Slate Office REIT · 2020-07-30 · Percentage of Portfolio Expiring Average Expiring Rent Market Rent. Slate Office REIT | 12 ... • Gross value creation of $70 million, resulting

Slate Office REITInvestor UpdateQ2 2020

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Slate Office REIT

Pure playNorth American office REIT

High quality assets and tenancies with strong operating histories

Well aligned9.5% ownership interest held by Slate Asset Management

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1 Presented at 100% of the building’s gross leasable area, without taking ownership percentage into consideration.

Slate Office REIT

TSX SOT.UN

36 Properties

6.9M Square feet1

$1.7B Total asset value

61.9% Q2/20 AFFO payout ratio

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What We Do

Strong track record of realizing gains at net asset value and generating double digit internal rates of return

Focus on Cost Basis

Acquire quality assets at a discount to replacement cost with below market in-place rents

Hands-on Asset Management

Reposition assets, grow rents, extend lease term and increase occupancy to create value

Recycle Capital

Sell fully valued assets and reinvest funds into new attractive opportunities

COVID-19Business Update

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COVID-19 Response

Transition to working remotely• Existing IT infrastructure and systems

allowed for smooth transition

Portfolio risk assessment• Engaged with key partners to understand

potential impacts on our portfolio

Portfolio and market tracking• Monitoring government support

available for tenants and performing ongoing liquidity analyses

March April May

Consistent tenant outreach and dialogue

SOT remains committed to ensuring the safety and well-being of our team, tenants and partners

Re-integration planning• Working with partners to prepare for

responsible re-entry and the gradual increase in economic activity

Public market updates• Issued press releases updating key

stakeholders on rent collection

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SOT’s cash collections compare favourably across REIT sector averages1

1 Source: NBF as at June 24.

Rent Collection

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1 As a percent of total base rent.

High Quality Tenant Base

Quality office portfolio with a diversified tenant roster

Tenant composition1

61%Base rent derived from government and credit rated tenants

10%Exposure to financial industry, the largest exposure to any one industry in the portfolio

Government and Credit Rated Tenants

61%

Other Office Tenants37%

Other Retail Tenants2%

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7.3%7.1%

6.7%

4.5%

3.7%3.3%

3.0%

2.3%2.1%

1.9%

CanadianImperial Bank of

Commerce

Bell CanadaEnterprises

SNC-Lavalin Government ofCanada

Thales RailSignallingSolutions

Province of NewBrunswick

Medavie BlueCross

Kraft Canada JohnsonInsurance

Province of NovaScotia

42% of base rent is derived from SOT’s top ten tenants

1 Source: DBRS, Moody’s and S&P.

High Quality Tenant Base

Credit Rating1 AA BBB+ BBB (low) AAA A2 A+ Unrated BB+ A AA-

Industry Financial TelecomPower & Utilities

Government Engineering Government Insurance Manufacturing Financial Government

Operational Update

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Proactive Asset Management Strong operating results achieved through the REIT’s strategic and hands-on asset management

9% in-place discount to market rent will continue to drive organic earnings growth

Total Leasing Spreads (New and Renewal)

Total Leasing Activity (New and Renewal)

In-Place vs. Market Rents

225,233

441,222

258,248

158,339

254,409

149,226 124,697

190,894

304,571

103,827

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

500,000

Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020Average

14.0%

9.2%6.0%

11.1%

18.5%

23.0%25.4%

13.4%

28.6%

13.9%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020Average

$15.81

$16.67

$15.46

$16.77

$19.21

7.1%5.2%

13.0%

5.9%

55.6%

$19.80

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

$8.00

$10.00

$12.00

$14.00

$16.00

$18.00

$20.00

$22.00

2020 2021 2022 2023 2024+Percentage of Portfolio Expiring Average Expiring Rent Market Rent

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Value Creation Case Study: Maritime Centre

• 24% increase in committed occupancy

• 27% increase in weighted average base rent

• Increased weighted average remaining lease term by 1.5 years

• Expected value upon completion of $130 million ($240 per sq. ft.)

• Gross value creation of $70 million, resulting in an IRR of 30%

• Centrally located office tower in downtown Halifax, Nova Scotia

• Acquired for $60.6 million in June 2015 ($112 per sq. ft.)

• Opportunity to reposition asset through reconstruction of lobby to refresh retail, enhance tenant amenities and add additional parking

• Refinanced the Maritime Centre in April 2020 at a $109 million valuation ($208 per sq. ft.)

• Provides $19.7 million of additional liquidity to finance value-add investments

01 Investment Overview 02 Success to

Date

03 Refinancing 04 Expected Results

Proposed Rendering – Exterior

Proposed Rendering – Interior

The Path Forward

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Defensive portfolio with durable cash flows

Liquidity

Growth outlook

• Diversified tenant roster with high credit quality tenants

• Collected 96% to 97% of rent in cash within each month of the second quarter and expect to substantially collect the remaining through short-term deferral agreements

• Current AFFO payout ratio of 62%

• Ample liquidity to fund the ongoing operations of the REIT

• Completed the Maritime Centre refinancing on favourable terms to fund further value-add investment

• Actively managing operating and capital spend

• Monitoring government policies and programs and working with property management partners to maintain safe environments for tenants

• Given the strength of the REIT’s existing portfolio and management team, SOT is well positioned to capitalize on attractive acquisition opportunities post COVID-19

Well Positioned Going Forward

With a defensive portfolio generating durable cash flows and ample liquidity, SOT is well positioned going forward

Additional Information

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1 Property under redevelopment.2 Includes a seven-storey office building at 280 Broadway Avenue, a three-storey multi-family residential building located at 70 Smith Street and two parking lots located at 286 Broadway Avenue and 68 Smith Street; excludes occupancy from residential tenants at 70 Smith Street.

Property List

As of June 30, 2020 Property Address Property Name City OwnershipSquare Feet of

GLAOccupancy

U.S. Office

1 20 South Clark Street Chicago, IL 100.0% 381,607 86.6%

2 120 South LaSalle Street Chicago, IL 100.0% 656,033 91.4%

Total U.S. Office 1,037,640 89.6%

GTA Office

3 7030, 7050, 7100 Woodbine Avenue & 55, 85 Idema Road Woodbine & Steeles Corporate Centre Markham, ON 75.0% 359,541 87.1%

4 3000 – 3100 Steeles Avenue East Gateway Centre Markham, ON 75.0% 239,612 91.0%

5 2655 – 2695 North Sheridan Way The Sheridan Exchange Mississauga, ON 75.0% 158,322 85.0%

6 2285 Speakman Drive Mississauga, ON 100.0% 127,419 100.0%

7 2599 Speakman Drive1 Mississauga, ON 100.0% 119,145 15.1%

8 2251 Speakman Drive Mississauga, ON 100.0% 115,580 100.0%

9 1189 Colonel Sam Drive Oshawa, ON 100.0% 103,179 100.0%

10 1 Eva Road Toronto, ON 100.0% 91,963 87.3%

11 185 – 195 The West Mall West Metro Corporate Centre Toronto, ON 75.0% 618,341 91.5%

12 401 – 405 The West Mall Commerce West Toronto, ON 75.0% 412,558 90.6%

13 105 Moatfield Drive Toronto, ON 100.0% 248,981 100.0%

14 95 Moatfield Drive Toronto, ON 100.0% 156,426 100.0%

Total GTA Office 2,751,067 89.2%

Western Office

15 280 Broadway Avenue2 Winnipeg, MB 100.0% 105,341 86.2%

16 114 Garry Street Winnipeg, MB 100.0% 74,246 100.0%

17 1450 Waverley Street Bell MTS Data Centre Winnipeg, MB 100.0% 64,000 100.0%

18 365 Hargrave Street Winnipeg, MB 100.0% 70,719 100.0%

19 1870 Albert Street Saskatchewan Place Regina, SK 100.0% 83,932 73.6%

Total Western Office 398,238 90.8%

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1 Includes Delta Brunswick Hotel.

Property List

As of June 30, 2020 Property Address Property Name City OwnershipSquare Feet of

GLAOccupancy

Atlantic Office

20 440 King Street Kings Place Fredericton, NB 100.0% 296,314 89.6%

21 250 King Street Fredericton, NB 100.0% 80,162 100.0%

22 460 Two Nations Crossing Fredericton, NB 100.0% 50,229 100.0%

23 570 Queen Street Fredericton, NB 100.0% 69,137 89.3%

24 644 Main Street Blue Cross Centre Moncton, NB 100.0% 320,154 99.3%

25 81 Albert Street Moncton, NB 100.0% 64,954 100.0%

26 39 King Street1 Brunswick Square Saint John, NB 100.0% 508,118 63.6%

27 4 Herald Avenue Corner Brook, NL 100.0% 73,393 27.5%

28 100 New Gower Street Cabot Place St. John's, NL 100.0% 136,167 99.1%

29 10 Factory Lane The Johnson Building St. John's, NL 100.0% 188,170 100.0%

30 5 Springdale Street Fortis Place St. John's, NL 100.0% 142,973 78.2%

31 140 Water Street TD Place St. John's, NL 100.0% 102,747 71.2%

32 1505 Barrington Street Maritime Centre Halifax, NS 100.0% 528,227 81.9%

33 84 – 86 Chain Lake Drive Halifax, NS 100.0% 77,979 46.5%

Total Atlantic Office 2,638,724 81.9%

Non-Office

34 5404 36th Street SE Doka Building Calgary, AB 100.0% 36,000 100.0%

35 200 Manitoba 10 Walmart Flin Flon Flin Flon, MB 100.0% 63,439 100.0%

36 307 – 311 Airport Road Airport Road Shopping Centre Yellowknife, NWT 100.0% 15,395 100.0%

Total Non-Office 114,834 100.0%

Total Portfolio 6,940,503 86.8%

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Analyst Coverage

BMO Capital Markets Jenny [email protected]

Echelon Wealth PartnersFrederic [email protected]

TD SecuritiesJonathan [email protected]

Canaccord GenuityBrendon [email protected]

National Bank FinancialMatt [email protected]

Industrial AllianceBrad [email protected]

CIBC Capital Markets Chris [email protected]

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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. SlateOffice 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