SmartCentres Real Estate Investment Trust (SRU.UN) Q3 2024 earnings summary

Executive summary

• Achieved 98.5% occupancy in Q3 2024, with strong leasing momentum and 88% of 2024 lease maturities renewed at 8.9% rental growth for non-anchor tenants.

• Portfolio includes 195 properties with 35.3M sq. ft. of income-producing assets, reaching over 90% of the Canadian population.

• Mixed-use development pipeline advanced, with 47 Vaughan NW townhomes closed, The Millway rental project at 93% occupancy, and ArtWalk Phase I 93% pre-sold.

• Self-storage portfolio expanded to over 1.3M sq. ft. operating, with multiple projects under construction and new facilities opening in 2025.

• Major tenants remain stable, with Walmart accounting for 23.4% of revenue and over 45% of rental income from the top 10 tenants.

Financial highlights

• FFO per unit was $0.71 in Q3 2024, up from $0.55 in Q3 2023; adjusted FFO per unit was $0.53, impacted by higher interest expense.

• Net operating income rose by $5M (3.4%) year-over-year, with net rental income up $11.6M (8.9%) and NOI at $141.98M for Q3 2024.

• AFFO per unit was $0.61, up from $0.48 in Q3 2023.

• Distributions maintained at $1.85 per unit annualized; payout ratio to AFFO was 75.2% for Q3.

• Liquidity stood at $1.1B, with $350M in new debentures issued and used to repay maturing and higher-interest debt.

Outlook and guidance

• Management expects continued rental growth, high occupancy, and NOI momentum into Q4 and 2025.

• Same property NOI run rate projected at 3%-5% for 2025, supported by strong tenant demand and lease extensions.

• Disposition target of $250–350M, mainly residential land, likely in 2025–2026, with potential for higher sales if market conditions improve.

• The Millway rental project is projected to exceed 95% occupancy by year-end, with rental rates above budget.

• Development pipeline includes 85.7M sq. ft., with 67% zoning approved and 0.8M sq. ft. under construction.