SmartCentres Real Estate Investment Trust Releases Fourth Quarter and Full Year Results for 2023

(in thousands of dollars, except per Unit and other non-financial data)

As at

December 31,
2023

December 31,
2022

December 31,
2021

Portfolio Information (Number of properties)

Retail properties

155

155

155

Office properties

4

4

4

Self-storage properties

8

6

6

Residential properties

3

2

1

Industrial properties

1

0

0

Properties under development

20

19

17

Total number of properties with an ownership interest

191

186

183

Leasing and Operational Information⁽¹⁾

Gross leasable retail and office area (in thousands of sq. ft.)

35,045

34,750

34,119

In-place and committed occupancy rate

98.5

%

98.0

%

97.6

%

Average lease term to maturity (in years)

4.3

4.2

4.4

Net annualized retail rental rate excluding Anchors (per occupied sq. ft.)

$

22.59

$

22.20

$

22.07

Mixed-Use Development Information

Trust’s share of future development area (in thousands of sq. ft.)

39,900

41,200

40,600

Financial Information

Investment properties⁽²⁾

10,564,269

10,286,891

9,923,120

Total unencumbered assets⁽³⁾

9,170,121

8,415,900

6,640,600

Debt to Aggregate Assets^(3)(4)(5)

43.1

%

43.6

%

42.9

%

Adjusted Debt to Adjusted EBITDA^(3)(4)(5)

9.6X

10.3X

9.2X

Weighted average interest rate⁽³⁾⁽⁴⁾

4.15

%

3.86

%

3.11

%

Weighted average term of debt (in years)

3.6

4.0

4.8

Interest coverage ratio⁽³⁾⁽⁴⁾

2.7X

3.1X

3.4X

Weighted average number of units outstanding – diluted⁽⁷⁾

180,023,932

179,657,455

173,748,819

Three Months Ended December 31

Year Ended December 31

2023

2022

2023

2022

Financial Information

Rentals from investment properties and other⁽²⁾

211,021

206,223

834,581

804,598

Net income and comprehensive income⁽²⁾

14,165

100,310

510,103

635,965

FFO^(3)(4)(6)

106,893

102,471

400,965

371,572

AFFO^(3)(4)(6)

92,187

86,105

354,424

334,335

Cash flows provided by operating activities⁽²⁾

93,745

134,668

330,853

370,762

Net rental income and other⁽²⁾

128,451

129,151

513,561

502,604

NOI⁽³⁾⁽⁴⁾

136,349

133,632

560,756

518,520

Change in net rental income and other⁽³⁾

(0.5)        %

1.7

%

2.2

%

3.5

%

Change in SPNOI⁽³⁾⁽⁴⁾

1.7

%

4.7

%

2.2

%

3.3

%

Net income and comprehensive income per Unit⁽²⁾

$0.08/$0.08

$0.56/$0.56

$2.86/$2.83

$3.57/$3.54

FFO per Unit^(3)(4)(6)

$0.60/$0.59

$0.58/$0.57

$2.25/$2.23

$2.09/$2.07

FFO with adjustments per Unit⁽³⁾⁽⁴⁾

$0.51/$0.51

$0.58/$0.58

$2.11/$2.09

$2.15/$2.13

AFFO per Unit^(3)(4)(6)

$0.52/$0.51

$0.48/$0.48

$1.99/$1.97

$1.88/$1.86

AFFO with adjustments per Unit⁽³⁾⁽⁴⁾

$0.43/$0.43

$0.49/$0.49

$1.85/$1.83

$1.94/$1.93

Payout Ratio to AFFO^(3)(4)(6)

89.4

%

95.7

%

93.0

%

98.6

%

Payout Ratio to AFFO with adjustments⁽³⁾⁽⁴⁾

107.5

%

93.9

%

99.9

%

95.2

%

Payout Ratio to cash flows provided by operating activities

87.9

%

61.2

%

99.6

%

88.9

%

(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 December 31, 2023, cash-on-hand of $31.4 million was excluded for the purposes of calculating the applicable ratios (December 31, 2022 – $33.4 million, December 31, 2022 – $80.0 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 (“REALpac White Paper”). Comparison with other reporting issuers may not be appropriate. The payout ratio to AFFO is calculated as declared distributions divided by AFFO.

(7)

The diluted weighted average includes the vested portion of the deferred units issued pursuant to the deferred unit plan.

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 units

Mixed-use Developments

Pickering (Seaton Lands)

Industrial

100

%

Q2 2023

91

%

229,000

—

Whitby Self-Storage

Self Storage

50

%

Q1 2024

82

%

126,000

810

Markham East / Boxgrove

Self Storage

50

%

Q2 2024

79

%

133,000

910

Vaughan NW

Townhouse

50

%

Q2 2024

39

%

—

174

Stoney Creek Self-Storage

Self Storage

50

%

Q4 2024

36

%

138,000

973

Gilbert Self-Storage

Self Storage

50

%

Q1 2025

46

%

176,000

1,469

Dorval (St-Regis Blvd.) Self-Storage

Self Storage

50

%

Q2 2025

24

%

164,000

1,165

Toronto (Jane St.) Self-Storage

Self Storage

50

%

Q3 2025

31

%

143,000

1,404

Ottawa SW⁽²⁾

Retirement Residence

50

%

Q2 2026

27

%

376,000

402

Ottawa SW⁽²⁾

Seniors’ Apartments

Vaughan / ArtWalk (40-Storey)

Condo

50

%

Q2 2027

14

%

320,000

373

Retail Development

Toronto (Laird)

Retail

50

%

Q1 2026

20

%

224,000

—

(in thousands of dollars)

Three Months Ended December 31, 2023

Three Months Ended December 31, 2022

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

$

211,021

$

10,439

$

221,460

$

206,223

$

8,441

$

214,664

Property operating costs and other

(82,073

)

(5,681

)

(87,754

)

(77,062

)

(3,779

)

(80,841

)

$

128,948

$

4,758

$

133,706

$

129,161

$

4,662

$

133,823

Residential sales revenue and other⁽²⁾

—

13,789

13,789

—

—

—

Residential cost of sales and other

(497

)

(10,649

)

(11,146

)

(10

)

(181

)

(191

)

$

(497

)

$

3,140

$

2,643

$

(10

)

$

(181

)

$

(191

)

NOI

$

128,451

$

7,898

$

136,349

$

129,151

$

4,481

$

133,632

(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.

(in thousands of dollars)

Year Ended December 31, 2023

Year Ended December 31, 2022

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

$

834,581

$

36,544

$

871,125

$

804,598

$

28,643

$

833,241

Property operating costs and other

(317,147

)

(18,361

)

(335,508

)

(301,559

)

(13,467

)

(315,026

)

$

517,434

$

18,183

$

535,617

$

503,039

$

15,176

$

518,215

Residential sales revenue and other⁽²⁾

—

139,190

139,190

—

4,524

4,524

Residential cost of sales and other

(3,873

)

(110,178

)

(114,051

)

(435

)

(3,784

)

(4,219

)

$

(3,873

)

$

29,012

$

25,139

$

(435

)

$

740

$

305

NOI

$

513,561

$

47,195

$

560,756

$

502,604

$

15,916

$

518,520

(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.

Three Months Ended December 31

Year Ended December 31

(in thousands of dollars)

2023

2022

2023

2022

Net rental income and other

$

128,451

$

129,151

$

513,561

$

502,604

NOI from equity accounted investments⁽¹⁾

7,898

4,481

47,195

15,916

Total portfolio NOI before adjustments⁽¹⁾

$

136,349

$

133,632

$

560,756

$

518,520

Adjustments:

Lease termination

(984

)

(82

)

(1,675

)

(214

)

Net profit on condo and townhome closings

(2,643

)

191

(25,139

)

(305

)

Non-recurring items and other adjustments⁽²⁾

4,112

(567

)

7,906

5,820

Total portfolio NOI after adjustments⁽¹⁾

$

136,834

$

133,174

$

541,848

$

523,821

NOI sourced from:

Acquisitions

(363

)

—

(8,014

)

(5,468

)

Dispositions

1

3

2

(9

)

Earnouts and Developments

(1,427

)

(413

)

(5,139

)

(1,266

)

Same Properties NOI⁽¹⁾

$

135,045

$

132,764

$

528,697

$

517,078

(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 vaccination centre costs, royalties, straight-line rent and amortization of tenant incentives.

Three Months Ended December 31

Year Ended December 31

(in thousands of dollars)

2023

2022

2023

2022

Net income and comprehensive income

$

14,165

$

100,310

$

510,103

$

635,965

Add (deduct):

Fair value adjustment on investment properties and financial instruments⁽¹⁾

56,197

(13,377

)

(101,792

)

(293,080

)

Gain (loss) on derivative – TRS

13,314

6,221

(205

)

(4,918

)

Gain on sale of investment properties

(67

)

(531

)

(44

)

(315

)

Amortization of intangible assets and tenant improvement allowance

2,469

2,338

9,199

8,535

Distributions on Units classified as liabilities and vested deferred units

2,157

1,807

8,478

7,140

Adjustment on debt modification

—

—

—

(1,960

)

Salaries and related costs attributed to leasing activities⁽²⁾

2,709

1,514

8,519

7,508

Acquisition-related costs

—

—

—

298

Adjustments relating to equity accounted investments⁽³⁾

15,949

4,189

(33,293

)

12,399

FFO⁽⁴⁾

$

106,893

$

102,471

$

400,965

$

371,572

Add (deduct) non-recurring adjustments:

(Gain) loss on derivative – TRS

(13,314

)

(6,221

)

205

4,918

FFO sourced from condominium and townhome closings

(2,657

)

180

(24,010

)

(680

)

Transactional FFO – gain (loss) on sale of land to co-owner

440

7,662

(568

)

7,662

FFO with adjustments⁽⁴⁾

$

91,362

$

104,092

$

376,592

$

383,472

(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 consolidated financial statements for the year ended December 31, 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 $8.5 million were incurred in the year ended December 31, 2023 (year ended December 31, 2022 – $7.5 million) and were eligible to be added back to FFO based on the definition of FFO, in the REALpac White Paper, 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.

Three Months Ended December 31

Year Ended December 31

(in thousands of dollars)

2023

2022

2023

2022

FFO⁽¹⁾

$

106,893

$

102,471

$

400,965

$

371,572

Add (Deduct):

Straight-line of rents

(479

)

(31

)

(690

)

(433

)

Adjusted salaries and related costs attributed to leasing

(2,709

)

(1,514

)

(8,519

)

(7,508

)

Actual sustaining capital expenditures, leasing commissions, and tenant improvements

(11,518

)

(14,821

)

(37,332

)

(29,296

)

AFFO⁽¹⁾

$

92,187

$

86,105

$

354,424

$

334,335

Add (deduct) non-recurring adjustments:

(Gain) loss on derivative – TRS

(13,314

)

(6,221

)

205

4,918

FFO sourced from condominium and townhome closings

(2,657

)

216

(24,010

)

(680

)

Transactional FFO – gain (loss) on sale of land to co-owner

440

7,662

(568

)

7,662

AFFO with adjustments⁽¹⁾

$

76,656

$

87,762

$

330,051

$

346,235

(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.

12 Months Ended

12 Months Ended

(in thousands of dollars)

December 31, 2023

December 31, 2022

Net income and comprehensive income

$

510,103

$

635,965

Add (deduct) the following items:

Net interest expense

157,990

138,464

Amortization of equipment, intangible assets and tenant improvements

11,619

11,078

Fair value adjustments on investment properties and financial instruments

(147,688

)

(293,704

)

Fair value adjustment on TRS

(205

)

(4,918

)

Adjustment for supplemental costs

5,709

4,648

Gain on sale of investment properties

(44

)

(74

)

Acquisition-related costs

—

298

Adjusted EBITDA⁽¹⁾

$

537,484

$

491,757

(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.