INVESTOR PRESENTATION - Smart Today Smart Tomorrow - SmartCentres
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INVESTOR PRESENTATION Smart Today Smart Tomorrow Based on 1st Quarter 2018 May 2018
BASED ON 1 ST 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 MAY 2018 - INVESTOR PRESENTATION 2
BASED ON 1 ST 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 March 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
MAY 2018 - INVESTOR PRESENTATION 3
TRACK RECORD OF PERFORMANCE HIGHLIGHTS ▪ One of Canada’s premier REITs ▪ $4.6 billion equity capitalization ▪ $9.4 billion total asset value ▪ Approximately 20 million sf. of mixed use identified: • residential – condominiums, apartments and townhomes • office buildings • retirement homes • self-storage facilities • medical facilities ▪ 153 shopping centres, with over 56 identified for additional mixed-use intensification ▪ TSX:SRU.UN SMARTCENTRES REAL ESTATE INVESTMENT TRUST MAY 2018 - INVESTOR PRESENTATION 4
TRACK RECORD OF PERFORMANCE
TOTAL RETURN TO UNITHOLDERS
8.7% AVERAGE ANNUAL RETURN SINCE IPO
(as of May 4, 2018)
$1,200
$1,000
$877.15
$800
$600
$458.00
$400
$374.65
$200
$0
SmartCentres TSX Capped REIT TSX Composite
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
MAY 2018 - INVESTOR PRESENTATION 5
TRACK RECORD OF PERFORMANCE
GROWTH IN RENTAL REVENUE
AND GROWTH IN 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
MAY 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
MAY 2018 - INVESTOR PRESENTATION 7
WHAT MAKES SMARTCENTRES STRONG
CONSERVATIVE
THE QUALITY OF OUR HEALTHY PROPERTY
OUR SHOPPING BALANCE SHEET VALUATIONS AND
CENTRE AND FINANCIAL SIGNIFICANT
PORTFOLIO FLEXIBILITY NAV GROWTH
POTENTIAL
THE QUALITY
AN EXCEPTIONAL
AND DEPTH
PIPELINE OF
OF OUR
MIXED-USE
DEVELOPMENT
GROWTH
TEAM AND JV
INITIATIVES
RELATIONSHIPS
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
MAY 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: 14.1 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 sites contain both a food store and a pharmacy, either in a Walmart store or independently ▪ Strong value orientation ▪ Results in high degree of stability: • Average occupancy of 98.9% since 2005 SMARTCENTRES REAL ESTATE INVESTMENT TRUST MAY 2018 - INVESTOR PRESENTATION 9
PORTFOLIO OVERVIEW
STRATEGICALLY
LOCATED
PROVINCE
# Properties / 156 Properties*
# Intensification Projects
34.2M SF.*
ALBERTA MANITOBA
8/0 3/1
BRITISH
COLUMBIA QUEBEC
14 / 5 SASKATCHEWAN ONTARIO 22 / 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
MAY 2018 - INVESTOR PRESENTATION 10PORTFOLIO OVERVIEW MARKET CONDITIONS Why is Canada different from the United States ▪ Much lower square feet of retail per person (15 vs. 23) traditionally drives higher rents per square foot ▪ Open Format retail and Big Box retail are only just over 20 years old in Canada, so assets are still 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 ▪ Canadian value orientation means all population segments shop at Walmart, dollar stores and other value chains SMARTCENTRES REAL ESTATE INVESTMENT TRUST MAY 2018 - INVESTOR PRESENTATION 11
PORTFOLIO OVERVIEW
STABLE INCOME BASE
LEASE MATURITY BY AREA
(in millions of square feet)
1.6
1.8 1.6 1.8
1.8
0.6
0.9
2.7 0.7
2.0 2.2 2.0 0.7
0.9 1.5 1.6
1.3
0.9 0.8 0.7
0.2 0.3
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 5.7 years
▪ Average remaining lease term of 6.9 years for Walmart, with multiple renewal options of up to 80 years
▪ Average remaining lease term excluding Walmart is 4.8 years
▪ As at March 31, 2018, 62% 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
MAY 2018 - INVESTOR PRESENTATION 12PORTFOLIO OVERVIEW
WELL TENANTED, HIGH QUALITY
Top ten tenants by gross rental revenues of SmartCentres' Portfolio as of
March 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 26.0 6.9 AA AA Aa2
Canadian Tire, Mark's and FGL Sports 70 4.5 5.1 BBB (high) BBB+ n/a
Winners, HomeSense, Marshalls 53 4.0 4.9 n/a A+ A2
Loblaws and Shoppers Drug Mart 24 2.7 7.6 BBB BBB n/a
Lowe's, RONA 9 2.4 6.2 A (low) A- A3
Sobeys 18 2.3 5.1 BB (high) BB+ n/a
Reitmans 94 2.1 2.8 n/a n/a n/a
Best Buy 22 1.8 2.6 n/a BBB- Baa1
Dollarama 52 1.7 4.2 BBB n/a n/a
Michaels 25 1.5 4.1 n/a n/a Ba2
Total 468 49.0 6.2
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
MAY 2018 - INVESTOR PRESENTATION 13PORTFOLIO OVERVIEW CURRENT LEASING ENVIRONMENT ▪ All major national and regional retailers continue to grow. Bankrupt mall-type retailers have left vacancy in the market, still being absorbed ▪ Value segment still growing – Dollar stores, Winners, Marshalls, HomeSense ▪ Other mid-size retailers also adding space – Indigo, Michaels, Food stores, Pet stores ▪ Fitness category still adding space or expanding existing footprint. Bars, restaurants, etc., part of lifestyle experience evolution SMARTCENTRES REAL ESTATE INVESTMENT TRUST MAY 2018 - INVESTOR PRESENTATION 14
ACQUISITIONS ONEREIT TRANSACTION SUMMARY ▪ 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 MAY 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.)
▪ In-house development team already in process of
reviewing opportunity, zoning, permissions, uses,
etc.
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
MAY 2018 - INVESTOR PRESENTATION 16ACQUISITIONS
ONEREIT SUMMARY - 12
PROPERTY PORTFOLIO
City
Property Acquired % GLA (sf) Leased % Major Tenants and Features
Province
Walmart, Costco, LCBO, Beer Store, RBC, TD, CIBC (New
Creekside Crossing Mississauga, ON 30% 122,402 98%
dominant urban retail centre)
Safeway, Winners, Sport Chek (Strategic location:
Chilliwack Mall Chilliwack, BC 100% 152,467 82%
redevelopment)
Loblaw Superstore (new 20 year lease), Dollarama, Liquor Store,
Golden Mile Shopping Centre Regina, SK 100% 255,572 93%
GoodLife, Rexall (Newly redeveloped centre)
Giant Tiger, GoodLife, Shoppers Drug Mart, (Urban, potential
Kingspoint Shopping Centre Brampton, ON 100% 202,236 98%
mixed-use residential)
Government, Swiss Chalet, Remax (Redevelopment potential
Burnhamthorpe City Centre Mississauga, ON 100% 199,434 84%
near Erindale GO Station)
No Frills (Loblaw), City of Toronto, Dollarama (New light-rail transit
Yorkgate Shopping Centre Toronto, ON 100% 215,862 93%
redevelopment potential)
Walmart, Canadian Tire, Loblaw (Dominant three anchored
Lincoln Value Centre St. Catharines, ON 100% 376,041 82%
centre, repositioning potential)
Hartzel Plaza St. Catharines, ON 100% 67,392 100% Food Basics, Provincial Government
Walmart, Winners, Dollarama (WM only discount mass retailer in
Orillia Shopping Centre Orillia, ON 100% 241,653 100%
market)
Simcoe Shopping Centre Simcoe, ON 100% 129,876 100% Walmart, LCBO (WM only discount mass retailer in the market)
Fergus Shopping Centre Fergus, ON 100% 109,652 100% Walmart, LCBO (WM only discount mass retailer in the market)
Walmart, Rona, LCBO (new Rona shadow and WM only discount
Rockland Shopping Centre Rockland, ON 100% 147,358 100%
mass retailer in the market)
Total 2,219,945 93%
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
MAY 2018 - INVESTOR PRESENTATION 17DEVELOPMENT / INTENSIFICATION GROWTH STRATEGY ▪ Every property under review for mixed-use intensification with over 56 specifically identified to date ▪ Multiple different 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 – some will be developable over time ▪ Total financial expenditures on projects begun in the next five years expected to be between $7 – $8 billion, of which our share is close to $3 billion SMARTCENTRES REAL ESTATE INVESTMENT TRUST MAY 2018 - INVESTOR PRESENTATION 18
DEVELOPMENT TEAM
ABILITY TO EXECUTE
STRONG,
PARTNER
EXPERIENCED IN-HOUSE
RELATIONSHIPS
DEVELOPMENT TEAM
GOVERNMENT/
CONSULTANT
RELATIONSHIPS
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
MAY 2018 - INVESTOR PRESENTATION 19DEVELOPMENT TEAM IN-HOUSE DEVELOPMENT TEAM Employees in Development & Leasing Related Functions: ▪ Number of People: 145 ▪ Number of Years Experience with SmartCentres • Average: 7.5 years • Total: 1,088 years ▪ Number of Years Experience in Real Estate • Average: 15.0 years ▪ Total: 2,175 years SMARTCENTRES REAL ESTATE INVESTMENT TRUST MAY 2018 - INVESTOR PRESENTATION 20
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
MAY 2018 - INVESTOR PRESENTATION 21STRATEGIC RELATIONSHIPS
M I TC H E L L
GOLDHAR
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
MAY 2018 - INVESTOR PRESENTATION 22KEY 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 May 3, 2018
▪ Walmart Canada attributes
• Value pricing and fresh food generates huge traffic
• Dominant retailer
• Benefiting from the closure of Target and Sears
▪ 76% of Canadians live within 10 km of a Walmart
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
MAY 2018 - INVESTOR PRESENTATION 23STRATEGIC RELATIONSHIP
M I TC H E L L
MITCHELL GOLDHAR GOLDHAR
▪ 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
▪ Multiple on-going business relationships as service
provider
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
MAY 2018 - INVESTOR PRESENTATION 24STRATEGIC 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 MAY 2018 - INVESTOR PRESENTATION 25
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 MAY 2018 - INVESTOR PRESENTATION 26
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 MAY 2018 - INVESTOR PRESENTATION 27
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 MAY 2018 - INVESTOR PRESENTATION 28
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 $1 billion of real estate assets under management ▪ Asset manager for 103 self storage facilities located throughout the United States and Toronto, Canada SMARTCENTRES REAL ESTATE INVESTMENT TRUST MAY 2018 - INVESTOR PRESENTATION 29
STRATEGIC RELATIONSHIP FIELDGATE HOMES ▪ Private company in residential development business for more than 60 years ▪ Primarily focused on GTA SMARTCENTRES REAL ESTATE INVESTMENT TRUST MAY 2018 - INVESTOR PRESENTATION 30
DEVELOPMENT / INTENSIFICATION
GROWTH INITIATIVES
SENIOR
RESIDENTIAL RETAIL
RESIDENCES
APARTMENT SELF- BUILD-OUT OF
RENTALS STORAGE EXISTING
PREMIUM
CONDOMINIUMS OFFICE OUTLETS
CENTRES
VAUGHAN
TOWNHOUSES METROPOLITAN
CENTRE
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
MAY 2018 - INVESTOR PRESENTATION 31DEVELOPMENT / INTENSIFICATION
TECHNOLOGY INITIATIVES
MOBILE CHARGING DIGITAL
ADVERTISING STATIONS SIGNS
WIFI ADVERTISING BUILDING
NETWORKS KIOSKS SYSTEMS
ALL INITIATIVES DESIGNED TO CREATE VALUE ADD FOR VISITORS
TO OUR SITES AND ALSO DRIVE ADDITIONAL REVENUE
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
MAY 2018 - INVESTOR PRESENTATION 32DEVELOPMENT / INTENSIFICATION
DEAL STRUCTURES
SMARTCENTRES JOINT VENTURE BUILDING
DEVELOPMENT PARTNERS LEASE
GROUND SALE OF
LEASE SURPLUS LAND
WE WILL TAILOR THE TYPE OF DEAL DEPENDING ON EACH SITE,
TYPE OF DEVELOPMENT AND JV STRUCTURE
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
MAY 2018 - INVESTOR PRESENTATION 33DEVELOPMENT / INTENSIFICATION
MAJOR MIXED-USE REAL ESTATE INITIATIVES
Estimated Costs ($M) Estimated Gain on Final Sale
GLA
('000sf) / SRU SRU NOI at 100% NOI at SRU Completion SRU
Site Project Type Units % Share 100% Share ($M) Share ($M) Year Yield Profit % Share Timing
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% — — —
(1)
1. VMC (Office Towers) d. Office (T#4) Office 300sf 50% $175.0 $87.5 $9.6 $4.8 2025 5.0%-6.0% — — —
2. Toronto Premium
(2)
Outlets Phase II (JV) Retail 144sf 50% $133.0 $66.5 $10.9 $5.4 Nov 2018 8.0%-8.5% — — —
3. Montreal Premium
(2)
Outlets Phase II (JV) Retail 140sf 50% $56.0 $28.0 $5.6 $2.7 2022-2023 9%-10% — — —
4. New Premium Outlets Premium (JV) Retail 360sf 50% $136.0 $68.0 $11.7 $5.9 2020 8.0%-8.5% — — —
(4)
5. Laval Centre Jadco (2 Bldgs) Apartments 338 Units 50% $76.5 $38.3 $4.3 $2.2 2019-2020 5.6% — — —
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
(4)
6. VMC (Condos) Condo Condo #4 & 5 1,100 Units 25% $380 $95.0 N/A N/A 2023 N/A 20%-25% 25% 2023
2020-
7. Vaughan NW Fieldgate Townhomes 229 Units 50% $152.0 $76.0 N/A N/A 2020-2021 N/A 20%-25% 50% 2021
JV Partner (2
(4)
8. Ottawa Laurentian Bldgs) Apartments 300 Units 25% $86.0 $21.5 $4.9 $1.23 2020-2021 5.5%-6.5% — — —
$4.8M net $2.4M net
Self Storage 500sf built $52M per $26M per new NOI new NOI
(4 to 5 new per year in year in year in commences commences
facilities each each of each of each of annually on annually on
(4) (3) (3)
9. Multiple Locations Self Storage (JV) year) years 1-5 50% years 1-5 years 1-5 stabilization stabilization 2019-2023 7.5%-8.5% — — —
Mixed-Use
10. StudioCentre (Office, Studio,
(Toronto) SRU-Penguin JV Hotel) 150sf 50% $53.0 $26.5 $3.4 $1.71 2019-2022 6.0%-7.0% — — —
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
MAY 2018 - INVESTOR PRESENTATION 34DEVELOPMENT / INTENSIFICATION
MAJOR MIXED-USE REAL ESTATE INITIATIVES
Estimated Costs ($M) Estimated Gain on Final Sale
GLA
('000sf) / SRU SRU NOI at 100% NOI at SRU Completion SRU
Site Project Type Units % Share 100% Share ($M) Share ($M) Year Yield Profit % Share Timing
VMC Rental
(4)
11. VMC (Apartments) Apartments Apartments 221 Units 25% $113.6 $28.4 $5.6 $1.4 2021-2022 4.9% — — —
12. Pointe-Claire Rental Apartments
(4)
(Apartments) (2 Bldgs) Apartments 486 Units 50% $154.8 $77.4 $7.2 $3.6 2023 4.7% — — —
13. Pointe-Claire
(4)
(Condo) Condo Condo 194 Units 50% $54.8 $27.4 N/A N/A 2020 N/A 10%-15% 50% 2020
Retirement $70M per $35M per $4.2M-$5.6M $2.1M-$2.8M
Homes 600sf built year per year per net new NOI net new NOI
(3 to 5 new per year in site in site in commences commences
Retirement facilities each each of each of each of annually on annually on
(4) (3) (3)
14 Multiple Locations Homes (JV) year) years 1-5 50% years 1-5 years 1-5 stabilization stabilization 2022-2024 6.0%-8.0% — — —
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 sf. 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 sf. 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 sf. in mixed-use initiatives that
will be completed in the longer-term.
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
MAY 2018 - INVESTOR PRESENTATION 35DEVELOPMENT / INTENSIFICATION
INITIATIVES
MIXED-USE RETAIL
INTENSIFICATION DEVELOPMENTS
UNDERWAY ACTIVE FUTURE UNDERWAY ACTIVE FUTURE
17 50 56+ 25 36 2+
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
MAY 2018 - INVESTOR PRESENTATION 36DEVELOPMENT / 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
MAY 2018 - INVESTOR PRESENTATION 37DEVELOPMENT / 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
MAY 2018 - INVESTOR PRESENTATION 38DEVELOPMENT / 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
MAY 2018 - INVESTOR PRESENTATION 39DEVELOPMENT / INTENSIFICATION MIXED-USE/RETAIL INITIATIVES ▪ Multiple sites under investigation for intensification. Currently over 56 sites have identified projects ▪ Majority of initial sites in the Greater Toronto Area ▪ Collaborate with JV partners who bring expertise ▪ Can be both new builds or retrofit in existing buildings SMARTCENTRES REAL ESTATE INVESTMENT TRUST MAY 2018 - INVESTOR PRESENTATION 40
DEVELOPMENT / 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 in Q2 2018 SMARTCENTRES REAL ESTATE INVESTMENT TRUST MAY 2018 - INVESTOR PRESENTATION 41
DEVELOPMENT / INTENSIFICATION VMC TORONTO Aerial Overview SMARTCENTRES REAL ESTATE INVESTMENT TRUST MAY 2018 - INVESTOR PRESENTATION 42
DEVELOPMENT / INTENSIFICATION VMC TORONTO Transit Overview SMARTCENTRES REAL ESTATE INVESTMENT TRUST MAY 2018 - INVESTOR PRESENTATION 43
DEVELOPMENT / INTENSIFICATION 1 2 3 4
VMC
TORONTO
Major 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
MAY 2018 - INVESTOR PRESENTATION 44DEVELOPMENT / 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 REAL ESTATE INVESTMENT TRUST MAY 2018 - INVESTOR PRESENTATION 45
DEVELOPMENT / INTENSIFICATION VMC TORONTO KPMG Tower Lobby SMARTCENTRES REAL ESTATE INVESTMENT TRUST MAY 2018 - INVESTOR PRESENTATION 46
DEVELOPMENT / INTENSIFICATION VMC TORONTO Transit City Condos SMARTCENTRES REAL ESTATE INVESTMENT TRUST MAY 2018 - INVESTOR PRESENTATION 47
DEVELOPMENT / INTENSIFICATION VMC TORONTO PWC - YMCA Tower SMARTCENTRES REAL ESTATE INVESTMENT TRUST MAY 2018 - INVESTOR PRESENTATION 48
DEVELOPMENT / INTENSIFICATION VMC TORONTO Central Park SMARTCENTRES REAL ESTATE INVESTMENT TRUST MAY 2018 - 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 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 based on consumer demand ▪ Sales centre has been built on-site to allow potential tenants to see suite layouts, finishes, etc. SMARTCENTRES REAL ESTATE INVESTMENT TRUST MAY 2018 - INVESTOR PRESENTATION 50
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 ▪ Work now proceeding on the remaining 6 acres to add seniors housing, condominium and rental accommodation SMARTCENTRES REAL ESTATE INVESTMENT TRUST MAY 2018 - INVESTOR PRESENTATION 51
DEVELOPMENT / INTENSIFICATION VAUGHAN NW TORONTO Residential SMARTCENTRES REAL ESTATE INVESTMENT TRUST MAY 2018 - INVESTOR PRESENTATION 52
DEVELOPMENT / INTENSIFICATION VAUGHAN NW TORONTO Upon Completion SMARTCENTRES REAL ESTATE INVESTMENT TRUST MAY 2018 - INVESTOR PRESENTATION 53
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 under contract 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 MAY 2018 - INVESTOR PRESENTATION 54
DEVELOPMENT / INTENSIFICATION LAVAL CENTRE MONTREAL Aerial SMARTCENTRES REAL ESTATE INVESTMENT TRUST MAY 2018 - INVESTOR PRESENTATION 55
DEVELOPMENT / INTENSIFICATION LAVAL CENTRE MONTREAL With Jadco ▪ 338 units in the two buildings along with central services SMARTCENTRES REAL ESTATE INVESTMENT TRUST MAY 2018 - INVESTOR PRESENTATION 56
DEVELOPMENT / INTENSIFICATION LAVAL CENTRE MONTREAL Architect’s Rendering SMARTCENTRES REAL ESTATE INVESTMENT TRUST MAY 2018 - INVESTOR PRESENTATION 57
DEVELOPMENT / INTENSIFICATION POINTE-CLAIRE MONTREAL ▪ Walmart and Home Depot anchored site in West Montreal purchased in 2016 ▪ Very well-located site in terms of transit and road access ▪ Extensive work has identified new opportunity to add 1 – 1½ million sf. of mixed-use development on the perimeter of the property ▪ Master planning activities moving forward with strong support from council ▪ Zoning in place for a multitude of uses including residential, seniors housing and office ▪ First condominium building expected to be completed in 2020 ▪ Significant NAV created from work to date SMARTCENTRES REAL ESTATE INVESTMENT TRUST MAY 2018 - INVESTOR PRESENTATION 58
DEVELOPMENT / INTENSIFICATION
POINTE-CLAIRE
MONTREAL FUTURE REM STATION
Existing conditions
ST-JEAN BOUL
HYMUS BOUL
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
MAY 2018 - INVESTOR PRESENTATION 59DEVELOPMENT / INTENSIFICATION
POINTE-CLAIRE
MONTREAL
Perspective from St. Jean Blvd.
and Hymus Blvd.
ST-JEAN BOUL
HYMUS BOUL
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
MAY 2018 - INVESTOR PRESENTATION 60DEVELOPMENT / INTENSIFICATION POINTE-CLAIRE MONTREAL Perspective from St. Jean Blvd. and Hymus Blvd. SMARTCENTRES REAL ESTATE INVESTMENT TRUST MAY 2018 - INVESTOR PRESENTATION 61
DEVELOPMENT / INTENSIFICATION WESTSIDE MALL TORONTO ▪ Inner urban redevelopment site. Currently an approximate 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 MAY 2018 - INVESTOR PRESENTATION 62
DEVELOPMENT / INTENSIFICATION
WESTSIDE MALL
TORONTO
Architect’s Rendering
LRT STATION
EGLINTON AVE
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
MAY 2018 - INVESTOR PRESENTATION 63DEVELOPMENT / 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 to open onsite in Spring 2018 SMARTCENTRES REAL ESTATE INVESTMENT TRUST MAY 2018 - INVESTOR PRESENTATION 64
TORONTO
DEVELOPMENT / INTENSIFICATION
PREMIUM OUTLETS
WITH SIMON PROPERTY GROUP
▪ Toronto Premium Outlets
• 500,000 sf. when all phases are
completed
• Phase I opened August 1, 2013
• Phase II construction – new parking
facility opened in November 2017 as part
of expansion and construction underway
on the expansion buildings which is
expected to open in November 2018
• Stabilized yield in the double digits
MONTREAL
▪ Premium Outlets Montreal
• Phase I – 350,000 sf.
• Opened October 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
MAY 2018 - INVESTOR PRESENTATION 65DEVELOPMENT / INTENSIFICATION TORONTO PREMIUM OUTLETS Expansion SMARTCENTRES REAL ESTATE INVESTMENT TRUST MAY 2018 - INVESTOR PRESENTATION 66
DEVELOPMENT / INTENSIFICATION TORONTO PREMIUM OUTLETS New Parking Deck SMARTCENTRES REAL ESTATE INVESTMENT TRUST MAY 2018 - INVESTOR PRESENTATION 67
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
MAY 2018 - INVESTOR PRESENTATION 68DEVELOPMENT / 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 MAY 2018 - INVESTOR PRESENTATION 69
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 MAY 2018 - INVESTOR PRESENTATION 70
KEY FINANCIAL HIGHLIGHTS BALANCE SHEET SUPPORTS EXTENSIVE ASSET GROWTH ▪ Unencumbered pool at $3.5 billion = flexibility ▪ Ready access to mortgage and unsecured debt capital when needed = strong liquidity ▪ Payout ratio to ACFO at 86.1% as of Q1 2018. Higher than latest long term target of 77% to 82% due to higher retail capex and RealPac guideline on treatment of recoverable capex ▪ 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 MAY 2018 - INVESTOR PRESENTATION 71
KEY FINANCIAL HIGHLIGHTS
DEBT MATURITY / LEVERAGE
(INCLUDING ONEREIT ACQUISITION)
DEBT MATURITY
(in millions of $)
436
347
328
308 300
275
250 250
200
155 150 160 160
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: 8.4X (Target: 8.0X – 8.5X)
▪ Debt to GBV: 52.3% (Target: 50% - 60% long-term trend to continue to de-lever)
▪ Unencumbered pool: $3.4 billion (1.8X) (Target: 1.5X unsecured coverage)
▪ Weighted Avg Interest Rate (Secured Debt): 3.87%
▪ Weighted Avg Term to Maturity (Secured Debt): 4.6 yrs
▪ DBRS rating of BBB with a Stable trend
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
MAY 2018 - INVESTOR PRESENTATION 72KEY FINANCIAL HIGHLIGHTS
LEVERAGE PROFILE
Mar. 31 Dec. 31 Dec. 31 Dec. 31
2018 2017 2016 2015
Debt to Aggregate Assets 45.0% 45.4% 44.3% 44.7%(1)
Secured Debt to Aggregate Assets 24.8% 26.1% 29.5% 31.2%(2)
Unencumbered Assets $3.5B $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 $415M $646M $355M $345M
Weighted Average Interest Rate(3) 3.90% 3.87% 3.79% 3.87%
Weighted Average Term to Maturity(3) 4.5 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
MAY 2018 - INVESTOR PRESENTATION 73KEY FINANCIAL HIGHLIGHTS
CONSERVATIVE
CAPITAL STRUCTURE
Secured Mortgage Financing
Amount - $2.3 billion $8.9 Billion
25.9%
Weighted Avg Interest Rate – 3.90% Total Enterprise Value
Weighted Avg Term to Maturity – 4.5 years
Unsecured Debentures Focused on:
Amount - $1.81 billion
20.4%
Weighted Avg Interest Rate – 3.45%
Weighted Avg Term to Maturity – 5.5 years
▪ Lowering interest
rates on renewals
Convertible Debentures
Amount - $36 million
▪ Maintaining maximum
0.4%
Weighted Avg Interest Rate – 5.50% flexibility
Weighted Avg Term to Maturity – 2.3 years
▪ Reducing leverage
Equity over time
Units Outstanding – 160 million
51.8%
Share Price – $28.58 as at May 3, 2018
Market Capitalization – $4.6 billion ▪ Rebalancing unsecured
and secured debt ratios
Operating Lines / Outstanding LC’s
1.5% Operating Line – $84 million
Letters of Credit – $50 million
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
MAY 2018 - INVESTOR PRESENTATION 74KEY FINANCIAL HIGHLIGHTS
STABLE CASH FLOW
PAYOUT 90.3% 88.6% 84.7% 81.1% 82.8%
79.8%
RATIO TO
AFFO
2012 2013 2014 2015 2016 2017
($ per unit)
FFO 1.79 1.85 1.95 2.10 2.23* 2.20
AFFO 1.71 1.75 1.84 1.99 2.10* 2.07
Distributions 1.55 1.55 1.56 1.61 1.66 1.71
*includes $9.9 million settlement proceeds associated with the Target lease terminations net of other amounts
▪ Distributions fully funded from operating cashflow
▪ Management expects the payout ratio to remain in the high 70% to low 80% range
▪ Annual distribution increased in October 2016 to $1.70 from $1.65, representing an
increase of 3.0%, and further increased in October 2017 to $1.75, representing an
additional 2.9% increase
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
MAY 2018 - INVESTOR PRESENTATION 75MARKET 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
• The focus on value-oriented retailers
• The value we provide our tenants
• The strength and capabilities of our partners
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
MAY 2018 - INVESTOR PRESENTATION 76MARKET FACTORS E-COMMERCE RESPONSE With Penguin Pick-Up ▪ Located at Scarborough (1900 Eglinton) SmartCentre SMARTCENTRES REAL ESTATE INVESTMENT TRUST MAY 2018 - INVESTOR PRESENTATION 77
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 at select locations
SMARTCENTRES REAL ESTATE INVESTMENT TRUST
MAY 2018 - INVESTOR PRESENTATION 78SUMMARY
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
MAY 2018 - INVESTOR PRESENTATION 79You can also read
