SmartCentres Real Estate Investment Trust (SRU.UN) Q2 2024 earnings summary

Executive summary

• Achieved strong leasing momentum in Q2 2024, with 272,000 sq. ft. of vacant space leased and in-place and committed occupancy rising to 98.2%.

• Extended or finalized 86% of 2024 lease maturities with 8.5% rent growth (excluding anchors).

• Mixed-use development pipeline advanced, including ArtWalk condos, Millway apartments (88–90% leased, expected to exceed 95% by year-end), and new self-storage facilities.

• Premium Outlets in Toronto and Montreal fully leased, driving EBITDA and value above budget.

• Completed and closed 25 Vaughan NW Townhome units, contributing $2.5 million to FFO, with further closings expected to accelerate.

Financial highlights

• Net operating income (NOI) for Q2 decreased by CAD 8 million (5.5%) year-over-year, mainly due to fewer condo closings.

• Same property NOI (excluding anchors) increased by 2.2% year-over-year and 3% for the first half of 2024.

• FFO per unit was CAD 0.50, down from CAD 0.55 last year; adjusted FFO (excluding one-time items) was CAD 0.51.

• AFFO per unit was CAD 0.46 (Q2 2024), with payout ratio to AFFO at 98.8%.

• Distributions maintained at CAD 1.85 per unit annualized; debt to aggregate assets at 43.7%, adjusted debt to EBITDA at 9.8–9.9x.

Outlook and guidance

• Expectation of continued leasing and renewal momentum through year-end, with rental rate lifts projected to persist.

• Anticipate further NOI growth and acceleration in condo and townhome closings in the back half of 2024.

• Development pipeline of 57.5–86 million sq. ft. (Trust's share) supports long-term growth, with 0.8 million sq. ft. under construction.

• Capital recycling of CAD 250–300 million targeted, likely in 2025, depending on market conditions and interest rates.

• The Millway leasing expected to exceed 95% by year-end at above-budget rents.