SmartCentres Real Estate Investment Trust Releases Second Quarter Results for 2025
TORONTO--(BUSINESS WIRE)--Aug. 7, 2025--
“Building on Q1, we are pleased to report continued momentum in leasing demand and operational performance in Q2,” said
2025 Second Quarter Highlights
Retail Operations
-
Improving customer traffic and a strengthened tenant base delivered strong Same Properties NOI(1) for the three months ended
June 30, 2025 which increased by 4.8% (7.7% excluding Anchors) compared to the same period in 2024. -
147,818 square feet leased during the quarter, resulting in an in-place and committed occupancy rate of 98.6% as of
June 30, 2025 . In addition, growing demand for new-build retail continues with approximately 38,740 square feet executed during the quarter. - Extended or finalized 82.1% of all leases maturing in 2025, with strong rent growth of 8.5%, excluding Anchors.
-
In
April 2025 , Pacific Fresh took possession of 136,703 square feet inVaughan , previously occupied by Lowe’s, and Costco took possession of 125,040 square feet at Winston Churchill and highway 401. Both tenants plan to open later in the year.
Development
- Significant development pipeline is expected to provide long-term portfolio expansion and profitable growth from the approximately 58.9 million square feet (at the Trust’s share) of zoned development permissions of various forms, including 0.8 million square feet currently under construction.
-
Construction of self-storage facilities in
Toronto (Gilbert Ave. ), Toronto (Jane St. ), andDorval (St-Regis Blvd. ) is substantially complete, with all three facilities opened during the quarter. Construction is underway atMontreal (Notre Dame St. W), and Laval E,Quebec , with facilities expected to open in 2026. Site preparation and demolition works were completed atBurnaby, British Columbia , with building construction commencing shortly and expected to open in 2027. -
Construction of Phase I of the Vaughan NW townhomes is mostly completed, with nine units closed in Q2 2025. As at
June 30, 2025 , a total of 98 out of the 120 units in Phase I have closed.
Financial
-
Net rental income and other for the three months ended
June 30, 2025 was$141.3 million representing an increase of$8.1 million or 6.1% compared to the same period in 2024. This increase was primarily due to lease-up and renewal activities mainly from retail properties. -
FFO per Unit(1) for the three months ended
June 30, 2025 , was$0.58 compared to$0.50 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 fair value adjustment on the TRS resulting from fluctuations in the Trust’s Unit price, partially offset by a decrease in interest income as a result of the repayment of mortgage receivables and lower loan interest rates compared to the prior year period. FFO with adjustments per Unit(1) for the three months endedJune 30, 2025 , was$0.55 compared to$0.51 for the same period in 2024, an increase of 7.8%. -
Net income and comprehensive income(1) for the three months ended
June 30, 2025 , decreased by$19.7 million compared to the same period in 2024. This decrease was mainly driven by a$27.7 million reduction in fair value gain on investment properties, partially offset by a$10.2 million increase in NOI primarily due to lease-up activities for retail and mixed-use properties.
|
(1) |
Represents a non-GAAP measure. The Trust’s method of calculating non-GAAP measures may differ from other reporting issuers’ methods and, accordingly, may not be comparable. For additional information, please see “Non-GAAP Measures” in this Press Release. |
Selected Consolidated Operational,
|
(in thousands of dollars, except per Unit and other non-financial data) |
|
|
|
|
|
As at |
|
|
|
|
|
Portfolio Information (Number of properties) |
|
|
|
|
|
Retail properties |
|
155 |
155 |
155 |
|
Office properties |
|
4 |
4 |
4 |
|
Self-storage properties |
|
12 |
11 |
10 |
|
Residential properties |
|
3 |
3 |
3 |
|
Industrial properties |
|
1 |
1 |
1 |
|
Properties under development |
|
22 |
21 |
22 |
|
Total number of properties with an ownership interest |
|
197 |
195 |
195 |
|
Leasing and Operational Information(1) |
|
|
|
|
|
Gross leasable retail, office and industrial area (in thousands of sq. ft.) |
|
35,566 |
35,300 |
35,199 |
|
In-place and committed occupancy rate |
|
98.6 % |
98.7 % |
98.2 % |
|
Average lease term to maturity (in years) |
|
4.4 |
4.2 |
4.3 |
|
In-place net retail rental rate excluding Anchors (per occupied sq. ft.) |
|
|
|
|
|
Financial Information |
|
|
|
|
|
Investment properties(2) |
|
10,726,823 |
10,659,783 |
10,556,877 |
|
Total unencumbered assets(3) |
|
9,646,721 |
9,464,521 |
9,309,221 |
|
NAV per Unit - diluted(3) |
|
|
|
|
|
Debt to Aggregate Assets(3)(4)(5) |
|
44.2 % |
43.7 % |
43.7 % |
|
Adjusted Debt to Adjusted EBITDA(3)(4)(5) |
|
9.6X |
9.6X |
9.9X |
|
Weighted average interest rate(3)(4) |
|
3.94 % |
3.92 % |
4.25 % |
|
Weighted average term of debt (in years) |
|
3.1 |
3.1 |
3.1 |
|
Interest coverage ratio(3)(4) |
|
2.6X |
2.5X |
2.5X |
|
|
|
|
|
|
|
|
Three Months Ended |
Six Months Ended |
||
|
|
2025 |
2024 |
2025 |
2024 |
|
Financial Information |
|
|
|
|
|
Rentals from investment properties and other(2) |
223,715 |
228,051 |
453,053 |
445,290 |
|
Net income and comprehensive income(2) |
109,186 |
128,916 |
99,605 |
107,741 |
|
FFO(3)(4)(6) |
106,119 |
90,780 |
208,039 |
177,737 |
|
AFFO(3)(4)(6) |
97,809 |
83,386 |
196,236 |
164,773 |
|
Cash flows provided by operating activities(2) |
77,455 |
76,991 |
159,192 |
146,710 |
|
Net rental income and other(2) |
141,345 |
133,222 |
278,131 |
263,950 |
|
NOI(3)(4) |
149,279 |
139,062 |
292,803 |
275,137 |
|
Change in SPNOI(3)(4) |
4.8 % |
1.3 % |
4.4 % |
1.9 % |
|
Change in SPNOI excluding anchors(3)(4) |
7.7 % |
2.2 % |
7.5 % |
3.0 % |
|
Weighted average number of units outstanding – diluted(7) |
182,050,755 |
180,664,749 |
181,733,524 |
180,472,496 |
|
Net income and comprehensive income per Unit(2) |
|
|
|
|
|
FFO per Unit(3)(4)(6) |
|
|
|
|
|
FFO with adjustments per Unit(3)(4) |
|
|
|
|
|
AFFO per Unit(3)(4)(6) |
|
|
|
|
|
AFFO with adjustments per Unit(3)(4) |
|
|
|
|
|
Payout Ratio to AFFO(3)(4)(6) |
84.3 % |
98.8 % |
84.0 % |
100.0 % |
|
Payout Ratio to AFFO with adjustments(3)(4) |
89.4 % |
96.9 % |
88.7 % |
95.6 % |
|
Payout Ratio to cash flows provided by operating activities |
106.5 % |
107.0 % |
103.6 % |
112.3 % |
|
(1) |
Excluding residential and self-storage area. |
|
|
(2) |
Represents a Generally Accepted Accounting Principles (“GAAP”) measure. |
|
|
(3) |
Represents a non-GAAP measure. The Trust’s method of calculating non-GAAP measures may differ from other reporting issuers’ methods and, accordingly, may not be comparable. For additional information, please see “Non-GAAP Measures” in this Press Release. |
|
|
(4) |
Includes the Trust’s proportionate share of equity accounted investments. |
|
|
(5) |
As at |
|
|
(6) |
The calculation of the Trust’s FFO and AFFO and related payout ratios, including comparative amounts, are financial metrics that were determined based on the REALPAC White Paper on FFO and AFFO issued in |
|
|
(7) |
The diluted weighted average includes the vested portion of the deferred units issued pursuant to the deferred unit plan, and vested EIPs granted pursuant to the equity incentive plan. |
Development and Intensification Summary
The following table provides additional details on the Trust’s 7 development initiatives that are currently under construction or where initial siteworks have begun (in order of estimated initial occupancy/closing date):
|
Projects under construction (Location/Project Name) |
Type |
Trust’s share |
Actual / estimated initial occupancy / closing date |
% of capital spend |
GFA(1) (sq. ft.) |
No. of residential units |
|
|
|
|
|
|
|
|
|
Mixed-use Developments |
|
|
|
|
|
|
|
Vaughan NW (Phase I & II) |
Townhomes |
50% |
Q1 2024 |
66% |
366,000 |
174 |
|
|
Self-storage |
50% |
Q2 2026 |
38% |
177,000 |
N/A |
|
|
Self-storage |
50% |
Q3 2026 |
27% |
178,000 |
N/A |
|
|
Self-storage |
50% |
Q1 2027 |
33% |
133,000 |
N/A |
|
|
Condo |
50% |
Q2 2027 |
39% |
300,000 |
340 |
|
Ottawa SW |
|
50% |
Q3 2027 |
30% |
361,000 |
425 |
|
Total Mixed-use Developments |
|
|
|
|
1,515,000 |
939 |
|
|
|
|
|
|
|
|
|
|
Retail |
50% |
Q2 2026 |
54% |
225,000 |
N/A |
|
(1) |
GFA represents Gross Floor Area. |
Reconciliations of Non-GAAP Measures
The following tables reconcile the non-GAAP measures to the most comparable GAAP measures for the three and six months ended
Net Operating Income (including the Trust’s Interests in Equity Accounted Investments)
|
(in thousands of dollars) |
Three Months Ended |
Three Months Ended |
||||||||||
|
|
GAAP Basis |
Proportionate Share Reconciliation |
Total Proportionate Share(1) |
GAAP Basis |
Proportionate Share Reconciliation |
Total Proportionate Share(1) |
||||||
|
Net rental income and other |
|
|
|
|
|
|
||||||
|
Rentals from investment properties and other |
|
|
|
|
|
|
|
|
|
|
|
|
|
Property operating costs and other |
(80,179 |
) |
(5,428 |
) |
(85,607 |
) |
(80,468 |
) |
(5,427 |
) |
(85,895 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential sales revenue and other(2) |
4,945 |
|
66 |
|
5,011 |
|
16,670 |
|
37 |
|
16,707 |
|
|
Residential cost of sales and other |
(2,191 |
) |
320 |
|
(1,871 |
) |
(14,361 |
) |
(42 |
) |
(14,403 |
) |
|
|
|
|
|
|
|
|
|
|
$(5 |
) |
|
|
|
NOI |
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands of dollars) |
Six Months Ended |
Six Months Ended |
||||||||||
|
|
GAAP Basis |
Proportionate Share Reconciliation |
Total Proportionate Share(1) |
GAAP Basis |
Proportionate Share Reconciliation |
Total Proportionate Share(1) |
||||||
|
Net rental income and other |
|
|
|
|
|
|
||||||
|
Rentals from investment properties and other |
|
|
|
|
|
|
|
|
|
|
|
|
|
Property operating costs and other |
(171,268 |
) |
(11,674 |
) |
(182,942 |
) |
(165,621 |
) |
(10,885 |
) |
(176,506 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential sales revenue and other(2) |
6,959 |
|
75 |
|
7,034 |
|
18,272 |
|
66 |
|
18,338 |
|
|
Residential cost of sales and other |
(3,654 |
) |
318 |
|
(3,336 |
) |
(15,719 |
) |
(188 |
) |
(15,907 |
) |
|
|
|
|
|
|
|
|
|
|
$(122 |
) |
|
|
|
NOI |
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
This column contains non-GAAP measures because it includes figures that are recorded in equity accounted investments. The Trust’s method of calculating non-GAAP measures may differ from other reporting issuers’ methods and, accordingly, may not be comparable. For additional information, please see “Non-GAAP Measures” in this Press Release. |
|
|
(2) |
Includes additional partnership profit and other revenues. |
Same Properties NOI
|
|
Three Months Ended |
Six Months Ended |
||||||
|
(in thousands of dollars) |
2025 |
|
2024 |
|
2025 |
|
2024 |
|
|
Net rental income and other |
|
|
|
|
|
|
|
|
|
NOI from equity accounted investments(1) |
7,934 |
|
5,840 |
|
14,672 |
|
11,187 |
|
|
Total portfolio NOI before adjustments(1) |
|
|
|
|
|
|
|
|
|
Adjustments: |
|
|
|
|
||||
|
Lease termination |
(126 |
) |
(592 |
) |
(453 |
) |
(592 |
) |
|
Net profit on condo and townhome closings |
(3,140 |
) |
(2,304 |
) |
(3,698 |
) |
(2,431 |
) |
|
Other adjustments(2) |
(235 |
) |
1,527 |
|
1,673 |
|
2,701 |
|
|
Total portfolio NOI after adjustments(1) |
|
|
|
|
|
|
|
|
|
NOI sourced from acquisitions, dispositions, Earnouts and developments |
(2,267 |
) |
(748 |
) |
(4,394 |
) |
(996 |
) |
|
Same Properties NOI(1) |
|
|
|
|
|
|
|
|
|
(1) |
Represents a non-GAAP measure. The Trust’s method of calculating non-GAAP measures may differ from other reporting issuers’ methods and, accordingly, may not be comparable. For additional information, please see “Non-GAAP Measures” in this Press Release. |
|
|
(2) |
Includes items such as adjustments relating to royalties, straight-line rent and amortization of tenant incentives. |
Reconciliation of FFO
|
|
Three Months Ended |
Six Months Ended |
||||||
|
(in thousands of dollars) |
2025 |
|
2024 |
|
2025 |
|
2024 |
|
|
Net income and comprehensive income |
|
|
|
|
|
|
|
|
|
Add (Deduct): |
|
|
|
|
||||
|
Fair value adjustment on investment properties and financial instruments(1) |
(26,744 |
) |
(34,665 |
) |
67,915 |
|
63,837 |
|
|
Gain (Loss) on derivative – TRS |
2,551 |
|
(3,994 |
) |
6,875 |
|
(10,143 |
) |
|
Gain (Loss) on sale of investment properties |
— |
|
— |
|
(7 |
) |
142 |
|
|
Amortization of intangible assets and tenant improvement allowance |
2,324 |
|
2,257 |
|
4,814 |
|
4,437 |
|
|
Distributions on Units classified as liabilities and vested deferred units and EIP |
5,366 |
|
4,778 |
|
10,437 |
|
9,374 |
|
|
Salaries and related costs attributed to leasing activities(2) |
2,090 |
|
2,301 |
|
4,473 |
|
4,708 |
|
|
Adjustments relating to equity accounted investments(3) |
11,346 |
|
(8,813 |
) |
13,927 |
|
(2,359 |
) |
|
FFO(4) |
|
|
|
|
|
|
|
|
|
Add (Deduct) non-recurring adjustments: |
|
|
|
|
||||
|
Gain (Loss) on derivative – TRS |
(2,551 |
) |
3,994 |
|
(6,875 |
) |
10,143 |
|
|
FFO sourced from condo and townhome closings |
(3,140 |
) |
(2,353 |
) |
(3,698 |
) |
(2,553 |
) |
|
Transactional FFO – sale of land(4) |
128 |
|
— |
|
170 |
|
— |
|
|
FFO with adjustments(4) |
|
|
|
|
|
|
|
|
|
(1) |
Includes fair value adjustments on investment properties and financial instruments. Fair value adjustment on investment properties is described in “Investment Properties” in the Trust’s MD&A. Fair value adjustment on financial instruments comprises the following financial instruments: units classified as liabilities, Deferred Unit Plan (“DUP”), Equity Incentive Plan (“EIP”), TRS, and interest rate swap agreements. The significant assumptions made in determining the fair value are more thoroughly described in the Trust’s unaudited interim condensed consolidated financial statements for the three and six months ended |
|
|
(2) |
Salaries and related costs attributed to leasing activities of |
|
|
(3) |
Includes tenant improvement amortization, indirect interest with respect to the development portion, fair value adjustment on investment properties, loss (gain) on sale of investment properties, and adjustment for supplemental costs. |
|
|
(4) |
Represents a non-GAAP measure. The Trust’s method of calculating non-GAAP measures may differ from other reporting issuers’ methods and, accordingly, may not be comparable. For definitions and basis of presentation of the Trust’s non-GAAP measures, refer to “Presentation of Certain Terms Including Non-GAAP Measures” and “Non-GAAP Measures” in the MD&A. |
Reconciliation of AFFO
|
|
Three Months Ended |
Six Months Ended |
||||||
|
(in thousands of dollars) |
2025 |
|
2024 |
|
2025 |
|
2024 |
|
|
FFO(1) |
|
|
|
|
|
|
|
|
|
Add (Deduct): |
|
|
|
|
||||
|
Straight-line rents |
(1,457 |
) |
(963 |
) |
(1,888 |
) |
(1,700 |
) |
|
Adjusted salaries and related costs attributed to leasing |
(2,090 |
) |
(2,301 |
) |
(4,473 |
) |
(4,708 |
) |
|
Capital expenditures, leasing commissions, and tenant improvements |
(4,763 |
) |
(4,130 |
) |
(5,442 |
) |
(6,556 |
) |
|
AFFO(1) |
|
|
|
|
|
|
|
|
|
Add (Deduct) non-recurring adjustments: |
|
|
|
|
||||
|
Gain (Loss) on derivative – TRS |
(2,551 |
) |
3,994 |
|
(6,875 |
) |
10,143 |
|
|
FFO sourced from condo and townhome closings |
(3,140 |
) |
(2,353 |
) |
(3,698 |
) |
(2,553 |
) |
|
Transactional FFO – sale of land(1) |
128 |
|
— |
|
170 |
|
— |
|
|
AFFO with adjustments(1) |
|
|
|
|
|
|
|
|
|
(1) |
Represents a non-GAAP measure. The Trust’s method of calculating non-GAAP measures may differ from other reporting issuers’ methods and, accordingly, may not be comparable. For additional information, please see “Non-GAAP Measures” in this Press Release. |
Adjusted EBITDA
The following table presents a reconciliation of net income and comprehensive income to Adjusted EBITDA:
|
|
Rolling 12 Months Ended |
||
|
(in thousands of dollars) |
|
|
|
|
Net income and comprehensive income |
|
|
|
|
Add (Deduct) the following items: |
|
|
|
|
Net interest expense |
195,100 |
|
176,559 |
|
Amortization of equipment, intangible assets and tenant improvements |
12,453 |
|
11,659 |
|
Fair value adjustments on investment properties and financial instruments |
68,880 |
|
3,422 |
|
Adjustment for supplemental costs |
4,156 |
|
4,115 |
|
Gain (Loss) on sale of investment properties |
(26 |
) |
75 |
|
Adjusted EBITDA(1) |
|
|
|
|
(1) |
Represents a non-GAAP measure. The Trust’s method of calculating non-GAAP measures may differ from other reporting issuers’ methods and, accordingly, may not be comparable. For additional information, please see “Non-GAAP Measures” in this Press Release. |
Net Asset Value
The following table presents NAV and NAV per unit diluted as at each of the reporting dates:
|
(in thousands of dollars, except per Unit information) |
|
|
|
|
Total equity |
|
|
|
|
LP Units classified as liabilities |
200,520 |
198,169 |
191,665 |
|
NAV(1) |
|
|
|
|
Units outstanding - diluted(2) |
182,134,237 |
181,595,454 |
181,205,536 |
|
NAV per Unit - diluted(1) |
|
|
|
|
(1) |
Represents a non-GAAP measure. The Trust’s method of calculating non-GAAP measures may differ from other reporting issuers’ methods and, accordingly, may not be comparable. For additional information, please see “Non-GAAP Measures” in this Press Release. |
|
|
(2) |
Total diluted Units outstanding include Trust Units and LP Units, including Units classified as liabilities, vested portion of the deferred units issued pursuant to the deferred unit plan and vested EIPs granted pursuant to the equity incentive plan. |
Conference Call
Management will hold a conference call on
Interested parties are invited to access the call by dialing 1-855-353-9183 and then keying in the participant access code 56742#.
A recording of this call will be made available
About SmartCentres
SmartCentres is one of Canada’s largest fully integrated REITs, with a best-in-class and growing mixed-use portfolio featuring 197 strategically located properties in communities across the country. SmartCentres has approximately
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 and six months ended
Full reports of the financial results of the Trust for the three and six months ended
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.
View source version on businesswire.com: https://www.businesswire.com/news/home/20250807428381/en/
For information, visit www.smartcentres.com or please contact:
Executive Chairman and CEO
(905) 326-6400 ext. 7674
mgoldhar@smartcentres.com
Chief Financial Officer
(905) 326-6400 ext. 7571
pslan@smartcentres.com
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