Crombie Real Estate Investment Trust · TSX:CRR.UN
Crombie Real Estate Investment Trust — Q3 2019 Earnings Presentation
26 slides from Crombie Real Estate Investment Trust's earnings presentation, Nov 7, 2019
Slide 1: Unlocking Value
Unlocking Value Q3 2019 Results Conference Call November 7th, 2019
Slide 2: Forward-looking Information
Forward-looking Information This presentation contains forward-looking statements that reflect the current expectations of management of Crombie about Crombie's future results, performance, achievements, prospects and opportunities. Wherever possible, words such as "continue", "may", "will", "estima
Slide 3: Opening Remarks
Opening Remarks Don Clow President & CEO
Slide 4: Unlocking Value
Unlocking Value Focused Strategy ▪ Strong Fundamentals ▪ 3.3% same-asset NOI growth ▪ 4.7% renewal growth over expiring rates ▪ Committed occupancy of 96.1% ▪ Sobeys/Empire ▪ Modernizations ▪ Land Use Intensifications ▪ Major Mixed-Use Development ▪ Major mixed-use developments remain “on track and
Slide 5: Empire – Winning Grocery Retail
Empire – Winning Grocery Retail Aggressively Building, Adapting & Growing Expanding FreshCo to the West Investing in Bricks-and-Mortar Leading Edge Omnichannel Technology Market Intelligence Aligned Interests Access to VECTOM at Reasonable Pricing Accelerating Major Mixed-Use Developments 5
Slide 6: Major Development Opportunities
Major Development Opportunities 33 Properties $4.0-5.8B Capital Cost 11,000 9.8M SF 1.3M SF Residential Units Residential GLA Commercial GLA 15 5 1 2 5 5 6
Slide 7: Acquisitions Dispositions
Overview Creatively executing Real Estate Transactions various types of partial interest property dispositions Capital Recycling Program Transaction Phase Value 2018 $260M Dispositions 2019 Closed YTD $342M Dispositions Closed executed in line $193M with IFRS FV Subsequent Sub Total $795M 2019 Close
Slide 8: Development & Operational Highlights
Development & Operational Highlights Glenn Hynes EVP & COO
Slide 9: Leasing & Value Creation
Leasing & Value Creation Improved Occupancy Drives Performance 201,000 square feet Committed Occupancy NEW LEASES Q3 $19.81 PSF 2019 96.1% 2018 96.0% 2017 95.2% 2016 94.4% 2015 93.6% 81,000 square feet COMMITTED $25.29 PSF 9
Slide 10: Q3'19 Operational Highlights
Q3’19 Operational Highlights Solid 2019 YTD Stable, Predictable Results Retail Renewals at +5.9% on 422k sf Q3 2019 Leasing Renewals Square Feet Rate PSF Growth 2019 Renewals 387,000 $16.67 3.3% Future Year 240,000 $20.00 6.6% Renewals Total 627,000 $17.94 4.7% YTD 2019 Leasing Renewals Square Feet
Slide 11: Repurposing of Properties
Repurposing of Properties Former Target Space North Bay 80% Occupancy Uptown Centre 94% Occupancy 11
Slide 12: Existing Retail Chains
Existing Retail Chains Proposed Expansion Plans Jan 2018 – Sept 2019 • Retailers that focus on providing value, convenience & experience will do well in the evolving digital economy • Discount/off-price retailers with strong value focus lead the way • Dollarama, Giant Tiger and Winners/Marshalls Pro
Slide 13: Store Closure Overview
Store Closure Overview • Crombie has limited exposure to these retailers and categories • Traditional retailers with weak value proposition, aged and static merchandising plans and absence of omni-channel strategy fail to adapt to the evolving digital economy 248 Proposed Store Closing Count by Reta
Slide 14: Active Major Development Pipeline
Active Major Development Pipeline Estimated Yield on Cost of 5.6 – 6.0% Estimated Yield Expected Full Year Total Cost = / NOI of on Cost Development Rental Rates derived Applicable Costs from Market Studies • Hard Costs • Reviewed regularly • Soft Costs • Tenant Costs • Capitalized Interest • Land a
Slide 15: Davie Street, Vancouver, BC
Davie Street, Vancouver, BC Creating Significant Unitholder Value $107M¹ mixed-use development = ~330 residential rental + Safeway + ancillary retail ¹At Crombie’s share, Crombie will own 100% of the retail and 50% of the residential 15
Slide 16: Belmont Market, Langford, (Victoria), BC
Belmont Market, Langford, (Victoria), BC Upgrading by Developing A+ Real Estate Committed occupancy of 92.7% $93M Premier retail destination = 160k sf of grocery, restaurants, & complementary retail & office 16
Slide 17: Avalon Mall, St. John's, NL
Avalon Mall, St. John’s, NL Dominant Enclosed Shopping Centre Winners HomeSense open in new & expanded space Phase II: $58M = CRU + Extension + Pad Site 17
Slide 18: Le Duke, Montreal, QC
Le Duke, Montreal, QC Placemaking along the Bonaventure Greenway $59M¹ mixed-use tower = ~390 residential rental + urban format IGA + ancillary retail ¹At Crombie’s share, this project is being developed at a 50% JV interest 18
Slide 19: Bronte Village, Oakville, ON
Bronte Village, Oakville, ON Building Community in Major Urban Centres Steps away from the lakefront & access to everyday convenience $139M¹ mixed-use community = ~480 luxury residential rental + Sobeys + ancillary retail ¹At Crombie’s share, this project is being developed at a 50% JV interest 19
Slide 20: Pointe-Claire CFC, Pointe-Claire, QC
Pointe-Claire CFC¹, Pointe-Claire, QC Empire’s State-of-the-art e-commerce CFC Future home of Voilà par IGA e-commerce hub Demolition complete & pad preparation underway ¹CFC = Customer Fulfillment Centre 20
Slide 21: Financial Highlights
Financial Highlights Clinton Keay CFO & Secretary
Slide 22: Q3'19 Financial Highlights
Q3’19 Financial Highlights Stable, Predictable Results FFO/AFFO per Unit $0.30 $0.29 $0.25 $0.24 Results driven by rental rate increases, new leases, and revenue from land use intensifications FFO/Unit AFFO/Unit Q3'18 Q3'19 SANOI Growth¹ FFO/AFFO Payout Ratio 3.3% 3.4% 92.7% 2.7% 2.8% 89.0% 74.3% 77
Slide 23: Building Financial Strength
Building Financial Strength Investment Grade, with Improving Debt Metrics 8.35x 2.90x 1.87x BBB Low Debt to Interest Debt Service (Stable) EBITDA Coverage Coverage by DBRS Debt to Gross Book Value (Fair Value) Fixed Rate Mortgages, 31.0% 52.5% Equity, 51.1% 51.0% Total 50.3% 50.3% Capitalization $4.
Slide 24: Well-Laddered Debt Maturity Profile
Well-Laddered Debt Maturity Profile Mortgages, Unsecured Notes and Credit Facilities Interest savings available on expiring ~$314M of debt due mortgages in 2019 & 2020 with $400 WAIR of 4.87% 6.0% ~$333M Millions $350 5.0% $300 Credit Facilities 4.0% Unsecured Notes $250 Mortgage Maturities WAIR Fix
Slide 25: Smart Capital Allocation
Smart Capital Allocation Prioritize Growth in NAV & AFFO/Unit Sources of Capital Capital Deployment Capital Sobeys Markets • Acquisitions • Equity • Modernizations • Debt • Conversions • Developments Dispositions Free Cash including future Major Land Use condo and potential Flow Intensification air
Slide 26: Unlocking Value
REIT ; i ig bo at a Unlocking Value
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