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1 Investor Presentation Q1 2006. 2 Ten Years of Growth Portfolio (sq. ft. millions) Revenue ($ millions) FFO per Unit 1.3 Jan 1, 96 32.7 Dec 05 $11 96.

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Presentation on theme: "1 Investor Presentation Q1 2006. 2 Ten Years of Growth Portfolio (sq. ft. millions) Revenue ($ millions) FFO per Unit 1.3 Jan 1, 96 32.7 Dec 05 $11 96."— Presentation transcript:

1 1 Investor Presentation Q1 2006

2 2 Ten Years of Growth Portfolio (sq. ft. millions) Revenue ($ millions) FFO per Unit 1.3 Jan 1, 96 32.7 Dec 05 $11 96 $289 05 $1.33 96 $1.91 05

3 3 10 Years of Growth 96 05 19.2% Ten-Year Average Annual Return 1996 - 2005

4 4 Summit generated record results in 2005… Profile

5 5 31% 84% A Successful Transition (% of annualized net operating income) Dec. 31, 2000 Light Industrial March 31, 2006 Light Industrial 31% Real estate assets of approximately $2.0 billion Approximately 33 million square feet

6 6 #1 industrial landlord in Canada Canadas Largest Industrial Landlord

7 7 Major Presence in Key Markets #1 Edmonton Calgary Halifax Ottawa #2 Toronto Top 5 Montreal Kitchener/Waterloo Cambridge Winnipeg

8 8 Geographic Diversification Alberta Ontario Quebec Nova Scotia Sask./Man. BC Breakdown of annualized net operating income (March 31, 2006) 1% 25% 3% 48% 14% 8% U.S. >1%

9 9 Strong Market Presence Benefits Synergies and economies of scale Strong acquisition pipeline Geographic and tenant diversity for investors Higher tenant retention and occupancy

10 10 Consistent High Occupancy 97% = economic full occupancy

11 11 No single industrial tenant >2% of base rent Approximately 3,000 Tenants – A Broad and Diverse Revenue Base At December 31, 2005

12 12 Full Service Real Estate Platform Generates value for investors Solid track record of success Industry leader with best-in-class service In-house expertise

13 13 Summit generated record results in 2005… Financial Review

14 14 Operating revenues Net operating income (NOI) Same property NOI Same property NOI – Cdn. industrial portfolio Funds from operations Funds from operations per Unit 2005 Performance Highlights 10.7 % 10.9 % 1.5 % 1.3 % 15.1 % 3.8 % Year ended, December 31, 2005* *Compared to the year ended December 31, 2004

15 15 FFO Payout Ratio Increased Cash Distributions, Improved Payout Ratio Cash Distributions High after tax return: 85% tax deferred

16 16 2005 Highlights New space, third-party developersInternal developments and expansions million sq. ft. under construction or pre-leasing million sq. ft. Invested $196M in targeted growth regions 1.9 1.8 0.5 1.9 1.8 purchased million sq. ft.

17 17 2005 Highlights Issued 4.7 million UnitsIssued senior unsecured debentures raised Increased focus on light industrial target sector – disposed of 7 non-core properties 92% $108M $100M 92% $108M GLA

18 18 2005 Highlights Capacity to acquire new properties2005 return for Unitholders – highest of all Canadian REITs Leverage reduced 51% $500M 45% 51% $500M

19 19 Progress Continued in Q1, 2006 Operating revenues $73.6M$73.2M Net operating income $46.8M $46.6M Same property NOI +2.4% Same property NOI – Cdn. industrial portfolio +2.2% Funds from operations $31.3M$30.1M Occupancy 95.6%95.2% Q1 2006Q1 2005 1.6% 1.5%

20 20 Debt % of gross book value Interest rate (%) – weighted average Term to maturity – weighted average (yrs) Interest coverage Solid Financial Position As of March 31, 2006 3.0x 4.6 6.03% 50%

21 21 Continuing strength of light industrial sector…

22 22 1-2 story buildings Around major cities Warehousing, storage, light assembly, logistics No heavy industry 1-2 story buildings Around major cities No heavy industry Warehousing, storage, light assembly, logistics

23 23 Factors Driving Strong Industrial Performance Key factorPerformance Broad customer baseStable cash flow Type of activitiesLow maintenance and capex Domestic business focus Positively affected by high Canadian dollar Steady economic growthHigh occupancy

24 24 Vacancies Down, Rents Increasing National Industrial Asking Net Rent (1) Source: Cushman & Wakefield LePage Note 1: All Canadian metro markets National Industrial Vacancy Rate (1)

25 25 We grew during a time of change

26 26 While the Acquisition Market has Heated Up… Property values still have room to grow Foreign investors showing greater interest Canadian demand for properties remains strong

27 27 … Our Growth will Continue A three-point growth plan – not just acquisitions 1. Acquisitions2. Expansions3. Developments + +

28 28 Strategy at Work: Impressive Results from Mezzanine Financing Program $81M Invested $43M in mezz financings – $7M in interest and fee income – 5 properties acquired – 1.3M sq ft Increase in combined value since acquisitions $81M 23.8% $150M Q1, 2006 properties in development – 8 properties – Will add 2.0M sq ft $150M

29 29 Looking ahead…

30 30 Continue to Execute Successful Strategies Profitable Growth 1. Acquisitions2. Expansions3. Developments + +

31 31 Solid Organic Growth Industrial Portfolio GLA (million sq ft) 3.24 4.49 3.41 2.80 4.33 In Place Rent$5.81$5.24$5.82$5.69$5.70 % of Industrial 11.1%15.4%11.7%9.6% 14.9% Total Portfolio GLA (million sq ft) 3.37 5.04 3.63 3.01 4.49 In Place Rent$6.11$6.07$6.31$6.36$5.95 % of Total Portfolio10.7%16.0%11.5% 9.7%14.3% 20062007200820092010 Lease expiries (March 31, 2006) Market rents at or above face rents in leases expiring over the next 5 years Well staggered lease maturity schedule Historical tenant retention ratio at lease maturity in excess of 70%

32 32 Strategy Builds Critical Mass, Drives Cash Flow 1.Increases critical mass 2.Operating synergies 3.Cash flow 4.Expanded features 5.Grow tenant base Strategy 1. Acquisitions2. Expansions3. Developments + +

33 33 Our Goal is to Double The Business Market Share (1) Today 3% 33 million sq. ft. Long term goal 7-10% 50-70 million sq. ft. Investing $200M in 2006 Note 1: Total leaseable industrial real estate in Canada

34 34 Four Attributes Set Summit Apart 1 Track Record – 10 years 2 Light Industrial – most profitable and stable 3 Diverse Portfolio – geographic, tenants 4 Resources to Grow – financial, management

35 35 Investor Presentation Q1 2006

36 36 Cautionary Statement This presentation may contain forward-looking statements with respect to Summit REIT and its operations, strategy, financial performance and condition. These statements generally can be identified by use of forward-looking words such as may, will, expect, estimate, anticipate, intends, believe or continue or the negative thereof or similar variations. Summits actual results and performance discussed herein could differ materially from those expressed or implied by such statements. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Important factors that could cause actual results to differ materially from expectations include, among other things, general economic and market factors, competition, changes in government regulation and the factors described under Risk Factors in Summit REITs annual information form and other securities regulatory filings. The cautionary statements qualify all forward-looking statements attributable to Summit REIT and persons acting on its behalf. Unless otherwise stated, all forward-looking statements speak only as of the date to which this presentation refers, and the parties have no obligation to update such statements. Funds from operations is not a measure recognized under Canadian generally accepted accounting principles ("GAAP") and does not have a standardized meaning prescribed by GAAP. Funds from operations is presented in this presentation because management believes that this non-GAAP measure is a relevant measure of its ability to earn and distribute cash returns to Unitholders. Funds from operations computed by Summit REIT may differ from similar computations as reported by other similar organizations and, accordingly, may not be comparable to funds from operations reported by such organizations. Funds from operations is calculated by reference to net income on a consolidated basis, as determined in accordance with GAAP.

37 37 Appendix

38 38 Throughout an extended period of significant growth, Summit has adhered to a conservative debt policy Leverage @ Gross Book Value Note: Includes Convertible Debentures that have been classified as debt on the balance sheet * Convertible Debentures ** Unsecured Debentures Consistent Moderate Leverage 5.7%** 5.0%* 10.2%** 4.7%* 54.1% 53.4% 52.1% 51.3% 54.4% 50.5% 43.7% Secured debt 35.6% Secured debt

39 39 Note: Market value based on unit price of $24.57 at December 31, 2005 Leverage at Market Value Summits strong ability to create value has resulted in a leverage ratio that, on a Market Value basis, is even more conservative Leverage – Book vs. Market (Dec. 31, 2005) 45.8% Excluding $98MM of Convertible Debentures 34.4% Excluding $98MM of Convertible Debentures

40 40 Favourable Debt Repayment Schedule (December 31, 2005) Weighted average term to maturity of 4.6 years Weighted average interest rate of 6.03% MortgagesUnsecured Debentures Convertible DebenturesWtd Avg Interest Rate ($mm) 11.6% 11.4% 7.4% 7.6% 16.0% 3.6% 11.3% 14.9% 16.2% 9.8% 6.4% 4.0% 1.0% 9.7% 10.7% 0.2% 4.1% 16.3% 7.8% 7.5% 11.6% 11.5% thereafter 15.2% 16.5% 0.0% 9.5%

41 41 Interest Coverage Strong Interest Coverage

42 42 Coverage Stability (at December 31, 2005) At the current 2.90x coverage and the 1.65x maintenance covenant, EBITDA would have to decline by a sizable 42% before the threshold would be reached Staggered lease maturity profile, record of strong EBITDA growth, the stability of industrial properties and high tenant demand make any significant drop in EBITDA unlikely Further comfort is provided by the fact that at the current WAIR of 6.05% and an average term to maturity of 4.8 years, Summits debt is approx. 80 bps over market. STA-3 (mid) stability rating by DBRS

43 43 Adjusted Unitholders Equity Strong Equity Base Adjusted book equity of $962 million at December 31, 2005 Market capitalization of $1.65 billion based on Unit price of $24.57 at December 31, 2005


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