Slate Grocery REIT Reports First Quarter 2025 Results

May 06 2025 00:51 BST

TORONTO--(BUSINESS WIRE)--May 5, 2025-- Slate Grocery REIT (TSX: SGR.U) (TSX: SGR.UN) (the "REIT"), an owner and operator of U.S. grocery-anchored real estate, today announced its financial results and highlights for the three months ended March 31, 2025.

"Grocery anchored real estate has proven its resiliency through various economic cycles, and we continue to have great conviction in the ability of this asset class to perform in today’s economic environment," said Blair Welch, Chief Executive Officer of Slate Grocery REIT. "Our portfolio continues to deliver healthy growth in same-property net operating income, driven by consistently strong leasing activity at double-digit spreads. Our team achieved record high renewal spreads in the first quarter, underscoring the growth embedded in our portfolio of below market rents. With new supply in the grocery-anchored sector expected to remain constrained in the near to medium term, we believe our portfolio is well positioned to drive stable growth and long-term value creation."

For the CEO's letter to unitholders for the quarter, please follow the link here.

Highlights

Same-property Net Operating Income (“NOI”) increased by 4.3% or $6.8 million on a trailing twelve-month basis, adjusting for completed redevelopments, driven by several consecutive quarters of strong leasing volumes at attractive spreads
- The REIT completed 222,886 square feet of total leasing in the quarter; renewal spreads¹ reached a record high at 17.1% above expiring rents, and new deals were completed at 22.2% above comparable average in-place rent
- Portfolio occupancy remained stable at 94.4%, as at March 31, 2025
- The REIT's average in-place rent of $12.72 per square foot remains well below the market average of $23.85², providing significant runway for continued rent increases
The REIT has only $179.4 million³ of debt maturing in 2025, which represents 12.9%³ of the REIT’s total debt
- The REIT financed $17.4 million of debt subsequent to quarter end, with productive discussions underway to refinance additional upcoming maturities
- The REIT's current portfolio valuation continues to provide significant positive leverage and embedded NOI growth
The REIT's units continue to trade at a discount to net asset value, presenting a compelling investment opportunity for unitholders looking for an attractive total return

^{(1) As of March 31, 2025, the REIT revised its “Deal Types” methodology. Refer to 'Leasing and Property Portfolio' in Part II of Management's Discussion and Analysis for further details.}

^{(2) CBRE Econometric Advisors, Q1 2025}

^{(3) Including the REIT’s share of joint venture investments.}

Summary of Q1 2025 Results

	Three months ended March 31,
(thousands of U.S. dollars, except per unit amounts)		2025		2024	Change %
Rental revenue	$	53,067	$	51,915	2.2%
NOI^{1 2}	$	41,239	$	40,572	1.6%
Net income ²	$	16,082	$	13,612	18.1%

Same-property NOI (3 month period, 114 properties) ^{1 2}	$	40,980	$	39,869	2.8%
Same-property NOI (12 month period, 111 properties) ^{1 2}	$	159,391	$	153,794	3.6%

New leasing (square feet) ²		43,098		98,198	(56.1)%
New leasing spread ²		22.2%		30.9%	(28.2)%
Total leasing (square feet) ²		222,886		770,784	(71.1)%
Total leasing spread ²		15.6%		10.8%	44.4%
New leasing – anchor / junior anchor ²		11,000		10,000	10.0%

Weighted average number of units outstanding ("WA units")		60,385		60,307	0.1%
FFO^{1 2}	$	15,757	$	16,198	(2.7)%
FFO per WA units^{1 2}	$	0.26	$	0.27	(3.2)%
FFO payout ratio^{1 2}		82.3%		80.1%	2.8%
AFFO ^{1 2}	$	12,388	$	13,045	(5.0)%
AFFO per WA units^{1 2}	$	0.21	$	0.22	(2.9)%
AFFO payout ratio^{1 2}		104.7%		99.4%	5.3%
Fixed charge coverage ratio^{1 3}	1.9x		2.0x		(3.1)%

(thousands of U.S. dollars, except per unit amounts)	March 31, 2025		December 31, 2024		Change %
Total assets	$	2,236,028	$	2,233,699	0.1%
Total assets, proportionate interest ^{1 2}	$	2,445,443	$	2,444,143	0.1%
Debt	$	1,169,435	$	1,166,655	0.2%
Debt, proportionate interest ^{1 2}	$	1,372,447	$	1,370,530	0.1%
Net asset value per unit	$	13.83	$	13.84	(0.1)%

Number of properties ²		116		116	—%
Portfolio occupancy²		94.4%		94.8%	(0.4)%
Debt / GBV ratio		52.3%		52.2%	0.2%
^{(1) Refer to “Non-IFRS Measures” section below.}
^{(2) Includes the REIT's share of joint venture investments.}
^{(3) As of March 31, 2025, the REIT transitioned from disclosing interest coverage ratio to fixed charge coverage ratio. Refer to 'Fixed Charge Coverage Ratio' in Part III of Management's Discussion and Analysis for further details.}

Conference Call and Webcast

Senior management will host a live conference call at 9:00 am ET on May 6, 2025 to discuss the results and ongoing business initiatives of the REIT.

The conference call can be accessed by dialing (289) 514-5100 or 1 (800) 717-1738. Additionally, the conference call will be available via simultaneous audio found at https://onlinexperiences.com/Launch/QReg/ShowUUID=A7343691-73C7-4F63-B89E-05C2058E4A0B&LangLocaleID=1033. A replay will be accessible until May 20, 2025 via the REIT’s website or by dialing (289) 819-1325 or 1 (888) 660-6264 (access code 44474#) approximately two hours after the live event.

About Slate Grocery REIT (TSX: SGR.U / SGR.UN)

Slate Grocery REIT is an owner and operator of U.S. grocery-anchored real estate. The REIT owns and operates approximately $2.4 billion of critical real estate infrastructure across major U.S. metro markets that communities rely upon for their everyday needs. The REIT’s resilient grocery-anchored portfolio and strong credit tenants are expected to provide unitholders with durable cash flows and the potential for capital appreciation over the longer term. Visit slategroceryreit.com to learn more about the REIT.

About Slate Asset Management

Slate Asset Management is a global investor and manager focused on essential real estate and infrastructure assets. We focus on fundamentals with the objective of creating long-term value for our investors and partners across the real assets space. We are supported by exceptional people and flexible capital, which enable us to originate and execute on a wide range of compelling investment opportunities. Visit slateam.com to learn more, and follow Slate Asset Management on LinkedIn, X (Twitter), and Instagram.

Supplemental Information

All interested parties can access Slate Grocery’s Supplemental Information online at slategroceryreit.com in the Investors section. These materials are also available on SEDAR+ or upon request to the REIT at info@slateam.com or (416) 644-4264.

Forward Looking Statements

Certain information herein constitutes “forward-looking information” as defined under Canadian securities laws which reflect management’s expectations regarding objectives, plans, goals, strategies, future growth, results of operations, performance, business prospects and opportunities of the REIT. The words “plans”, “expects”, “does not expect”, "forecasts", “scheduled”, “estimates”, “intends”, “anticipates”, “does not anticipate”, “projects”, “believes”, or variations of such words and phrases or statements to the effect that certain actions, events or results “may”, “will”, “could”, “would”, “might”, “occur”, “be achieved”, or “continue” and similar expressions identify forward-looking statements. Management believes that the expectations reflected in its forward-looking statements are based upon reasonable assumptions, however, management can give no assurance that actual results, performance or achievements will be consistent with these forward-looking statements. Such forward-looking statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations.

Forward-looking statements are necessarily based on a number of estimates and assumptions that, while considered reasonable by management as of the date hereof, are inherently subject to significant business, economic and competitive uncertainties and contingencies. When relying on forward-looking statements to make decisions, the REIT cautions readers not to place undue reliance on these statements, as forward-looking statements involve significant risks and uncertainties, and should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not the times at or by which such performance or results will be achieved. A number of factors could cause actual results to differ, possibly materially, from the results discussed in the forward-looking statements. Additional information about risks and uncertainties is contained in the filings of the REIT with securities regulators.

Non-IFRS Measures

This news release and accompanying financial statements are based on IFRS^® Accounting Standards (“IFRS Accounting Standards”), as issued by the International Accounting Standards Board (“IASB”).

We disclose a number of financial measures in this news release that are not measures used under IFRS Accounting Standards, including NOI, same-property NOI, FFO, FFO payout ratio, AFFO, AFFO payout ratio, adjusted EBITDA, fixed charges and the fixed charge coverage ratio, in addition to certain measures on a per unit basis.

NOI is defined as rental revenue less operating expenses, prior to straight-line rent, IFRIC 21, Levies ("IFRIC 21") property tax adjustments and adjustments for equity investments. Same-property NOI includes those properties owned by the REIT for each of the current period and the relevant comparative period, excluding those properties under development.
FFO is defined as net income adjusted for certain items including transaction/disposition costs, change in fair value of properties, change in fair value of financial instruments, deferred income taxes, unit income (expense), adjustments for equity investments and IFRIC 21 property tax adjustments.
AFFO is defined as FFO adjusted for straight-line rental revenue and revenue sustaining capital, leasing costs and tenant improvements.
FFO payout ratio and AFFO payout ratio are defined as distributions declared divided by FFO and AFFO, respectively.
FFO per WA unit and AFFO per WA unit are defined as FFO and AFFO divided by the weighted average class U equivalent units outstanding, respectively.
Adjusted EBITDA is defined as NOI less general and administrative expenses at the REIT's proportionate interest.
Fixed charges include principal payments and cash interest paid, net at the REIT"s proportionate interest.
Fixed charge coverage ratio is defined as adjusted EBITDA divided by fixed charges at the REIT's proportionate interest.
Net asset value is defined as the aggregate of the carrying value of the REIT's equity, deferred income taxes and exchangeable units of subsidiaries.
Proportionate interest represents financial information adjusted to reflect the REIT's equity accounted joint ventures and financial real estate assets and its share of net income (losses) from equity accounted joint ventures and financial real estate assets on a proportionately consolidated basis at the REIT's ownership percentage of the related investment.

We utilize these measures for a variety of reasons, including measuring performance, managing the business, capital allocation and the assessment of risk. Descriptions of why these non-IFRS measures are useful to investors and how management uses each measure are included in Management’s Discussion and Analysis. We believe that providing these performance measures on a supplemental basis to our IFRS Accounting Standards results is helpful to investors in assessing the overall performance of our businesses in a manner similar to management. These financial measures should not be considered as a substitute for similar financial measures calculated in accordance with IFRS Accounting Standards. We caution readers that these non-IFRS financial measures may differ from the calculations disclosed by other businesses, and as a result, may not be comparable to similar measures presented by others.

SGR-FR

Calculation and Reconciliation of Non-IFRS Measures

The table below summarizes a calculation of non-IFRS measures based on financial information in accordance with IFRS Accounting Standards.

	Three months ended March 31,
(in thousands of U.S. dollars, except per unit amounts)		2025		2024
Rental revenue	$	53,067	$	51,915
Straight-line rent revenue		(201)		(114)
Property operating expenses		(38,071)		(37,600)
IFRIC 21 property tax adjustment		20,867		21,145
Contribution from joint venture investments		5,577		5,226
NOI^{1 2}	$	41,239	$	40,572

Cash flow from operations	$	19,559	$	17,039
Changes in non-cash working capital items		(2,543)		452
Finance charge and mark-to-market adjustments		(1,014)		(557)
Interest, net and TIF note adjustments		155		125
Adjustments for joint venture investments		2,763		2,431
Non-controlling interest		(3,232)		(3,343)
Capital expenditures		(1,169)		(736)
Leasing costs		(633)		(808)
Tenant improvements		(1,498)		(1,558)
AFFO^{1 2}	$	12,388	$	13,045

Net income²	$	16,082	$	13,612
Change in fair value of financial instruments		1,214		(2,186)
Change in fair value of properties		(20,299)		(13,682)
Deferred income tax expense		3,035		1,591
Unit expense (income)		452		(612)
Adjustments for joint venture investments		(1,605)		385
Non-controlling interest		(3,989)		(4,055)
IFRIC 21 property tax adjustment		20,867		21,145
FFO^{1 2}	$	15,757	$	16,198
Straight-line rental revenue		(201)		(114)
Capital expenditures		(1,169)		(736)
Leasing costs		(633)		(808)
Tenant improvements		(1,498)		(1,558)
Adjustments for joint venture investments		(625)		(649)
Non-controlling interest		757		712
AFFO^{1 2}	$	12,388	$	13,045
^{(1) Refer to “Non-IFRS Measures” section above.}
^{(2) Includes the REIT's share of joint venture investments.}



	Three months ended March 31,
(in thousands of U.S. dollars, except per unit amounts)		2025		2024
NOI^{1 2}	$	41,239	$	40,572
General and administrative expenses		(4,198)		(3,945)
Cash interest, net		(14,226)		(13,460)
Finance charge and mark-to-market adjustments		(1,014)		(557)
Current income tax expense		(67)		(325)
Adjustments for joint venture investments		(2,814)		(2,795)
Non-controlling interest		(3,232)		(3,343)
Capital expenditures		(1,169)		(736)
Leasing costs		(633)		(808)
Tenant improvements		(1,498)		(1,558)
AFFO^{1 2}	$	12,388	$	13,045
^{(1) Refer to “Non-IFRS Measures” section above.}
^{(2) Includes the REIT's share of joint venture investments.}

	Three months ended March 31,
(in thousands of U.S. dollars, except per unit amounts)		2025		2024
Net income ¹	$	16,082	$	13,612
Interest and finance costs		15,240		14,017
Change in fair value of financial instruments		1,214		(2,186)
Change in fair value of properties		(20,299)		(13,682)
Deferred income tax expense		3,035		1,591
Current income tax expense		67		325
Unit expense (income)		452		(612)
Adjustments for joint venture investments		286		2,305
Straight-line rent revenue		(201)		(114)
IFRIC 21 property tax adjustment		20,867		21,145
Adjusted EBITDA^{1 2}	$	36,743	$	36,401

Adjusted EBITDA^{1 2}	$	36,743	$	36,401

Cash interest paid		(16,452)		(15,729)
Principal payments		(2,854)		(2,849)
Total fixed charges¹	$	(19,306)	$	(18,578)
Fixed charge coverage ratio^{1 2 3}	1.9x		2.0x
^{(1) Includes the REIT's share of joint venture investments.}
^{(2) Refer to “Non-IFRS Measures” section above.}
^{(3) As of March 31, 2025, the REIT transitioned from disclosing interest coverage ratio to fixed charge coverage ratio. Refer to 'Fixed Charge Coverage Ratio' in Part III of Management's Discussion and Analysis for further details.}

	March 31, 2025						December 31, 2024
(in thousands of U.S. dollars, except per unit amounts)	Statement of Financial Position		Joint Venture Investments		Proportionate Share (Non-IFRS)		Statement of Financial Position		Joint Venture Investments		Proportionate Share (Non-IFRS)
ASSETS
Non-current assets
Properties	$	2,059,588	$	312,600	$	2,372,188	$	2,054,511	$	310,400	$	2,364,911
Joint venture investments		116,471		(116,471)		—		112,429		(112,429)		—
Interest rate swaps		1,118		—		1,118		4,690		—		4,690
Other assets		3,477		—		3,477		3,624		—		3,624
	$	2,180,654	$	196,129	$	2,376,783	$	2,175,254	$	197,971	$	2,373,225
Current assets
Cash		23,658		5,607		29,265		22,668		4,851		27,519
Accounts receivable		21,609		1,177		22,786		23,417		1,723		25,140
Other assets		3,802		4,943		8,745		4,327		4,629		8,956
Prepaids		4,507		1,395		5,902		5,050		1,025		6,075
Interest rate swaps		1,798		164		1,962		2,983		245		3,228
	$	55,374	$	13,286	$	68,660	$	58,445	$	12,473	$	70,918
Total assets	$	2,236,028	$	209,415	$	2,445,443	$	2,233,699	$	210,444	$	2,444,143

LIABILITIES
Non-current liabilities
Debt	$	1,123,853	$	59,730	$	1,183,583	$	1,120,616	$	59,914	$	1,180,530
Deferred income taxes		155,659		—		155,659		153,580		2		153,582
Other liabilities		4,206		853		5,059		4,378		837		5,215
	$	1,283,718	$	60,583	$	1,344,301	$	1,278,574	$	60,753	$	1,339,327
Current liabilities
Debt		45,582		143,282		188,864		46,039		143,961		190,000
Accounts payable and accrued liabilities		42,112		5,550		47,662		42,071		5,730		47,801
Exchangeable units of subsidiaries		8,919		—		8,919		8,733		—		8,733
Distributions payable		4,323		—		4,323		4,323		—		4,323
	$	100,936	$	148,832	$	249,768	$	101,166	$	149,691	$	250,857
Total liabilities	$	1,384,654	$	209,415	$	1,594,069	$	1,379,740	$	210,444	$	1,590,184

EQUITY
Unitholders' equity	$	670,911	$	—	$	670,911	$	673,474	$	—	$	673,474
Non-controlling interest		180,463		—		180,463		180,485		—		180,485
Total equity	$	851,374	$	—	$	851,374	$	853,959	$	—	$	853,959
Total liabilities and equity	$	2,236,028	$	209,415	$	2,445,443	$	2,233,699	$	210,444	$	2,444,143

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Investor Relations
Tel: +1 416 644 4264
E-mail: ir@slateam.com

Source: Slate Grocery REIT