1. home and garden

Investor Day 2015
April 23, 2015
1
Forward Looking Statements
Certain information to be discussed during this management presentation, contains forward-looking statements within the meaning of
applicable securities laws including, among others, statements concerning RioCan’s 2015 objectives, RioCan’s 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.
Such forward-looking statements reflect management’s current beliefs and are based on information currently available to management.
These statements are not guarantees of future performance and are based on RioCan’s estimates and assumptions and are subject to risks
and uncertainties, including those described in RioCan’s management discussion & analysis (MD&A) regarding the 2014 audited financial
statements and the MD&A, which could cause RioCan’s actual results to differ materially from the forward-looking statements to be
discussed during this presentation. Certain statements included in this presentation may be considered “financial outlook” for purposes of
applicable securities laws, and such financial outlook may not be appropriate for purposes other than this presentation.
Although the forward-looking information discussed during this presentation is based upon what management believes are reasonable
assumptions, there can be no assurance that actual results will be consistent with these forward-looking statements. 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.
Non-GAAP Measures
Consistent with RioCan’s management framework, the Trust uses certain measures to assess its financial performance that are not generally
accepted accounting principles (GAAP) as measured under IFRS. These measures do not have any standardized definition as 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 other comparable metrics determined in accordance with IFRS. For a complete definition of
such measures please refer to RioCan’s audited financial statements for the period ended December 31, 2014 and MD&A related thereto.
2
Edward Sonshine, O. Ont., Q.C.
Chief Executive Officer,
RioCan Real Estate Investment Trust
3
4
Raghunath Davloor
President and Chief Operating Officer,
RioCan Real Estate Investment Trust
5
•
Caution and Diversification
•
Strategic Flexibility
•
Strong Balance Sheet
6
Today’s Retail Environment
Some sectors are challenging
•
Target
•
Competitive forces
•
Foreign competition
•
Internet affected retailers
7
Today’s Retail Environment
Other sectors are performing well
8
Today’s Retail Environment
Other sectors are performing well
9
Strength From Strong Tenants
Revenues from National
and Anchor Tenants
86.4%
10
Strength From Diversity
•
More than 7,700 tenants
•
No tenant represents more
than 5% of Revenues
•
Top5:
-
Loblaws/Shoppers Drug Mart
Walmart
Canadian Tire Corp.
Metro
Cineplex/Galaxy Cinemas
11
Strength From Strong Tenants
Canadian Rental Revenues from Canada’s Six Largest Markets
73.3%
Expected to grow to more than
57.7%
Dec. 2004
80%
50%
with development completions
Dec. 2014
12
Experience
Completed Projects
13
Yonge Eglinton Centre
14
Yonge Sheppard Centre
15
16
Jordan Robins
Senior Vice President, Planning and Development,
RioCan Real Estate Investment Trust
17
18
RioCan
•
Over 340 shopping centres
in Canada
•
Over 6,000 acres of land built
out with 25% coverage
19
Ottawa
Edmonton
Calgary
20
Vancouver
21
“Demand in 2014 proved strong enough to
absorb the market’s greatest amount of new
supply in history, while also revealing an
equilibrium for rent levels.”
Shaun Hildebrand, Senior Vice-President, Urbanation
22
23
24
In 2014
•
We submitted 7 rezoning applications
•
Total potential residential density of 1.7 million square feet
•
Approximately 2,500 units
•
An additional 400,000 square feet of net new commercial density
25
In 2015
•
19 additional property rezoning applications
•
7.5 million square feet of residential density
•
Approximately 11,000 units
•
830,000 square feet of new commercial density
26
In 2016
•
Plan to submit 20 property applications
•
Residential density of 5.9 million square feet
•
8,400 units
•
1 million square feet of new commercial density
27
What will this new business
unit mean to RioCan?
28
29
30
31
Ba
yvi
ew
Av
en
ue
Bayview
Station
Bayview
Station
t
s
a
E
e
u
n
e
v
A
n
o
t
n
i
l
g
E
32
ast
nue E
ue
ven
wA
vie
Eglin
ton A
ve
Bay
Bayview
Station
33
Bayview
Station
34
35
36
37
38
39
40
41
42
43
John Ballantyne
Senior Vice President, Asset Management,
RioCan Real Estate Investment Trust
44
Residential Markets
A Position of Strength
•
Depth of our pipeline
•
Continuum of sites
•
Talented development group
•
Strong balance sheet and management
45
Residential Markets
A Position of Strength
46
Residential Markets
A Position of Strength
Now we need to execute.
47
Residential Markets
A Position of Strength
Why rental residential
as an asset class?
48
Residential Markets
Why rental residential as an asset class?
House Prices
Lifestyle & Location
49
Residential Markets
Why rental residential as an asset class?
House Prices
February, 2015
Average price of Toronto detached home ...
$1,000,000
50
Residential Markets
Why rental residential as an asset class?
House Prices
675000
625000
575000
Trend (12-Month Moving Average)
GTA average home price
yearly increase of almost
525000
475000
425000
8%
375000
325000
275000
225000
175000
Jan 95
Jan 00
Jan 05
Jan 10
Jan 15
Source: Toronto Real Estate Board
51
Residential Markets
Why rental residential as an asset class?
House Prices
675000
625000
575000
Trend (12-Month Moving Average)
Toronto rental market
vacancy rate is below
525000
475000
425000
2%
375000
325000
275000
225000
175000
Jan 95
Jan 00
Jan 05
Jan 10
Jan 15
Source: Toronto Real Estate Board
52
Residential Markets
Why rental residential as an asset class?
House Prices
675000
625000
575000
Trend (12-Month Moving Average)
In 2014 condominium units
used as rentals increased by
525000
475000
425000
14,000
375000
325000
275000
225000
175000
Jan 95
Jan 00
Jan 05
Jan 10
Jan 15
Source: Toronto Real Estate Board
53
Residential Markets
Why rental residential as an asset class?
House Prices
Lifestyle & Location
54
Residential Markets
Why rental residential as an asset class?
Lifestyle & Location
Population Growth Rates
Suburbs
Downtown Toronto
17%
•
Between 1991 and 2006, the population
growth rate in the suburbs was roughly 17%. Over the same period, the growth rate in
downtown Toronto was approximately 4%. •
Between 2006 and 2011, the growth rate of
the suburbs fell to only 13.7 percent while the
growth rate downtown spiked to over 16%.
16%
Growth %
13.7%
4%
1991-2006
2006-2011
1991-2006
2006-2011
55
56
Residential Markets
A Position of Strength
Why rental residential for RioCan
and what will set us apart?
57
Residential Markets
Why rental residential for RioCan and what will set us apart?
The RioCan Advantage
•
Our vast inexpensive urban, transit oriented
& underutilized land holdings
•
The scale to create management efficiencies
•
Excellent marketing opportunities as
Canada’s largest retail landlord
58
Ottawa
59
Calgary
60
Toronto
61
Residential Markets
Why rental residential for RioCan and what will set us apart?
Lifestyle & Location
•
Land Holdings
-
Land costs have increased dramatically
-
Size of RioCan’s land holdings speaks to the depth
of its residential development pipeline. -
There are few developers who possess such a
deep and high quality land bank that, through
the lengthy approval process, remains income
producing.
62
Residential Markets
Why rental residential for RioCan and what will set us apart?
Lifestyle & Location
•
Muted Costs
-
Low cost of land procurement – land is already
owned.
-
Overall project yields are aided substantially by
the low cost of the underlying land.
-
Intensification replaces old stock with dynamic
retail – high demand space, attracting the highest
class of tenants, and attracts the highest rents.
63
64
65
Cross Promotion Opportunities
66
Residential Markets
A Position of Strength
Management Platform
and Structures
67
Residential Markets
Management Platform and Structures
“Build it and they will come.”
68
Residential Markets
Management Platform and Structures
“Build it and they will come.”
•
An exceptional leasing, marketing and
property management team
•
Giving RioCan optimal levels of flexibility
and control
69
70
71
Cynthia Devine
Executive Vice President and Chief Financial Officer,
RioCan Real Estate Investment Trust
72
73
Revenue Growth
$ Millions
1,241
758
10.3% CAGR
2014
2009
74
Operating FFO Growth
$ Millions
517
280
13.0% CAGR
2014
2009
This slide contains reference to Non-GAAP Measures, for a definition of such measures please refer to RioCan’s 2014 Annual Report.
75
Operating FFO Growth per Unit
$/unit
$1.68
$1.63
6.6% CAGR
$1.52
$1.43
$1.33
$1.22
2009
2010
2012
2011
2013
2014
This slide contains reference to Non-GAAP Measures, for a definition of such measures please refer to RioCan’s 2014 Annual Report.
76
77
Renewals
Canadian Portfolio
RioCan Lease Maturity Schedule and Renewal History
$20
Retention
6M
5M
4M
$18
>90%
$16
Renewal
2M
$14
1M
0M
$12
2019
2008 2009 2010 2011 2012 2013 2014 2015
Square feet renewed/expiring (left axis)
Achieved Renewal Rent PSF
78
Expiring Rent PSF
+11.4%
Renewals
Canadian Portfolio
RioCan Lease Maturity Schedule and Renewal History
$20
6M
5M
4M
$18
55%
$16
of lease renewals over
next five years
2M
$14
1M
0M
$12
2019
2008 2009 2010 2011 2012 2013 2014 2015
Square feet renewed/expiring (left axis)
Achieved Renewal Rent PSF
79
Expiring Rent PSF
Improved Interest Coverage
3.5x
3.3x
3.0x
2.8x
2.5x
2.9x
Target
2.8x
2.7x
Old Interest Coverage Target
2.5x
2.5x
2010
2011
2.2x
2.3x
2.0x
2009
2012
2013
This slide contains reference to Non-GAAP Measures, for a definition of such measures please refer to RioCan’s 2014 Annual Report.
80
2014
Debt Maturity Schedule
$ Millions
3,000
6.0%
2,500
5.0%
2,000
4.0%
1,500
3.0%
1,000
2.0%
500
1.0%
0
0.0%
2015
2016
2017
Scheduled principal amortization
2018
Mortgages payable
2019
Thereafter
Long-term staggered
debt maturity profile
Low floating
debt exposure
Floating Rate Mortgages and Lines of Credit
Adjusted for issuance of $300 million Series W, $175 Series Q re-opening, and the redemption of Series N (US$100 million) and O ($225 million)
81
Debentures payable
82
Conservative Balance Sheet
Debt
Assets
14,720
2014 leverage ratio
CAGR – 19.2%
43.8%
5,338
3,260
2008
2009
6,483
CAGR – 12.6%
2010
2011
2012
2013
2014
83
Leverage and Coverage Ratios & Targets
Dec. 31/14
Dec. 31/13
Targeted Ratios
Interest coverage ratio
2.89x
2.83x
>3.00x
Debt service coverage ratio
2.20x
2.10x
>2.25x
Fixed charge coverage ratio
1.08x
1.06x
>1.1x
Net operating debt to operating EBITDA ratio
7.67x
7.24x
<6.5x
This slide contains reference to Non-GAAP Measures, for a definition of such measures please refer to RioCan’s 2014 Annual Report.
84
Development Activity
Current Portfolio – Greenfield and Urban Intensification Projects
Calgary Developments
Greenfield Developments
• East Hills
• Sage Hill
Urban Intensification
• East Village (CPA Lands)
GTA Developments
Greenfield Developments
• RioCan Centre Vaughan
• Windfield Farms
Urban Intensification
• The Stockyards (completed)
• 1860 Bayview Ave
• Bathurst & College
• Yonge & Eglinton Northeast Corner
• College and Manning
• Dupont Street
• The Well
• King & Portland
Ottawa Developments
Greenfield Developments
• Tanger Outlets – Kanata (completed)
Greenfield Development
•
85
RioCentre Milton, Milton, ON (completed)
Development Projects
Yonge Eglinton Northeast Corner,
Toronto, ON
Sage Hill, Calgary, AB
RioCan YEC, Toronto, ON
1860 Bayview, Toronto, ON
86
Development Portfolio
Risk Management Practices
•
Staggered Development Pipeline
•
Multiple Sources of Capital
-
Debt/Equity
-
Strategic Relationships
-
Capital Recycling
•
Pre-Leasing on Retail Developments
•
Experience, market research for Residential Projects
87
Disciplined Growth
•
Geographic Diversification & Stable Property Types
-
•
Staggered Development Completions
-
•
Manages development risks
Staggered Debt Maturities
-
•
Ensures resilient and steady cashflows
Manages interest rate and refinancing risk
Conservative Leverage
-
Prudent balance sheet management provides access to capital in varying market conditions
88
89