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]

Financial Data and Key Metrics Changes - The company reported same-property NOI growth of 6.3% for Q4 and 5.7% for the year, exceeding guidance [30] - Earnings per share for Q4 was $0.34, which included $0.03 from the sale of Albertsons shares, resulting in a clean run rate of $0.30 [30][31] - Economic occupancy increased by 30 basis points to 93.9%, with street and urban occupancy rising by 80 basis points in Q4 and 370 basis points over 2025 [31] Business Line Data and Key Metrics Changes - The street retail segment outperformed other segments, with significant tenant demand and performance, particularly in high-growth markets [7][15] - The company achieved over 90% economic shop occupancy, up from approximately 81% at the end of 2021 [8] - The company signed $3.5 million of ABR in Q4, with nearly 75% from high-growth markets [16] Market Data and Key Metrics Changes - The company noted strong performance in key markets such as San Francisco, New York, and Washington D.C., with significant leasing activity [21][24] - Year-over-year sales growth for tenants ranged from 10% to as high as 30% to 40% in some markets [15] - The company signed 90,000 sq ft of leases in San Francisco, indicating a positive trend in that market [21] Company Strategy and Development Direction - The company aims for multi-year NOI growth of 5%, supported by leasing up vacancies, capturing rental growth, and redevelopment initiatives [8][13] - The focus on street retail investments is intended to build operating scale in key corridors, with significant investments made in areas like Georgetown and Williamsburg [10][11] - The company is pursuing a dual-platform approach, balancing high-growth street retail with opportunistic investments through its investment management platform [12][23] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the retail real estate sector, citing a fundamental shift benefiting open-air and street retail [4][6] - The company anticipates continued tenant demand and a robust pipeline of leases, projecting $9 million in advanced negotiations [20] - Management highlighted the importance of tenant performance as a key indicator for future rent growth, with expectations for sustained sales growth translating into higher rents [16][65] Other Important Information - The company has closed nearly $1 billion in acquisitions over the past year, with a focus on street retail and value-add deals [28] - The balance sheet remains strong, with pro-rata debt to EBITDA at about 5x and significant liquidity available for future investments [38][39] - The company plans to maintain a disciplined approach to acquisitions while actively seeking opportunities in both established and emerging markets [70] Q&A Session Summary Question: Can you expand on the acquisition environment and pricing perspective? - Management noted that active markets include New York, SoHo, and Williamsburg, with a focus on acquiring assets that can achieve a 5% CAGR over five years [45][46] Question: What are the main factors influencing same-property NOI growth guidance? - The primary factors include rent commencement dates, credit loss assumptions, and the potential impact of the pri-loose strategy on short-term results [48][49] Question: What is the outlook for street occupancy and blended rent per square foot? - Management aims for 95% street occupancy within 18 months, emphasizing the importance of high-impact leases over overall occupancy percentages [63][75]

Financial Data and Key Metrics Changes - The company generated FFO as adjusted of $1.43 per share in 2025, representing a 6% growth compared to 2024, driven by a 5% same-property NOI growth [4][17] - Same-property NOI, including redevelopment, increased by 2.9% in Q4 and 5% for the full year [17] - The company ended 2025 with a net debt to annualized EBITDA ratio of 5.8x, below the target of 6.5x, indicating a strong balance sheet [18] Business Line Data and Key Metrics Changes - The company executed 58 new leases at a record same-space cash rent spread of 32% and achieved a record shop occupancy of 92.6% [4][10] - The signed but not open pipeline is expected to generate an additional $22 million of annual gross rent, representing 8% of current NOI [5] - The company completed 14 projects totaling $55 million, generating unlevered yields of 19% [6] Market Data and Key Metrics Changes - Nationally, shopping center vacancy remains near historic lows, with supply constraints particularly pronounced in the Northeast [11] - The company noted that finding land and securing entitlements is extremely difficult in its markets, which supports expectations for healthy rent growth [12] Company Strategy and Development Direction - The company aims for FFO as adjusted growth of at least 4.5% in 2026 and same-property NOI growth above 3% [8] - The growth outlook is highly visible, with over 80% of same-property NOI growth expected from executed leases and contractual rent increases [9] - The company is focused on redevelopment and anchor repositioning projects, with significant investments planned for the future [22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the continued demand for high-quality retail spaces and expects new lease spreads to remain above 20% in 2026 [4][5] - The company anticipates challenges in the acquisition market due to increased competition and lower cap rates, but remains optimistic about capital recycling opportunities [28][60] Other Important Information - The board approved an 11% increase in the annualized dividend to $0.84 per share, reflecting an FFO payout ratio of about 56% [21] - The company has $166 million of active redevelopment projects, with plans to spend about $70 million-$80 million during 2026 [21] Q&A Session Summary Question: Expectations for shop occupancy growth - Management expects to reach a steady state of 94%-96% occupancy, with potential for strategic leasing improvements [25][26] Question: Insights on capital recycling and acquisition pipeline - The acquisition market is competitive, with cap rates decreasing, but the company is optimistic about capital recycling opportunities [28][60] Question: Same-property NOI growth path - The deceleration in 2026 is attributed to tenant fallout and one-time benefits in 2025, while growth visibility from the signed but not open pipeline supports a rebound in 2027 [34][35] Question: Impact of snow removal costs on guidance - Guidance for 2026 accounts for snow removal costs incurred in January, with appropriate provisions made [43] Question: Opportunities in redevelopment projects - The company is focused on both small-scale and larger redevelopment projects, with significant potential for growth from completed projects [46][47]

InvenTrust Properties Conference Call Summary Company Overview - InvenTrust Properties is a $3 billion enterprise value, high-quality open-air shopping center REIT, primarily located in the Sunbelt region with 71 properties totaling over 10 million square feet, predominantly grocery-anchored [3][3][3]. Core Insights - **Financial Performance**: Since its listing in 2021, InvenTrust has grown FFO per share by approximately 30% while reducing leverage [3][3]. - **Occupancy Rates**: The company reports a leasing rate of over 97% and economic occupancy exceeding 95%, with a retention rate of over 90% [5][6]. - **Leasing Demand**: There is strong leasing demand, with expectations to push rents higher as frictional vacancy decreases [6][6]. - **NOI Growth**: The company has averaged about 5% same-property NOI growth since listing, with a more sustainable expectation of 3% to 4% moving forward [9][11]. Market Dynamics - **Consumer Behavior**: Despite some softness in consumer spending in early 2025, InvenTrust has not experienced significant distress or slowdown in its portfolio [5][5]. - **Retail Environment**: The company has no exposure to major discount retail bankruptcies and continues to see strong demand for its properties [5][5]. - **Grocery Competition**: InvenTrust focuses on grocery anchors that provide customer experiences, positioning itself to be less affected by same-day delivery competition [12][13]. Strategic Decisions - **Capital Recycling**: The company has exited California, selling properties for over $300 million to reinvest in markets with higher growth potential, such as the Carolinas and Florida [16][19]. - **Acquisition Strategy**: InvenTrust aims to acquire fully stabilized assets, with a focus on grocery-anchored centers, while being open to other formats [22][27]. - **Market Competition**: The competitive landscape has intensified, particularly in California, prompting a strategic shift to focus on less competitive markets [24][24]. Financial Health - **Balance Sheet Strength**: InvenTrust maintains a strong balance sheet with the lowest leverage in the shopping center space at around three times [39][39]. - **Refinancing**: Recent refinancing of term loans has extended maturities to 2030 and 2031, enhancing financial stability [40][41]. - **Bad Debt Management**: The company is assessing its bad debt reserves, which have been lower than historical averages, and is preparing for potential normalization [33][34]. Future Outlook - **Growth Expectations**: InvenTrust anticipates continued internal and external growth in 2026, with no significant interest rate headwinds expected [49][49]. - **Market Trends**: The company is monitoring the retail landscape closely, particularly regarding tenant health and potential disruptions [30][30]. - **Construction Costs**: Rising construction costs are influencing the company's strategy, as they continue to acquire properties below replacement costs [59][59]. Additional Considerations - **Tenant Watch List**: Minimal exposure to distressed tenants, with proactive management of potential risks [30][31]. - **Acquisition Pipeline**: The company remains selective in its acquisition strategy, focusing on core grocery-anchored centers while considering lifestyle centers under specific conditions [27][28]. - **Market Dynamics**: The company is observing increased competition in the power center segment, with a focus on smaller, more manageable properties [62][62].