SmartCentres Real Estate Investment Trust Releases Second Quarter Results For 2023
Operational
Shopping centre leasing activity strengthened from Q1 2023, with an industry-leading in-place and committed occupancy rate of 98.2% as at June 30, 2023 (December 31, 2022 – 98.0%).
Executed new leases of 273,150 square feet during the quarter.
Renewed 75.5% of the 5,157,636 square feet of space expiring in 2023.
Mixed-use Development
Construction activity is currently underway, with respect to high rise residential on existing shopping centre sites in Vaughan, Laval, and Ottawa.
First occupancy and condo closings for Transit City 4 & 5 commenced in March and May 2023, respectively. In Q2 2023, 452 units were closed generating additional FFO(1) of $10.6 million or $0.06 per unit. Closing of the balance of Transit City 4 & 5 will take place over the next two quarters.
The 458-unit Millway rental apartment project commenced occupancy in the Transit City 4 & 5 podiums in February 2023. The remaining 366 units, located in a 36-storey purpose-built tower, are nearing completion, and initial occupancy began in July 2023.
Construction nears completion on the full 229,000 square feet of industrial space for the 16-acre Phase 1 development in Pickering. Over half of the space has been completed, having been pre-leased to a single tenant who took possession in April 2023.
With the recent opening of the Kingspoint self-storage facility, the Trust reached a milestone of approximately 1.0 million square feet of gross floor area of self-storage rental facilities (at 100%). Excluding the two facilities that have been open for less than a year, the Trust’s self-storage portfolio has an average occupancy rate of 93.0%.
Financial
Same Properties NOI(1) increased by $4.2 million or 3.2% in Q2 2023 as compared to the same period in 2022, which was primarily due to an increase in rental revenue attributable to lease-up activity and step-up rents, and miscellaneous revenue.
FFO per Unit(1) was $0.55 for the three months ended June 30, 2023 (compared to $0.49 for the three months ended June 30, 2022). The increase was mainly attributable to higher profits from condo closings at Transit City 4 & 5 and higher rental income, partially offset by higher interest costs.
The Payout Ratio to AFFO(1) for the three months ended June 30, 2023 was 93.8%, as compared to 101.2% for the same period ended June 30, 2022.
Net rental income for the three months ended June 30, 2023 increased by $4.6 million or 3.7% as compared to the three months ended June 30, 2022, primarily due to lease-up activity, step-up rents and percentage rents.
Net income and comprehensive income per Unit was $0.93 (three months ended June 30, 2022 – $0.90).
For the three months ended June 30, 2023, excess distribution over cash flow from operation was improved by $17.3 million to $21.1 million compared to same period 2022, mainly as result of timing differences in property tax and interest payments.
TORONTO, Aug. 09, 2023 (GLOBE NEWSWIRE) -- 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 June 30, 2023.
“Building on Q1, we are pleased to report stronger performances in all areas of the business for Q2,” said Mitchell Goldhar, CEO of SmartCentres. “Our defensive portfolio has become more offensive, with even stronger numbers in our Walmart anchored centres, which drove a $7.0 million increase in net rental income(1) compared to the same quarter of last year. In-place and committed occupancy increased 20 basis points to 98.2% in the quarter, demonstrating our industry leadership. We expect to continue delivering strong occupancy levels and solid rental income for the balance of the year.”
“In addition to the strength of our core recurring retail income, our mixed-use development business also continues to grow and deliver strong results. We are delighted with the progress we have made on our Transit City 4 & 5 condominium projects at the Vaughan Metropolitan Centre,” said Mr. Goldhar. “During the quarter, we closed on an additional 452 units in Transit City 4 & 5, resulting in FFO(1) at the REIT’s share of $10.6 million or $0.06 per Unit(1). The remaining 380 units at these two towers are expected to close over the balance of the year.”
“With the recent opening of our self-storage rental facilities at our Kingspoint Plaza in Brampton, the Trust reached a milestone of 1.0 million square feet of gross floor area of self-storage rental facilities (at 100%) in four short years. Excluding the two facilities that have been open for less than a year, the Trust’s self-storage portfolio has an average occupancy rate of 93%. We also have a further 1.6 million square feet in the pipeline, mostly on properties we already own, along with numerous other highly accretive initiatives.”
“Additionally, we currently have 10 mixed-use development initiatives that are under construction. Collectively, these projects have an estimated total development cost, at the REIT’s share, of $547.9 million, of which $202.5 million is required to complete construction. We have ample liquidity available, not only to complete these projects, but also to commence several new initiatives where construction is expected to begin later in the year. These new projects include Phase I of our sold-out Art Walk condominium tower at the VMC, a townhome community in Vaughan Northwest, a large pre-leased retail project in Leaside, and several new self-storage locations.”
“In May 2023, the Trust issued $300.0 million of 5.354% Series Z senior unsecured debentures with a maturity date of May 29, 2028. We used the net proceeds from the offering to repay the $200.0 million aggregate principal of Series I senior unsecured debentures in full upon their maturity and other existing indebtedness. The issuance of the debentures has improved the Trust’s debt maturity profile by extending the term of previous short-term debt and reducing its exposure to floating rate debt.”
“Despite a more challenging current economic environment for launching new development initiatives, we remain nimble and we are continuing to move forward with fewer, albeit impactful, projects in the near term,” continued Mr. Goldhar. “As always, we are focused on the long term, which includes advancing new entitlements and zoning applications for multiple opportunities within our large network of retail centres. We are confident that the ongoing and future intensification on these strategically-located properties will be highly complementary to our existing retail centres and will deliver strong returns to unitholders for decades to come.”
(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. |
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Selected Consolidated Operational, Mixed-Use Development and Financial Information
Key consolidated operational, mixed-use development and financial information shown in the table below includes the Trust’s proportionate share of equity accounted investments:
(in thousands of dollars, except per Unit and other non-financial data) |
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| |||||
As at |
| June 30, 2023 |
| December 31, 2022 |
| June 30, 2022 |
| |
Portfolio Information (Number of properties) |
|
|
|
| ||||
Retail properties |
| 155 |
| 155 |
| 155 |
| |
Office properties |
| 4 |
| 4 |
| 4 |
| |
Self-storage properties |
| 8 |
| 6 |
| 6 |
| |
Residential properties |
| 2 |
| 2 |
| 2 |
| |
Properties under development |
| 20 |
| 19 |
| 19 |
| |
Total number of properties with an ownership interest |
| 189 |
| 186 |
| 186 |
| |
Leasing and Operational Information(1) |
|
|
|
| ||||
Gross leasable retail and office area (in thousands of sq. ft.) | 34,922 |
| 34,750 |
| 34,661 |
| ||
In-place and committed occupancy rate (%) |
| 98.2 |
| 98.0 |
| 97.6 |
| |
Average lease term to maturity (in years) |
| 4.2 |
| 4.2 |
| 4.4 |
| |
Net annualized retail rental rate excluding Anchors (per occupied sq. ft.) ($) | 22.27 |
| 22.20 |
| 22.26 |
| ||
Mixed-Use Development Information |
|
|
|
| ||||
Trust’s share of future development area (in thousands of sq. ft.) | 40,425 |
| 41,200 |
| 40,200 |
| ||
Financial Information |
|
|
|
| ||||
Investment properties(2) |
| 10,336,527 |
| 10,250,392 |
| 10,285,753 |
| |
Total unencumbered assets(3) |
| 8,844,821 |
| 8,415,900 |
| 8,413,000 |
| |
Debt to Aggregate Assets (%)(3)(4)(5) |
| 43.2 |
| 43.6 |
| 43.0 |
| |
Adjusted Debt to Adjusted EBITDA(3)(4)(5) |
| 9.9X |
| 10.3X |
| 10.0X |
| |
Weighted average interest rate (%)(3)(4) |
| 4.03 |
| 3.86 |
| 3.30 |
| |
Weighted average term of debt (in years) |
| 4.1 |
| 4.0 |
| 4.4 |
| |
Interest coverage ratio(3)(4) |
| 2.8X |
| 3.1X |
| 3.3X |
| |
Weighted average number of units outstanding – diluted |
| 180,045,789 |
| 179,696,944 |
| 179,662,689 |
| |
|
|
|
|
| ||||
| 2023 |
| 2022 |
| 2023 |
| 2022 |
|
Financial Information |
|
|
|
| ||||
Rentals from investment properties and other(2) | 206,950 |
| 198,585 |
| 417,544 |
| 401,413 |
|
Net income and comprehensive income(2) | 167,902 |
| 161,997 |
| 280,763 |
| 532,107 |
|
FFO(3)(4)(6) | 98,534 |
| 88,464 |
| 195,667 |
| 180,699 |
|
AFFO(3)(4)(6) | 87,848 |
| 81,436 |
| 176,449 |
| 167,135 |
|
Cash flows provided by operating activities(2) | 61,322 |
| 43,970 |
| 143,253 |
| 146,789 |
|
Net rental income and other(2) | 129,887 |
| 125,253 |
| 254,708 |
| 245,972 |
|
NOI(3)(4) | 147,105 |
| 130,034 |
| 280,573 |
| 253,902 |
|
Change in net rental income and other(3) | 3.7% |
| 4.9% |
| 3.6% |
| 4.3% |
|
Change in SPNOI(3) | 3.2% |
| 5.0% |
| 3.7% |
| 3.5% |
|
Net income and comprehensive income per Unit(2) | $0.94/$0.93 |
| $0.91/$0.90 |
| $1.58/$1.56 |
| $2.99/$2.96 |
|
FFO per Unit(3)(4)(6) | $0.55/$0.55 |
| $0.50/$0.49 |
| $1.10/$1.09 |
| $1.01/$1.01 |
|
FFO with adjustments per Unit(3)(4) | $0.55/$0.54 |
| $0.53/$0.53 |
| $1.06/$1.05 |
| $1.04/$1.03 |
|
AFFO per Unit(3)(4)(6) | $0.49/$0.49 |
| $0.46/$0.45 |
| $0.99/$0.98 |
| $0.94/$0.93 |
|
AFFO with adjustments per Unit(3)(4) | $0.49/$0.48 |
| $0.50/$0.49 |
| $0.95/$0.94 |
| $0.97/$0.96 |
|
Payout Ratio to AFFO(3)(4)(6) | 93.8% |
| 101.2% |
| 93.4% |
| 98.7% |
|
Payout Ratio to AFFO with adjustments(3)(4) | 95.2% |
| 93.4% |
| 97.5% |
| 95.8% |
|
Payout Ratio to cash flows provided by operating activities | 134.4% |
| 187.4% |
| 115.1% |
| 112.2% |
|
(1) | Excluding residential and self-storage area. |
(2) | Represents a 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 June 30, 2023, cash-on-hand of $43.3 million was excluded for the purposes of calculating the applicable ratios (December 31, 2022 – $33.4 million, June 30, 2022 – $133.2 million). |
(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 January 2022. Comparison with other reporting issuers may not be appropriate. The payout ratio to AFFO is calculated as declared distributions divided by AFFO. |
Development and Intensification Summary
The following table provides additional details on the Trust’s 10 development initiatives that are currently under construction (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 completion | GFA(2) | No. |
Vaughan / Transit City 4 | Condo | 25 | Q1 2023 | 94 % | — | 498 |
Vaughan / Transit City 5 | Q2 2023 | 94 % | 528 | |||
Vaughan / The Millway | Apartment | 50 | Q1 2023 | 85 % | — | 458 |
Pickering (Seaton Lands) | Industrial | 100 | Q2 2023 | 93 % | 229,000 | — |
Laval Centre | Apartment | 50 | Q3 2023 | 83 % | — | 211 |
Markham East / Boxgrove | Self-storage | 50 | Q1 2024 | 51 % | 133,000 | 910 |
Whitby | Self-storage | 50 | Q1 2024 | 52 % | 126,000 | 811 |
Vaughan NW | Townhouse | 50 | Q3/Q4 2024 | 15 % | — | 174 |
Ottawa SW (1) | Retirement Residence | 50 | Q1/Q2 2025 | 24 % | — | 402 |
Ottawa SW (1) | Seniors’ Apartments | |||||
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| In millions of dollars |
|
| |
Total Capital Spend to Date at 100% (3) |
| 847.9 |
|
| ||
Estimated Cost to Complete at 100% |
| 414.7 |
|
| ||
Total Expected Capital Spend by Completion at 100% (3) |
| 1,262.6 |
|
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Total Capital Spend to Date at Trust’s share (3) |
| 345.4 |
|
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Estimated Cost to Complete at Trust’s share |
| 202.5 |
|
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Total Expected Capital Spend by Completion at Trust’s share (3) |
| 547.9 |
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(1) | Figure represents capital spend of both retirement residence and seniors’ apartments projects. |
(2) | GFA represents Gross Floor Area. |
(3) | Total capital spend to date and total expected capital spend by completion include land value. |
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 June 30, 2023 and the comparable periods in 2022. Such measures do not have a standardized meaning prescribed by IFRS and may not be comparable to similar measures disclosed by other issuers.
Net Operating Income (including the Trust’s Interests in Equity Accounted Investments)
Quarterly Comparison to Prior Year
(in thousands of dollars) | Three Months Ended June 30, 2023 |
| Three Months Ended June 30, 2022 |
| ||||||||
| GAAP Basis |
| Proportionate Share Reconciliation |
| Total Proportionate Share(1) |
| GAAP Basis |
| Proportionate Share Reconciliation |
| Total Proportionate Share(1) |
|
Net rental income and other |
|
|
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|
|
| ||||||
Rentals from investment properties and other | 206,950 |
| 8,469 |
| 215,419 |
| 198,585 |
| 6,729 |
| 205,314 |
|
Property operating costs and other | (75,400 | ) | (4,146 | ) | (79,546 | ) | (73,332 | ) | (3,108 | ) | (76,440 | ) |
| 131,550 |
| 4,323 |
| 135,873 |
| 125,253 |
| 3,621 |
| 128,874 |
|
Residential sales revenue and other(2) | — |
| 62,634 |
| 62,634 |
| — |
| 4,511 |
| 4,511 |
|
Residential cost of sales and other | (1,663 | ) | (49,739 | ) | (51,402 | ) | — |
| (3,351 | ) | (3,351 | ) |
| (1,663 | ) | 12,895 |
| 11,232 |
| — |
| 1,160 |
| 1,160 |
|
NOI | 129,887 |
| 17,218 |
| 147,105 |
| 125,253 |
| 4,781 |
| 130,034 |
|
(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. |
Year-to-Date Comparison to Prior Year
(in thousands of dollars) | Six Months Ended June 30, 2023 |
| Six Months Ended June 30, 2022 |
| ||||||||
| GAAP Basis |
| Proportionate Share Reconciliation |
| Total Proportionate Share(1) |
| GAAP Basis |
| Proportionate Share Reconciliation |
| Total Proportionate Share(1) |
|
Net rental income and other |
|
|
|
|
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Rentals from investment properties and other | 417,544 |
| 16,525 |
| 434,069 |
| 401,413 |
| 12,916 |
| 414,329 |
|
Property operating costs and other | (160,523 | ) | (8,283 | ) | (168,806 | ) | (155,441 | ) | (6,121 | ) | (161,562 | ) |
| 257,021 |
| 8,242 |
| 265,263 |
| 245,972 |
| 6,795 |
| 252,767 |
|
Residential sales revenue and other(2) | — |
| 87,467 |
| 87,467 |
| — |
| 4,517 |
| 4,517 |
|
Residential cost of sales and other | (2,313 | ) | (69,844 | ) | (72,157 | ) | — |
| (3,382 | ) | (3,382 | ) |
| (2,313 | ) | 17,623 |
| 15,310 |
| — |
| 1,135 |
| 1,135 |
|
NOI | 254,708 |
| 25,865 |
| 280,573 |
| 245,972 |
| 7,930 |
| 253,902 |
|
(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 June 30 |
| Six Months Ended June 30 |
| ||||
(in thousands of dollars) | 2023 |
| 2022 |
| 2023 |
| 2022 |
|
NOI | 129,887 |
| 125,253 |
| 254,708 |
| 245,972 |
|
NOI from equity accounted investments(1) | 17,218 |
| 4,781 |
| 25,865 |
| 7,930 |
|
Total portfolio NOI before adjustments(1) | 147,105 |
| 130,034 |
| 280,573 |
| 253,902 |
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Adjustments: |
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Lease termination | (49 | ) | 97 |
| (461 | ) | (145 | ) |
Net profit on condo and townhome closings | (11,232 | ) | (791 | ) | (15,310 | ) | (740 | ) |
Non-recurring items and other adjustments(2) | 992 |
| 1,981 |
| 3,510 |
| 3,072 |
|
Total portfolio NOI after adjustments(1) | 136,816 |
| 131,321 |
| 268,312 |
| 256,089 |
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NOI sourced from: |
|
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Acquisitions | (285 | ) | 178 |
| (3,604 | ) | (2,296 | ) |
Dispositions | — |
| (38 | ) | 1 |
| (13 | ) |
Earnouts and Developments | (1,129 | ) | (294 | ) | (1,880 | ) | (426 | ) |
Same Properties NOI(1) | 135,402 |
| 131,167 |
| 262,829 |
| 253,354 |
|
(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 non-recurring items such as one-time adjustments relating to COVID ECL and vaccination centre costs, royalties, straight-line rent and amortization of tenant incentives. |
Reconciliation of FFO
| Three Months Ended June 30 |
| Six Months Ended June 30 |
| ||||
(in thousands of dollars) | 2023 |
| 2022 |
| 2023 |
| 2022 |
|
Net income and comprehensive income | 167,902 |
| 161,997 |
| 280,763 |
| 532,107 |
|
Add (deduct): |
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Fair value adjustment on investment properties and financial instruments(1) | (68,918 | ) | (71,166 | ) | (90,926 | ) | (360,493 | ) |
Loss on derivative – TRS | (9,333 | ) | (7,843 | ) | (8,037 | ) | (6,238 | ) |
Loss (gain) on sale of investment properties | 45 |
| (18 | ) | 23 |
| 104 |
|
Amortization of intangible assets and tenant improvement allowance | 2,250 |
| 1,911 |
| 4,645 |
| 3,903 |
|
Distributions on Units classified as liabilities and vested deferred units | 2,145 |
| 1,811 |
| 4,149 |
| 3,532 |
|
Adjustment on debt modification | — |
| (1,960 | ) | — |
| (1,960 | ) |
Salaries and related costs attributed to leasing activities(2) | 1,954 |
| 1,952 |
| 4,034 |
| 3,778 |
|
Acquisition-related costs | — |
| 323 |
| — |
| 323 |
|
Adjustments relating to equity accounted investments(3) | 2,489 |
| 1,457 |
| 1,016 |
| 5,643 |
|
FFO(4) | 98,534 |
| 88,464 |
| 195,667 |
| 180,699 |
|
Add (deduct) non-recurring adjustments: |
|
|
|
| ||||
Loss on derivative – TRS | 9,333 |
| 7,843 |
| 8,037 |
| 6,238 |
|
FFO sourced from condominium and townhome closings | (10,620 | ) | (1,100 | ) | (14,436 | ) | (1,076 | ) |
Transactional FFO – loss on sale of land to co-owner | — |
| — |
| (1,008 | ) | — |
|
FFO with adjustments(4) | 97,247 |
| 95,207 |
| 188,260 |
| 185,861 |
|
(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, interest rate swap agreements, and LTIP recorded in the same period in 2022. 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 June 30, 2023. For details, please see discussion in “Results of Operations” in the Trust’s MD&A. |
(2) | Salaries and related costs attributed to leasing activities of $4.0 million were incurred in the six months ended June 30, 2023 (six months ended June 30, 2022 – $3.8 million) and were eligible to be added back to FFO based on the definition of FFO, in the REALpac White Paper published in January 2022, which provided for an adjustment to incremental leasing expenses for the cost of salaried staff. This adjustment to FFO results in more comparability between Canadian publicly traded real estate entities that expensed their internal leasing departments and those that capitalized external leasing expenses. |
(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 additional information, please see “Non-GAAP Measures” in this Press Release. |
Reconciliation of AFFO
| Three Months Ended June 30 |
| Six Months Ended June 30 |
| ||||
(in thousands of dollars) | 2023 |
| 2022 |
| 2023 |
| 2022 |
|
FFO(1) | 98,534 |
| 88,464 |
| 195,667 |
| 180,699 |
|
Add (Deduct): |
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| ||||
Straight-line of rents | 149 |
| (304 | ) | 199 |
| (381 | ) |
Adjusted salaries and related costs attributed to leasing | (1,954 | ) | (1,952 | ) | (4,034 | ) | (3,778 | ) |
Actual sustaining capital expenditures, leasing commissions, and tenant improvements | (8,881 | ) | (4,772 | ) | (15,383 | ) | (9,405 | ) |
AFFO(1) | 87,848 |
| 81,436 |
| 176,449 |
| 167,135 |
|
Add (deduct) non-recurring adjustments: |
|
|
|
| ||||
Loss on derivative – TRS | 9,333 |
| 7,843 |
| 8,037 |
| 6,238 |
|
FFO sourced from condominium and townhome closings | (10,620 | ) | (1,100 | ) | (14,436 | ) | (1,076 | ) |
Transactional FFO – loss on sale of land to co-owner | — |
| — |
| (1,008 | ) | — |
|
AFFO with adjustments(1) | 86,561 |
| 88,179 |
| 169,042 |
| 172,297 |
|
(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) | June 30, 2023 |
| June 30, 2022 |
|
Net income and comprehensive income | 384,681 |
| 1,362,238 |
|
Add (deduct) the following items: |
|
| ||
Net interest expense | 146,908 |
| 135,397 |
|
Amortization of equipment, intangible assets and tenant improvements | 11,622 |
| 10,705 |
|
Fair value adjustments on investment properties and financial instruments | (28,557 | ) | (1,021,276 | ) |
Fair value adjustment on TRS | (6,717 | ) | (1,666 | ) |
Adjustment for supplemental costs | 4,899 |
| 4,919 |
|
(Gain) loss on sale of investment properties | (156 | ) | 20 |
|
Gain on sale of land to co-owners (Transactional FFO) | — |
| 336 |
|
Acquisition-related costs | (24 | ) | 3,114 |
|
Adjusted EBITDA(1) | 512,656 |
| 493,787 |
|
(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. |
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, Same Properties NOI, 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 June 30, 2023, dated August 9, 2023 (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 and six months ended June 30, 2023 are outlined in the unaudited interim condensed consolidated financial statements and the related MD&A of the Trust for the three and six months ended June 30, 2023, which are available on SEDAR+ at www.sedarplus.ca.
Conference Call
SmartCentres will hold a conference call on Thursday, August 10, 2023 at 3:00 p.m. (ET). Participating on the call will be members of SmartCentres’ senior management.
Investors are invited to access the call by dialing 1-855-353-9183 and then keying in the participant access code 30006#. You will be required to identify yourself and the organization on whose behalf you are participating.
A recording of this call will be made available Thursday, August 10, 2023 beginning at 8:30 p.m. (ET) through to 8:30 p.m. (ET) on Thursday, August 17, 2023. To access the recording, please call 1-855-201-2300, enter the conference access code 30006# and then key in the playback access code 0113627#.
About SmartCentres
SmartCentres Real Estate Investment Trust is one of Canada’s largest fully integrated REITs, with a best-in-class portfolio featuring 189 strategically located properties in communities across the country. SmartCentres has approximately $11.8 billion in assets and owns 34.9 million square feet of income producing value-oriented retail and first-class office space with 98.2% in-place and committed occupancy, on 3,500 acres of owned land across Canada.
SmartCentres continues to focus on enhancing the lives of Canadians by planning and developing complete, connected, mixed-use communities on its existing retail properties. The publicly announced $16.0 billion intensification program ($10.9 billion at SmartCentres' share) represents the REIT’s current major development focus on which construction is expected to commence within the next five years. This intensification program consists of rental apartments, condos, seniors’ residences and hotels, to be developed under the SmartLiving banner, and retail, office, and storage facilities, to be developed under the SmartCentres banner.
SmartCentres' intensification program is expected to produce an additional 55.5 million square feet (40.4 million square feet at SmartCentres’ share) of space, 26.6 million square feet (18.1 million square feet at SmartCentres’ share) of which has or will commence construction within the next five years. From shopping centres to city centres, SmartCentres is uniquely positioned to reshape the Canadian urban and urban-suburban landscape.
Included in this intensification program is the Trust’s share of SmartVMC which, when completed, is expected to include approximately 20.0 million square feet of mixed-use space in Vaughan, Ontario. Final closings of the first three phases of Transit City Condominiums began ahead of budget and ahead of schedule in August 2020 and all 1,741 units, in addition to the 22 townhomes that complete these phases, have now closed. The fourth and fifth sold-out phases representing 1,026 units commenced closing and occupancy in March 2023.
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 condominium 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 such as the COVID-19 pandemic, 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.
For more information, please visit www.smartcentres.com or contact:
Mitchell Goldhar | Peter Slan |
Executive Chairman and CEO | Chief Financial Officer |
SmartCentres | SmartCentres |
(905) 326-6400 ext. 7674 | (905) 326-6400 ext. 7571 |
