SmartCentres Real Estate Investment Trst Q4 Earnings Call Highlights

Core Insights - SmartCentres Real Estate Investment Trust (TSE:SRU.UN) reported strong same-property net operating income (NOI) growth, high occupancy levels, and competitive rental increases, while maintaining a conservative balance sheet [3][5][20] Financial Performance - Same-property NOI growth for Q4 was 2.9%, or 5.1% excluding anchor tenants, with a potential growth of 4.5% if not for a credit loss provision related to one retail tenant [1] - For the year, same-property NOI grew 3.7%, or 5.6% excluding anchors, aligning with initial expectations [2] - Quarterly cash collections remained strong at nearly 99% [2] Occupancy and Leasing - Year-end occupancy was reported at 98.6%, unchanged from the previous quarter [2] - The REIT extended 88% of the 5.3 million square feet of space maturing during the year, with rental spreads of 8.4% excluding anchors and 6.3% overall [2] Development and Expansion - SmartCentres is planning an 85,000–90,000 square foot expansion at Toronto Premium Outlets, targeting an expected return of over 8% by 2028 [4][10] - The REIT is also expanding into complementary uses such as medical and entertainment facilities, supported by strong retail demand [8] Capital Structure and Liquidity - The company has over CAD 1 billion in liquidity, with 90% of its debt at fixed rates and an unencumbered asset pool of CAD 10 billion [5] - Adjusted debt to EBITDA was reported at 9.7 times, with a weighted average debt term to maturity of 3.4 years [6] Distribution and Payout - The REIT maintained its distribution at an annualized rate of CAD 1.85 per unit, with a payout ratio to adjusted funds from operations improving to 89.2% for the year [7] Market Outlook and Strategy - Management anticipates a healthy retail growth outlook over the next five years, driven by population growth and limited retail construction in recent years [17] - The REIT is actively pursuing new site acquisitions and approvals for shopping centers, with construction activity expected to ramp up next year [17]