1. SP18 SIM Stock Presentation
Real Estate
April 10, 2018
Pooja Shah | Drake Tharp | Wesley Smith

2. Table of Contents Section Title 1. Sector Recap & Overview 2.
Boston Properties, Inc. (NYSE: BXP) 3.
Digital Realty Trust (NYSE: DLR) 4.
Cubesmart L.P. (NYSE: CUBE) 6.
Recommendation

3. Sector Recap & Overview1.
Sector Recap & Overview

4. Companies by Market Cap and Assets
Overview: Companies
Major Players
SIM Holdings
Companies by Market Cap and Assets
S&P 500 Portfolio
Real Estate
2.6%
Source: Company Filings

5. Overview: Sector Performance
Relative Performance YTD
S&P 500
-0.2%
Sector Performance
TTM
YTD
-5.8%
-9.1%
Source: Bloomberg

6. Sector Recommendation
Since we are currently underweight in real estate for the portfolio, we recommend that we stay underweight.
Negatives:
We believe that interest rates will continue to rise which will undercut companies that are used as bond proxies.
Higher interest rates raise the cost of borrowing for commercial and homeowners
Online shopping hurts retail space
Positives:
Growth in economy/corporate tax cut: office space demand
Higher wages/lower unemployment: housing/apartment demand, retail demand, increased need for inventory space.
Currently the negatives outweigh the positives as real estate demand tends to lag a growing economy.

7. Boston Properties, Inc. (NYSE: BXP)2.
Boston Properties, Inc. (NYSE: BXP)

8. Geographical Footprint
BXP: Company Overview
Summary
Geographical Footprint
Boston Properties, Inc. (NYSE: BXP), founded in 1997, is a self-managed real estate investment trust (“REIT”) and has grown to be one of the largest owners, managers and developers of office properties in the United States. The company has a significant presence in Boston, Washington, D.C., Midtown Manhattan, and San Francisco.
Headquarters: Boston, MA
Management: Owen D. Thomas, CEO
Key Financials
$mm, except per share values
State Coverage
Current Price
$120.82
Revenue
$2,602
52-wk High
$137.35
EBITDA
$1,526
52-wk Low
$111.57
Net Income
$458
Mkt. Cap.
$18,648
Debt / EBITDA
10.83
P/FFO
19.40
ROA
2.42
Div. Yield
2.65%
ROE
3.13
Source: Company Filings; Market Data as of 4/9/2018

9. Segment Analysis Office Residential Retail
97% of revenues come from its office properties, accounting for 159 properties
Significant Class-A portfolio
Eight properties under development for organic revenue growth
BXP operates six properties, four of which are currently being developed
Properties in MA, CA, VA, NY
Urbanization is driving the segment
BXP operates five properties
Strong presence in MA
Omnichannel is fueling growth in the space

10. Property Analysis CAGR 5.0% NOI by Property Type NOI by Location
% Leased as of December 31, 2017
Office: 91%
Residential: 93%
Hotel: 80%
Wtd. Avg.: 91%
Industry: 84%

11. Property Analysis (cont’d)
% Leased Trend
Diversification of Assets
Sector
% of Portfolio
Media & Tech.
26%
Legal Services
20%
Financial Services
14%
91%
Media & technology sector’s growth is expected to propel BXP’s top-line
The industry has been experiencing rapid employment growth of 5% annualized over the past five years
Improving Margins
Tenant
Sq. Ft.
% of Portfolio
U.S. Government
1,706,503
3.87%
Arnold & Porter Kaye Scholer
890,578
2.02%
Biogen
772,212
1.75%
Kirkland & Ellis
767,749
1.74%
Bank of America
665,193
1.51%
$64

12. BXP Performance Relative Performance Industry Operational Performance
BXP YTD
Industry Operational Performance
Historical Operational Performance
Source: Bloomberg

13. Related Market Growth Opportunities
Economic Growth
Pro-business spending tax reform may result in increased CAPEX spending
Largely seen in media and technology space, with employment growing at a rate of 5% YoY
U.S. market and employment growth presents expansion opportunities in office properties
E-commerce Demand
Promotion of omnichannel retailing, which BXP is increasing its market share in
Pop-up stores are expected to increase in numbers
BXP investment in mixed-use developments will position itself to capture this growth without struggling from closings of brick and mortar stores
Rise of Urbanization
Millennials and empty-nesters are driving urbanization to never-before-seen numbers
Luxurious taste in multifamily units is more common, leading to investment in micro-apartments
BXP’s heavy exposure to popular cities in states like MA, CA, and NY will allow it to gain from this trend

14. Company Growth Opportunities
Internal Strategy
CEO Owen D. Thomas highlighted the company’s goal to grow NOI 25% by 2020
2/3 of the growth is coming from new developments, mostly the Salesforce Tower in San Francisco
1/3 of the growth is coming from increased occupancy level from 90% to 93%
Growth of Media & Tech Space
The industry has been experiencing rapid employment growth of 5% annualized over the past five years to more than $7.3 million people
Media & tech growth is prominent in CA and MA, both areas BXP has significant investments in
Premiums on residential properties due to higher demand and stronger affordability
Healthy Economy
Economic growth in the United States with projected GDP growth of 3% for 2018
Job creation remains favorable with 313,000 jobs created in February and unemployment at a historical low of 4.1%
BXP dominates the office space and is in the process of completing and developing four residential properties, both areas that benefit strongly from economic growth

15. Relative Valuation
Cover
Cover

16. Intrinsic Valuation

17. Recommendation BUY Valuation Range Recommendation Intrinsic Relative
Potential Upside: 27.8%
Prior Weight: 0.00%
Target Weight: 1.25%
Relative

18. Digital Realty Trust, Inc. (NYSE: DLR)3.
Digital Realty Trust, Inc. (NYSE: DLR)

19. Geographical Footprint
DLR: Company Overview
Summary
Business Segment
Digital Realty Trust, Inc. (NYSE: DLR), founded in 2004 is a REIT which owns, acquires, develops and manages technology related real-estate. The company is focused on providing data center, colocation and interconnection solutions for domestic and international tenants across a variety of industry verticals ranging from cloud and information technology to healthcare.
Headquarters: San Francisco, CA
Management: A. William Stein , CEO
Key Financials
Geographical Footprint
$mm, except per share values
Current Price
$104.38
Revenue
$2,450
52-wk High
$127.23
EBITDA
$1,330
52-wk Low
$96.56
Net Income
$248
Mkt. Cap.
$22354
Debt / Equity
79.23
P/FFO
18.38
ROA
2.04%
Div. Yield
3.57%
ROE
3.16%

20. Digital Realty Trust Inc. (NYSE: DLR)
52 Week Stock Price Graph
5 year Stock Price Graph

21. Digital Realty Trust Inc. (NYSE: DLR)
Key Value Drivers
Demand for data centers and ability to provide flexible solutions
Acquisition synergies
Solid demand from cloud service providers
Improving lease spreads
Flexibility of balance sheet
Key Risk Factors
Interest rate risk
Technological innovation causing redundancy
Changes in financial condition of top customers
Oversupply of data centers
Foreign Exchange Risk

22. Ratio Analysis of DLR and Peers
Market Value Ratios
Ticker
P/E TTM
P/S TTM
P/B
P/CF TTM
EV/ EBITDA TTM
Average
46.60
7.17
3.09
17.38
20.23
Digital Realty Trust
105.22
7.39
2.31
17.80
31.15
Peers
Coresite Realty Corporation
55.73
21.10
16.51
19.48
CyrusOne
159.27
6.62
2.80
15.46
22.29
Equinix
137.15
4.70
21.84
23.68
QTS Realty Trust
4.62
2.07
N/A
17.95
Global Switch Holdings
93.25
10.05
18.16
7.96

23. Profitability Ratios Company Profit Margin Operating Margin ROA ROE
Digital Realty Trust
10%
22.10%
2.04%
3.16%
Coresite Realty Corporation
15.54%
25.90%
5.23%
19.79%
CyrusOne
-12.43%
14.42%
1.69%
-5.81%
Equinix
5.33%
19.40%
3.38%
4.15%
QTS Realty Trust
0.29%
11.70%
1.45%
0.15%
Global Switch Holdings
8.87%
25.76%
N/A

24. Dividend Yield

25. Debt-Capitalization Ratio
Solvency Ratios
Debt-Capitalization Ratio

26. Total Debt to EBITDA Ratio

27. Digital Realty Trust Inc. (NYSE: DLR)
DCF Model

28. Digital Realty Trust Inc. (NYSE: DLR)
Recommendation: HOLD
Potential Upside: 8.7%
Prior Weight: 1.03%
Target Weight: 1.03%

29. Cubesmart, L.P. (NYSE: CUBE)4.
Cubesmart, L.P. (NYSE: CUBE)

30. CUBE: Company Overview
Summary
Geographical Footprint
Cubesmart L.P. owns, operates, acquires, and develops self- storage facilities in the United States. Third largest self-storage REIT in the S&P 500 behind Public Storage and Extra Space Storage. Cubesmart owns 484 self-storage properties with 33.8m rentable sq. feet across 23 US states, the company generated $558 million in revenue during 2017.
Headquarters: Malvern, PA
Management: Christopher P. Marr, CEO
Key Financials
$mm, except per share values
Recent Performance
Current Price
$28.26
Revenue
$548m
52-wk High
$29.7
EBITDA
$195m
52-wk Low
$22.83
Net Income
$135m
Mkt. Cap.
$5.15B
Debt / EBITDA
4.75
P/FFO
18.42
ROA
4.67%
Div. Yield
4.32%
ROE
8.24%
Source: Company Filings; Market Data as of 4/9/2018

31. FFO and Dividend Growth
Property Analysis
Property Growth
Debt Coverage
FFO and Dividend Growth

32. Occupancy

33. Occupancy

34. Performance

35. Related Market Growth Opportunities
Economic Growth
Pro-consumer spending tax reform may result in increased durable goods purchases
Low Unemployment of 4.1% Record High consumer spending on durable goods
Rising disposable income allows same store rent growth and demand for storage
Rise of Urbanization
Millennials and empty-nesters are driving urbanization to never-before-seen numbers
Rise of micro-apartments
Cube’s heavy exposure to popular cities in states like NY, TX, and NJ will allow it to gain from this trend
70% of Cube’s revenue comes from densely populated urban areas.

36. Company Growth Opportunities
Internal Strategy
Grow Same store revenue (raise rents.) Short term leases are renegotiated often
Lower expenses and raise NOI margin
Maintain/increase occupancy levels. Added many properties in 2016, takes a few years to get to full occupancy (57 properties )
External Strategy
Acquisitions: 80 million in 2017 down from ~500m in 2016
Open new developments: opened $168m of properties in 2017
Third party operations: used as acquisition targets and are good for the brand. 160 contracts in 2017
Healthy Economy
Economic growth in the United States with projected GDP growth of 3% for 2018
Job creation remains favorable with 313,000 jobs created in February and unemployment at a historical low of 4.1%
Cube is the third largest self storage company and benefits from this expansion

37. Intrinsic Valuation

38. Recommendation BUY Recommendation Valuation Range Intrinsic
Potential Upside: 11%
Prior Weight: 0.00%
Target Weight: 1%
Valuation Range
Intrinsic

39. Recommendation Company REIT Industry Recommendation Basis Points
Current Price
Target Price
Upside/
Downside
(260 Available)
Boston Properties
REIT
BUY
0.82
120.82
156.20
27.8%
Digital Realty Trust
Specialized-Data Center
HOLD
1.03%
104.38
113
8.70%
Cubesmart
Self Storage
0.75%
28.44
30.33
11%