Slate Asset Management L.P Corporate Overview

Transcription

1 Slate Asset Management L.P Corporate Overview

2 EXECUTIVE SUMMARY Clear Vision. Clear Value. Delivering outsized returns starts with seeing real estate from a fresh perspective and having the determination to go farther and look deeper for opportunities. That vision has made us one of Canada s most active and innovative investors and operators, with $3 billion of North American assets under management. Working with likeminded partners and investors, we are building the next great Canadian asset manager with a focus on real estate and an unwavering commitment to generating value. Where can our vision take you? Founded in 2005 $3 billion of Assets Under Management Publicly Traded Vehicles Private Alternative Investments 145 Properties 17 Million Square Feet Hands-On Operators Investors First Slate Asset Management L.P. 2

3 HOW WE VE GROWN Assets Under Management 2010 Launched a U.S. grocery-anchored retail platform that today comprises 58 assets and 6.8 million square feet. Slate Retail REIT debuted on the TSX in Q Acquired GE Capital s Canadian real estate operations for $1 billion. This included a portfolio of over 70 industrial and commercial assets. $117 million of value creation to date 2014 Acquired a diversified portfolio of Canadian office, industrial and retail assets for $210 million. Assumed management and the largest ownership position of an additional TSX-listed REIT. Launched the re-focused Slate Office REIT Completed $190 million of transformative acquisitions Partnered with The Blackstone Group to complete 30 totalling 3.2 million square feet. 21 Separate transactions 800 leases negotiated 193% NOI increase 1 million square feet of leasing $1.1 billion of debt and equity origination Sold the Slate/Blackstone Portfolio for $832 million 3.0x equity multiple 30%+ IRR Slate Asset Management L.P. 3

4 WHY WE CREATED SLATE Commercial real estate was becoming dominated by investors who had never owned or operated real estate. Too often, they treated real estate as a cash flow stream similar to a fixed income security. These investors weren't focused on the fundamentals like we would focus on the fundamentals. We could be the bridge. - Blair Welch, Partner & Co-Founder Slate Asset Management L.P. 4

5 BUILDING ON DEEPLY HELD BELIEFS 1. The best real operators are owners too, investing shoulder to shoulder with their capital partners 2. Great real estate investing means putting real estate fundamentals first 3. Great real estate managers are entrepreneurial and find opportunities where others don t Slate Asset Management L.P. 5

6 WE LIVE BY SOME KEY RULES Buy only what we would comfortably own forever Buy only at a discount to replacement value Use leverage prudently Stay on top of market trends and capital flows Always be well-positioned to respond tactically to disposition and new investment opportunities Slate Asset Management L.P. 6

7 WE RELENTLESSLY PURSUE VALUE As value investors, we look for opportunities to own buildings for less than we could build them. That reduces risk, protects capital and increases returns. Identify an asset class that is out of favour Actively monitor opportunities to exit and re-deploy capital Acquire properties at below replacement value Re-lease at higher rents to better quality tenants Use our operational know-how to upgrade the properties Slate Asset Management L.P. 7

8 WE ARE EXPERIENCED OPERATORS Though we believe in the fundamental importance of being able to identify compelling opportunities and buying them correctly, that s only part of it. With every asset, Slate works directly with its investment partners and tenants on property enhancement and leasing strategies, leveraging our expertise in real estate operations management. Since inception, we have strategically deployed approximately $100 million in capital improvements. Vision is identifying ways to strengthen assets and then executing Slate Asset Management L.P. 8

9 WE ALIGN FEES WITH PERFORMANCE With a significant equity stake in every investment, we don t like high-cost management contracts that do not produce results. We strive to keep management fees low and to align ourselves with our partners through performance incentive structures that reward clear focus and ability to execute. We never allow fees to cloud investment decisions. When the time is right to sell an asset or move on to a new theme, we do it because our first priority is to be a shoulder to shoulder investor. This is how we put real estate, and investors, first. Vision is looking at investments as owners Slate Asset Management L.P. 9

10 SLATE TODAY Our investment strategies are focused and theme oriented. We find niches in the marketplace where capital is not flowing, where there are opportunities that are considered too small by large capital or too complex by others that aren't willing to figure out and unlock value. - Brady Welch, Partner & Co-Founder Vision is seeing overlooked value Slate Asset Management L.P. 10

11 SLATE TODAY Capital Partners Private institutional investors Publicly-traded real estate investment trusts Investment Vehicles Private Alternative Investments Slate Retail REIT (TSX:SRT) Slate Office REIT (TSX:SOT) Investment Themes Core, core plus and opportunistic real estate focused investments Grocery anchored U.S. retail properties Downtown and suburban Canadian office properties $3.0 billion AUM Slate Asset Management L.P. 11

12 SLATE TODAY Canada NWT Total assets 87 Square feet (millions) 10.3 Provinces/Territories 8 United States Total assets 58 Square feet (millions) 6.8 States 20 AB CO SK ND TX MB MN ON WI MI PA IL OH VA KY TN NC SC AL GA NB NH CT MD NS NL FL Slate Asset Management L.P. 12

13 PRIVATE ALTERNATIVE INVESTMENTS Seek undervalued assets in irreplaceable locations Acquire at a discount to replacement value Renovate and re-lease to drive rents and occupancy Co-invest in every deal Don t be afraid to sell Slate/Blackstone Canadian Office Portfolio (Sold, 2011) 30 value-add properties acquired in 21 transactions 3.2 million square feet of leasing Net Operating Income increase of 193% 3.0x equity multiple and 30% IRR Acquisition of GE Canadian Equity Platform (Ongoing) 79 office and industrial assets totaling $1 billion Management platform including 70 employees Ongoing leasing and repositioning initiatives $117 million of value creation to date Slate Asset Management L.P. 13

14 PRIVATE ALTERNATIVE INVESTMENTS SLATE/BLACKSTONE CANADIAN OFFICE Photo: 330, 350 and 360 Bay St, Toronto Slate Asset Management L.P. 14

15 PRIVATE ALTERNATIVE INVESTMENTS SLATE/BLACKSTONE CANADIAN OFFICE From 2005 to 2011 Slate, in partnership with The Blackstone Group: Acquired 30 office buildings in Toronto, Calgary, Edmonton and Ottawa. Completed over 21 separate transactions, 60% of which were off-market Directly negotiated over 800 lease transactions covering the entire 3.2 million square foot portfolio Increased NOI by 193% By 2011, we had created a stabilized, institutional-quality core office portfolio with considerable scale. Believing we had executed on our business plan and could crystallize significant value creation, we put the portfolio up for sale. Sold in Q to a Canadian REIT for $831.8 million at the time the largest purchase of a portfolio by a REIT in Canada Selling reduced our asset base by 95% but it was the right decision Slate delivered a 3.0x equity multiple, and a levered IRR of greater than 30% Slate Asset Management L.P. 15

16 PRIVATE ALTERNATIVE INVESTMENTS ACQUISITION OF GE EQUITY PLATFORM Photo: 40, 30 and 2 St Clair Ave W; 2 and 21 St Clair Ave E, Toronto Slate Asset Management L.P. 16

17 PRIVATE ALTERNATIVE INVESTMENTS ACQUISITION OF GE EQUITY PLATFORM In 2013, GE was seeking a buyer for a platform comprising core office towers, non-core office complexes, industrial buildings and a management team, at a price of $1 billion. Slate had a long relationship with GE, which was our lender when we worked with Blackstone to purchase office buildings across Canada. 59 Industrial Assets Sold to Canadian REIT for $360 million 7 properties sold to Slate Office REIT for $190 million to seed transformational deal creating Canada s leading non-core office REIT GE Platform $1 billion price tag; Acquired by Slate in High-Quality GTA Office Properties Partnered with Canadian institutional equity and retained; implementation of attractive seller-financing 13 Downtown Office Properties Well-occupied and irreplaceable assets continue to undergo hands-on repositioning and quality enhancement with significant value creation to date 70 GE Employees Joined Slate or given positions at our 3 rd party operating partners Vision is seeing a way to execute complex transactions Slate Asset Management L.P. 17

18 SLATE RETAIL REIT TSX: SRT.UN/SRT.U Listed in 2014; a continuation of our 2010 U.S. grocery retail strategy Only North American REIT with 100% grocery anchored asset base Diversified geographically and by tenant with ~66% of portfolio situated in markets with over 1 million population Embedded internal and external growth opportunities Slate aligned via ~8% ownership Photos: (left to right) Independence Square, Charlotte, NC; Fuquay Crossing, Fuquay-Varina (Raleigh), NC; Westhaven Town Center, Franklin (Nashville), TN Slate Asset Management L.P. 18

19 SLATE OFFICE REIT TSX: SOT.UN Highly experienced and dedicated management team Significant opportunity to acquire high quality non-core office assets Fragmented investment landscape provides significant growth potential Strong operating and demographic fundamentals Slate aligned via ~20% ownership Photos: (left to right) 135 Queens Plate Dr, Toronto, ON; 1 Eva Rd, Toronto, ON Slate Asset Management L.P. 19

20 WHAT WE DO I think that on all of our deals we have had people say can t to us. They say Can't be done, can't do that, can't raise money, etcetera. At Slate, we don't do can t well. - Blair Welch, Partner & Co-Founder Vision is seeing the opportunity where others can t Slate Asset Management L.P. 20

21 AN EYE FOR MISPRICED ASSETS We seek out themes characterized by the mispricing of attractive yet out of favour categories of real estate These situations often arise as capital is flowing elsewhere When we see a theme, we source the correct equity capital and prudent leverage and go to work We always invest alongside our partners to create alignment We assemble portfolios and apply our operational expertise to drive the value of a portfolio Vision is identifying themes others overlook Slate Asset Management L.P. 21

22 WE HAVE DEEP BENCH STRENGTH Our dynamic and highly integrated management platform oversees all stages of the real estate investment life cycle. Slate comprises 40 talented professionals who draw on deep experience from preeminent names in commercial real estate finance, asset management and brokerage. Investments Asset Management Leasing Finance & Taxation Investor Relations Legal Vision is monitoring investments 360 degrees, 24/7 Slate Asset Management L.P. 22

23 WE RE PRUDENT DEBT MANAGERS Our strategy is two-fold: Utilize flexible debt structures typically floating in value-add phase Re-finance stabilized assets with conservative long-term debt once the value-add cycle has run its course Things we keep in mind: Hedging strategies can be costly and should be used with caution Finance with an eye to exit strategy; bad debt planning traps value Strong relationships with major lenders are key Slate Asset Management L.P. 23

24 WE ARE WELL-CAPITALIZED Having multiple capital sources means that we are able to pursue many types of deals, pairing the right opportunities with the right investors in the process. We have worked extensively with pension funds and private equity in addition to having raised debt capital via our wide relationships with North American banks and private lenders. Slate Asset Management L.P. 24

25 WHY INVEST WITH SLATE? Because we re the next great Canadian asset manager with a focus on real estate Because we go farther and look deeper for the unexplored value that creates great risk-adjusted returns Because we are seasoned operators with a proven track record of creating value Because we invest alongside our partners we re owners, too That s clear vision. That s clear value. Slate Asset Management L.P. 25

26 CAUTIONARY STATEMENTS Forward-Looking Statements This presentation contains forward-looking information within the meaning of applicable securities laws. These statements include, but are not limited to, statements concerning Slate Asset Management L.P. s ( Slate ) objectives, its strategies to achieve 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, performance or 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 other factors which may cause the actual results, performance or achievements of Slate to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information. 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 are based 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 Slate 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-looking statements. 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 than this presentation. Except as required by applicable law, Slate 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 Measures This 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. Slate Retail 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 and Amortization ( 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 Slate 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 performance measures 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 Estimates The preparation of Slate s financial statements in conformity with IFRS requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent 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 and other assumptions that are believed to be reasonable under the circumstances. Actual resultscould differ from those estimates under different assumptions. Slate Asset Management L.P. 26

27 WHERE CAN OUR VISION TAKE YOU? Blair Welch Partner & Co-Founder Brady Welch Partner & Co-Founder Conor McBroom Vice President, Investor Relations Slate Asset Management L.P. 200 Front St W, Suite 2400 Toronto, ON M5V 3K2 slateam.com Slate Asset Management L.P. 27