RFA Financial Inc. · TSX:RFA
RFA Financial — Artis Real Estate Investment Trust — Q3 2010 Earnings Presentation
32 slides from RFA Financial's earnings presentation, November 2010
Slide 1: Properties of Success
PROPERTIES OF SUCCESS NOVEMBER 2010 Q3‐10 INSTITUTIONAL INVESTOR PRESENTATION 1
Slide 2: Forward-Looking Disclaimer
FORWARD‐LOOKING DISCLAIMER Certain information included in this presentation contains forward‐looking statements within the meaning of applicable securities laws. For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward looking statemen
Slide 3: Notice Respecting Non-GAAP Measures
NOTICE RESPECTING NON‐GAAP MEASURES Property Net Operating Income (“Property NOI”) , Distributable Income (“DI") and Funds from Operations (“FFO”) are non‐GAAP measures commonly used by Canadian income trusts as an indicator of financial performance. “GAAP” means the generally accepted accounting pr
Slide 4: Unique Four Part Strategy
UNIQUE FOUR PART STRATEGY 1. Geographic focus: primarily western Canada focus : recent expansion into the GTA and select U.S. markets 2. Product focus: commercial real estate only ‐ industrial ‐ office ‐ retail 3. External growth: via accretive acquisitions in our target markets 4. Internal growth:
Slide 5: Portfolio Overview
PORTFOLIO OVERVIEW Properties 147 Size 13.6 M sq.ft. Gross Book Value $2.37 B (1) Overall Occupied 95.9% (2) & Committed Portfolio Assets as at September 30, 2010 adjusted for acquisitions completed or under unconditional contract at November 9, 2010 (1) Based on preliminary allocation of purchase p
Slide 6: Portfolio Summary by Province
PORTFOLIO SUMMARY Property GLA Property NOI by Province (1) by Province (2) Ontario 9.4% Ontario 7.0% Alberta 48.0% Alberta 34.9% USA 6.6% USA 18.9% British Columbia 12.2% British Columbia 10.6% Saskatchewan 6.3% Saskatchewan 4.7% Manitoba 23.9% Manitoba 17.5% (1) Portfolio Assets as at September 30
Slide 7: Portfolio Summary by Asset Class
PORTFOLIO SUMMARY Property GLA Property NOI by Asset Class (1) by Asset Class (2) Industrial 46.6% Office 47.6% Industrial 21.9% Office 29.5% Retail 23.9% Retail 30.5% (1) Portfolio Assets as at September 30, 2010 adjusted for acquisitions completed or under unconditional contract at November 9, 201
Slide 8: Portfolio Summary – Top Three Submarkets by GLA
PORTFOLIO SUMMARY – TOP THREE SUBMARKETS BY GLA Winnipeg Office 7.5% Winnipeg Class A Office (% of total portfolio) = 4.0% Winnipeg Class B Office (% of total portfolio) = 2.9% Calgary Office 9.8% Winnipeg Suburban Office (% of total portfolio) = 0.6% Winnipeg Office 7.5% Total Winnipeg Office (% of
Slide 9: Lease Expiration Schedule
PORTFOLIO OVERVIEW Lease Expiration Schedule (1) Expiries in All Provinces (% of Leased Area) Expiries in Calgary Office (% of Leased Area) 45.0% 98% of 2010 expiries and 40.0% 36.6% 44% of 2011 expiries are 35.0% dealt with. (1) 30.0% 79% retention ratio for 2010 expiries. (1) 25.0% 20.0% 5.6% weig
Slide 10: Robust Western Economy
ROBUST WESTERN ECONOMY Average Retail Sales Growth GDP Growth 2010f Year Over Year 2004 ‐ 2009 7.0% 6.4% 4.5% 4.0% 3.5% 6.0% 5.0% 3.5% 3.1% 4.8% 2.9% 3.0% 3.0% 5.0% 3.0% 3.6% 2.5% 2.2% 4.0% 2.6% 2.8% 2.0% 3.0% 1.5% 2.0% 1.0% 1.0% 0.5% 0.0% 0.0% Manitoba Sask. Canada Alberta British Ontario British O
Slide 11: Robust Western Economy: Per Capita Retail Sales
ROBUST WESTERN ECONOMY Provincial Per Capita Retail Sales ‐ 2009 $ 15,173 $ 16,000 $ 13,625 $ 14,000 $ 12,175 $ 12,244 $ 12,046 $ 11,295 $ 12,000 $ 10,000 $ 8,000 $ 6,000 $ 4,000 $ 2,000 $0 Ontario British Columbia Manitoba Canada Saskatchewan Alberta Source: Statistics Canada 2009 Retail Sales Figu
Slide 12: Robust Western Economy: Unemployment Rates
ROBUST WESTERN ECONOMY Provincial Unemployment Rates October ‐ 2010 16.0% 14.0% 13.0% 12.9% 12.0% 9.8% 9.8% 10.0% 8.6% 7.9% 8.0% 8.0% 7.4% 6.0% 5.7% 6.0% 5.2% 4.0% 2.0% 0.0% MB SK AB BC CAN QC ON NS NB PEI NFLD Source: Statistics Canada November 2010 Release 12
Slide 13: Largest Tenants by Gross Revenue
PORTFOLIO OVERVIEW 10 Largest Tenants by Gross Revenue Approximately 15.7% of Gross Revenue Excluding Government Tenants Portfolio Assets as at September 30, 2010 adjusted for acquisitions completed or under unconditional contract at November 9, 2010 13
Slide 14: 65.9% of Tenants are Government or National
PORTFOLIO OVERVIEW – 65.9% of Tenants are Government or National (1) Diversification by Tenant Size (GLA)(1) (2) Vacant 4.1% Government 4.8% Fort McMurray Regional & Local 30.0% National 61.1% Saskatoon Winnipeg Weighted Average Term to Maturity All Leases 5.3 Years Top 10 Tenants 7.2 Years West Kel
Slide 15: Portfolio Overview: GLA and Gross Book Value
PORTFOLIO OVERVIEW GLA Gross Book Value 13.6 M sq. ft. (1) $2.37 B (1)(2) (M sq.ft.) ($M) 13.6 $2,369 14.0 $2,500 12.0 $2,000 10.0 $1,374 $1,357 8.0 $1,500 $1,247 6.6 6.8 6.1 6.0 $1,000 4.0 2.9 $523 1.9 $500 2.0 $254 0.1 $20 0.0 $0 2004 2005 2006 2007 2008 2009 Nov‐10 2004 2005 2006 2007 2008 2009 N
Slide 16: Annual Information
ANNUAL INFORMATION Revenues (1) Property NOI (1) In (000’s) In (000’s) $160 $146.2 $144.9 $120 $99.9 $98.3 $140 $100 $120 $99.3 $80 $67.5 $100 $80 $60 $53.5 $60 $34.3 $40 $40 $9.6 $20 $6.2 $20 $0.6 $0.4 $0 $0 2004 2005 2006 2007 2008 2009 2004 2005 2006 2007 2008 2009 FFO/unit $1.8 $1.66 $1.53 (Basi
Slide 17: 2010 Year to Date Information – Q3 2010
2010 YEAR TO DATE INFORMATION – Q3 2010 Revenues (1)(2) Property NOI (1)(2) In (000’s) In (000’s) $130.9 $140 $100 $90.1 $90 $120 $101.6 $80 $69.7 $100 $70 $60 $80 $50.6 $50 $34.3 $60 $40 $33.5 $23.0 $40 $30 $20 $20 $10 $0 $0 Q3‐09 Q3‐10 YTD Q3‐09 YTD Q3‐10 Q3‐09 Q3‐10 YTD Q3‐09 YTD Q3‐10 FFO/unit $
Slide 18: Schedule of Mortgages Maturing
PORTFOLIO OVERVIEW Schedule of Mortgages Maturing (2) ($M) $250 $238.4 Mortgage to Gross Book Value (1) 46.2% $200 $183.2 (1) As at September 30, 2010 $155.9 $150 $121.1 (2) As at November 9, 2010 adjusted $103.5 to exclude repayments of mortgages $100 and include new mortgage financing commitments
Slide 19: Mortgage Profile
PORTFOLIO OVERVIEW Mortgage Profile Weighted Average Term of 5.0 Years(1) Weighted Average Interest Rate(1) 5.0% Interest Coverage Ratio(2) 2.2 360 Main & Shops of Winnipeg Square (1) Mortgage Financing in‐place as at September 30, 2010, less acquisitions completed or under unconditional contract No
Slide 20: Internal Growth
INTERNAL GROWTH Year over Year Occupancy Portfolio Occupancy(1) Same Property Occupancy(2) Q3‐10 96.6% 96.9% Q3‐09 96.4% 97.5% Increasing Rental Income as Leases Turn Over (3) Leasable Sq. In‐Place Rent Leased Sq. Market Rent Change in % Change % Change Ft. (000’s) Ft. (000’s) $/Sq. ft. (Renewals) E
Slide 21: Latest Analyst Projections
LATEST ANALYST PROJECTIONS (1) 2010 2011 2012 2012 Current Current diluted per unit results (Q3‐10) FFO AFFO FFO AFFO FFO AFFO NAV Target Price CIBC World Markets $1.20 $0.86 $1.37 $1.01 $12.75 $14.50 Canaccord Genuity $1.17 $0.83 $1.28 $1.00 $13.20 $14.50 RBC Capital Markets $1.17 $0.79 $1.25 $0.96
Slide 22: Peer Comparisons
PEER COMPARISONS P / FFO P / AFFO Daily Real Estate Market Indicator 2010E 2011E 2010E 2011E Canaccord (11/12/10) Artis REIT (AX.un) 10.4x 9.5x 14.7x 12.2x Dundee REIT (D.un) 11.1x 11.0x 14.7x 13.5x Morguard REIT (MRT.un) 11.9x 11.5x 13.3x 13.1x Allied REIT (AP.un) 12.7x 12.2x 14.5x 14.0x Canadian R
Slide 23: Growth Strategy – External
GROWTH STRATEGY – EXTERNAL AMB Industrial Portfolio – Minneapolis, MN, USA GLA: 2,285,118 sq ft (Portfolio) Purchase Price: $ 113.0 million Asset Class: Industrial 23 Buildings @ 15 locations 88.9% Leased – Mix of National & Local Tenants 23
Slide 24: Growth Strategy – External
GROWTH STRATEGY – EXTERNAL Cancross Court – Mississauga, ON GLA: 143,877 sq ft Purchase Price: $ 29.5 million Asset Class: Office – 2 Buildings 100% Leased – Mix of 3 National Tenants (Intria Items, Aecom Canada HB Group Insurance) Concorde Corporate Centre – Toronto, ON GLA: 548,742 sq ft Purchase
Slide 25: Growth Strategy – External
GROWTH STRATEGY – EXTERNAL Meadowvale– Mississauga, ON GLA: 99,869 sq ft (Newly constructed) LEED Silver Purchase Price: $ 29.15 million Asset Class: Office 95.0% Leased – 3 National Tenants, Dematic, Whirpool, Takeda, Dunwin Portfolio – Mississauga, ON GLA: 157,551 sq ft (3 Properties) Purchase Pri
Slide 26: Growth Strategy – External
GROWTH STRATEGY – EXTERNAL 1045 Howe Street – Vancouver, BC GLA: 101,145 sq ft Purchase Price: $ 38.0 million Asset Class: Office 100% Leased – Mix of National & Regional Tenants (MMM Group & BGC Engineering) St. Vital Square – Winnipeg, MB GLA: 116,353 sq ft Purchase Price: $ 52.5 million (Portfoli
Slide 27: Growth Strategy – Internal
GROWTH STRATEGY – INTERNAL North City Centre – Edmonton, AB 20,000 sq ft office building under construction 9% unlevered yield (mgt estimate) Capital City Centre ‐ Regina, SK 13,500 sq ft mixed office/CRU 9% unlevered yield (mgt estimate) 6461 Metral Drive – Nanaimo, BC Redevelopment 27
Slide 28: Growth Strategy – Internal
GROWTH STRATEGY ‐ INTERNAL Increase Rental Income with Lease Turnover Nurture Existing Relationships Sears Centre – Grande Prairie, AB Exploit Development Opportunities 360 Main & Shops of Winnipeg Canarama Mall – Saskatoon, SK Square ‐ Winnipeg, MB 28
Slide 29: Senior Management Team
SENIOR MANAGEMENT TEAM Armin Martens, P.Eng., M.B.A. President, Chief Executive Officer and Trustee Mr. Martens has been actively involved in the construction, development and management of commercial real estate since the 1980’s. In addition to his position as President and CEO of Artis REIT, he is
Slide 30: Some Key 2010 YTD Milestones
SOME KEY 2010 YTD MILESTONES • $858 Million of new acquisitions closed / announced … Weighted Average Cap Rate 7.8% … Weighted Average Interest Rate 4.5% •Raised $405 Million in new Equity • Unit price has moved from $9.00 to $13.00 range • Market Cap has increased from $330 Million to ~ $1 Billion,
Slide 31: Investment Highlights – Q3 2010
INVESTMENT HIGHLIGHTS – Q3 2010 • Artis REIT has a primarily western Canadian focus • Recent entry into the United States and the Greater Toronto Area (GTA) • High quality commercial properties – all asset classes (Retail, Industrial, Office) • Sound diversity of income • Consistent and reliable cas
Slide 32: Properties of Success
PROPERTIES OF SUCCESS
Artis Real Estate Investment Trust — Q3 2010 Earnings Presentation on 6ix