SmartCentres Real Estate Investment Trust Releases First Quarter Results for 2025

Source: SmartCentres

TORONTO, ONTARIO – (May 7, 2025) SmartCentres Real Estate Investment Trust (“SmartCentres”, the “Trust” or the “REIT”) (TSX: SRU.UN) is pleased to report its financial and operating results for the quarter ended March 31, 2025.

“We are pleased to report a strong start to 2025,” said Mitchell Goldhar, CEO of SmartCentres. “We continue to outperform the current market, resulting in a $7.4 million increase in net operating income⁽¹⁾ and a 4.1% increase in Same Properties NOI⁽¹⁾ compared to the first quarter of last year. Walmart took possession of its 110,000 square foot supercentre in our South Oakville Centre during the quarter with a planned opening in a few months. In addition, exceptional retention of maturing tenancies has led to lease extensions with a compelling average rent growth of 8.4% (excluding anchors). Our relentless focus on value-oriented retail reinforces our strong relationships and delivers a more attractive place to shop for consumers. On the development front, we are continuing to make significant progress on projects under construction. In addition, we delivered and closed four additional units during the quarter in Phase I of our Vaughan NW Townhomes project, bringing the total closed to approximately 90% of the pre-sold units and to-date profit of $12.4 million, resulting in a cumulative margin of approximately 21%.”

2025 First Quarter Highlights

Retail Operations

With growing demand for existing space and strong retention, Same Properties NOI⁽¹⁾ for the three months ended March 31, 2025 increased by 4.1% (6.7% excluding Anchors) compared to the same period in 2024.
178,408 square feet of existing space leased during the quarter, resulting in an in-place and committed occupancy rate of 98.4% as at March 31, 2025. In addition, growing demand for new-build retail continues with approximately 28,620 square feet executed during the quarter.
Renewed and extended over 68% of leases maturing in 2025 at strong rental growth of 8.4% (excluding Anchors).
In March 2025, Walmart took possession at the South Oakville Centre property filling the 110,000 square foot space, and has commenced fixturing with an opening planned for later this year.

Development

Our significant stock of municipal approvals is expected to provide long-term portfolio expansion and profitable growth from the approximately 59.1 million square feet (at the Trust’s share) of zoned mixed-use development permissions, including 1.0 million square feet of sites currently under construction.
Construction of self-storage facilities in Toronto (Gilbert Ave.), Toronto (Jane St.), and Dorval (St-Regis Blvd.) is progressing, with all three facilities on schedule to open during the second quarter of 2025. Site preparation and demolition works have been completed for three additional self-storage facilities in Montreal (Notre Dame St. W), Laval E, Quebec, and Burnaby, British Columbia, with facilities expected to open in 2026.
Construction of Phase I of the Vaughan NW townhomes is progressing well, with four units completed and closed in Q1 2025, bringing the total to approximately 90% of the pre-sold units now closed with to-date profit of $12.4 million resulting in a cumulative margin of approximately 21%.
Construction of the ArtWalk condo Tower A in the Vaughan Metropolitan Centre is continuing with siteworks and below-grade work nearing completion. Approximately 93% of the 340 units in Tower A have been pre-sold.
Construction of the Trust’s flagship 224,000 square foot Canadian Tire store on Laird Drive in Toronto continues on schedule, with possession expected in Q2 2026.

Financial

Net rental income and other for the three months ended March 31, 2025 was $136.8 million, representing an increase $6.1 million or 4.6% compared to the same period in 2024. This increase was primarily due to lease-up and renewal activities.
FFO per Unit⁽¹⁾ for the three months ended March 31, 2025, was $0.56 (+17%) compared to $0.48 for the same period in 2024. This increase was primarily due to an increase in NOI mainly due to lease-up activities and changes in the fair value adjustment on the TRS resulting from fluctuations in the Trust’s Unit price, partially offset by a non-recurring severance cost related to reduced staffing from deferred development activities and by higher net interest expense compared to the prior year period. FFO with adjustments per Unit⁽¹⁾ for the three months ended March 31, 2025, was $0.54 compared to $0.52 for the same period in 2024.
Net loss and comprehensive loss improved by $11.6 million for the three months ended March 31, 2025, compared to the same period in 2024. This improvement was driven by stronger operating performance, including a $7.4 million increase in NOI from lease-up activity, and a $42.0 million reduction in fair value losses on investment properties due to changes in market conditions. These gains were partially offset by a $34.9 million lower fair value adjustment on financial instruments and higher G&A expenses related to non-recurring severance costs. Net loss and comprehensive loss per Unit was $0.05, compared to $0.12 in the prior year.

Selected Consolidated Operational, Mixed-Use Development and Financial Information

Development and Intensification Summary

The following table provides additional details on the Trust’s 10 development initiatives that are currently under construction or where initial siteworks have begun (in order of estimated initial occupancy/closing date):

Reconciliations of Non-GAAP Measures

The following tables reconcile the non-GAAP measures to the most comparable GAAP measures for the three months ended March 31, 2025, and the comparable period in 2024. Such measures do not have a standardized meaning prescribed by IFRS and may not be comparable to similar measures disclosed by other issuers.

Conference Call

Management will hold a conference call on Thursday, May 8, 2025 at 3:00 p.m. (ET).

Interested parties are invited to access the call by dialing 1-855-353-9183 and then keying in the participant access code 74304#.

A recording of this call will be made available Thursday, May 8, 2025 through to Thursday, May 15, 2025. To access the recording, please call 1-855-201-2300, enter the conference access code 74304# and then key in the playback access code 74304#.

About SmartCentres

SmartCentres is one of Canada’s largest fully integrated REITs, with a best-in-class and growing mixed-use portfolio featuring 196 strategically located properties in communities across the country. SmartCentres has approximately $11.9 billion in assets and owns 35.4 million square feet of income producing value-oriented retail and first-class office properties with 98.4% in place and committed occupancy, on 3,500 acres of owned land across Canada.

Non-GAAP Measures

The non-GAAP measures used in this Press Release, including but not limited to, AFFO, AFFO with adjustments, AFFO per Unit, AFFO with adjustments per Unit, Payout Ratio to AFFO, Payout Ratio to AFFO with adjustments, Unencumbered Assets, NOI, Debt to Aggregate Assets, Interest Coverage Ratio, Adjusted Debt to Adjusted EBITDA, Unsecured/Secured Debt Ratio, FFO, FFO with adjustments, FFO per Unit, FFO with adjustments per Unit, Net Asset Value (“NAV”), Same Properties NOI, Same Properties NOI excluding Anchors, Debt to Gross Book Value, Weighted Average Interest Rate, Transactional FFO, and Total Proportionate Share, do not have any standardized meaning prescribed by International Financial Reporting Standards (“IFRS”) and are therefore unlikely to be comparable to similar measures presented by other issuers. Additional information regarding these non-GAAP measures is available in the Management’s Discussion and Analysis of the Trust for the three months ended March 31, 2025, dated May 7, 2025 (the “MD&A), and is incorporated by reference. The information is found in the “Presentation of Certain Terms Including Non-GAAP Measures” and “Non-GAAP Measures” sections of the MD&A, which is available on SEDAR+ at www.sedarplus.ca. Reconciliations of non-GAAP financial measures to the most directly comparable IFRS measures are found in “Reconciliations of Non-GAAP Measures” of this Press Release.

Full reports of the financial results of the Trust for the three months ended March 31, 2025 are outlined in the unaudited interim condensed consolidated financial statements and the related MD&A of the Trust for the three months ended March 31, 2025, which are available on SEDAR+ at www.sedarplus.ca.

Cautionary Statements Regarding Forward-looking Statements

Certain statements in this Press Release are “forward-looking statements” that reflect management’s expectations regarding the Trust’s future growth, results of operations, performance and business prospects and opportunities. More specifically, certain statements including, but not limited to, statements related to SmartCentres’ expectations relating to cash collections, SmartCentres’ expected or planned development plans and joint venture projects, including the described type, scope, costs and other financial metrics and the expected timing of construction and condo closings and statements that contain words such as “could”, “should”, “can”, “anticipate”, “expect”, “believe”, “will”, “may” and similar expressions and statements relating to matters that are not historical facts, constitute “forward-looking statements”. These forward-looking statements are presented for the purpose of assisting the Trust’s Unitholders and financial analysts in understanding the Trust’s operating environment and may not be appropriate for other purposes. Such forward-looking statements reflect management’s current beliefs and are based on information currently available to management.

However, such forward-looking statements involve significant risks and uncertainties. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements, including risks associated with potential acquisitions not being completed or not being completed on the contemplated terms, public health crises, real property ownership and development, debt and equity financing for development, interest and financing costs, construction and development risks, and the ability to obtain commercial and municipal consents for development. These risks and others are more fully discussed under the heading “Risks and Uncertainties” and elsewhere in SmartCentres’ most recent Management’s Discussion and Analysis, as well as under the heading “Risk Factors” in SmartCentres’ most recent annual information form. Although the forward-looking statements contained in this Press Release are based on what management believes to be reasonable assumptions, SmartCentres cannot assure investors that actual results will be consistent with these forward-looking statements. The forward-looking statements contained herein are expressly qualified in their entirety by this cautionary statement. These forward-looking statements are made as at the date of this Press Release and SmartCentres assumes no obligation to update or revise them to reflect new events or circumstances unless otherwise required by applicable securities legislation.

Material factors or assumptions that were applied in drawing a conclusion or making an estimate set out in the forward-looking information may include, but are not limited to: a stable retail environment; a continuing trend toward land use intensification, including residential development in urban markets and continued growth along transportation nodes; access to equity and debt capital markets to fund, at acceptable costs, future capital requirements and to enable our refinancing of debts as they mature; that requisite consents for development will be obtained in the ordinary course, construction and permitting costs consistent with the past year and recent inflation trends.