properties REIT (CHP), CT REIT (CRT), and

Crombie REIT (CRR). All information presented is at RioCan’s interest unless otherwise noted. CAGR refers to compound annual growth rate of a specific metric over a

period of time.

PEER DATA PRESENTATION

Certain information included in this presentation contains forward-looking statements within the meaning of applicable securities laws including, among others, statements

concerning our objectives, our 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. Certain material factors, estimates or

assumptions were applied in drawing a conclusion or making a forecast or projection as reflected in these statements and actual results could differ materially from such

conclusions, forecasts or projections.

The forward looking information contained in this presentation is made as of the date hereof.

Additional information on the material risks that could cause our actual results to differ materially from the conclusions, forecast or projections in these statements and the

material factors, estimates or assumptions that were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking information can be

found in our most recent annual information form and annual report that are available on our website and at www.sedar.com.

Except as required by applicable law, RioCan undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information,

future events or otherwise.

FORWARD LOOKING INFORMATION

http://www.sedar.com/





BC

AT A GLANCE

• One of Canada’s first and largest REITs,

focused on the ownership, management and

development of high-quality, mixed-use

properties in Canada’s six major markets

• 25-year proven track record

• Diversified and predominantly necessity-based,

service-focused tenant mix

• Robust 26.2 M sf development pipeline,

11.2 M sf or 43% already with zoning approvals.

2,100 residential rental units under construction with

additional 2,200 units underway by 20213.

• Rated BBB with stable outlook by S&P

and BBB (high) with stable trend by DBRS

QUICK FACTS

Enterprise Value $13.2 B

Number of Properties 233

Net Leasable Area (NLA) (M sf) 38.7

Same Property NOI (SPNOI) 2.2%

Major Market SPNOI 2.6%

Committed Occupancy 97.1%

Major Market Committed Occupancy 97.7%

Blended New and Renewal Leasing Spread1 6.8%

Renewal Retention Rate 91.2%

GTA Focus - % of Annualized Rental Revenue

Peer Average2

46.8%

24.4%

Growth driven by strategic insight

1. Excludes 11 renewals with one anchor tenant at properties mostly located in secondary markets

2. Source: Company reports. Peer group includes: FCR, CHP, and CRT (CRR and SRU do not disclose this info)

3. At 100% of project

Investor Presentation | RioCan | 03

Calgary

Edmonton

Vancouver

Toronto

Montreal

Ottawa 13.0%

9.5%

5.5%

5.5%

46.8%

ANNUALIZED REVENUE FROM SIX MAJOR MARKETS: 85.4%

5.1%

KEY DIFFERENTIATORS STRATEGIC PRIORITIES

Strengthen Canada’s leading major market portfolio by focusing on properties

within fast-growing, high-population and high-income areas in order to achieve

higher occupancy and rent growth.

CONCENTRATE WITHIN MAJOR MARKETS

Strategically evolve our tenant mix to stay ahead of changing consumer trends

and drive strong results from operating efficiency and ancillary revenue.

DRIVE ORGANIC GROWTH

25 YEARS OF

REIT LEADERSHIP

STRONG

BALANCE SHEET

LEADING MAJOR

MARKET PORTFOLIO

UNPARALLELED

DEVELOPMENT

PIPELINE Bring our major market assets to their highest and best use by capitalizing on opportunities

to intensify transit-oriented properties with mixed-use and residential developments,

generating new sources of cash flow and NAV growth from completions.

UNLOCK INTRINSIC VALUE

Utilize our diversified and strong tenant base, disciplined and staggered development approach,

sophisticated management team and fortress balance sheet to control development risks, embed

sustainability and diversify our portfolio.

MANAGE RISK EFFECTIVELY


OUR QUALITY OF INCOME HAS NEVER BEEN STRONGER

Edward

Sonshine

O.Ont, Q.C

Founder and

Chief Executive

Officer

Jonathan Gitlin

President &

Chief Operating

Officer

Qi Tang

Senior Vice

President &

Chief Financial

Officer

John

Ballantyne

Senior Vice

President,

Asset

Management

Jeff Ross

Senior Vice

President,

Leasing &

Tenant

Coordination

Andrew

Duncan

Senior Vice

President,

Developments

Jennifer Suess

Senior Vice

President, General

Counsel and

Corporate

Secretary

25 YEARS OF REIT LEADERSHIP Deep industry knowledge and unparalleled experience

Deep executive bench

operating one of the largest

and longest-running

REITs in Canada.

Long track record of

driving success and value,

resulting in respect, trust

and deep relationships.

Uniquely integrated to

drive the highest returns and

best use of every property

for continued optimization.

Proven balance of

calculated risk-taking

and prudent financial

management.


Metric 2013 1 2018 Total

Improvement

Major Market Presence (% of Revenue) 71.7% 85.4% +13.7%

GTA Presence (% of Revenue) 41.6% 46.8% +5.2%

Total NLA from Development Pipeline (in SF) 4.9M 26.2M +21.3M

Same Property NOI growth 1.3% 2.2% +0.9%

Average Net Rent PSF (Canada Only) $16.63 $19.07 +$2.44

Committed Occupancy (Canada Only) 96.9% 97.1% +0.2%

% Revenue from Department Stores & Apparel 13.0% 8.6% -4.4 %

Largest Revenue Exposure from One Tenant 3.7% 4.5% +0.8%

Development Costs on the Balance Sheet $583M $1,194M 2 +$611M

Debt to Adjusted EBITDA 7.56x 7.88x +0.32x

Interest Coverage 2.83x 3.63x +0.80x

Debt Service Coverage 2.10x 3.05x +0.95x

Fixed Charge Coverage 1.06x 1.15x +0.09x

Unencumbered Assets $2,068M $7,970M +$5,902M

Unencumbered Assets / Unencumbered Debt 142% 231% +89%

NOI % from Unencumbered Assets 19.2% 59.1% +39.9 %

Unsecured Debt as % of Total Debt 24.3% 57.6% +33.3%

FFO Payout Ratio 90.4% 77.9% -12.5%

Leverage 44.0% 42.1% -1.9%

Net Book Value Per Unit $23.01 $25.13 +$2.12

1. Includes US operations unless otherwise noted

2. Includes $206M of Residential Inventory

OUR QUALITY OF INCOME HAS NEVER BEEN STRONGER Operating metrics and balance sheet are producing the highest quality income in RioCan’s history



UNDERVALUED UNIT PRICE Relative to analyst consensus estimate of RioCan’s net asset value

-40.0%

-30.0%

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

$0.00

$5.00

$10.00

$15.00

$20.00

$25.00

$30.00

$35.00

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Dis

co

un

t o

r P

rem

ium

to

NA

V

Un

it P

rice H

isto

ry

Unit Price History Discount or Premium to NAV

Source: SNL (S&P)

Grocery / Pharmacy /

Liquor / Restaurants

27%

Personal Services

21%

Value Retailers 14%

Specialty Retailers

11%

Furniture & Home 10%

Department Stores & Apparel

9%

Movie Theatres 5%

Entertainment & Hobby

3%

The portfolio’s balanced tenant mix eliminates single tenant

overexposure and drives long-term, stable revenues.

RENT BREAKDOWN 2018

WELL DIVERSIFIED NATIONAL TENANT BASE


STAYING AHEAD OF CHANGING CONSUMER TRENDS Strategic insights drive long-term growth and high-quality returns

NO SINGLE TENANT REPRESENTING >5%

OF ANNUAL RENTAL REVENUE

RioCan has shaped its rental portfolio in parallel with

key consumer behaviour trends with the objective of maximizing long-

term revenue growth.

3%

since 2007

5%

since 2007

8%

since 2007

73% OF RENT FROM NECESSITY-BASED AND

SERVICE ORIENTED TENANTS


CANADA vs. U.S. Retail market differences

• Less retail space per capita in Canada1 (16.4 sf

per capita vs 23.5 sf per capita in the U.S.).

• Canada has one of the fastest rates of

population growth within the OEDC countries.

• Retailers in Canada face less competition, and

there are fewer players within each category

which means retailers within each category are

more viable.

• Canada has only two major department

stores (Walmart and Hudson’s Bay

Company) and has already gone

through the dislocation of Target and

Sears exiting the market.

• Distribution obstacles create a more

challenging eCommerce environment in

Canada.

Historical Background and

Stronger Demand for Yield

• Canadian REITs have a

shorter history and face

higher investor demand for

yield.

• Canadian retail REITS have

lower institutional ownership

(~32% in Canada vs. ~87%

in the U.S.).

Stronger Retail

Operating Environment

More Significant

Barriers to Entry

• Canada’s largest cities have

limited land supply due to

environmental and government

restrictions including,

development regulations and

municipal bylaws.

• Recourse borrowing and

higher proportion of secured

financing in Canada vs. U.S.

non-recourse borrowing and

heavier reliance on unsecured

financing, which leads to less

retail development.

1. Source: Retail Council of Canada Canadian Shopping Centre Study

STRATEGIC CANADIAN MAJOR MARKET POSITIONING Concentrate in

Major Markets

1. Excludes 16 active properties under development with 2.2M sf at RioCan’s interest

2. Excludes 12 active properties under development with 1.7M sf at RioCan’s interest Investor Presentation | RioCan | 10

171 assets 1

29.8M SF

85.4% of

annualized revenue 11M+ SF zoned

for development

2.6%

SPNOI growth 97.7% committed

occupancy

KEY METRICS IN CANADA’S SIX MAJOR MARKETS

Calgary

Edmonton

Vancouver

Toronto

Montreal Ottawa

7 assets

1.8M SF

12 assets

1.7M SF

14 assets

3.2M SF

20 assets

3.0M SF

35 assets

4.8M SF

83 assets2

15.3M SF

24%

46.8% >50%

PeerAverage

Riocan2018

RiocanVision

DISPOSITION PROGRESS AS OF FEBRUARY 11, 2019

Transaction type Value (M)

• Sale prices to-date are materially in line with IFRS value

• $1.5B progress since the October 2017 announcement

represents approximately 73% of the $2.0B disposition target

• Dispositions span a broad range of secondary markets

Closed and Firm $1,265

Conditional $191

Total to Date $1,456

Weighted Average Cap Rate 6.68%

8.7%

26.2%

64.6%

3.7% 8.1%

17.8%

2006 2011 2017 2036 Forecast

Six Major Markets Secondary markets

Concentrate in

Major Markets

SUCCESSFULLY EXECUTING SECONDARY MARKET DISPOSITIONS

Investor Presentation | RioCan | 11 1. Source: Company reports. Peer group includes: FCR, CHP, and CRT (CRR and SRU do not disclose this info)

1

62%

85.4% >90%

PeerAverage

Riocan2018

RiocanVision

% of Revenue

in Major Markets

% of Revenue

in GTA

1

Canadian Cumulative

Population Growth

2006, 2017 Data: Statistics Canada

2036 Data: Statistics Canada, Provincial and Municipal population forecasts

TOTAL GTA Presence

15.3M sf1 in the GTA

INDUSTRY LEADING PRESENCE IN THE GTA & TORONTO CORE

Legend

RioCan Property

83 assets1

46.8% of annualized revenue

3.3% SPNOI growth

98.0% Committed Occupancy


Concentrate in

Major Markets

Primary Highways

TORONTO CORE Presence

4.5M sf in the Toronto Core

1. Excludes 12 properties under development with 1.7M sf at RioCan’s interest

Billy Bishop

Toronto City Airport

Toronto Etobicoke

York East York Toronto Pearson

International Airport

407

400

401

401

427

QEW

GARDINER EXP

DVP

Union

Station

CN Tower

Under Development: 4.7M sf

Completed Development: 0.2M sf

Future Development Potential: 4.0M sf

TOTAL: 8.9M sf

4.7M sf

0.2M sf

4.0M sf

UNLOCKING THE FULL POTENTIAL

OF HIGH DENSITY LOCATIONS RioCan’s selected developments mapped to Toronto’s rapid transit system

1. Average demographics within a 3km radius

of RioCan Urban Toronto development sites

Legend

Demographics, 3km radius

Average population: 230,000

Dense population1:

HH Income: $130,000+

Post-secondary education: 65%+

Desirable demographic1:


Concentrate in

Major Markets

Billy Bishop Toronto City Airport

CN Tower

Toronto Pearson

International Airport

Union Station

TTC – Existing

TTC – Under Development

TTC – Station

Planned Rapid Transit Line

88.0%

90.2%

85.7% 85.8%

91.1% 91.2%

80.0%

85.0%

90.0%

95.0%

2013 2014 2015 2016 2017 2018

Strong retention rate

8.3%

11.2% 12.5%

9.9%

12.1%

$19.69 $19.47 $18.86

$21.26 $20.13

$0.00

$5.00

$10.00

$15.00

$20.00

$25.00

0.0%

5.0%

10.0%

15.0%

20.0%

2019 2020 2021 2022 2023

Lease Maturity Expiring Rent

Staggered lease maturity

HIGH-PERFORMANCE PORTFOLIO Consistently delivering high-quality, growing income

High occupancy and strong net rent growth (8 year net rent CAGR ─ 3.2%)


97.3% 97.5% 97.2% 96.9% 97.0%

94.0%

95.6% 96.6% 97.1%

$14.82 $15.21

$16.07

$16.63 $16.69 $17.11

$17.59

$17.75 $19.07

$14.00

$15.00

$16.00

$17.00

$18.00

$19.00

$20.00

90.0%

95.0%

100.0%

2010 2011 2012 2013 2014 2015 2016 2017 2018

Committed Occupancy Average Net Rent

Target

departure

Sears

departure

PSF

Drive Organic Growth

Proposed

RioCan Leaside Centre - Toronto ON South Edmonton Common - Edmonton AB

Acquisition Date 2002 50% in 2002 and 50% in 2015

Total GLA 133,035 sf 426,270 sf

Ownership % 100% 100%

Total Cost 1 $50.0M $121.6M

Valuation, 2018 $98.0M $213.6M

Value Creation ($M) 2 $48.0M $92.0M

Value Creation (%) 2 95.9% 75.7%

Value Creation CAGR 2

4.3% 6.6%4

NOI growth CAGR 2 2.8% 4.7%

Value drivers

• Central, transit-oriented location, with a desirable demographic3

(198,000 people & an average household income of $147,000)

• Rents were under market at acquisition

• Leveraged our scale and the desirability of the site to consistently

maximize rents on renewals

• Significant future value creation will be realized via intensification

• Prime location with excellent highway access

• Consistently driving rent growth through renewals by

leveraging the scale and size of the thriving retail

development, and the growing, desirable demographic2

(423,000 people & an average household income of $121,000)


CASE STUDY | LEVERAGING THE QUALITY OF OUR LOCATIONS And the strength of our teams to deliver value


1. Total cost includes purchase price and revenue enhancing capital expenditures since acquisition but does not include maintenance capital expenditures

2. Since acquisition date

3. Source – Environics Analytics. Demographic information assumes 3km trade area for midtown Toronto locations and 10km trade area for properties outside of the city core

4. Average of value creation CAGR for the original 50% interest since 2002 and CAGR for remaining 50% interest since 2015

• Located at the intersection of the Yonge subway

station and the Eglinton Crosstown LRT

• In 2016 completed the transformation from a

traditional retail/office space into a vibrant mixed-

use destination centre:

˗ Full redevelopment and expansion of the

retail space

˗ Office tower renovation and façade

improvements

˗ Addition of digital screens to drive ancillary

revenue


CASE STUDY | TRANSFORMING AN ICONIC LOCATION Yonge Eglinton Centre

Driving value through demand in an iconic location: 57.8% increase in office rent since acquisition

Driving growth through strategic

remerchandising. Addition of Sephora,

Cineplex VIP Cinemas, Winners and

multiple national food service operators

55% or $7.95 growth in net rent psf

since acquisition

Perfectly positioned through location

& tenant mix to serve a high growth,

desirable demographic3

Population: 191,000

Average income: $272,000



3. Source: Environics Analytics Data Stats 2018 – assumes a 3km trade area for mid-town Toronto

Acquisition Date 2007

Total GLA 1,057,610 sf

Ownership 100%

Total Costs 1 $333.0M

Valuation 2018 $639.2M

Value Creation2 ($M) $306.2M

Value Creation2 (%) 92.0%

Value Creation CAGR2 6.1%

NOI growth CAGR2 8.3%

Estimated $306.2M of value creation since acquisition


Acquisition Date 2013

Total GLA 600,831 sf

Ownership 50%

Total Cost 1 $143.8M

Valuation, 2018 $174.0M

Value Creation ($M) 2 $30.2M

Value Creation (%) 2

21.0%

NOI growth 2

42.0%

Comprehensive redevelopment strategy includes re-branding and

remerchandising to transform the property into an essential community hub.

New tenants include: Denningers, Indigo, Winners, Homesense and

multiple national food service providers.

Re-demised a former Target space

to bring in new lifestyle, value based

and service-oriented tenants.

39% or $6.46 growth in rent psf

since acquisition.

Redevelopment included a new corridor to

improve flow, an expanded food court,

upgraded common areas, and a

dedicated community room.

Estimated $30.2M of value creation since acquisition



CASE STUDY | REDEVELOPING TO DRIVE GROWTH Burlington Centre



* Includes 22.8M sf of incremental NLA and 3.4M sf of NLA which is currently income producing. All data at RioCan’s interest

22.8M incremental

NLA or ~62% of

existing NLA. The

pipeline is expected

to grow over time

36.5M existing

IPP NLA

RioCan NLA RioCan NLA includingincremental NLA from

Development*

Zoned, 11.2M sf, 42.9%

Application submitted, 5.4M sf, 20.5%

Future est. density, 9.6M sf, 36.6%

Total Pipeline by Zoning Status* (26.2M sf)


Unlock Intrinsic Value

ROBUST PIPELINE TO DRIVE CASH FLOW & NAV GROWTH High percentage of development pipeline zoned, enabling strong incremental NLA increase

42.9% or 11.2M sf with

zoning approved, 100%

located in the six major

markets

97.1% of projects are mixed-

use residential totaling 25.5M

sf and the remaining 3% in

commercial only with 0.7M sf

10 year head start in the zoning

approval process is key competitive

advantage in today’s more

challenging regulatory environment

2,100 residential units under

construction with additional

2,200 units underway by 2021

• Dedicated development

team; planning, design,

construction and mixed-use

residential experience

• Well laddered development

starts

• Pre-leasing requirement for

commercial development

and sound market studies for

residential development

• Well-established internal

control process for

development approvals and

construction management

• Strategic alliances to

reduce capital requirements

and mitigate risks

• Already own the assets,

which are income producing,

thus allowing for strategic

development starts in

response to construction cost

fluctuation

• Balanced approach to rental

residential, condominium

and townhouse

development

1. Maximum permitted is 15%. RioCan targets this metric to be no more than 10% (except for short-term fluctuations as large projects are completed)

As at

Dec 31, 2018 Target

Properties Under Development (“PUD”) & Residential

Inventory $1.2B N/A

PUD and Residential Inventory as % of Gross Assets – Per

Line of Credit and Credit Facilities Agreements 8.5% ~ 10%1

Investment in Greenfield Development and Residential

Inventory as % of Unitholder Equity - Per Declaration of

Trust 5.3% N/A


WELL-POSITIONED FOR VALUE CREATION Prudent approach to development

Current PUD andInventory Balance

Annual DevelopmentSpend

Annual DevelopmentCompletions

Target PUD andInventory Balance *

$1.2B

$400M-$500M < $1.5B

$300M-$600M

Self fund development, not through leverage increase or equity issuance

Manage Risk Effectively

2018 2019 2020


TREMENDOUS SOURCE OF CASH FLOW & NAV GROWTH Mixed-use development in high growth, high population, transit-oriented major markets


Yonge Eglinton Northeast

Corner (ePlace) Brentwood Village

(Brio)

Bathurst College

Centre

Gloucester Phase I

(Frontier) Dupont Street

(Litho)

College & Manning

(Strada)

King Portland Centre

(Kingly)

491 College St

Selected development completions through 2020

• Estimates of development yield and value creation are as follows for five urban intensification and greenfield

development projects that are complete or close to completion:

• As of December 31, 2018, $165.4 million of the incremental value creation has been recognized through property

IFRS fair market values, applicable interim and fee income, and inventory gains

Ownership

(For data in this

table)

Total Estimated

Net Project Costs

Estimated

Stabilized NOI

Estimated Yield

on Total Costs

Estimated Future

Stabilized Value

Estimated

Residential

Inventory Gains

Total Estimated

Incremental

Value Creation

Yonge Eglinton

Northeast Corner

(ePlace) 1

100% $223.2M $11.8M 5.3% $327.3M $14.0M $118.1M

King Portland

Centre 50% $86.4M $5.5M 6.4% $129.9M $12.5M $56.0M

Bathurst

College Centre 100% $109.4M $5.2M 4.8% $115.4M N/A $6.0M

Gloucester

(Frontier) 2 50% $34.1M $1.8M 5.3% $44.8M N/A $10.7M

Sage Hill 3 100% $120.8M $8.5M 7.0% $161.0M N/A $40.2M

TOTAL $573.9M $32.8M 5.7% $778.4M $26.5M $231.0M

1. Total estimated project costs include estimated project costs for the Trust's current 50% interest, net of applicable interim and fee income during the development period, plus the cost of acquiring

the remaining 50% interest in the residential rental tower at costs plus $10 million and the remaining 50% interest in the retail component based on stabilized retail NOI at a 7.0% capitalization rate

pursuant to the existing agreements with our project partners. Both transactions are expected to close in 2019.

2. Total estimated net project costs include land costs for this phase one development. Excluding the cost of the phase one land which has been owned by the Trust since 1999 as part of the 7.1-acre

shopping center, the estimated development yield would be 5.8%.

3. The estimated yield on the Trust's original 50% interest in this project is 8.4%. In February 2019 the Trust acquired the remaining 50% ownership interest for $70.4 million, which is higher than the

estimated net project costs of the Trust's original 50% interest in the project. The blended yield on this project is therefore 7.0%.

DEVELOPMENT YIELD AND VALUE CREATION




• eCentral is a 36 storey, 466 unit rental residential building

• Located across the street from, and with an underground connection to Yonge

Eglinton Centre

• Unparalleled access to the Yonge subway and the new Eglinton Crosstown LRT

• Part of ePlace; a 50% JV with Metropia and Bazis, mixed-use development

which also includes (at 100%):

• 22,000 sf of retail (flagship TD Bank and foodservice)

• 20,000 sf commercial condo

• 58 storey, 623 unit condominium tower (fully sold out, possession

expected in 2019)

• Rental residential leasing commenced in Q4 2018


CASE STUDY | eCENTRAL RENTAL RESIDENTIAL

1. Total estimated project costs include estimated project costs for the Trust's current 50% interest, net of applicable interim and fee income during the development period,

plus the cost of acquiring the remaining 50% interest in the residential rental tower at costs plus $10 million and the remaining 50% interest in the retail component based

on stabilized retail NOI at a 7.0% capitalization rate pursuant to the existing agreements with our project partners. Both transactions are expected to close in 2019.

Pro Forma Ownership 100%

Construction Start 2015

Construction Completion 2019

Total Cost1 $223.2M

Stabilized Value $327.3M

Value Creation ($M) $104.1M

Value Creation (%) 46.6%

Condo Sale Gains $14.0M

Total Project - Value

Creation $118.1M

Stabilized NOI $11.8M

Estimated $118.1M of value creation

Ownership 50% JV with

Killam REIT



Total Cost 1 $34.1M






Frontier rental residential phase I:

• 23 storey, 228 unit rental residential

building

• Leasing commenced in Q4 2018 and

is progressing ahead of expectations

• Located on a 7.1 acre portion of

RioCan’s Gloucester Silver City

Shopping Centre

• Adjacent to the new Confederation

LRT line at the Blair Station in Ottawa

• Transitioned the land use from 77,000

sf of struggling fashion

retail to a desirable rental

residential development

• Sustainable development including

a geothermal energy system


CASE STUDY | FRONTIER (PHASE I)

Zoning has been approved for four residential

towers on the site with up to 840 units

RioCan Gloucester Silver City shopping centre

tenant mix is strong and diverse: Cineplex theatre,

Chapters, Goodlife and numerous restaurants


1. Total costs are net of applicable interim and fee income during the development period

Acquisition Date 2014 and 2019

Total GLA 383,796 sf

Ownership 2 100%

Total Cost 3 $120.8M




NOI at Stabilization $8.5M

1. Source: Environics Analytics Data Stats 2018 – assumes 5km trade area

2. In February 2019 the Trust acquired the remaining 50% ownership interest for $70.4 million

3. Total cost includes the Trust's original 50% interest in total project costs, net of applicable interim and fee income during the development period, plus the $70.4

M purchase price for the remaining 50% interest that was acquired in February 2019

CASE STUDY | SUCCESSFUL EXECUTION IN ALL MARKET CYCLES Sage Hills Crossing, Calgary, AB



Desirable, stable and diverse tenant

mix, curated to meet the needs of the

community.

Driving organic growth through location. Growing,

desirable demographic1:

Population (5km): 126,000

Average income (5km): $121,000

10 year population growth: >25%

Greenfield site, developed from the

ground up in the challenging Calgary market.

57 units, 98% leased




CASE STUDY | KING & PORTLAND & KINGLY CONDOS

Unlocking value through urban mixed-use development

Newly constructed office space is fully

leased to Shopify (183,000 sf) and Indigo

(79,000 sf). Targeted LEED platinum

Existing 55,000 sf of previously existing

adjacent office space is fully leased

with significant rent upside potential

~18,000 sf of retail space fully leased to

restaurant and food service curated to suit a

dense, growing and desirable demographic3

Population (1km): 68,000

Average income (1km): $173,000

10 year population growth: 25%

Kingly Condos: 132 condominium

units sold out, exceeding price

expectations. Possession is

expected Q3 2019

• Urban Toronto, transit-oriented location with

frontage on King St

• One of the first projects in the RioCan/Allied

urban intensification joint venture.

• 421,000 sf mixed-use development (at

100%), including Kingly, a 132 unit

condominium building

Ownership 50% JV with Allied

Properties REIT



Total Cost1 $86.4M


Value Creation ($M) 2 $43.5M

Value Creation (%) 2 50.3%

Condo Sale Gains $12.5M

Total Project - Value Creation $56.0M


1. Total cost includes the total project costs of the commercial component of the project. net of applicable interim and fee income during the development period


3. Source: Environics Analytics Data Stats 2018 – assumes a 1km trade area for downtown Toronto


Proposed

Located in downtown Toronto’s west side, The Well is a

3.0M sf of net leasable area (at 100%), first-of-its kind take

on urban mixed-use in Canada.

• 1.1M sf of office

• 420,000 sf of retail, food and service

• 90,000 sf evolved food market

• 1,700 condominium and purpose built rental units

• 11,000 people to live and work on-site once completed


CASE STUDY | TRANSFORMING TORONTO’S WEST SIDE The Well


Source: Company reports. Peer group includes: FCR, SRU, CHP, CRT, and CRR

• Solid balance sheet with strong debt-to-Adjusted

EBITDA, leverage and coverage ratios relative to

peers

• Laddered debt maturity profile with mostly fixed-rate

debt to manage interest rate risk

• Access to multiple sources of capital

• Liquidity and financial flexibility with ample

availability on credit facilities and an $8B

unencumbered assets pool, generating 59.1% of

annualized NOI


DISCIPLINED CAPITAL ALLOCATION STRATEGY Conservative capital structure provides financial strength and flexibility

• Self-fund development program through a variety

of accessible sources

• Net proceeds from dispositions

• Sales proceeds from air rights sales and

condominium / townhouse developments

• Strategic alliances

• Excess operating cash flows

• Sale of marketable securities

RioCan Peer Average

7.9x

8.5x

Debt-to-Adjusted EBITDA

42.1%

45.9%

Leverage

3.1x

2.4x

Debt Service

3.6x

3.1x

Interest Coverage


ENVIRONMENTAL (E) SOCIAL (S) GOVERNANCE (G)

• Established a baseline for performance;

energy, water and GHG emissions

• Implemented a utility management system

to measure and manage consumption

• Ontario Energy and Water Reporting &

Benchmarking (EWRB) regulation

compliance

• Installed a high-efficiency geothermal HVAC

system at Frontier rental residential

• Partnered with Enwave to extend the Deep

Lake Water Cooling and hot

water distribution networks to

The Well flagship development in Toronto

• Completed our first tenant engagement

survey

• Completed materiality interviews with

investors, tenants, suppliers and partners

regarding RioCan’s ESG policy and

disclosures

• Conducted our annual employee

engagement survey: 94% participation rate

• Recognized as one of Greater Toronto’s

top 100 employers

• Formalized a Sustainability Policy

• Established an Executive Sustainability

Steering Committee

• Hired dedicated environmental and

sustainability resources

• Aligned RioCan’s Environmental

Management System (EMS) to

ISO 14001

• Continued to integrate sustainability

features into existing properties and

development/construction projects

AC

HIE

VE

ME

NT

S

NE

XT

ST

EP

S

• Completed the GRESB survey for two consecutive years, improving our score by 16-points (37% increase) from the previous year

• Improved RioCan’s Public Disclosure score to a B-rating

• 26 RioCan properties BOMA BEST certified

• Establish short term and long term targets

• Publish RioCan’s materiality assessment and inaugural Sustainability Report in May 2019

• Collaborate with tenants on joint sustainability goals and initiatives

• Partner with leading sustainability focused organizations to advance our sustainability performance across environmental, social and governance



COMMITTED TO EMBEDDING SUSTAINABILITY Systematically embed people, community and environmental considerations

2300 Yonge Street. P.O. Box 2386. Toronto, ON. M4P 1E4 | Email: [email protected] | (T) 1-800-465-2733 or (416) 866-3033

building on experience, shaping the future · 2019-03-26 · building on experience, shaping the...

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