RFA Financial Inc. · TSX:RFA
RFA Financial — Artis Real Estate Investment Trust — Q2 2010 Earnings Presentation
31 slides from RFA Financial's earnings presentation, August 2010
Slide 1: Properties of Success
PROPERTIES OF SUCCESS AUGUST 2010 Q2‐10 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 2. Product focus: commercial real estate only ‐ industrial ‐ office ‐ retail 3. External growth: via accretive acquisitions in our target markets 4. Internal growth: via active asset management and new developments 4
Slide 5: Portfolio Overview
PORTFOLIO OVERVIEW Properties 118 Size 10.4 M sq.ft. Gross Book Value $1.98 B (1) Overall Occupied 98.1% (2) & Committed •DSI Building – New Brighton, MN, USA Portfolio Assets as at June 30, 2010 adjusted for acquisitions completed or under unconditional contract at August 4, 2010 (1) Based on preli
Slide 6: Portfolio Summary by Province
PORTFOLIO SUMMARY Property GLA Property NOI by Province (1) by Province (2) Ontario 6.6% Ontario 6.9% Minnesota 1.1% Minnesota 1.2% Alberta 53.5% Alberta 43.4% British Columbia British Columbia 13.9% 13.9% Saskatchewan 6.1% Saskatchewan 7.0% Manitoba 17.5% Manitoba 28.9% (1) Portfolio Assets as at J
Slide 7: Portfolio Summary by Asset Class
PORTFOLIO SUMMARY Property GLA Property NOI by Asset Class (1) by Asset Class (2) Industrial 34.8% Office 37.6% Industrial 17.1% Office 52.1% Retail 30.8% Retail 27.6% (1) Portfolio Assets as at June 30, 2010 adjusted for acquisitions completed or under unconditional contract at August 4, 2010 (2) P
Slide 8: Portfolio Summary – Top Three Submarkets by GLA
PORTFOLIO SUMMARY – TOP THREE SUBMARKETS BY GLA Winnipeg Office 9.7% Winnipeg Class A Office (% of total portfolio) = 5.2% Winnipeg Class B Office (% of total portfolio) = 3.8% Calgary Office 12.9% Winnipeg Suburban Office (% of total portfolio) = 0.7% Remaining Portfolio 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% 92% of 2010 expiries and 39.2% 40.0% 25% of 2011 expiries are 35.0% dealt with. (1) 30.0% 83% retention ratio for 25.0% 2010 expiries. (1) 20.0% 4.9% weig
Slide 10: Robust Western Economy: GDP and Retail Sales Growth
ROBUST WESTERN ECONOMY Average Retail Sales Growth GDP Growth 2010f Year Over Year 2004 ‐ 2009 4.5% 7.0% 6.4% 4.0% 3.6% 3.7% 6.0% 3.3% 3.3% 3.4% 5.0% 4.8% 3.5% 3.0% 5.0% 3.0% 3.6% 4.0% 2.5% 2.6% 2.8% 2.0% 3.0% 1.5% 2.0% 1.0% 1.0% 0.5% 0.0% 0.0% British Ontario Canada Manitoba Alberta Saskatchewan Ma
Slide 11: Robust Western Economy: Provincial Unemployment Rates
ROBUST WESTERN ECONOMY Provincial Unemployment Rates July ‐ 2010 16.0% 15.0% 14.0% 12.0% 10.8% 10.0% 9.0% 9.3% 8.2% 8.5% 8.0% 8.0% 7.5% 6.3% 5.6% 6.0% 5.1% 4.0% 2.0% 0.0% SK MB AB BC CAN QC ON NB NS PEI NFLD Source: Statistics Canada August 2010 Release 11
Slide 12: Robust Western Economy: Per Capita Retail Sales
ROBUST WESTERN ECONOMY Provincial Per Capita Retail Sales ‐ 2009 $ 15,173 $ 16,000 $ 13,625 $ 14,000 $ 12,046 $ 12,175 $ 12,244 $ 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 13: Largest Tenants by Gross Revenue
PORTFOLIO OVERVIEW 10 Largest Tenants by Gross Revenue Approximately 17.6% of Gross Revenue Excluding Government Tenants Portfolio Assets as at June 30, 2010 adjusted for acquisitions completed or under unconditional contract at August 4, 2010 13
Slide 14: 68.4% of Tenants are Government or National
PORTFOLIO OVERVIEW – 68.4% of Tenants are Government or National (1) Diversification by Tenant Size (GLA)(1) Vacant 2.9% Government 6.1% Fort McMurray Regional & Local 28.7% National 62.3% Saskatoon Winnipeg Weighted Average Term to Maturity All Leases 6.0 Years Top 10 Tenants 8.5 Years West Kelowna
Slide 15: Portfolio Overview: GLA and Gross Book Value
PORTFOLIO OVERVIEW GLA Gross Book Value 10.4 M sq. ft. (1) $1.98 B (1)(2) (M sq.ft.) ($M) 12.0 $1,978 10.4 $2,000 10.0 $1,374 $1,357 8.0 $1,500 6.8 $1,247 6.1 6.6 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 Aug‐10 2004 2005 2006 2007 2008 2009 Aug‐10 (1) Po
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 $34.3 $60 $40 $40 $9.6 $20 $6.2 $20 $0.4 $0.6 $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 – Q2 2010
2010 YEAR TO DATE INFORMATION – Q2 2010 Revenues (1)(2) Property NOI (1)(2) In (000’s) In (000’s) $55.8 $90 $80.3 $60 $46.7 $80 $68.1 $50 $70 $60 $40 $43.0 $30.1 $50 $33.5 $30 $23.1 $40 $30 $20 $20 $10 $10 $0 $0 Q2‐09 Q2‐10 YTD Q2‐09 YTD Q2‐10 Q2‐09 Q2‐10 YTD Q2‐09 YTD Q2‐10 $0.83 FFO/unit $0.9 (Bas
Slide 18: Schedule of Mortgages Maturing
PORTFOLIO OVERVIEW Schedule of Mortgages Maturing (2) ($M) $250 Mortgage to Gross Book $203.0 Value (1) 46.9% $200 $155.9 (1) As at June 30, 2010 $150 $136.1 $121.4 (2) As at August 13, 2010 adjusted to $103.5 $100 exclude repayments of mortgages and include new mortgage financing commitments as at
Slide 19: Mortgage Profile
PORTFOLIO OVERVIEW Mortgage Profile Weighted Average Term of 4.7 Years(1) Weighted Average Interest Rate(1) 5.3% Interest Coverage Ratio(2) 2.2 360 Main & Shops of Winnipeg Square (1) Mortgage Financing in‐place as at June 30, 2010, less acquisitions completed or under unconditional contract August
Slide 20: Internal Growth
INTERNAL GROWTH Year over Year Occupancy Portfolio Occupancy(1) Same Property Occupancy(2) Q2‐10 97.1% 97.1% Q2‐09 96.2% 97.3% 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 Current Current Latest analyst projections (Q2‐10 updates) FFO AFFO FFO AFFO NAV Target Price (diluted per unit results) CIBC World Markets $1.28 $0.92 $1.43 $1.04 $12.00 $13.50 Canaccord Genuity $1.24 $0.92 $1.34 $1.05 $12.25 $13.50 RBC Capital Markets $1.26
Slide 22: Peer Comparisons
PEER COMPARISONS P / FFO P / AFFO Daily Real Estate Market Indicator 2010E 2011E 2010E 2011E Canaccord (08/13/10) Artis REIT (AX.un) 9.2x 8.7x 12.5x 11.5x Dundee REIT (D.un) 9.0x 9.2x 11.4x 11.4x Morguard REIT (MRT.un) 11.2x 10.8x 12.5x 12.4x Allied REIT (AP.un) 11.9x 11.3x 13.6x 13.1x Canadian REIT
Slide 23: 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 24: 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) Uplands Common – Lethbridge, AB GLA: 53,392 sq ft Purchase Price: $ 12.5 million Asset Clas
Slide 25: Growth Strategy – External
GROWTH STRATEGY – EXTERNAL DSI Building – Minneapolis, MN GLA: 115,667 sq ft Purchase Price: $ USD 17.9 million 100% Leased – Data Science International Grande Prairie Power Centre – Grande Prairie, AB GLA: 140,181 sq ft Purchase Price: $ 43.8 million Asset Class: Retail 93.2% Leased – Anchored by F
Slide 26: Growth Strategy – External
GROWTH STRATEGY – EXTERNAL 360 Main & Shops of Winnipeg Square – Winnipeg, MB Acquired Remaining 62.0% Interest Bringing Ownership to 100% 32 Storey Class A Downtown Office Tower Linked to Underground Winnipeg Square Concourse & Winnipeg Square Parkade Beneath Office Tower Winnipeg Square Parkade –
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: Investment Highlights – Q2 2010
INVESTMENT HIGHLIGHTS – Q2 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) • Proven management team • Consistent and reliable cash f
Slide 31: Properties of Success
PROPERTIES OF SUCCESS
Artis Real Estate Investment Trust — Q2 2010 Earnings Presentation on 6ix