slate grocery reit · 2020. 10. 27. · slate grocery reit | 8. sgr’s grocery -anchored portfolio...

Slate Grocery REITInvestor UpdateQ3 2020

Slate Grocery REIT | 2

Note: As at September 30, 2020.1 Excludes properties under development.2 In US$.

Slate Grocery REIT

100% Grocery-anchored1

TSX SGR.UNSGR.U

76 PropertiesAll U.S. locations

9.7M Square feet

20 States

$1.3B Asset value2

U.S. grocery-anchoredshopping centers with resilient cash flow


Note: As at September 30, 2020.1 Ranked by annual base rent.

Diversified Portfolio

Geographically well diversified with 76 properties totaling 9.7M sq. ft. in 20 states and 19 metropolitan statistical areas

Top Five Tenants1

8.4% Walmart

7.9% Kroger

4.0% Publix

3.8% Ahold Delhaize

2.5% Southeastern Grocers

73.4% Remaining tenants (1,113 leases)

Top Five States1

15.5% Florida

14.1% North Carolina

10.4% Pennsylvania

8.4% South Carolina

6.6% Georgia

Florida

South Carolina

North Carolina

Pennsylvania

Georgia

COVID-19Business Update


1 Expect to substantially collect outstanding billings through immediate cash collection and deferral programs.

Leading Rent Collection

SGR’s sector leading cash rent collections have continued and deferral repayments are trending ahead of expectations

Cash Rent Collections

96.0% 95.4% 93.4%

4.0% 4.0% 6.6%

0.6%

Q2 2020 Q3 2020 October 2020

Cash Received Deferred Abated1


1 Company public disclosure.

Rent Collection

SGR’s cash rent collections compare favourably to North American peers

Cash Rent Collections vs. US Peers1

Cash Rent Collections vs. Canadian Peers1

95%88% 85% 85% 84% 83% 80%

76% 75% 74% 71%

94%

73% 71%

60%66% 66% 65% 68%

58%

71%

62%

SlateGrocery

REIT

WeingartenRealty

RetailOpportunityInvestments

BrixmorProperty

KimcoRealty

FederalRealty

Urban Edge RetailPropertiesof America

RegencyCenters

AcadiaRealty

SITECenters

July Collections May Collections

95%

89%85% 85%

79%

94%

76%71% 72%

75%

Slate Grocery REIT Plaza Retail REIT RioCan SmartCentres First Capital

July Collections May Collections


1 Includes Walmart.2 Based on occupied GLA.

Essential-Based Tenancy

64%

Base rent derived from grocery and essential goods and service-based tenants

100%Anchors that remain open for business2

99%Tenants that are open for business2

Defensive portfolio comprised of grocery and essential tenants

Supermarkets & Grocery1

39%


SGR’s grocery-anchored portfolio composition is best-in-class

1 Green Street Advisors, August 2020.2 Excludes properties under development.

Grocery-Anchored Dominance

% of Total Rent from Grocery-Anchored Centers1

100.0%

83.0%

68.0%

48.0%44.0%

36.0%29.0% 26.0% 24.0%

17.0%11.0%

Slate GroceryREIT


RegencyCenters

WeingartenRealty

BrixmorProperty

Kimco Realty Urban Edge Acadia Realty Federal Realty RetailProperties of

America

SITE Centers2


SGR has among the lowest exposure to COVID-19 sensitive tenants vs. US strip center REIT peers

1 Green Street Advisors, August 2020.

Essential-Based Tenancy

Estimated Rent Exposure to COVID-19 Sensitive Tenants1

48.3%

43.4% 42.6% 41.8%38.3% 37.5%

34.7%33.1%

30.3%26.6% 25.6%


WeingartenRealty

RetailProperties of

America

RegencyCenters

BrixmorProperty

Kimco Realty Federal Realty Acadia Realty SITE Centers Urban Edge Slate GroceryREIT

Restaurants Small Businesses Fitness Theatres Bankruptcy Watchlist


Note: All amounts in US$.1 Company public disclosure for Q2 2020 or latest available.2 Ahold Delhaize Q2 2019 same-store sales growth figure adjusts for timing of Easter and impact of Stop & Shop strike.3 Brick Meets Click / Mercatus Grocery Shopping Survey, August 2020.

Strength of Grocery

America’s largest grocers have performed well throughout the COVID-19 pandemic, demonstrating the strength and resilience of the sector

Same-Store Sales Growth1

Year-over-Year Change

US Online Grocery Statistics – Delivery & Pickup3

Performance Metrics Aug 2019 Mar 2020 Apr 2020 May 2020 Jun 2020 Aug 2020

Sales (past 30 days)

$1.2B $4.0B $5.3B $6.6B $7.2B $5.7B

Spend(average per order)

$72 $85 $85 $90 $84 $95

Orders (past 30 days)

16.1M 46.9M 62.5M 73.5M 85.0M 59.5M

Customers(active during past 30 days)

16.1M 39.5M 40.0M 43.0M 45.6M 37.5M

Frequency (Monthly average/customer)

1.0x 1.2x 1.6x 1.7x 1.9x 1.6x

20.6% 19.9%14.6%

9.3%

2.3%4.8%

2.2% 2.8%

Ahold Delhaize Publix Kroger Walmart

Current Period Prior Period

2


The Future of Grocery

01Click and collect

02Personal shopper

Grocery stores are located close to where consumers reside and will continue to serve as critical food distribution points, fulfilling both in-store and online purchases


Name Change to Slate Grocery REIT

Slate Grocery REIT stands alone as the only 100% grocery-anchored business in the REIT sector and our name now reflects that differentiation

Research Perspectives

New Name, Same Strategy

“SGR’s grocery-anchored portfolio continues to demonstrate relative resilience compared with its retail peers as demonstrated by its above average rental collection rates and defensive tenant roster. The REIT is changing its name to Slate Grocery REIT, subject to receiving TSX approval. The name change more accurately reflects the focus on U.S. grocery-anchored real estate, a strategy the REIT has embarked upon since inception.”

- Chris Couprie, CIBC, July 29, 2020

“We like the planned name change to 'Slate Grocery REIT' from 'Slate Retail REIT' as it is better reflective of the strategy given the portfolio is 100% grocery-anchored (vs ~40% average for the U.S. peer group with grocery exposure). Rent collection has improved progressively and continues to be above SGR’s peer group due to its higher grocery exposure.”

- Himanshu Gupta, Scotiabank, July 29, 2020

Operational Update


Strong Leasing Continues

SGR’s strong leasing continued with record new leasing volumes in the third quarter of 2020

New Leasing VolumeSquare Feet

Renewal VolumeSquare Feet

33,777 38,65360,950 53,653

85,50454,365

196,438

Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020

341,781285,589

684,162

95,563174,923

464,326

235,340

Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020


$28.2

$7.0

$46.1$29.4

$60.2$47.0

$6.1$19.0

$242.9

Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Subsequent Total

Completed $243 million of dispositions since the beginning of 2019 at a weighted average cap rate of 7.15%

Note: All amounts in US$.

Completion of Disposition Program

Dispositions$ Millions

Dispositions were executed at full pricing and were not discounted due to COVID-19


Note: All amounts in US$.1 Ranked by annual base rent.

Recent Acquisition of Grocery-Anchored Properties

Opportunistically completed the acquisition of 7 grocery-anchored properties in the Southeastern and Mid-Atlantic United States for $90 million

Acquisition Highlights

Portfolio Summary

• Seven grocery-anchored properties comprising 623,766 square feet of gross leasable area

• Immediately accretive to FFO/unit and AFFO/unit

• Anchored by market dominant high-credit grocers including Harris Teeter (Kroger), Food Lion (Ahold Delhaize) and Weis Markets

• Well-located properties in markets where the REIT has an established presence

• Redeploying capital from completed dispositions of lower tier assets totaling $218 million at a weighted average cap rate of 7.2% into higher quality grocery-anchored assets for $90 million at a weighted average cap rate of 8.7%

Virginia

North Carolina

Maryland

Geographic Summary1

45.6% Virginia (3 Assets)

33.1% North Carolina (3 Assets)

21.3% Maryland (1 Asset)

Tenant Summary1

25.8% Harris Teeter

11.5% Food Lion

9.5% Weis Markets

53.2% Remaining tenants


Note: As at September 30, 2020; all amounts in US$.

Creating Value Through Redevelopment

Redevelopment Highlights

• Mooresville Town Square is a grocery-anchored center located in Mooresville, NC, 30 minutes north of Charlotte and 2 miles west of Mooresville Consumer Square, an SGR center anchored by Walmart

• Mooresville is known as “Race City USA” due to NASCAR’s presence within the city and benefits from a significant daytime population

• Acquired in November 2016 with in-place occupancy of 88% and within 21 months, SGR increased occupancy to 100%

• Upon reaching 100% occupancy, SGR redeveloped a 0.5 acre land parcel adjacent to the grocery store (Lowe’s Foods)

• Securing new rents for the redeveloped space at $30 per square foot, a 62% premium to inline rents in the rest of the center

• Increased NOI to $1.6 million from $1.2 million at acquisition

Grocery Anchor

Completed Redevelopment

At Acquisition (November 2016)

Purchase Price $16.7M

Yield 7.3%

Occupancy 88%

W.A. Base Rent $16.29 / sq. ft.

Today

IFRS Value $22.9M

IFRS Cap Rate 7.0%

Occupancy 99%

W.A. Base Rent $18.53 / sq. ft.

Execution


Enhanced liquidity and no debt maturities until 2023

Note: All amounts in US$.1 Excludes the impact of the REIT’s extension option.2 Includes the impact of pay-fixed receive-float swaps.3 For the three months ended September 30, 2020.

Solidified Balance Sheet

$164M Borrowing capacity

4.2 yearsWeighted average debt maturity1

98.6% Fixed rate debt

3.98%Weighted average interest rate2

2.48x Interest coverage ratio3

77.9% Flexible bank debt

Consolidated Debt Maturities$ Millions | % of total

31.9%

17.4%

39.3%

10.5%

0.9%$0

$50

$100

$150

$200

$250

$300

$350

2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031

Term loan Revolver Mortgage %


SGR benefits from the ability to leverage the entire C$6.5B Slate Asset Management platform and the expertise of more than 100 real estate professionals

Note: All amounts in US$.1 Year-to-date as at September 30, 2020.2 Year-to-date as at June 30, 2020.

Management Platform

REIT Comparison – General & Administrative Expense

• Annual asset management fee equal to 40 bps of Gross Book Value

• Performance fee totaling 15% of FFO per unit above $1.34 (plus inflation mechanism). Calculation of FFO does not include gain from sales

• Acquisition fee equal to 75 bps of gross acquisition cost, capitalized upon closing

• No leasing, property management, construction, re-financing or disposition fees

• 5-year term(s) with internalization mechanism at $750M market cap (C$) equal to 1x trailing twelve-month fees

• Total trailing twelve-month fees of $5.2M1

• Slate Asset Management and insiders own 8.0% of Slate Grocery REIT

U.S. REITs (US$ thousands)2

Slate Grocery

REIT1

Acadia Realty

Brixmor Federal Realty

Kimco Realty

Regency Centers

Retail Opportunity Investments

Retail Properties

of America

SITE Centers

Urban EdgeWeingarten

Realty

G&A 8,797$ 17,790$ 47,033$ 20,065$ 43,521$ 34,907$ 7,873$ 17,656$ 24,878$ 27,900$ 15,227$

Total assets 1,302,849$ 4,328,748$ 8,416,285$ 7,789,930$ 11,559,970$ 11,386,309$ 3,030,133$ 3,621,412$ 4,048,531$ 3,125,107$ 3,907,209$

Total revenue 94,258$ 135,193$ 529,921$ 407,784$ 528,660$ 514,771$ 141,424$ 215,498$ 212,342$ 166,979$ 209,487$

G&A as % of total assets 0.2% 0.2% 0.3% 0.1% 0.2% 0.2% 0.1% 0.2% 0.3% 0.4% 0.2%

G&A as % of total revenue 9.3% 13.2% 8.9% 4.9% 8.2% 6.8% 5.6% 8.2% 11.7% 16.7% 7.3%


Opportunities post COVID-19

Well-positioned to capitalize on acquisition opportunities

Growth markets

• Expect a robust pipeline of attractive acquisition opportunities post COVID-19 as landlords look to generate liquidity

• Execution of the disposition program has de-risked the balance sheet

• Significant available liquidity

• Strong grocer relationships

• Attractive markets with strong demographics (robust population and employment growth, favorable business climate) with the top 1-2 grocers in each MSA

• Markets where the REIT has an existing presence

Growth Outlook

SGR has strong grocer relationships, significant liquidity and a sophisticated team prepared to act on opportunities as they arise


Analyst Coverage

BMO Capital Markets Jenny [email protected]

RBC Capital MarketsPammi [email protected]

ScotiabankHimanshu [email protected]

CIBC Capital Markets Chris [email protected]

mailto:[email protected]





Disclaimer Forward-Looking StatementsThis presentation contains forward-looking information within the meaning of applicable securities laws. These statements include, but are not limited to, statements concerning the REIT’s objectives, its strategies toachieve those objectives, as well as statements with respect to management’s beliefs, plans, estimates, and intentions, and similar statements concerning anticipated future events, results, circumstances, performanceor expectations that are not historical facts. Readers should not place undue reliance on any such forward-looking statements. Forward-looking information involves known and unknown risks, uncertainties and otherfactors which may cause the actual results, performance or achievements of the REIT to be materially different from any future results, performance or achievements expressed or implied by the forward-lookinginformation. Actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained herein. Such forward-looking statements arebased on a number of assumptions that may prove to be incorrect, including, but not limited to, the continued availability of mortgage financing and current interest rates; the extent of competition for properties;assumptions about the markets in which the REIT and its subsidiaries operate; the global and North American economic environment; and changes in governmental regulations or tax laws. Although the forward-looking information contained in this presentation is based upon what management believes are reasonable assumptions, there can be no assurance that actual results will be consistent with these forward-lookingstatements. Certain statements included in this presentation may be considered “financial outlook” for purposes of applicable securities laws, and such financial outlook may not be appropriate for purposes other thanthis presentation. Except as required by applicable law, the REIT undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Non-IFRS MeasuresThis presentation contains financial measures that do not have a standardized meaning under International Financial Reporting Standards (“IFRS”) as prescribed by the International Accounting Standards Board. SlateGrocery uses the following non-IFRS financial measures: Funds from Operations (“FFO”), Adjusted Funds from Operations (“AFFO”), Net Operating Income (“NOI”), and Earnings Before Interest, Taxes, Depreciation andAmortization (“EBITDA”). Management believes that in addition to conventional measures prepared in accordance with IFRS, investors in the real estate industry use these non-IFRS financial measures to evaluate theREIT’s performance and financial condition. Accordingly, these non-IFRS financial measures are intended to provide additional information and should not be considered in isolation or as a substitute for performancemeasures prepared in accordance with IFRS. In addition, they do not have standardized meanings and may not be comparable to measures used by other issuers in the real estate industry or other industries.

Use of EstimatesThe preparation of the REIT financial statements in conformity with IFRS requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, disclosure ofcontingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Management’s estimates are based on historical experience andother assumptions that are believed to be reasonable under the circumstances. Actual results could differ from those estimates under different assumptions.

Slate Asset Management 121 King Street W, Suite 200Toronto, ON M5H 3T9 slateam.com

slate grocery reit · 2020. 10. 27. · slate grocery reit | 8. sgr’s grocery -anchored portfolio...

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