INVESTOR PRESENTATION - Smart Today Smart Tomorrow - SmartCentres
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INVESTOR PRESENTATION Smart Today Smart Tomorrow Based on 4th Quarter 2018 March 2019
BASED ON 4 TH QUARTER 2018 INVESTOR PRESENTATION TABLE OF CONTENTS ▪ Track record of performance ▪ Portfolio overview ▪ Acquisitions ▪ Development / Intensification ▪ Financial highlights ▪ Development team ▪ Market factors ▪ Summary ▪ Appendix SMARTCENTRES REAL ESTATE INVESTMENT TRUST MARCH 2019 - INVESTOR PRESENTATION 2
BASED ON 4 TH QUARTER 2018
INVESTOR PRESENTATION
NOTICE TO READER
Readers are cautioned that certain terms used in this Investor Presentation (“Presentation”) such as Funds from Operations ("FFO"),
Adjusted Cashflow from Operations ("ACFO"), "Gross Book Value", "Payout Ratio", "Interest Coverage", "Total Debt to Adjusted
EBITDA" and any related per Unit amounts used by management to measure, compare and explain the operating results and
financial performance of the Trust do not have any standardized meaning prescribed under IFRS and, therefore, should not be
construed as alternatives to net income or cash flow from operating activities calculated in accordance with IFRS. These terms are
defined in this Presentation and reconciled to the consolidated financial information of the Trust in the Management’s Discussion and
Analysis (“MD&A”) for the year ended December 31, 2018. Such terms do not have a standardized meaning prescribed by IFRS and
may not be comparable to similarly titled measures presented by other publicly traded entities.
Certain statements in this Presentation are "forward-looking statements" that reflect management's expectations regarding the
Trust's future growth, results of operations, performance and business prospects and opportunities. More specifically, certain
statements contained in this Presentation, including statements related to the Trust's maintenance of productive capacity, estimated
future development plans and costs, view of term mortgage renewals including rates and upfinancing amounts, timing of future
payments of obligations, intentions to secure additional financing and potential financing sources, and vacancy and leasing
assumptions, and statements that contain words such as "could", "should", "can", "anticipate", "expect", "believe", "will", "may" and
similar expressions and statements relating to matters that are not historical facts, constitute "forward-looking statements". These
forward-looking statements are presented for the purpose of assisting the Trust's Unitholders and financial analysts in understanding
the Trust's operating environment, and may not be appropriate for other purposes. Such forward-looking statements reflect
management's current beliefs and are based on information currently available to management. However, such forward-looking
statements involve significant risks and uncertainties. A number of factors could cause actual results to differ materially from the
results discussed in the forward-looking statements. Although the forward-looking statements contained in this Presentation are
based on what management believes to be reasonable assumptions, the Trust cannot assure investors that actual results will be
consistent with these forward-looking statements. The forward-looking statements contained herein are expressly qualified in their
entirety by this cautionary statement. These forward-looking statements are made as at the date of this Presentation and the Trust
assumes no obligation to update or revise them to reflect new events or circumstances unless otherwise required by applicable
securities legislation.
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
MARCH 2019 - INVESTOR PRESENTATION 3
TRACK RECORD OF PERFORMANCE HIGHLIGHTS ▪ One of Canada’s premier REITs ▪ $5.5 billion equity capitalization ▪ $9.5 billion total asset value ▪ Approximately 20 million sf. of mixed-use development on 76 properties identified so far: • residential – apartments, condominiums, and townhomes • office buildings • retirement living residences • self-storage facilities • medical facilities ▪ 157 properties – 152 shopping centres, 4 mixed-use properties and 1 office property ▪ TSX:SRU.UN SMARTCENTRES REAL ESTATE INVESTMENT TRUST MARCH 2019 - INVESTOR PRESENTATION 4
TRACK RECORD OF PERFORMANCE
THE CONTINUING EVOLUTION
Barrie South SmartCentre Mascouche SmartCentre
MITCHELL
JOINT VENTURE
GOLDHAR
1989-1994 1999 2015 2018
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
MARCH 2019 - INVESTOR PRESENTATION 5
TRACK RECORD OF PERFORMANCE
TOTAL RETURN TO UNITHOLDERS
15.8% AVERAGE ANNUAL RETURN SINCE IPO
(as of February 27, 2019)
$1,200
$1,086.46
$1,000
$800
$600
$524.78
$400 $379.54
$200
$0
SmartCentres TSX Capped REIT TSX Composite
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
MARCH 2019 - INVESTOR PRESENTATION 6
TRACK RECORD OF PERFORMANCE
GROWTH IN RENTAL REVENUE AND FFO/UNIT
RENTAL REVENUE FFO
(in millions of $) ($ per unit)
6.8% CAGR 4.0% CAGR
since 2014 since 2014
2.28
791 2.17 2.20
741 2.10
728
1.95
670
608
2014 2015 2016 2017 2018 2014 2015 2016* 2017 2018
* Excludes $0.06 per unit of non-recurring income
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
MARCH 2019 - INVESTOR PRESENTATION 7
TRACK RECORD OF PERFORMANCE
GROWTH IN TOTAL ASSETS
TOTAL ASSETS
(in millions of $)
32.2% CAGR
9,380 9,460
8,739
since 2002 8,505
7,070 7,107
6,480
5,956
4,194 4,237 4,374
3,894
3,584
2,564
1,015
109 229
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
MARCH 2019 - INVESTOR PRESENTATION 8
WHAT MAKES SMARTCENTRES STRONG
AN EXCEPTIONAL OUTSTANDING
OUR HEALTHY
PIPELINE OF QUALITY OF OUR
BALANCE SHEET
MIXED-USE SHOPPING
AND FINANCIAL
GROWTH CENTRES &
FLEXIBILITY
INITIATIVES TENANTS
CONSERVATIVE THE QUALITY
PROPERTY AND DEPTH
VALUATIONS AND OF OUR
SIGNIFICANT DEVELOPMENT
NAV GROWTH TEAM AND JV
POTENTIAL RELATIONSHIPS
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
MARCH 2019 - INVESTOR PRESENTATION 9
PORTFOLIO OVERVIEW VALUE AND CONVENIENCE IN ONE STOP ▪ 34.4 million sf. of principally open format shopping centre space ▪ Average age: 14.8 years (youngest in the industry) • Lower capital expenditures ▪ Coast to coast locations • 84% are urban or near urban markets • 83% by square feet in Ontario, Quebec and BC ▪ Virtually 100% of centres contain both a food store and a pharmacy, in a Walmart store or independently or both ▪ Strong value orientation of our tenants ▪ Results in high degree of stability: • Average occupancy of 98.9% since 2005 SMARTCENTRES REAL ESTATE INVESTMENT TRUST MARCH 2019 - INVESTOR PRESENTATION 10
PORTFOLIO OVERVIEW
STRATEGICALLY LOCATED
PROVINCE
157 Properties*
# Properties /
# Intensification Properties 76 Intensification Properties
34.4M SF.*
ALBERTA MANITOBA
7/2 3/1
BRITISH
COLUMBIA QUEBEC
14 / 6 SASKATCHEWAN ONTARIO 23 / 18 ATLANTIC
5/2 95 / 47 10 / 0
* Excludes 7 development sites totalling 0.6 million sf. upon
completion and an additional 2.6 million sf. of retail development
density associated with existing retail centres.
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
MARCH 2019 - INVESTOR PRESENTATION 11PORTFOLIO OVERVIEW MARKET CONDITIONS – CANADA VS. UNITED STATES ▪ Much lower square feet of retail per person (15 vs. 23) in Canada (traditionally drives higher rents per square foot) ▪ In both countries, luxury and discount retail brands are performing best, consistent with trend in population discretionary income patterns ▪ When combined with Canadians’ value orientation, all population segments shop at Walmart, dollar stores, TJX banners, and other value chains (the focus of SmartCentres’ tenant mix) ▪ Open Format retail and Big Box retail are newer in Canada, so centres remain very relevant to consumers’ daily shopping habits ▪ Rate and stage of E-commerce penetration is much slower in Canada due to small market size, lower population, density, cost of shipping, etc. ▪ Canada has already rationalized its department store base (Zellers, Target, Sears gone) SMARTCENTRES REAL ESTATE INVESTMENT TRUST MARCH 2019 - INVESTOR PRESENTATION 12
PORTFOLIO OVERVIEW
STABLE INCOME BASE
LEASE MATURITY BY AREA
(in millions of square feet)
1.6
2.3 1.5
1.9 1.7
0.9 0.6
0.8 0.7 0.6
0.8
1.9 2.0
0.7 0.7
0.4
0.6
0.2
1.1 1.1 1.4 1.4 0.5 1.2 0.2
0.6
0.1
0.7
0.3 0.6
0.1
0.7
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Month-to- Vacant
month
Walmart Other Anchor Non-Anchor
Average roll of 2.3 million sf. annually (6.6% of total GLA per year)
▪ Average lease term of 5.4 years
▪ Average remaining lease term of 6.6 years for Walmart, with multiple renewal options of up to
80 years
▪ Average remaining lease term excluding Walmart is 4.6 years
▪ 2,475,403 sf. or 69.5% of 2019 lease maturities have been renewed or near completion
▪ Average “same property” NOI growth is 1.0% to 1.5% p.a.
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
MARCH 2019 - INVESTOR PRESENTATION 13PORTFOLIO OVERVIEW
WELL TENANTED, HIGH QUALITY
Top ten tenants by gross rental revenues of SmartCentres' Portfolio as of
December 31, 2018:
% of
Average DBRS S&P Moody’s
Number of Gross
Tenant Remaining Credit Credit Credit
Stores Rental
Lease Term Rating Rating Rating
Revenues
Walmart 101 25.7 6.6 AA AA Aa2
Canadian Tire, Mark's and FGL Sports 71 4.5 5.0 BBB (high) BBB+ n/a
Winners, HomeSense, Marshalls 55 4.0 4.8 n/a A+ A2
Loblaws and Shoppers Drug Mart 24 2.7 7.0 BBB BBB n/a
Lowe's, RONA 9 2.4 5.4 A (low) BBB+ Baa1
Sobeys 18 2.3 4.3 BB (high) BB+ n/a
Reitmans 91 2.0 2.7 n/a n/a n/a
Best Buy 22 1.8 2.4 n/a BBB Baa1
Dollarama 52 1.7 4.0 BBB n/a n/a
Michaels 25 1.5 3.5 n/a n/a Ba2
Total 468 48.6 5.9
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
MARCH 2019 - INVESTOR PRESENTATION 14PORTFOLIO OVERVIEW CURRENT LEASING ENVIRONMENT ▪ All major national and regional retailers continue to grow and SmartCentres continues to deliver at 98% occupancy ▪ Value segment still growing – Dollar stores, Winners, Marshalls, HomeSense, sporting goods, services, and food ▪ Delivering additional services and amenities to every location continues to be a priority (fitness, entertainment, restaurants, pet stores, pop-ups, etc.) SMARTCENTRES REAL ESTATE INVESTMENT TRUST MARCH 2019 - INVESTOR PRESENTATION 15
DEVELOPMENT / INTENSIFICATION GROWTH STRATEGY ▪ Continue review of every property for mixed-use intensification initiatives, with 76 properties specifically identified to date and encompassing over 168 intensification projects ▪ Joint venture relationships are being added to optimize investment returns, project quality and operational effectiveness ▪ In addition to existing land banks, we own over 2,600 acres of additional density at grade on our sites, of which over half are in the six major urban markets – much of what can be intensified over time ▪ Including retail development, total expenditures on projects to commence construction over the next five years estimated to exceed $9.5 billion ($3.3 billion at our share) SMARTCENTRES REAL ESTATE INVESTMENT TRUST MARCH 2019 - INVESTOR PRESENTATION 16
DEVELOPMENT TEAM
ABILITY TO EXECUTE
STRONG,
PARTNER
EXPERIENCED IN-HOUSE
RELATIONSHIPS
DEVELOPMENT TEAM
GOVERNMENT/
CONSULTANT
RELATIONSHIPS
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
MARCH 2019 - INVESTOR PRESENTATION 17DEVELOPMENT TEAM IN-HOUSE DEVELOPMENT TEAM Employees in Development & Leasing Related Functions: ▪ Number of People: 151 ▪ Number of Years Experience with SmartCentres • Average: 7 years • Total: 1,092 years ▪ Number of Years Experience in Real Estate • Average: 16 years ▪ Total: 2,400 years SMARTCENTRES REAL ESTATE INVESTMENT TRUST MARCH 2019 - INVESTOR PRESENTATION 18
DEVELOPMENT TEAM
IN-HOUSE DEVELOPMENT RESOURCES
ENVIRONMENTAL
PLANNERS / GOVERNMENT
ENGINEERS / GEOTECH
DEVELOPERS RELATIONS
SPECIALISTS
LEASING CONSTRUCTION ARCHITECTS
FINANCE /
LAWYERS FINANCIAL MARKETING
ANALYSTS
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
MARCH 2019 - INVESTOR PRESENTATION 19STRATEGIC RELATIONSHIPS SMARTCENTRES REAL ESTATE INVESTMENT TRUST MARCH 2019 - INVESTOR PRESENTATION 20
STRATEGIC RELATIONSHIP
WALMART CANADA
NUMBER OF
WALMART
STORES 230 296
13 14
96 101
Supercentres (339)* Total Walmart Stores (411)*
Other SmartCentres Shadow SmartCentres Tenants
* Company source as at February 27, 2019
▪ Walmart Canada attributes
• Value pricing and fresh food generates huge traffic
• Customer traffic increasing and food market share increasing
• Benefiting from the closure of Target and Sears – little competition in the discount general
merchandise space
▪ 76% of Canadians live within 10 km of a Walmart
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
MARCH 2019 - INVESTOR PRESENTATION 21STRATEGIC RELATIONSHIP
MITCHELL GOLDHAR
M I TC HE LL
GO LD HAR
▪ JV Partner
• Vaughan Metropolitan Centre
• StudioCentre / Eastern Avenue
• Salmon Arm SmartCentre
▪ Consultant on development and mixed-use projects
▪ Executive Chairman, Trustee and Investment
Committee member
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
MARCH 2019 - INVESTOR PRESENTATION 22STRATEGIC RELATIONSHIP
SIMON PROPERTY GROUP
▪ Largest public real estate company in the U.S.
▪ Engaged primarily in retail real estate properties
including regional malls, Premium Outlets and The
Mills®
▪ Exceptional relationships with the world’s largest
retailers provides strong tenant base for Premium sites
▪ Canada is part of a continuing global expansion
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
MARCH 2019 - INVESTOR PRESENTATION 23STRATEGIC RELATIONSHIP TRANSIT CITY CONDOS
CONDOMINIUMS
WITH CENTRECOURT
▪ Partner for first three 55-storey
sold-out towers at VMC
▪ Partner for VMC towers 4 & 5 –
Spring 2019 marketing launch
▪ GTA focused:
• 2,000 units completed
• 4,000 units under active
construction
▪ Initial discussions for other
projects
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
MARCH 2019 - INVESTOR PRESENTATION 24STRATEGIC RELATIONSHIP RETIREMENT HOMES WITH REVERA ▪ Leading owner, operator and investor in the senior living sector through various partnerships own over 500 properties in Canada, the United States, and the United Kingdom serving over 55,000 seniors ▪ Joint venture with Revera, first 3 sites announced – 2 in Vaughan and 1 in Oakville. ▪ Expect to complete 5 projects per year ▪ Typical building size is 140,000 sf., with investment including land of up to $100 million per site ▪ Yields in the 6.0% - 8.0% range on cost SMARTCENTRES REAL ESTATE INVESTMENT TRUST MARCH 2019 - INVESTOR PRESENTATION 25
STRATEGIC RELATIONSHIP SELF-STORAGE WITH SMARTSTOP ▪ Diversified real estate company focused on self-storage, student and senior housing. Portfolio currently includes 80,000 self storage units, 9.4 million rentable square feet, and $1.8 billion of real estate assets under management. Buildings on average 100,000 to 130,000 sf. ▪ Development yield expected to be 7.0% to 8.5% ▪ Additional returns from sale of land into the JV ▪ 6 sites approved in the GTA, with expansion across country planned SMARTCENTRES REAL ESTATE INVESTMENT TRUST MARCH 2019 - INVESTOR PRESENTATION 26
STRATEGIC RELATIONSHIP
JADCO CORPORATION
▪ Well reputed family-owned business
▪ Has gained a strong foothold in the residential sector in
the Greater Montreal Area
▪ Strengths lie in its commitment to excellence in building
exceptional living and mixed-used environments
▪ Diversified portfolio comprised of luxury residential,
upscale rental and mixed-used projects such as
Paton1, Quintessence and Équinoxe
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
MARCH 2019 - INVESTOR PRESENTATION 27STRATEGIC RELATIONSHIP
FIELDGATE HOMES
▪ Private company in residential development business
for more than 60 years
▪ Primarily focused on GTA
▪ Over 12,000 homes built
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
MARCH 2019 - INVESTOR PRESENTATION 28STRATEGIC RELATIONSHIP ONLY “OMNI CHANNEL” LANDLORD Penguin Pick-Up & Penguin Fresh SMARTCENTRES REAL ESTATE INVESTMENT TRUST MARCH 2019 - INVESTOR PRESENTATION 29
DEVELOPMENT / INTENSIFICATION
GROWTH INITIATIVES
VAUGHAN
RESIDENTIAL METROPOLITAN RETAIL
CENTRE
APARTMENT SENIOR BUILD-OUT OF
RENTALS RESIDENCES EXISTING
PREMIUM
SELF-
CONDOMINIUMS OUTLETS
STORAGE
CENTRES
TOWNHOUSES OFFICE
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
MARCH 2019 - INVESTOR PRESENTATION 30DEVELOPMENT / INTENSIFICATION
TECHNOLOGY INITIATIVES
MOBILE CHARGING DIGITAL
ADVERTISING STATIONS SIGNS
WIFI ADVERTISING BUILDING
NETWORKS KIOSKS SYSTEMS
ALL INITIATIVES DESIGNED TO CREATE VALUE ADD FOR VISITORS
TO OUR SITES AND ALSO DRIVE ADDITIONAL REVENUE
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
MARCH 2019 - INVESTOR PRESENTATION 31DEVELOPMENT / INTENSIFICATION
MAJOR MIXED-USE REAL ESTATE INITIATIVES
Estimated Costs ($M) Estimated Gain on Final Sale
GLA SRU 100%
Site Project Type ('000sf) / Completion % Share Share SRU Share Yield Profit % SRU Share Timing
Units Year
1. VMC (Office Towers) a. KPMG (T#1) Office 360sf 2016 50% $180 $90.0 5.7% — — —
b. PWC (T#2) Office 105sf 2019 50% $65 $32.5 4.5%-5.5% — — —
c. Office (T#3) Office 600sf 2024 50% $375 $187.5 4.8%-5.5% — — —
d. Office (T#4) Office 300sf 2026 50% $210 $105.0 4.8%-5.5% — — —
(1)
2. Toronto Premium Outlets Phase II (JV) Retail 144sf Nov 2018 50% $133 $66.5 8.0%-8.5% — — —
(Simon Property Group)
(1)
3. Montreal Premium Outlets Phase II (JV) Retail 140sf 2022-2023 50% $56 $28.0 9%-10% — — —
(Simon Property Group)
4. New Premium Outlets Premium (JV) Retail 360sf 2022 50% $136 $68.0 8.0%-8.5% — — —
(Simon Property Group)
(2)
5. Laval Centre Jadco (2 Bldgs) Apartments 338 Units 2020-2022 50% $82 $41.0 5.3%-5.8% — — —
6. VMC (Condos) CentreCourt Transit City 1 551 Units 2020 25% $181 $45.3 N/A 25%-30% 25% 2020
CentreCourt Transit City 2 559 Units 2020 25% $189 $47.3 N/A 25%-30% 25% 2020
CentreCourt Transit City 3 606 Units 2021 25% $190 $47.5 N/A 20%-25% 25% 2021
CentreCourt Transit City 4 497 Units 2023 25% $200 $50.0 N/A 20%-25% 25% 2023
CentreCourt Transit City 5 518 Units 2023-2024 25% $200 $50.0 N/A 20%-25% 25% 2023-2024
(2)
7. VMC (Apartments) VMC Rental Apartments Apartments 480 Units 2023-2024 50% $220 $110.0 4.2%-4.8% — — —
8. Vaughan NW Fieldgate Low/Mid Rise 230-300 2021-2022 50% $150-$200 $75-$100 N/A 15%-20% 50% 2021-2022
Residential Units
(2)
9. Ottawa Laurentian JV Partner Apartments/ 400 Units 2022 50% $150 $75.0 6.0%-7.0% — — —
Retirement
Homes
(2)
10. Multiple Locations Self-Storage (JV) Self-Storage 500sf built 2019-2025 50% $60M per $30M per 7.0%-8.5% — — —
(6 Approved Projects – (SmartStop) (4 to 5 new per year in year in each year in each
Toronto (Leaside), Oshawa, facilities each each of of years 1-5 of years 1-5
Brampton (2 projects), year) years 1-5
Vaughan, Toronto
(Scarborough))
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
MARCH 2019 - INVESTOR PRESENTATION 32DEVELOPMENT / INTENSIFICATION
MAJOR MIXED-USE REAL ESTATE INITIATIVES
Estimated Costs ($M) Estimated Gain on Final Sale
GLA SRU 100%
Site Project Type ('000sf) / Completion % Share Share SRU Share Yield Profit % SRU Share Timing
Units Year
11. StudioCentre (Toronto) SRU-Penguin JV Mixed-Use 150sf 2022-2023 50% $53 $26.5 6.0%-7.0% — — —
(Office, Studio,
Hotel)
12. Pointe-Claire Rental Apartments Apartments 480 Units 2022-2023 50% $155 $77.4 4.4%-5.0% — — —
(2)
(Apartments) (2 Bldgs)
13. Pointe-Claire (Condo) Condo Condo 200 Units 2024 50% $55 $27.4 N/A 10%-15% 50% 2024
(2)
14. Multiple Locations Retirement Living Retirement 600sf built 2022-2025 50% $100M per $50M per 6.0%-8.0% — — —
(3 Approved Projects – Residences (JV) Residences & per year in year per site year per site
Vaughan (2 projects), (Revera) Seniors each of in each of in each of
Oakville) Apartments years 1-5 years 1-5 years 1-5
(3 to 5 new
facilities each
year)
Notes:
(1) The Phase II expansions for both the Toronto Premium Outlets and the Montreal Premium Outlets are included in the future development pipeline as Developments.
(2) Stabilization is estimated to be 1 to 3 years after completion.
(3) Estimated Transactional FFO Gains on Sale related to parcel sales of land into Joint Ventures estimated at 1%-2% of annual FFO at SmartCentres' ownership share.
In addition to the projects set out in the table above (with the exception of the projects listed in Note 1), SmartCentres' pipeline also includes approximately 3.2 million square feet of future developments
as set out in the table shown on the “Future Earnouts and Developments” section. Also in addition to the above, SmartCentres has a further mixed-use development pipeline estimated at 4.5 million
square feet in projects that are underway or active. Further, SmartCentres will initiate activities in the short-term to work towards development of a further estimated 12.5 million to 15 million square feet
in mixed-use initiatives that will be completed in the longer-term.
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
MARCH 2019 - INVESTOR PRESENTATION 33DEVELOPMENT / INTENSIFICATION
INITIATIVES
MIXED-USE RETAIL
INTENSIFICATION DEVELOPMENTS
UNDERWAY ACTIVE FUTURE UNDERWAY ACTIVE FUTURE
33 49 86+ 26 35 2+
168+ Projects
(on 76 Properties)
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
MARCH 2019 - INVESTOR PRESENTATION 34DEVELOPMENT / INTENSIFICATION
BY ASSET CLASS
SELF-STORAGE
UNDERWAY ACTIVE FUTURE
13 14 11+
OFFICE
UNDERWAY ACTIVE
1 2
SENIORS RESIDENCES
UNDERWAY ACTIVE FUTURE
2 16 30+
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
MARCH 2019 - INVESTOR PRESENTATION 35DEVELOPMENT / INTENSIFICATION
BY ASSET CLASS
APARTMENT RENTALS
UNDERWAY ACTIVE FUTURE
9 7 22+
CONDOMINIUMS
UNDERWAY ACTIVE FUTURE
7 9 13+
TOWNHOUSES
UNDERWAY ACTIVE FUTURE
1 4 10+
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
MARCH 2019 - INVESTOR PRESENTATION 36DEVELOPMENT / INTENSIFICATION
BY ASSET CLASS
RETAIL BUILD-OUT EXISTING
UNDERWAY ACTIVE
23 34
PREMIUM OUTLET CENTRES
EXISTING EXPANSIONS FUTURE
2 2 2
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
MARCH 2019 - INVESTOR PRESENTATION 37DEVELOPMENT / INTENSIFICATION VAUGHAN METROPOLITAN CENTRE (VMC) TORONTO ▪ A long term build (10 – 15 years) ▪ A 50:50 JV between SmartCentres and Penguin Properties. Mitchell Goldhar intimately involved in all aspects of the project ▪ Potential density of 18 – 19 million sf. of residential, office and retail development for the whole 100-acre site ▪ At its 50% ownership, SmartCentres lands (approximately 25 acres) represent 4.5 – 5.5 million sf. of potential development ▪ Transit infrastructure, including TTC subway and VIVA bus opened in December 2017, and York regional bus station to open early in 2019 SMARTCENTRES REAL ESTATE INVESTMENT TRUST MARCH 2019 - INVESTOR PRESENTATION 38
DEVELOPMENT / INTENSIFICATION VMC TORONTO Aerial Overview – Existing Conditions SMARTCENTRES REAL ESTATE INVESTMENT TRUST MARCH 2019 - INVESTOR PRESENTATION 39
DEVELOPMENT / INTENSIFICATION
VMC
TORONTO
Transit Overview
BUS TERMINAL
OPEN 2019
VMC
OPEN 2017
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
MARCH 2019 - INVESTOR PRESENTATION 40DEVELOPMENT / INTENSIFICATION VMC TORONTO Master Plan SMARTCENTRES REAL ESTATE INVESTMENT TRUST MARCH 2019 - INVESTOR PRESENTATION 41
DEVELOPMENT / INTENSIFICATION VMC TORONTO Central Park SMARTCENTRES REAL ESTATE INVESTMENT TRUST MARCH 2019 - INVESTOR PRESENTATION 42
DEVELOPMENT / INTENSIFICATION VMC TORONTO VMC Subway Station, SC Home Office, KPMG Tower, and PwC-YMCA Tower SMARTCENTRES REAL ESTATE INVESTMENT TRUST MARCH 2019 - INVESTOR PRESENTATION 43
DEVELOPMENT / INTENSIFICATION VMC TORONTO Aerial – 3 Towers Superimposed SMARTCENTRES REAL ESTATE INVESTMENT TRUST MARCH 2019 - INVESTOR PRESENTATION 44
DEVELOPMENT / INTENSIFICATION VMC TORONTO KPMG Tower Lobby SMARTCENTRES REAL ESTATE INVESTMENT TRUST MARCH 2019 - INVESTOR PRESENTATION 45
DEVELOPMENT / INTENSIFICATION VMC TORONTO PwC-YMCA Tower Rendering SMARTCENTRES REAL ESTATE INVESTMENT TRUST MARCH 2019 - INVESTOR PRESENTATION 46
DEVELOPMENT / INTENSIFICATION VMC TORONTO PwC-YMCA – Construction SMARTCENTRES REAL ESTATE INVESTMENT TRUST MARCH 2019 - INVESTOR PRESENTATION 47
DEVELOPMENT / INTENSIFICATION VMC TORONTO PwC-YMCA Tower Under Construction SMARTCENTRES REAL ESTATE INVESTMENT TRUST MARCH 2019 - INVESTOR PRESENTATION 48
DEVELOPMENT / INTENSIFICATION VMC TORONTO PHASES 1 & 2 OFFICE ▪ KPMG Tower complex with 365,000 sf. of LEED Gold space, opened in 2016 (300,000 sf. of office space 100% leased) ▪ 16th Annual Real Estate Excellence (REX) Award for Office Development of the Year for the GTA ▪ Tenants include: ▪ Second mixed-use tower under construction, with YMCA, Library and community space for 100,000 sf. and PwC has taken 80,000 sf. of office space ▪ Nine-acre urban park is a key component of the master plan ▪ SmartCentres home office to move into two-storey former retail building adjacent to subway station SMARTCENTRES REAL ESTATE INVESTMENT TRUST MARCH 2019 - INVESTOR PRESENTATION 49
DEVELOPMENT / INTENSIFICATION VMC TORONTO RESIDENTIAL ▪ First residential development is a JV with CentreCourt Developments, an experienced GTA-based condominium developer ▪ Initial plan was for a 55 story condominium tower with over 500 suites, anchored by a BUCA-branded restaurant and BAR BUCA, together with an associated parking facility ▪ First tower fully sold in 7 days at higher than initially projected pricing, so second and third towers launched early, which also sold out at strong pricing ▪ Additional condominium towers and residential rental apartments expected to be developed. Next phase, to the east of the bus terminal, to include two condominium towers and one rental apartment ▪ Sales centre has been built on-site to allow potential tenants to see suite layouts, finishes, etc. SMARTCENTRES REAL ESTATE INVESTMENT TRUST MARCH 2019 - INVESTOR PRESENTATION 50
DEVELOPMENT / INTENSIFICATION VMC TORONTO Transit City 1, 2 & 3 Towers Under Construction SMARTCENTRES REAL ESTATE INVESTMENT TRUST MARCH 2019 - INVESTOR PRESENTATION 51
DEVELOPMENT / INTENSIFICATION VMC TORONTO Rendering of Transit City in the East Block SMARTCENTRES REAL ESTATE INVESTMENT TRUST MARCH 2019 - INVESTOR PRESENTATION 52
DEVELOPMENT / INTENSIFICATION VAUGHAN NW TORONTO RESIDENTIAL ▪ Existing Walmart anchored shopping centre at Major Mackenzie Drive and Weston Road in Vaughan ▪ JV with Fieldgate on 16-acre site for 230-300 freehold townhomes to be built, municipal approval for Phase 1 and construction to commence in 2020 and possession to occur in 2021 and into 2022 ▪ JV with SmartStop for a co-owned self-storage facility ▪ In the process of obtaining approvals on the remaining 6 acres to add mixed-use density including 800,000 sf. of seniors housing, condominium and rental accommodation SMARTCENTRES REAL ESTATE INVESTMENT TRUST MARCH 2019 - INVESTOR PRESENTATION 53
DEVELOPMENT / INTENSIFICATION VAUGHAN NW TORONTO Mixed-Use SMARTCENTRES REAL ESTATE INVESTMENT TRUST MARCH 2019 - INVESTOR PRESENTATION 54
DEVELOPMENT / INTENSIFICATION VAUGHAN NW TORONTO Upon Completion SMARTCENTRES REAL ESTATE INVESTMENT TRUST MARCH 2019 - INVESTOR PRESENTATION 55
TORONTO
DEVELOPMENT / INTENSIFICATION
PREMIUM OUTLETS
WITH SIMON PROPERTY GROUP
▪ Toronto Premium Outlets
• 500,000 sf. when fully completed
• Phase I opened Aug. 1, 2013
• Phase II – new parking facility opened
in Nov. 2017 as part of expansion and
and Phase II opened in Nov. 2018
• Stabilized yield in the double digits
▪ Premium Outlets Montreal MONTREAL
• Phase I – 350,000 sf.
• Opened Oct. 30, 2014
• Additional 75 acres of potential
development adjacent to the site to
include retail, residential, hotel, etc.
▪ Actively sourcing two other locations in
Canada
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
MARCH 2019 - INVESTOR PRESENTATION 56DEVELOPMENT / INTENSIFICATION TORONTO PREMIUM OUTLETS 144,000 Square Foot Expansion SMARTCENTRES REAL ESTATE INVESTMENT TRUST MARCH 2019 - INVESTOR PRESENTATION 57
EXPANSION GRAND OPENING
NOV 15, 2018
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
MARCH 2019 - INVESTOR PRESENTATION 58DEVELOPMENT / INTENSIFICATION LAVAL CENTRE MONTREAL ▪ Lands designated by City as “Centre-Ville”, due to highway and transit access ▪ 43 acre site anchored by a 160,000 square foot Walmart Supercentre ▪ Parcels of land sold to others for seniors housing, hotel and office development of 400,000 sf. ▪ JV for 290,000 sf. of rental residential in 338 units with Jadco ▪ Remaining 15 acres to be developed with up to 2 million sf. of mixed-use SMARTCENTRES REAL ESTATE INVESTMENT TRUST MARCH 2019 - INVESTOR PRESENTATION 59
DEVELOPMENT / INTENSIFICATION LAVAL CENTRE MONTREAL Original Plan SMARTCENTRES REAL ESTATE INVESTMENT TRUST MARCH 2019 - INVESTOR PRESENTATION 60
DEVELOPMENT / INTENSIFICATION LAVAL CENTRE MONTREAL With Jadco – 338 Apartment Units SMARTCENTRES REAL ESTATE INVESTMENT TRUST MARCH 2019 - INVESTOR PRESENTATION 61
DEVELOPMENT / INTENSIFICATION LAVAL CENTRE MONTREAL Current Plan SMARTCENTRES REAL ESTATE INVESTMENT TRUST MARCH 2019 - INVESTOR PRESENTATION 62
DEVELOPMENT / INTENSIFICATION POINTE-CLAIRE MONTREAL ▪ Walmart and Home Depot anchored site in West Montreal purchased in 2016 ▪ Very well-located site – transit (new light rail transit line to downtown) and road access ▪ Master planning activities moving forward with strong support from council ▪ Secured zoning for a multitude of uses including residential, seniors housing and office – 1 to 1½ million sf. on the perimeter of the property ▪ First rental apartment building expected to be completed in 2022 ▪ Significant NAV accretion potential from entitlements achieved to date SMARTCENTRES REAL ESTATE INVESTMENT TRUST MARCH 2019 - INVESTOR PRESENTATION 63
DEVELOPMENT / INTENSIFICATION
POINTE-CLAIRE
MONTREAL
FUTURE REM STATION
Existing conditions
ST-JEAN BOUL
HYMUS BOUL
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
MARCH 2019 - INVESTOR PRESENTATION 64DEVELOPMENT / INTENSIFICATION
POINTE-CLAIRE
MONTREAL
Perspective from St. Jean Blvd. and
Hymus Blvd.
ST-JEAN BOUL
HYMUS BOUL
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
MARCH 2019 - INVESTOR PRESENTATION 65DEVELOPMENT / INTENSIFICATION
CHILLIWACK MALL
Aerial – Existing Conditions
Sto:Lo
First Nation ALR Lands
Residential
Rental
Residential KNIGHT ROAD Residential
Condo Rental
Kekinow Native Housing Society
Chilliwack Mall
VEDDER ROAD
LUCKAKUCK WAY
Cottonwood Mall
(Morguard)
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
MARCH 2019 - INVESTOR PRESENTATION 66DEVELOPMENT / INTENSIFICATION WESTSIDE MALL TORONTO ▪ Urban redevelopment site. Currently a 140,000 square foot shopping centre ▪ New Light Rapid Transit (LRT) station as part of Eglinton Cross Town system to open on site ▪ New links to existing GO network will link new East:West to existing North:South transit framework ▪ Received council support for rezoning up to 2.5 million sf. ▪ Long-term project to add principally new residential development, with select retail SMARTCENTRES REAL ESTATE INVESTMENT TRUST MARCH 2019 - INVESTOR PRESENTATION 67
DEVELOPMENT / INTENSIFICATION
WESTSIDE MALL
TORONTO
Architect’s Rendering
EGLINTON AVE
LRT STATION
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
MARCH 2019 - INVESTOR PRESENTATION 68DEVELOPMENT / INTENSIFICATION STUDIOCENTRE TORONTO ▪ StudioCentre is a brownfield location next to Toronto’s eastern waterfront. A former industrial site, today it is a well- utilized film production centre ▪ SmartCentres and Penguin Properties intend to revitalize the centre, adding new film production, office, and retail opportunities ▪ Rezoning has created the opportunity to build up to 1.2 million sf. of office, retail and film studios at the centre ▪ New music studio opened in 2018 SMARTCENTRES REAL ESTATE INVESTMENT TRUST MARCH 2019 - INVESTOR PRESENTATION 69
KEY FINANCIAL HIGHLIGHTS BALANCE SHEET SUPPORTS EXTENSIVE ASSET GROWTH ▪ Unencumbered pool at $4.3 billion = flexibility ▪ Ready access to mortgage and unsecured debt capital when needed = strong liquidity ▪ Payout ratio to ACFO at 83.0% as of December 31, 2018 ▪ Current interest rates still lower than maturing rates despite recent Bank of Canada rate hikes, which help to improve FFO SMARTCENTRES REAL ESTATE INVESTMENT TRUST MARCH 2019 - INVESTOR PRESENTATION 70
KEY FINANCIAL HIGHLIGHTS
DEBT MATURITY / LEVERAGE
DEBT MATURITY
(in millions of $)
400
371
314 300
275
250 250
202 200
180
150 160
140
119
100 87
45
3
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 THEREAFTER
Secured Debt Debentures
▪ Interest costs on refinancing available with 10 year unsecured rates around 5% and secured rates below that
▪ Interest Coverage: 3.3X (Target: 2.5X – 3.0X)
▪ Debt to EBITDA: 8.2X (Target: 8.0X – 8.5X)
▪ Unencumbered pool: $4.3 billion (2.1X unsecured coverage) (Target: 1.5X unsecured coverage)
▪ Debt to GBV: 51.1% (Target: 50% - 60% long-term trend to continue to de-lever)
▪ Debt to Aggregate Assets: 43.9%
▪ Weighted Avg Interest Rate (Secured Debt): 3.93%
▪ Weighted Avg Term to Maturity (Secured Debt): 4.4 yrs
▪ DBRS rating of BBB with a Stable trend
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
MARCH 2019 - INVESTOR PRESENTATION 71KEY FINANCIAL HIGHLIGHTS
LEVERAGE PROFILE
Dec. 31 Dec. 31 Dec. 31 Dec. 31
2018 2017 2016 2015
Debt to Aggregate Assets 43.9%(1) 45.4%(2) 44.3% 44.7%
Secured Debt to Aggregate Assets 23.1% 26.1% 29.5% 31.2%
Unencumbered Assets $4.3B $3.4B $2.7B $2.5B
Debt to Adjusted EBITDA 8.2X(1) 8.4X 8.4X 8.4X
Interest Coverage 3.3X(1) 3.1X 3.1X 3.0X
Liquidity: Cash Resources $399M $646M $355M $345M
Weighted Average Interest Rate(3) 3.93% 3.87% 3.79% 3.87%
Weighted Average Term to Maturity(3) 4.4 yrs 4.6 yrs 4.8 yrs 5.4 yrs
(1) Including the recent $230 million equity issuance that occurred subsequent to year-end in January 2019, Debt to Aggregate Assets at
41.5%, Debt to Adjusted EBITDA at 8.0X, and Interest Coverage at 3.5X
(2) Leverage increased during 2017 in support of the OneREIT acquisition
(3) Secured Debt
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
MARCH 2019 - INVESTOR PRESENTATION 72KEY FINANCIAL HIGHLIGHTS
CONSERVATIVE CAPITAL
STRUCTURE
Secured Mortgage Financing
Amount - $2.1 billion
$9.8 Billion
21.4% Weighted Avg Interest Rate – 3.93% Total Enterprise Value
Weighted Avg Term to Maturity – 4.4 years
Unsecured Debentures Focused on:
Amount - $1.8 billion
18.5% Weighted Avg Interest Rate – 3.53%
Weighted Avg Term to Maturity – 4.8 years ▪ Lowering interest
rates on renewals
Debt on Equity Accounted
Investments
1.3% Amount - $126 million
▪ Maintaining maximum
Weighted Avg Interest Rate – 3.76% flexibility
Weighted Avg Term to Maturity – 14.9 years
Operating Lines / Bank Loans / ▪ Reducing leverage
Outstanding LC’s over time
2.7% Operating Line – $121 million
Bank Loan – $80 million
Letters of Credit – $62 million ▪ Rebalancing unsecured
and secured debt ratios
Equity
Units Outstanding – 162 million
56.1% Share Price – $33.70 as at February 27, 2019
Market Capitalization – $5.5 billion
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
MARCH 2019 - INVESTOR PRESENTATION 73KEY FINANCIAL HIGHLIGHTS
STABLE CASH FLOW
PAYOUT 83.1% 81.8% 81.2%
RATIO TO
ACFO
2013 2014 2015 2016 2017 Q3 2018
($ per unit)
FFO 1.85 1.95 2.10 2.17* 2.20 2.28
ACFO NP NP NP 2.00* 2.10 2.16
Distributions 1.55 1.56 1.61 1.66 1.71 1.76
* Excludes $0.06 per unit of non-recurring income
▪ Distributions fully funded from operating cashflow
▪ Annual distribution increases announced in each of 2014, 2015, 2016, 2017, and 2018 of
$0.05 per unit. Current annual distribution per unit is $1.80
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
MARCH 2019 - INVESTOR PRESENTATION 74SUMMARY
THE BEST OFFENSE STARTS
WITH A STRONG DEFENSE
BEST-IN-CLASS STRONG PIPELINE
PORTFOLIO FINANCIAL OF NEW
Youngest retail portfolio POSITION DEVELOPMENT
amongst all Canadian Strong balance sheet OPPORTUNITIES
peers. 84% located in and strong credit metrics. GROWING EVERY
urban or near urban Growing unencumbered QUARTER
locations, with strong pool provides increased
national tenants as Extensive portfolio of
financial flexibility. growth opportunities
anchors Access to multiple from smaller local
sources of capital intensification to
Vaughan Metropolitan
Centre, Canada’s largest
mixed-use development
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
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