INVESTOR PRESENTATION - Smart Today Smart Tomorrow - SmartCentres
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INVESTOR PRESENTATION Smart Today Smart Tomorrow Based on 2nd Quarter 2018 September 2018
BASED ON 2 ND 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 SEPTEMBER 2018 - INVESTOR PRESENTATION 2
BASED ON 2 ND 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 quarter ended June 30, 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
SEPTEMBER 2018 - INVESTOR PRESENTATION 3
TRACK RECORD OF PERFORMANCE HIGHLIGHTS ▪ One of Canada’s premier REITs ▪ $5.0 billion equity capitalization ▪ $9.5 billion total asset value ▪ Approximately 20 million sf. of mixed use development identified: • residential – condominiums, apartments and townhomes • office buildings • retirement homes • self-storage facilities • medical facilities ▪ 154 shopping centres, with over 56 identified for additional mixed-use intensification ▪ TSX:SRU.UN SMARTCENTRES REAL ESTATE INVESTMENT TRUST SEPTEMBER 2018 - INVESTOR PRESENTATION 4
TRACK RECORD OF PERFORMANCE
TOTAL RETURN TO UNITHOLDERS
8.7% AVERAGE ANNUAL RETURN SINCE IPO
(as of August 28, 2018)
$1,200
$1,000 $985.62
$800
$600
$496.67
$400 $392.95
$200
$0
SmartCentres TSX Capped REIT TSX Composite
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
SEPTEMBER 2018 - INVESTOR PRESENTATION 5
TRACK RECORD OF PERFORMANCE
GROWTH IN RENTAL REVENUE AND FFO/UNIT
RENTAL REVENUE FFO
(in millions of $) ($ per unit)
6.4% CAGR 4.4% CAGR
since 2013 since 2013
728 741
2.17 2.20
670 2.10
608 1.95
573 1.85
2013 2014 2015 2016 2017 2013 2014 2015 2016* 2017
* Excludes $0.06 per unit of non-recurring income
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
SEPTEMBER 2018 - INVESTOR PRESENTATION 6
TRACK RECORD OF PERFORMANCE
GROWTH IN TOTAL ASSETS
TOTAL ASSETS
(in millions of $)
34.6% CAGR
9,380
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
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
SEPTEMBER 2018 - INVESTOR PRESENTATION 7
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
SEPTEMBER 2018 - INVESTOR PRESENTATION 8
PORTFOLIO OVERVIEW VALUE AND CONVENIENCE IN ONE STOP ▪ 34.2 million sf. of principally open format shopping centre space ▪ Average age: 14.3 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 SEPTEMBER 2018 - INVESTOR PRESENTATION 9
PORTFOLIO OVERVIEW
STRATEGICALLY LOCATED
PROVINCE
# Properties / 157 Properties*
# Intensification Projects
34.2M SF.*
ALBERTA MANITOBA
8/0 3/1
BRITISH
COLUMBIA QUEBEC
14 / 5 SASKATCHEWAN ONTARIO 23 / 13 ATLANTIC
5/1 94 / 36 10 / 0
* Excludes 7 development sites totalling 0.7 million sf. upon
completion and an additional 3.3 million sf. of development
density associated with existing centres.
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
SEPTEMBER 2018 - INVESTOR PRESENTATION 10PORTFOLIO 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) ▪ Canadian value orientation means 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 SEPTEMBER 2018 - INVESTOR PRESENTATION 11
PORTFOLIO OVERVIEW
STABLE INCOME BASE
LEASE MATURITY BY AREA
(in millions of square feet)
1.6
1.6 2.0
1.8
1.7
1.1 0.6
2.7
2.0 2.2 2.1 0.7 0.7
1.3 1.4 1.6
0.6 0.9 0.8
0.1 0.3 0.6
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Month-to- Vacant
month
Anchor Non-Anchor
Average roll of 2.4 million sf. annually (6.9% of total GLA per year)
▪ Average lease term of 5.6 years
▪ Average remaining lease term of 6.7 years for Walmart, with multiple renewal options of up to
80 years
▪ Average remaining lease term excluding Walmart is 4.7 years
▪ As at June 30, 2018, 74% of 2018 lease maturities have been renewed
▪ Average “same property” NOI growth is 1.0% to 1.5% p.a.
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
SEPTEMBER 2018 - INVESTOR PRESENTATION 12PORTFOLIO OVERVIEW
WELL TENANTED, HIGH QUALITY
Top ten tenants by gross rental revenues of SmartCentres' Portfolio as of
June 30, 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 25.8 6.7 AA AA Aa2
Canadian Tire, Mark's and FGL Sports 71 4.5 5.2 BBB (high) BBB+ n/a
Winners, HomeSense, Marshalls 53 4.1 4.9 n/a A+ A2
Loblaws and Shoppers Drug Mart 24 2.8 7.4 BBB BBB n/a
Lowe's, RONA 9 2.4 5.9 A (low) A- A3
Sobeys 18 2.3 4.8 BB (high) BB+ n/a
Reitmans 94 2.1 2.7 n/a n/a n/a
Best Buy 22 1.8 2.4 n/a BBB- Baa1
Dollarama 52 1.7 4.1 BBB n/a n/a
Michaels 25 1.5 3.8 n/a n/a Ba2
Total 469 49.0 6.1
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
SEPTEMBER 2018 - INVESTOR PRESENTATION 13PORTFOLIO 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, fitness, and food ▪ Delivering additional services and amenities to every location continues to be a priority (pet stores, entertainment, restaurants, pop-ups, etc.) ▪ New, value-focused entrants to markets from within Canada and from the U.S. SMARTCENTRES REAL ESTATE INVESTMENT TRUST SEPTEMBER 2018 - INVESTOR PRESENTATION 14
ACQUISITIONS ONEREIT TRANSACTION SUMMARY Closed – Fall 2017 ▪ 12 Properties / $429 million ▪ 2.2 million sf. / 93% leased ▪ Ontario (10) / BC (1) / Saskatchewan (1) ▪ 10 Food-anchored / inclusive of 6 Walmarts ▪ NOI of $26 - $28 million (Year 1 to Year 2) ▪ FFO / Unit growth near $0.05 - $0.06 ▪ Average lease term of 7.3 years ▪ SmartCentres & Strathallen combined for $4.26 Unit Price to OneREIT (15% premium) SMARTCENTRES REAL ESTATE INVESTMENT TRUST SEPTEMBER 2018 - INVESTOR PRESENTATION 15
ACQUISITIONS
ONEREIT SUMMARY
IN EFFECT TWO PORTFOLIOS
A. Stability
• 99.5% leased
• Walmart Supercentre anchored
• Very strong national tenants / covenants
• Coupon clipper
B. Growth & Stability
• 90% leased
• Redevelopment opportunity for part / all of each
property
• 100,000 sf. of future retail density
• 1.7 million sf. of future mixed-use (residential,
retirement, office, storage, etc.)
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
SEPTEMBER 2018 - INVESTOR PRESENTATION 16DEVELOPMENT / INTENSIFICATION GROWTH STRATEGY ▪ Continue review of every property for mixed-use intensification, with over 56 specifically identified to date ▪ 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 parking lots, of which over half are in the six major urban markets – much of what can be intensified over time ▪ Total expenditures on projects to begin construction in the next five years expected to be approximately $8 billion (our share is $3 billion) SMARTCENTRES REAL ESTATE INVESTMENT TRUST SEPTEMBER 2018 - INVESTOR PRESENTATION 17
DEVELOPMENT TEAM
ABILITY TO EXECUTE
STRONG,
PARTNER
EXPERIENCED IN-HOUSE
RELATIONSHIPS
DEVELOPMENT TEAM
GOVERNMENT/
CONSULTANT
RELATIONSHIPS
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
SEPTEMBER 2018 - INVESTOR PRESENTATION 18DEVELOPMENT TEAM IN-HOUSE DEVELOPMENT TEAM Employees in Development & Leasing Related Functions: ▪ Number of People: 145 ▪ Number of Years Experience with SmartCentres • Average: 7.0 years • Total: 1,015 years ▪ Number of Years Experience in Real Estate • Average: 15.5 years ▪ Total: 2,250 years SMARTCENTRES REAL ESTATE INVESTMENT TRUST SEPTEMBER 2018 - INVESTOR PRESENTATION 19
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
SEPTEMBER 2018 - INVESTOR PRESENTATION 20STRATEGIC RELATIONSHIPS SMARTCENTRES REAL ESTATE INVESTMENT TRUST SEPTEMBER 2018 - INVESTOR PRESENTATION 21
KEY FINANCIAL HIGHLIGHTS
WALMART CANADA
NUMBER OF
WALMART
295
STORES 225
13 14
96 101
Supercentres (334)* Total Walmart Stores (410)*
Other SmartCentres Shadow SmartCentres Tenants
* Company source as at August 28, 2018
▪ 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
SEPTEMBER 2018 - INVESTOR PRESENTATION 22STRATEGIC RELATIONSHIP
MITCHELL GOLDHAR
M I TC HE LL
G O 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
SEPTEMBER 2018 - INVESTOR PRESENTATION 23STRATEGIC 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 SEPTEMBER 2018 - INVESTOR PRESENTATION 24
STRATEGIC RELATIONSHIP CENTRECOURT DEVELOPMENTS ▪ A leader in the development of high-rise condominiums in downtown Toronto ▪ Since 2011, CentreCourt has completed and/or is in various stages of developing over 4,000 condominium units in six major high-rise projects with a development value of over $2.5 billion SMARTCENTRES REAL ESTATE INVESTMENT TRUST SEPTEMBER 2018 - INVESTOR PRESENTATION 25
STRATEGIC RELATIONSHIP REVERA INC. ▪ 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 ▪ Offering seniors’ apartments, independent living, assisted living, memory care and long term care. ▪ Joint venture with SmartCentres and Penguin Investments to develop properties in Canada, with initial focus in the GTA SMARTCENTRES REAL ESTATE INVESTMENT TRUST SEPTEMBER 2018 - 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 SEPTEMBER 2018 - INVESTOR PRESENTATION 27
STRATEGIC RELATIONSHIP SMARTSTOP ASSET MANAGEMENT ▪ Diversified real estate company focused on self storage assets, along with student and senior housing ▪ Portfolio currently includes 65,000 self storage units, 7.5 million rentable square feet and $1 billion of real estate assets under management ▪ Asset manager for 103 self storage facilities located throughout the United States and Toronto, Canada SMARTCENTRES REAL ESTATE INVESTMENT TRUST SEPTEMBER 2018 - INVESTOR PRESENTATION 28
STRATEGIC RELATIONSHIP FIELDGATE HOMES ▪ Private company in residential development business for more than 60 years ▪ Primarily focused on GTA SMARTCENTRES REAL ESTATE INVESTMENT TRUST SEPTEMBER 2018 - INVESTOR PRESENTATION 29
DEVELOPMENT / INTENSIFICATION
GROWTH INITIATIVES
VAUGHAN
RESIDENTIAL METROPOLITAN RETAIL
CENTRE
APARTMENT SENIOR BUILD-OUT OF
RENTALS RESIDENCES EXISTING
PREMIUM
SELF-
CONDOMINIUMS OUTLETS
STORAGE
CENTRES
TOWNHOUSES OFFICE
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
SEPTEMBER 2018 - INVESTOR PRESENTATION 30DEVELOPMENT / INTENSIFICATION
TECHNOLOGY INITIATIVES
MOBILE CHARGING DIGITAL
ADVERTISING STATIONS SIGNS
WIFI ADVERTISING BUILDING
NETWORKS KIOSKS SYSTEMS
ALL INITIATIVES DESIGNED TO CREATE VALUE ADD FOR VISITORS
TO OUR SITES AND ALSO DRIVE ADDITIONAL REVENUE
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
SEPTEMBER 2018 - INVESTOR PRESENTATION 31DEVELOPMENT / INTENSIFICATION
MAJOR MIXED-USE REAL ESTATE INITIATIVES
Estimated Costs ($M) Estimated Gain on Final Sale
GLA SRU 100% SRU NOI at NOI at Completion SRU
Site Project Type ('000sf) / % Share Share Share 100% SRU Share Year Yield Profit % Share Timing
Units ($M) ($M)
(1)
1. VMC (Office Towers) a. KPMG (T#1) Office 360sf 50% $180.0 $90.0 $10.2 $5.1 2016 5.7% — — —
b. PWC (T#2) Office 105sf 50% $65.0 $32.5 $3.0 $1.5 2019 4.5%-5.5% — — —
c. Office (T#3) Office 600sf 50% $310.0 $155.0 $17.4 $8.7 2023 5.0%-6.0% — — —
d. Office (T#4) Office 300sf 50% $175.0 $87.5 $9.6 $4.8 2025 5.0%-6.0% — — —
(4)
2. VMC (Condos) CentreCourt Condo #1 551 Units 25% $181 $45.25 N/A N/A 2020 N/A 25%-30% 25% 2020
CentreCourt Condo #2 559 Units 25% $189 $47.25 N/A N/A 2020 N/A 25%-30% 25% 2020
CentreCourt Condo #3 606 Units 25% $190 $47.5 N/A N/A 2021 N/A 20%-25% 25% 2021
Condo Condo #4 & 5 1,100 Units 25% $380 $95.0 N/A N/A 2023 N/A 20%-25% 25% 2023
(4)
3. VMC (Apartments) VMC Rental Apartments 221 Units 25% $113.6 $28.4 $5.6 $1.4 2021-2022 4.9% — — —
Apartments
4. Toronto Premium Phase II (JV) Retail 144sf 50% $133.0 $66.5 $10.9 $5.4 Nov 2018 8.0%-8.5% — — —
(2)
Outlets
5. Montreal Premium Phase II (JV) Retail 140sf 50% $56.0 $28.0 $5.6 $2.7 2022-2023 9%-10% — — —
(2)
Outlets
6. New Premium Outlets Premium (JV) Retail 360sf 50% $136.0 $68.0 $11.7 $5.9 2020 8.0%-8.5% — — —
(4)
7. Laval Centre Jadco (2 Bldgs) Apartments 338 Units 50% $76.5 $38.3 $4.3 $2.2 2019-2020 5.6% — — —
8. Vaughan NW Fieldgate Townhomes 229 Units 50% $152.0 $76.0 N/A N/A 2020-2021 N/A 20%-25% 50% 2020-2021
(4)
9. Ottawa Laurentian JV Partner (2 Apartments 300 Units 25% $86.0 $21.5 $4.9 $1.23 2020-2021 5.5%-6.5% — — —
Bldgs)
(4)
10. Multiple Locations Self Storage (JV) Self Storage 500sf built 50% $52M per $26M per $4.8M net $2.4M net 2019-2023 7.0%-8.5% — — —
(4 to 5 new per year in year in year in new NOI new NOI
facilities each each of each of each of commences commences
year) years 1-5 years 1-5 years 1-5 annually on annually on
(3) (3)
stabilization stabilization
10. StudioCentre SRU-Penguin JV Mixed-Use 150sf 50% $53.0 $26.5 $3.4 $1.71 2019-2022 6.0%-7.0% — — —
(Toronto) (Office, Studio,
Hotel)
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
SEPTEMBER 2018 - INVESTOR PRESENTATION 32DEVELOPMENT / INTENSIFICATION
MAJOR MIXED-USE REAL ESTATE INITIATIVES
Estimated Costs ($M) Estimated Gain on Final Sale
GLA SRU 100% SRU NOI at NOI at Completion SRU
Site Project Type ('000sf) / % Share Share Share 100% SRU Share Year Yield Profit % Share Timing
Units ($M) ($M)
11. StudioCentre SRU-Penguin JV Mixed-Use 150sf 50% $53.0 $26.5 $3.4 $1.71 2019-2022 6.0%-7.0% — — —
(Toronto) (Office, Studio,
Hotel)
12. Pointe-Claire Rental Apartments Apartments 486 Units 50% $154.8 $77.4 $7.2 $3.6 2023-2024 4.7% — — —
(4)
(Apartments) (2 Bldgs)
13. Pointe-Claire Condo Condo 194 Units 50% $54.8 $27.4 N/A N/A 2021 N/A 10%-15% 50% 2021
(4)
(Condo)
(4)
14 Multiple Locations Retirement Retirement 600sf built 50% $70M per $35M per $4.2M-$5.6M $2.1M-$2.8M 2022-2024 6.0%-8.0% — — —
Homes (JV) Homes per year in year per year per net new NOI net new NOI
(3 to 5 new each of site in site in commences commences
facilities each years 1-5 each of each of annually on annually on
(3) (3)
year) years 1-5 years 1-5 stabilization stabilization
Notes:
(1) KPMG and PwC-YMCA towers are included in the future development pipeline as Developments.
(2) The Phase II expansions for both the Toronto Premium Outlets and the Montreal Premium Outlets are included in the future development pipeline as Developments.
(3) Stabilization is estimated to be 2 to 3 years after completion.
(4) 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 Notes 1 and 2), SmartCentres' pipeline also includes approximately 4.0 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
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
SEPTEMBER 2018 - INVESTOR PRESENTATION 33DEVELOPMENT / INTENSIFICATION
INITIATIVES
MIXED-USE RETAIL
INTENSIFICATION DEVELOPMENTS
UNDERWAY ACTIVE FUTURE UNDERWAY ACTIVE FUTURE
17 50 56+ 25 36 2+
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
SEPTEMBER 2018 - INVESTOR PRESENTATION 34DEVELOPMENT / INTENSIFICATION
BY ASSET CLASS
SELF-STORAGE
UNDERWAY ACTIVE FUTURE
8 14 7+
OFFICE
UNDERWAY ACTIVE
1 3
SENIORS RESIDENCES
UNDERWAY ACTIVE FUTURE
1 9 18+
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
SEPTEMBER 2018 - INVESTOR PRESENTATION 35DEVELOPMENT / INTENSIFICATION
BY ASSET CLASS
APARTMENT RENTALS
UNDERWAY ACTIVE FUTURE
1 10 18+
CONDOMINIUMS
UNDERWAY ACTIVE FUTURE
5 9 12+
TOWNHOUSES
UNDERWAY ACTIVE FUTURE
1 5 4+
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
SEPTEMBER 2018 - 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
SEPTEMBER 2018 - INVESTOR PRESENTATION 37DEVELOPMENT / INTENSIFICATION VAUGHAN METROPOLITAN CENTRE (VMC) TORONTO ▪ A long term build (10 – 15 years) ▪ A 50:50 JV between SmartCentres and Penguin Investments. 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 later in 2018 SMARTCENTRES REAL ESTATE INVESTMENT TRUST SEPTEMBER 2018 - INVESTOR PRESENTATION 38
DEVELOPMENT / INTENSIFICATION VMC TORONTO Aerial Overview SMARTCENTRES REAL ESTATE INVESTMENT TRUST SEPTEMBER 2018 - INVESTOR PRESENTATION 39
DEVELOPMENT / INTENSIFICATION VMC TORONTO Transit Overview SMARTCENTRES REAL ESTATE INVESTMENT TRUST SEPTEMBER 2018 - INVESTOR PRESENTATION 40
DEVELOPMENT / INTENSIFICATION 1 2 3 4
VMC
TORONTO
Other Projects in Vicinity CENTRO
MET ICONA SQUARE EXPO
510 Units 1,566 Units 783 Units 1,570 Units
4
1
2
3
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
SEPTEMBER 2018 - INVESTOR PRESENTATION 41DEVELOPMENT / INTENSIFICATION VMC TORONTO PHASES 1 & 2 OFFICE ▪ KPMG Tower complex with 365,000 sf. of LEED Gold space, opened in 2016 ▪ 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 SEPTEMBER 2018 - INVESTOR PRESENTATION 42
DEVELOPMENT / INTENSIFICATION VMC TORONTO KPMG Tower Lobby SMARTCENTRES REAL ESTATE INVESTMENT TRUST SEPTEMBER 2018 - INVESTOR PRESENTATION 43
DEVELOPMENT / INTENSIFICATION VMC TORONTO Transit City Condos SMARTCENTRES REAL ESTATE INVESTMENT TRUST SEPTEMBER 2018 - INVESTOR PRESENTATION 44
DEVELOPMENT / INTENSIFICATION VMC TORONTO PWC - YMCA Tower Artist’s rendering of the PwC-YMCA Tower Construction of the PwC-YMCA Tower SMARTCENTRES REAL ESTATE INVESTMENT TRUST SEPTEMBER 2018 - INVESTOR PRESENTATION 45
DEVELOPMENT / INTENSIFICATION VMC TORONTO Central Park SMARTCENTRES REAL ESTATE INVESTMENT TRUST SEPTEMBER 2018 - INVESTOR PRESENTATION 46
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 and residential rental towers expected to be developed. Next phase, to the east of the bus terminal, to include 3 towers and a residential podium ▪ Sales centre has been built on-site to allow potential tenants to see suite layouts, finishes, etc. SMARTCENTRES REAL ESTATE INVESTMENT TRUST SEPTEMBER 2018 - INVESTOR PRESENTATION 47
DEVELOPMENT / INTENSIFICATION VMC TORONTO Aerial Overlaid With a Rendering of the First Three Transit City Condominiums SMARTCENTRES REAL ESTATE INVESTMENT TRUST SEPTEMBER 2018 - INVESTOR PRESENTATION 48
DEVELOPMENT / INTENSIFICATION VMC TORONTO Rendering of Transit City in the East Block of VMC SMARTCENTRES REAL ESTATE INVESTMENT TRUST SEPTEMBER 2018 - INVESTOR PRESENTATION 49
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 ▪ Up to 230 freehold townhomes to be built ▪ Construction to commence in late 2018 and possession to occur in early 2020 and into 2021 ▪ 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 SEPTEMBER 2018 - INVESTOR PRESENTATION 50
DEVELOPMENT / INTENSIFICATION VAUGHAN NW TORONTO Residential SMARTCENTRES REAL ESTATE INVESTMENT TRUST SEPTEMBER 2018 - INVESTOR PRESENTATION 51
DEVELOPMENT / INTENSIFICATION VAUGHAN NW TORONTO Upon Completion SMARTCENTRES REAL ESTATE INVESTMENT TRUST SEPTEMBER 2018 - INVESTOR PRESENTATION 52
DEVELOPMENT / 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 SEPTEMBER 2018 - INVESTOR PRESENTATION 53
DEVELOPMENT / INTENSIFICATION LAVAL CENTRE MONTREAL Aerial SMARTCENTRES REAL ESTATE INVESTMENT TRUST SEPTEMBER 2018 - INVESTOR PRESENTATION 54
DEVELOPMENT / INTENSIFICATION LAVAL CENTRE MONTREAL With Jadco – 338 Apartment Units SMARTCENTRES REAL ESTATE INVESTMENT TRUST SEPTEMBER 2018 - INVESTOR PRESENTATION 55
DEVELOPMENT / INTENSIFICATION LAVAL CENTRE MONTREAL Architect’s Rendering SMARTCENTRES REAL ESTATE INVESTMENT TRUST SEPTEMBER 2018 - INVESTOR PRESENTATION 56
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 condominium building expected to be completed in 2021 ▪ Significant NAV potential from work to date SMARTCENTRES REAL ESTATE INVESTMENT TRUST SEPTEMBER 2018 - INVESTOR PRESENTATION 57
DEVELOPMENT / INTENSIFICATION
POINTE-CLAIRE
MONTREAL
FUTURE REM STATION
Existing conditions
ST-JEAN BOUL
HYMUS BOUL
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
SEPTEMBER 2018 - INVESTOR PRESENTATION 58DEVELOPMENT / INTENSIFICATION
POINTE-CLAIRE
MONTREAL
Perspective from St. Jean Blvd. and
Hymus Blvd.
ST-JEAN BOUL
HYMUS BOUL
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
SEPTEMBER 2018 - INVESTOR PRESENTATION 59DEVELOPMENT / 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 SEPTEMBER 2018 - INVESTOR PRESENTATION 60
DEVELOPMENT / INTENSIFICATION
WESTSIDE MALL
TORONTO
Architect’s Rendering
LRT STATION
EGLINTON AVE
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
SEPTEMBER 2018 - INVESTOR PRESENTATION 61DEVELOPMENT / 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 Investments 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 SEPTEMBER 2018 - INVESTOR PRESENTATION 62
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 construction – new parking
facility opened in Nov. 2017 as part of
expansion and construction underway
on the expansion buildings which is
expected to open in Nov. 2018
• Stabilized yield in the double digits MONTREAL
▪ Premium Outlets 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
SEPTEMBER 2018 - INVESTOR PRESENTATION 63DEVELOPMENT / INTENSIFICATION TORONTO PREMIUM OUTLETS Expansion SMARTCENTRES REAL ESTATE INVESTMENT TRUST SEPTEMBER 2018 - INVESTOR PRESENTATION 64
DEVELOPMENT / INTENSIFICATION TORONTO PREMIUM OUTLETS New Parking Deck and Expansion Opening in November 2018 SMARTCENTRES REAL ESTATE INVESTMENT TRUST SEPTEMBER 2018 - INVESTOR PRESENTATION 65
DEVELOPMENT / INTENSIFICATION TRANSIT CITY CONDOS
CONDOMINIUMS
WITH CENTRECOURT
▪ Partner for first three 55-storey
sold-out towers at VMC
▪ GTA focused:
• 2,000 units completed
• 4,000 units under active
construction
▪ Initial discussions for further
VMC towers and other projects
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
SEPTEMBER 2018 - INVESTOR PRESENTATION 66DEVELOPMENT / INTENSIFICATION RETIREMENT HOMES WITH REVERA ▪ Joint venture with Revera, one of Canada’s largest operators in the senior living sector ▪ Once the pipeline is fully established, expect to complete 5 projects per year ▪ Typical building size is 140,000 sf., with investment including land of up to $70 million per site ▪ Yields in the 6.0% - 8.0% range on cost SMARTCENTRES REAL ESTATE INVESTMENT TRUST SEPTEMBER 2018 - INVESTOR PRESENTATION 67
DEVELOPMENT / INTENSIFICATION SELF-STORAGE WITH SMARTSTOP ▪ 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 ▪ 5 initial sites identified in the GTA, with expansion across country planned SMARTCENTRES REAL ESTATE INVESTMENT TRUST SEPTEMBER 2018 - INVESTOR PRESENTATION 68
KEY FINANCIAL HIGHLIGHTS BALANCE SHEET SUPPORTS EXTENSIVE ASSET GROWTH ▪ Unencumbered pool at $3.9 billion = flexibility ▪ Ready access to mortgage and unsecured debt capital when needed = strong liquidity ▪ Payout ratio to ACFO at 79.9% as of Q2 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 SEPTEMBER 2018 - INVESTOR PRESENTATION 69
KEY FINANCIAL HIGHLIGHTS
DEBT MATURITY / LEVERAGE
(INCLUDING ONEREIT ACQUISITION)
DEBT MATURITY
(in millions of $)
436
310 328
300
275
250 250
200
164 167 150 160 160
140
119 100
87
48
2018 2019 2020* 2021 2022 2023 2024 2025 2026 2027 THEREAFTER
Secured Debt Debentures
▪ Lower interest costs on refinancing available with 10 year unsecured rates around 4.3% and secured rates below that
▪ Interest Coverage: 3.1X (Target: 2.5X – 3.0X)
▪ Debt to EBITDA: 8.5X (Target: 8.0X – 8.5X)
▪ Debt to GBV: 51.4% (Target: 50% - 60% long-term trend to continue to de-lever)
▪ Unencumbered pool: $3.9 billion (1.9X unsecured coverage) (Target: 1.5X unsecured coverage)
▪ Weighted Avg Interest Rate (Secured Debt): 3.82%
▪ Weighted Avg Term to Maturity (Secured Debt): 4.4 yrs
▪ DBRS rating of BBB with a Stable trend
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
SEPTEMBER 2018 - INVESTOR PRESENTATION 70KEY FINANCIAL HIGHLIGHTS
LEVERAGE PROFILE
Jun. 30 Dec. 31 Dec. 31 Dec. 31
2018 2017 2016 2015
Debt to Aggregate Assets 44.7% 45.4% 44.3% 44.7%(1)
Secured Debt to Aggregate Assets 23.6% 26.1% 29.5% 31.2%(2)
Unencumbered Assets $3.9B $3.4B $2.7B $2.5B
Debt to Adjusted EBITDA 8.5X 8.4X 8.4X 8.4X(1)
Interest Coverage 3.1X 3.1X 3.1X 3.0X
Liquidity: Cash Resources $323M $646M $355M $345M
Weighted Average Interest Rate(3) 3.82% 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) Leverage increased during 2015 in support of the transformative Penguin Investments Platform transaction
(2) Significant rate spread between unsecured and secured debt led management to increase secured debt financing during 2015
(3) Secured Debt
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
SEPTEMBER 2018 - INVESTOR PRESENTATION 71KEY FINANCIAL HIGHLIGHTS
CONSERVATIVE CAPITAL
STRUCTURE
Secured Mortgage Financing
Amount - $2.2 billion
$9.3 Billion
23.7% Weighted Avg Interest Rate – 3.82% Total Enterprise Value
Weighted Avg Term to Maturity – 4.4 years
Unsecured Debentures Focused on:
Amount - $1.81 billion
19.5% Weighted Avg Interest Rate – 3.45%
Weighted Avg Term to Maturity – 5.3 years ▪ Lowering interest
rates on renewals
Convertible Debentures
Amount - $36 million ▪ Maintaining maximum
0.4% Weighted Avg Interest Rate – 5.50%
Weighted Avg Term to Maturity – 2.0 years
flexibility
▪ Reducing leverage
Equity over time
Units Outstanding – 161 million
53.7% Share Price – $31.36 as at August 28, 2018
Market Capitalization – $5.0 billion ▪ Rebalancing unsecured
and secured debt ratios
Operating Lines / Outstanding LC’s
2.7% Operating Line – $191 million
Letters of Credit – $63 million
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
SEPTEMBER 2018 - INVESTOR PRESENTATION 72KEY FINANCIAL HIGHLIGHTS
STABLE CASH FLOW
PAYOUT 90.3% 88.6% 84.7% 81.1% 82.8%
79.8%
RATIO TO
AFFO
2012 2013 2014 2015 2016 2017
($ per unit)
FFO 1.79 1.85 1.95 2.10 2.17* 2.20
AFFO 1.71 1.75 1.84 1.99 2.04* 2.07
Distributions 1.55 1.55 1.56 1.61 1.66 1.71
* Excludes $0.06 per unit of non-recurring income
▪ Distributions fully funded from operating cashflow
▪ Annual distribution increased in October 2017 to $1.75 from $1.70, representing an increase
of 2.9%, and further increased in October 2018 to $1.80, representing an additional 2.9%
increase
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
SEPTEMBER 2018 - INVESTOR PRESENTATION 73MARKET FACTORS BEING MONITORED ▪ In the coming years, retailers’ businesses will be affected by: • E-commerce • Aging population • Urbanization and the move to more convenient shopping • Changing ethnic mix of population ▪ We will continue to monitor the impact of these issues and will adjust our business model accordingly, always remembering: • The quality of our sites • Our focus on value-oriented retailers, with increasing customer traffic • The value we provide our tenants • The strength, capabilities and experience of our partners SMARTCENTRES REAL ESTATE INVESTMENT TRUST SEPTEMBER 2018 - INVESTOR PRESENTATION 74
MARKET FACTORS E-COMMERCE RESPONSE With Penguin Pick-Up ▪ Located at Scarborough (1900 Eglinton) SmartCentre SMARTCENTRES REAL ESTATE INVESTMENT TRUST SEPTEMBER 2018 - INVESTOR PRESENTATION 75
MARKET FACTORS
E-COMMERCE RESPONSES
▪ Penguin Pick-Up:
• Initiative driven by Penguin Investments
• Convenient locations for consumers to pick up products ordered online
• Drives traffic to shopping centres and supports tenants
• 8 SmartCentres locations in place for the initiative at year-end, along with
73 external sites in multiple provinces
• Over 2,500 different retailers supported so far
▪ A network of Tesla charging stations on SmartCentre sites being built
▪ Launching digital signage across our shopping centre network
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
SEPTEMBER 2018 - INVESTOR PRESENTATION 76SUMMARY
THE BEST OFFENSE STARTS
WITH A STRONG DEFENSE
BEST-IN-CLASS STRONG PIPELINE
PORTFOLIO FINANCIAL OF NEW
Newest 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
SEPTEMBER 2018 - INVESTOR PRESENTATION 77You can also read
