ADVANCING OUR STRATEGY - INVESTOR PRESENTATION January, 2017
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ADVANCING OUR STRATEGY INVESTOR PRESENTATION January, 2017
“Safe Harbour” Disclosure and Confidentiality Statement
Forward-looking
Forward-looking Information
Information
This
This
presentation
presentation contains
containsforward
forwardlooking
looking
statements
statements thatthat
reflect
reflect
thethe
current
current
expectations
expectationsof of
management
management of of
Crombie
Crombie about
about
Crombie's
Crombie's future
futureresults,
results,performance,
performance, achievements,
achievements, prospects
prospects andand
opportunities.
opportunities. Wherever
Wherever possible,
possible,words
wordssuch
such
as as
“continue”,
“continue”,
"may",
"may",
"will",
"will",
"estimate",
"estimate","anticipate",
"anticipate",
"believe",
"believe",
"expect",
"expect","intend"
"intend"
andandsimilar
similar
expressions
expressions have
havebeen
been used
usedto to
identify
identify
these
these
forward
forward
looking
looking
statements,
statements, andandinclude
include
statements
statements regarding:
regarding:acquisition
acquisitionof of
properties
propertiesthat
that
provide
provide
accretive
accretive growth;
growth;major
majordevelopments
developments
maymaybebeimpacted
impacted by by
real
real
estate
estate
cycles,
cycles,
availability
availability
of of
financing
financing opportunities
opportunities andandlabour
labour
andand
other
other
riskrisk
factors
factors
as as
described
described in the
in the
year
year
ended
ended December
December 31,31,
2015
2015Management
Management Discussion
Discussion andand
Analysis,
Analysis, These
Thesestatements
statementsreflect
reflect
current
currentbeliefs
beliefs
and
andareare
based
basedonon
information
information currently
currentlyavailable
availableto to
management
management of of
Crombie.
Crombie. Forward
Forward looking
looking
statements
statements necessarily
necessarilyinvolve
involveknown
knownandandunknown
unknown
risks
risks
andanduncertainties.
uncertainties.
A number
A number of of
factors,
factors,including
including
thethe
risks
risks
discussed
discussedin the
in the
2015
2015
annual
annual
Management
Management Discussion
Discussion andand
Analysis
Analysis under
under"Risk
"Risk
Management",
Management", could
could cause
cause
actual
actualresults,
results,
performance,
performance, achievements,
achievements,
prospects
prospects
or or
opportunities
opportunitiesto to
differ
differ
materially
materially
from
from
thethe
results
results
discussed
discussed or or
implied
implied
in the
in the
forward-looking
forward-looking statements.
statements.
These
These
factors
factors
should
should
bebe
considered
considered carefully
carefullyand
and
a reader
a reader
should
should
notnot
place
place
undue
undue reliance
reliance ononthethe
forward
forwardlooking
looking
statements.
statements.There
There
can
can
bebe
nono
assurance
assurancethat
that
thethe
expectations
expectations of of
management
management of of
Crombie
Crombie willwill
prove
proveto to
bebe correct.
correct.
Readers
Readers areare
cautioned
cautioned
that
that
such
such
forward-looking
forward-looking
statements
statements
areare
subject
subject
to to
certain
certain
risks
risks
andand
uncertainties
uncertainties that
that
could
could
cause
causeactual
actual
results
results
to to
differ
differ
materially
materially
from
from
these
these
statements.
statements.
Crombie
Crombie
can
can
give
give
nono
assurance
assurancethat
that
actual
actual
results
results
willwill
bebe consistent
consistent
with
with
these
these
forward-looking
forward-looking
statements.
statements.
Non-IFRS
Non-IFRS Measures
Measures
Certain
Certain
terms
terms usedusedin this
in this
presentation,
presentation, such
such
as as
AFFO
AFFO andand
NOI,
NOI,areare
notnot
measures
measures defined
defined
under
underInternational
InternationalFinancial
FinancialReporting
Reporting
Standards
Standards (“IFRS”)
(“IFRS”) andand
dodonotnothavehavestandardized
standardized meanings
meanings prescribed
prescribed by by
IFRS.
IFRS.AFFO
AFFOandand
NOINOIshould
shouldnotnot
bebe
construed
construed as as
anan
alternative
alternative
to to
netnetearnings
earningsor or
cashcashflowflow
from
from
operating
operatingactivities
activities
as as
determined
determined by by
IFRS.
IFRS.AFFO
AFFOandand
NOI,
NOI,as as
presented,
presented, maymay
notnot
bebe
comparable
comparable to to
similar
similar
measures
measures presented
presented by by
other
other
issuers.
issuers.Crombie
Crombie believes
believesthat
that
NOINOI
andand
AFFO
AFFO areare
useful
useful
in the
in the
assessment
assessment of of
its its
operating
operatingperformance
performance andandthatthat
these
these
measures
measures areare
also
also
useful
usefulforfor
valuation
valuation purposes
purposesand
andareare
relevant
relevant
and and
meaningful
meaningful
measures
measures of of
its its
ability
ability
to to
earn
earnand anddistribute
distributecash
cash
to to
unitholders.
unitholders.Examples
Examples of of
reconciliations
reconciliations
of of
AFFO
AFFOto to
thethe
most
most
directly
directly
comparable
comparable measure
measure calculated
calculated in accordance
in accordance with
with
IFRS
IFRSareare
provided
provided in the
in the
Management
Management Discussion
Discussion andandAnalysis
Analysisof of
Crombie
Crombie
forfor
thetheyears
years
ending
ending December
December 31,31,
20152015 and
andDecember
December 31,31,
2014.
2014.
2
Attractive Investment Thesis
Crombie as a key part of a core Equity and Debt investment portfolio
1. Strong Unit Holder Return (2016 - 13%, 5 year – 34%)
2. High quality, diversified and defensive grocery anchored retail portfolio
3. Proven growth & value creation track record
4. Large development pipeline
5. Investment grade rating – strong and improving credit metrics
6. Strong capital structure, moderate leverage and ample liquidity
7. Strong management
3
Crombie Strategy – Guiding Principles
GREAT • Focus on acquiring high quality grocery or drugstore anchored retail in Canada’s top urban and
REAL ESTATE - suburban markets
ACCRETIVE • Optimize strategic relationships with Sobeys, institutions, developers, local property owners,
GROWTH etc.
GREAT
REAL ESTATE - • Strong asset management (leasing, operations, development, acquisitions/dispositions)
PORTFOLIO • Improve operational effectiveness to grow NOI, FFO, AFFO and EBITDA
OPTIMIZATION
STRONG FINANCIAL • Greater liquidity and financial flexibility – Debt to gross book value 50.5% on fair value basis
CONDITION • Leverage strong bank relationships and investment grade credit rating
• Strong talent management focus
GREAT PEOPLE
• Right person, right place, right time philosophy
4Success – Executing on Our Full Range of Real Estate Activities
ACQUISITIONS STRONG OPERATIONS
Purchase accretive properties Owning, operating and leasing a strong
in top urban and suburban and improving portfolio. Great team;
markets.
strong focus.
DISPOSITIONS DEVELOP / REDEVELOP
Disposition of properties Develop and redevelop to meet everyday
not core to Crombie’s needs of tenants and customers including
strategy; capital recycling. JV partnerships to mitigate development
risk
5Crombie’s National Portfolio
280 Properties at December 2016
Retail – Plaza
19.1 million feet of GLA Retail – Enclosed
Retail – Freestanding
A National platform Mixed – Use
Office
Distribution Centre
Safeway – Plaza
Safeway – Freestanding
Newfoundland
and Labrador
4 2 6 1
26 12 3 Alberta
Manitoba
9 12 Quebec
British
Columbia 9 2 13 19
23 10 Saskatchewan Ontario PEI
4 1
1 3 1 26 2
1 1
20
Nova Scotia
4 1 New
1 Brunswick 4
16 13
9 8
2 6 4
1
6Geographically Diverse Portfolio
Geographic Diversification by % of Annual Minimum Rent
As at Q3 2016
7.7%
15.4%
38.3%
$286
million
38.6%
Atlantic West ON QC
More National; More Urban (since IPO)
7Growing Urban / Suburban Presence
Top 6/36 Markets - Total Portfolio
100.00% $5,000,000,000
90.00% $4,500,000,000
79.95%
% 80.00% $4,000,000,000
o 70.00% $3,500,000,000
f
60.00% $3,000,000,000
P
o
50.00% $2,500,000,000 % Top 6 Markets
r
%Top 36 Markets
t
40.00% $2,000,000,000
f Total Portfolio Value (RHS)
31.94%
o
30.00% $1,500,000,000
l
i
20.00% $1,000,000,000
o
10.00% $500,000,000
0.00% $0
2009 2010 2011 2012 2013 2014 2015 2016
Year
8Growing Urban and Suburban Presence
Top 6/36 Markets - Acquisitions Per Year
100.00% $1,400,000,000
% 90.00% 86.77%
$1,200,000,000
o 80.00%
f
68.22% $1,000,000,000
70.00%
p
A
e
c 60.00%
r $800,000,000
q
u 50.00% % Top 6Markets
Y
i $600,000,000 % Top 36 Markets
e
s 40.00%
a Total Acquisitions (RHS)
i
r 30.00%
t $400,000,000
i
o 20.00%
n $200,000,000
s 10.00%
0.00% $-
2010 2011 2012 2013 2014 2015 2016
Year
9Potential Major Developments
Included in Crombie’s pipeline of 19 potential Major Developments (>$50M
investment) are 13 properties in Western Canada, nine in Vancouver, BC; four in
Calgary and Edmonton, AB; and six located in Central and Atlantic Canada.
Crombie’s current Major Developments have the potential to add up to 839,000
square feet of commercial GLA and up to 5,100,000 square feet (up to 5,800 units) of
residential GLA.
Based on current estimates, total cost to develop these properties could reach $2
to $3 billion, of which Crombie may enter joint venture or other partnership
arrangements to share cost, revenue, risk and development expertise depending on
the nature of each project.
•Risk factors that cause uncertainty related to potential major developments include: locations identified, timing, cost, development size and nature, impact on net asset value, cash flow
growth, unitholder value or other financial measures, all of which may be impacted by real estate market cycles, the availability of financing opportunities and labour, actual development
costs and general economic conditions and which assumes obtaining required municipal zoning and development approvals and successful agreements with development partners and
existing tenants.
10Potential Major Developments
Potential Potential
Commercial Residential
Existing Property City, Province Site Size Existing Tenants Expansion Expansion Status
Development
1641 Davie Street Vancouver, BC 1.09 acres Safeway/Other tenants Yes Yes
Planning
To be
2733 West Broadway Vancouver, BC 1.95 acres Safeway Yes Yes determined
“TBD”
3410 Kingsway Vancouver, BC 3.74 acres Safeway/Other tenants Yes Yes TBD
990 West 25 Avenue
Vancouver, BC 1.80 acres Safeway Yes Yes TBD
(King Edward)
1170 East 27 Street North Vancouver, BC 2.82 acres Safeway Yes Yes Pre-planning
1780 East Broadway Vancouver, BC 2.43 acres Safeway Yes Yes Pre-planning
Royal Oak Vancouver, BC 2.76 acres Safeway Yes Yes TBD
East Hastings Burnaby, BC 3.30 acres Safeway/Other Tenants Yes Yes TBD
10355 King George Boulevard Surrey, BC 5.07 acres Safeway Yes Yes TBD
813 11 Avenue SW Calgary, AB 2.59 acres Safeway Yes Yes TBD
11Potential Major Developments – (continued)
Potential Potential
Commercial Residential
Existing Property City, Province Site Size Existing Tenants Expansion Expansion Status
524 Elbow Drive SW Calgary, AB 1.60 acres Safeway Yes Yes Pre-planning
410 10 Street NW Calgary, AB 1.73 acres Safeway Yes Yes TBD
10930 82 Avenue Edmonton, AB 2.44 acres Safeway/Other tenants Yes Yes TBD
Brampton Mall Brampton, ON 8.74 acres Retail Yes Yes TBD
Bronte Village Oakville, ON 5.66 acres Sobeys/Other tenants Yes Yes Pre-Planning
Triangle Lands Halifax, NS 0.68 acres Land Yes Yes TBD
Penhorn Lands Dartmouth, NS 31.00 acres Land Yes Yes TBD
Scotia Square Halifax, NS 14.47 acres Office/Retail Yes Yes In Development
Avalon Mall St. John’s, NL 50.91 acres Retail Yes No Pre-planning
12Highlights – 2016 YTD
Nine Months Ended September 30, 2016 2016 2015
Committed occupancy 94.2% 93.2%
EBITDA $205.0 $189.0
Property revenue +6.4% +3.5%
Property Cash NOI +8.7% +4.3%
Same Asset Property Cash NOI +2.5% +1.5%
FFO Per Unit $0.87 $0.84
Growth in FFO / Unit 3.5% 1.2%
AFFO Per Unit $0.74 $0.71
Growth in AFFO / Unit 4.3% 2.9%
Acquisitions $525M $35M
13Capital Structure
September 30, 2016
Total Assets (FV) $4,759 M
Weighted Average Average
Fixed rate mortgages $1,528 M 63% Mortgage Interest Mortgage Term to
Rate Maturity
Senior unsecured notes $400 M 17% 4.54% 5.98 years
Convertible debentures $134 M 6%
Revolving credit facility $241 M 10%
Bilateral credit facility $100 M 4%
Total $2,403M 100%
BBB(Low) Unencumbered
Credit Rating Assets
Debt to GBV (FV) 50.5% $1,194 million
DBRS
Undrawn credit facility $152.0
Borrowing available on
$716.4
Unencumbered Assets (@ 60%)
Potential Borrowing Capacity $868.4
14Debt Maturity
Total Debt $2.4 billion
Weighted Average (WA) Interest Rate Mortgages 4.54% (overall 4.13%)
Average Term to Maturity Mortgages 5.98 years
$1 - $2 million per year interest savings available on near term debt maturities
500 0.06
0.055
5.2% 5.1% 4.8%
5.0% 0.05
400
4.5% 4.5% 0.045
4.3% 4.2%
0.04
3.9%
300 0.035
0.03
200 0.025
0.02
0.015
100
0.01
0.005
0 0
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025+
Unsecured/Converts Secured Revolver WA Expiring Mortgage Rate All in Rate 5 YR 2.6% 10 YR
15Defensive Portfolio
Approximately 88% of properties are grocery or drugstore anchored
“Everyday Needs” retailing less risky than fashion and internet exposed retailing
Strong credit-worthy tenants coupled with long average lease term of 13.5 years and
average mortgage maturities of 5.98 years
16Strong Tenant Relationships
LARGEST TENANTS
September 30, 2016
Average
Tenant Total Area
% of Annual Remaining DBRS Credit
Leased
Minimum Rent Lease Term Rating
(Sq Ft)
(years)
Sobeys Stores 53.3%* 16.3 10,413,843 BBB (low)
Shoppers Drug Mart 4.5% 11.4 492,093 BBB
Cineplex 1.4% 8.8 270,520
Province of Nova Scotia 1.2% 2.2 287,357 A(H)
CIBC 1.2% 14.2 188,247 AA
Lawtons/Sobeys Pharmacy 1.1% 10.6 181,154 BBB (low)
Dollarama 1.0% 6.5 239,782 BBB
GoodLife Fitness 1.0% 10.5 220,778
Bank of Nova Scotia 0.9% 2.7 148,542 AA
Bank of Montreal 0.9% 11.5 107,933 AA
Other 33.5% 5,658,545
Total 100% 13.5 18,208,794
• 43.4% of Total Property Revenue
High quality tenants driving a high quality portfolio
17Aligned Strategic Crombie/Empire/Sobeys Relationship
•Crombie and Empire/Sobeys have enjoyed a closely aligned strategic relationship since Crombie’s IPO
in 2006
•Crombie and Sobeys share market intelligence to accelerate development and enhance asset
management
•Developer (Crombie) and retailer (Sobeys) interests aligned to add value via major mixed-use
developments
•Empire has participated in each Crombie public offering of Units and holds a 40.3% fully diluted
ownership position
•Crombie has grown since IPO primarily through its strategic, sustainable competitive advantage with
the Sobeys property development pipeline.
•Over $2.4B in acquisitions since IPO; including $418M in June 2016
•Crombie provides property management services to Empire/Sobeys for portions of their owned real
estate
•Strong operational synergies shared by both Empire/Sobeys and Crombie
18Investment Highlights
FOCUS Grocery and drug store anchored retail Reliable and defensive asset class
OCCUPANCY Currently 94.2% Consistent NOI, FFO & AFFO growth
DIVERSIFIED Portfolio of 280 properties across Canada Increasing Urban / Top urban and suburban market focus
DEFENSIVE Average lease term 13.5 years No more than 4.6% of leased area maturing in a single year
over the next 5 years
STRATEGIC Relationship with Sobeys/Empire Right of First Offer on all Sobeys property dispositions
UNENCUMBERED ASSETS Valued at approximately $1,194 million at September 30, 2016 Investment grade rating
DEBT Debt to fair value 50.5% Interest coverage 2.92x
GROWTH $900M in assets at IPO - $4.7B today Driven by Empire/Sobeys relationship providing close to $2.4B
in acquisition pipeline activity including Safeway assets
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