RFA Financial Inc. · TSX:RFA
RFA Financial — Artis Real Estate Investment Trust — Q2 2017 Earnings Presentation
23 slides from RFA Financial's earnings presentation, August 2017
Slide 1: Q2 – 2017 Investor Presentation
Q2 – 2017 Investor Presentation Artis Real Estate Investment Trust
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation may contain forward-looking statements. For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words “expects”, “anticipates”, “inten
Slide 3: Strategy and Business Model
Strategy and Business Model Geographic Diversification 01 • Canada and the United States 02 Product Diversification • Office • Retail • Industrial 03 Internal Growth • Results driven active asset management • Increasing same property net operating income • Accretive recycling of capital • Accretive
Slide 4: Portfolio Overview Diversified Commercial Properties
Portfolio Overview Diversified Commercial Properties 0.9M sq.ft 4.7M sq.ft 1.5M 3.9M sq.ft sq.ft 4.0M sq.ft 0.6M sq.ft 6.5M sq.ft 1.7M sq.ft 1.5M .04M Office sq.ft sq.ft Industrial Retail 2 countries – 3 asset classes – 10 major markets 248 properties – 25.9 million square feet – $5.5B GBV – 93% occ
Slide 5: Portfolio Diversification
Portfolio Diversification NOI by Asset Class NOI by Geographical Region US - Other SK WI Retail 4% 7% 9% 20% ON Office 57% 11% MN 18% MB 13% BC AZ 4% Industrial 23% 8% AB - Other Calgary - 15% Office 11% Property NOI for three months ended June 30, 2017, inclusive of Artis’ proportionate share of jo
Slide 6: Lease Expiration Schedule
Lease Expiration Schedule 20.0% Percentage of Portfolio GLA Expiring 18.0% 16.0% 14.0% 12.8% 12.2% 12.0% 10.4% 9.6% 10.0% 8.0% 6.0% 4.0% 3.0% 2.0% 0.0% 2017 2018 2019 2020 2021 Weighted-average rental increase on renewals YTD: 7.4% excluding Artis’ Calgary office properties (0.8% including Calgary o
Slide 7: Schedule of Debt Maturities
Schedule of Debt Maturities At June 30, 2017 (1): Total Debt to GBV – 50.4% Weighted-average interest rate – 3.75% Secured Mortgage Debt to GBV – 38.9% Weighted-average term – 3.6 yrs EBITDA Interest Coverage Ratio Q2-17 – 3.30 times Debt to EBITDA – 8.3 $700 $600 $ millions (2) $500 $453 $423 (2) $
Slide 8: Leverage Profile
Leverage Profile Healthy Balance Sheet and Liquidity Fiscal quarter ending: June 30, December 31, June 30, DBRS Recommended 2016 2016 2017 Threshold Debt: GBV 52.9% 51.0% 50.4% ≤ 53.0% Secured mortgages 40.9% 40.6% 38.9% N/A and loans: GBV Unencumbered assets $1,035 million $999 million $1,101 milli
Slide 9: Select Financial Information
Select Financial Information $700 $1.52 $1.50 $600 $553 $573 $1.50 $1.49 $509 $500 $467 $1.48 $ millions (1) $400 $342 $349 $1.46 $1.45* $299 $317 $300 $1.44 $1.42 $200 $1.42 $100 $1.40 2013 2014 2015 2016 2013 2014 2015 2016 2014 2015 2016 2017(3) $0 $1.38 (1) Property NOI Revenue (1) FFO per Unit
Slide 10: Recently Completed Development Projects
Recently Completed Development Projects Millwright Building, Minneapolis, MN Unlevered yield of 7.3% Midtown Business Center, Minneapolis, MN Linden Ridge Shopping Centre, Winnipeg, MB Unlevered yield of 7.6% Unlevered yield of 8.0% Artis Real Estate Investment Trust Q2-17 Quarterly Results | www.ar
Slide 11: New Development Activity
New Development Activity Targeted weighted-average unlevered yield of 7.20% Park Lucero Phase I Millwright Building 175 Westcreek Phoenix, AZ Minneapolis, MN GTA, ON Completed in 2016 Completed in Q1-17 Completed in Q1-17 Park Lucero Phase II & III Park 8Ninety Phase I 169 Inverness Drive Phoenix, A
Slide 12: Active Development Pipeline
Active Development Pipeline Project Name Asset Class Location Approx. GLA Estimated Total % Current/ Estimated (Artis’ share) Cost (000’s) Leased Projected Completion Yield Recently Completed Developments and Developments in Process Minneapolis, Millwright Building Office 139,600 sq. ft. US$36,156 3
Slide 13: Future Development Pipeline
Future Development Pipeline Project Name Asset Class Location Estimated GLA (Artis’ share) Linden Ridge Shopping Centre III Retail Winnipeg, MB 30,000 sq. ft. Stampede Station Apartments Apartments Calgary, AB 315,000 sq. ft. Park Lucero Phase IV Industrial Phoenix, AZ 85,000 sq. ft. 801 Carlson Par
Slide 14: Projected Returns from Developments
Projected Returns from Developments (in millions of dollars, except Projected Value 2017 2018 2019 (1) 2020+ Total Creation/Cost and Projected Value Creation/Unit) Artis’ Share of Total Budgeted Costs of Projects Delivered $100.5 $50.3 $178.1 $1,559.0 $1,887.9 Estimated Artis’ Share of Combined NOI
Slide 15: Upcoming Development Projects
Upcoming Development Projects 300 Main Street, Winnipeg, MB 415 Yonge Street, Toronto, ON Artis Real Estate Investment Trust Q2-17 Quarterly Results | www.artisreit.com 15
Slide 16: Artis' Investment in Alberta
Artis’ Investment in Alberta Q2-17 Property NOI Alberta Industrial 4% Alberta Retail 10% Artis - Other 74% Alberta 26% Alberta Office 12% Alberta Office Assets Alberta Retail Assets Alberta Industrial Assets 12% of total property NOI 10% of total property NOI 4% of total property NOI 20 assets 24 as
Slide 17: Artis' Investment in Alberta
Artis’ Investment in Alberta Alberta Expiry Schedule Alberta Outlook Improving % of Total GLA expiring per year • Alberta to lead Canada in GDP 4.0% growth during 2017 & 2018 3.5% • Two Canadian pipelines approved 3.0% 2.8% • Pending approval of Keystone XL 2.5% pipeline 2.0% 1.7% 1.6% 1.7% 1.7% • O
Slide 18: Alberta Dispositions in 2016
Alberta Dispositions in 2016 Summary of Alberta Properties Sold in 2016: Number of Properties: 13 Gross Leasable Area: 1.5 million square feet Aggregate Sale Price: $274 million Total IFRS value: $266 million *Total $400 million sold and accretively recycled at 150 bps spread during 2016 Uplands Com
Slide 19: Madison Lifestyle Office Portfolio - Story of Success
Madison Lifestyle Office Portfolio - Story of Success Madison Lifestyle Office Portfolio: 10% NOI growth in less than a year Rated one of top 10 Tech Cities in 2017 by Cushman & Wakefield Occupancy increased by 6% from 2016 to 2017 Artis Real Estate Investment Trust Q2-17 Quarterly Results | www.art
Slide 20: Market and Analyst Information
Market and Analyst Information Information as of July 2017: Analyst Consensus Information (1) Unit price: $13.25 Target price: $13.61 Distribution per unit: $1.08 Net Asset Value: $14.04 Yield: 8.2% Implied cap rate: 6.85% Market cap: $2.0B 2017 2018 Consensus AFFO FFO AFFO FFO Per Unit $1.12 $1.45
Slide 21: Guideposts for 2017 and Beyond
Guideposts for 2017 and Beyond • Accretive recycling of capital ($300-$400 million target) • Accretive refinancing of debt • DRIP suspended, minimizing dilution • Narrow the gap between Unit price and NAV • Balance sheet considerations • Maintain Debt/EBITDA below 8.5x • Maintain EBITDA interest cov
Slide 22: Portfolio Overview Diversified Commercial Properties
Portfolio Overview Diversified Commercial Properties 0.9M sq.ft 4.7M sq.ft 1.5M 3.9M sq.ft sq.ft 4.0M sq.ft 0.6M sq.ft 6.5M sq.ft 1.7M sq.ft 1.5M .04M Office sq.ft sq.ft Industrial Retail 2 countries – 3 asset classes – 10 major markets 248 properties – 25.9 million square feet – $5.5B GBV – 93% occ
Slide 23: Q2 – 2017 Investor Presentation
Q2 – 2017 Investor Presentation Artis Real Estate Investment Trust
Artis Real Estate Investment Trust — Q2 2017 Earnings Presentation on 6ix