Crombie Real Estate Investment Trust · TSX:CRR.UN
Crombie Real Estate Investment Trust — Q4 2019 Earnings Presentation
24 slides from Crombie Real Estate Investment Trust's earnings presentation, Feb 27, 2020
Slide 1: Unlocking Value: Q4 2019 Results Conference Call
Unlocking Value Q4 2019 Results Conference Call February 27th, 2020
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: 2019 Successes
2019 Successes Focused Strategy Executed ▪ Innovative capital recycling - $536M in gross proceeds ▪ Improved capital structure - Debt to GBV (FV) 48.9% ▪ Optimized Sobeys/Empire relationship ▪ Expanded development pipeline to 33 sites totaling $4-5.8B ▪ First six developments on track ▪ Strong funda
Slide 5: Set for Success in 2020 and Beyond
Set for Success in 2020 and Beyond Delivering Value ▪ Effectively allocate capital to support both NAV and AFFO per unit growth ▪ Secure multiple sources of capital, optimize capital structure, minimize cost of capital, and de-risk business ▪ Optimize Sobeys/Empire relationship through modernization
Slide 6: Development & Operational Highlights
Development & Operational Highlights Glenn Hynes EVP & COO
Slide 7: Strong Fundamentals
Strong Fundamentals Improved Occupancy Drives Performance 247,000 SF Committed Occupancy NEW LEASES $20.68 PSF 2019 96.1% 2018 96.0% 2017 95.2% 2016 94.4% 2015 93.6% 115,000 SF COMMITTED $20.38 PSF 7
Slide 8: 2019 Operational Highlights
2019 Operational Highlights Stable, Predictable Results Record square footage renewed 2019 Leasing Renewals in 2019 Square Feet Rate PSF Growth Retail & ~9% of portfolio 1,375,000 $17.69 4.1% GLA renewed in Commercial 2019 Office 251,000 $15.65 2.6% Total 1,626,000 $17.37 3.9% Solid Retail Renewals
Slide 9: Growing Existing Retail Chains
Growing Existing Retail Chains Proposed Expansion Plans Jan 2018 – Dec 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/Marsha
Slide 10: Limited Exposure to Store Closures
Limited Exposure to Store Closures • 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 Proposed Store Closing Count
Slide 11: Material NAV Creation
Material NAV Creation $610M Investment in First 6 Major Developments Davie Belmont Street Bronte Avalon Village Mall Create $1-2 Pointe- Le Duke NAV/Unit by Claire 20211 1Assumes NAV creation equals difference between Crombie’s current estimated stabilized value based on current market cap rates, an
Slide 12: Davie Street, Vancouver, BC
Davie Street, Vancouver, BC Creating Significant Unitholder Value $186M mixed-use development ($107M¹ Crombie share) = ~330 residential rental units + Safeway + ancillary retail ¹At Crombie’s share, Crombie will own 100% of the retail and 50% of the residential 12
Slide 13: Belmont Market, Langford, (Victoria), BC
Belmont Market, Langford, (Victoria), BC Upgrading by Developing A+ Real Estate $93M Premier retail destination = 160k sf of grocery, restaurants, & complementary retail & office 13
Slide 14: Avalon Mall, St. John's, NL
Avalon Mall, St. John’s, NL Dominant Regional Shopping Centre Phase II: $57M = CRU + Extension + Pad Site 14
Slide 15: Le Duke, Montreal, QC
Le Duke, Montreal, QC Placemaking along the Bonaventure Greenway $118M mixed-use tower ($59M¹ Crombie share) = ~390 residential rental units + urban format IGA + ancillary retail ¹At Crombie’s share, this project is being developed at a 50% JV interest 15
Slide 16: Bronte Village, Oakville, ON
Bronte Village, Oakville, ON Building Community in GTA $277M mixed-use development ($139M¹ Steps away from Crombie share) = ~480 the lakefront & luxury residential rental access to everyday units + Sobeys + ancillary convenience retail ¹At Crombie’s share, this project is being developed at a 50% JV
Slide 17: 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 Building construction starting in spring 2020 ¹CFC = Customer Fulfillment Centre 17
Slide 18: Financial Highlights
Financial Highlights Clinton Keay CFO & Secretary
Slide 19: Q4'19 Financial Highlights
Q4’19 Financial Highlights1 Stable, Predictable Results FFO/AFFO per Unit $0.31 $0.28 $0.26 SANOI results driven by $0.24 rental rate increases, new leases, modernization investments and revenue from land use intensifications FFO/Unit AFFO/Unit Q4'18 Q4'19 SANOI Growth FFO/AFFO Payout Ratio 93.8% 4.
Slide 20: Acquisitions Dispositions
Overview Creatively executing Real Estate Transactions various types of partial interest property dispositions Capital Recycling Program Phase Transaction Value Dispositions 2018 $260M 2019 $536M Dispositions executed in line Sub Total $796M with IFRS FV 2018 $119M Acquisitions 2019 $156M Sub Total
Slide 21: Well-Laddered Debt Maturity Profile
Well-Laddered Debt Maturity Profile Mortgages, Unsecured Notes and Credit Facilities ~$218M of maturing debt in 2020 with WAIR of 5.0% $800 6.0% Interest savings Millions available on $700 expiring mortgages 5.0% $600 4.0% $500 Available Credit Facility Credit Facilities $400 3.0% Unsecured Notes Mo
Slide 22: Building Financial Strength
Building Financial Strength Investment Grade, with Improving Debt Metrics 8.52x 2.99x 1.91x BBB Low Debt to Interest Debt Service (Stable) EBITDA Coverage Coverage by DBRS Debt to Gross Book Value (Fair Value) Fixed Rate 52.5% Mortgages, 27.6% Equity, 51.1% 51.0% Total 50.3% 50.3% Capitalization $4.
Slide 23: 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 • Future condo Free Cash Major Land Use and potential Flow Development Intensification
Slide 24: Unlocking Value
REIT ; i ig bo at a Unlocking Value
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