TORONTO, Feb. 15, 2022 (GLOBE NEWSWIRE) -- SmartCentres Real Estate Investment Trust (“SmartCentres”, the “Trust” or the “REIT”) (TSX: SRU.UN) is pleased to report its financial and operating results for the quarter and year ended December 31, 2021.
“While there continues to be work to do, we ended the 4th quarter with solid performances from every aspect of the business. Operational resilience was demonstrated by solid leasing momentum, increased occupancy to 97.6%, and further improved cash collections exceeding 98%. This is a reflection of the strength of our tenants. Our mixed-use intensification program continues to be a source of additional accretive growth, demonstrated this quarter by the commencement of presales at both our exciting new 627-unit ArtWalk condominium/residential rental project at SmartVMC and our in-demand 174-unit townhome project in Vaughan. Initial presale activity in both of these residential projects has exceeded our expectations and we plan to commence construction on both imminently. In addition, during the quarter, we experienced property value increments exceeding $580.7 million, representing progress in the zoning and entitlements’ process on several strategic projects together with improved market conditions. Also, FFO per unit increased by $0.06 or 12% to $0.56 as compared to the same quarter in the prior year,” said Mitchell Goldhar, Executive Chairman and CEO of SmartCentres REIT.
“At SmartVMC, currently our highest profile development initiative, but just one of many master-planned projects, we have thus far closed on 1,741 units in the first three Transit City condominium phases, resulting in $0.37 in FFO per unit. In addition, construction is progressing well on the 1,026 units in our sold-out Transit City 4 and 5 towers and the 454-unit Millway rental complex. In addition, our residential banner, ‘SmartLiving’ recently had its inaugural launch of the 627-unit ArtWalk condominium/residential rental project, and is expected to soon launch Park Place, a new 1,100-unit two-tower project on the SmartVMC West lands which we purchased just a month ago. The REIT purchased a 66.67% interest in these lands which represents the western 53-acre portion of our SmartVMC City Centre. We intend to develop approximately 10.0 million square feet of mixed-use space on these newly acquired lands and they will also accommodate part of the 9-acre park which, over time, will become the focal point of SmartVMC.”
“Given the progress that was made in 2021, as we move toward a ‘post-covid era’ in 2022, we expect an improving leasing environment, further growth in our self-storage business, increased construction activity in new residential rental buildings in both Ontario and Quebec and the commencement of construction of our first of many retirement home projects with Revera,” added Mr. Goldhar.
Key Business Development, Financial and Operational Highlights for the Year Ended December 31, 2021
Mixed-Use Development and Intensification at SmartVMC
Other Business Development
Financial
Operational
Subsequent Events
(1) | Represents a GAAP measure. | |
(2) | 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 definitions and basis of presentation of the Trust’s non-GAAP measures, refer to “Presentation of Certain Terms Including Non-GAAP Measures” and “Non-GAAP Measures” in the Trust’s MD&A. | |
(3) | Net of cash-on-hand of $80.0 million as at December 31, 2021 for the purposes of calculating the ratios. | |
Selected Consolidated Operational, Mixed-Use Development and Financial Information
Key consolidated operational, mixed-use development and financial information shown in the table below includes the Trust’s proportionate share of equity accounted investments:
(in thousands of dollars, except per Unit and other non-financial data) | December 31, 2021 | December 31, 2020 | December 31, 2019 |
Portfolio Information | |||
Total number of properties with an ownership interest | 174 | 167 | 165 |
Leasing and Operational Information | |||
Gross leasable area including retail and office space (in thousands of sq. ft.) | 34,119 | 34,056 | 34,337 |
Occupied area including retail and office space (in thousands of sq. ft.) | 33,219 | 33,039 | 33,678 |
Vacant area including retail and office space (in thousands of sq. ft.) | 900 | 1,017 | 659 |
In-place occupancy rate (%) | 97.4 | 97.0 | 98.1 |
Committed occupancy rate (%) | 97.6 | 97.3 | 98.2 |
Average lease term to maturity (in years) | 4.4 | 4.6 | 4.9 |
Net retail rental rate (per occupied sq. ft.) ($) | 15.44 | 15.37 | 15.49 |
Net retail rental rate excluding Anchors (per occupied sq. ft.) ($) | 22.07 | 21.89 | 22.13 |
Mixed-Use Development Information | |||
Trust’s share of future development area (in thousands of sq. ft.) | 40,600 | 32,500 | 27,900 |
Trust’s share of estimated costs of future projects currently under construction, or for which construction is expected to commence within the next five years (in millions of dollars) | 9,800 | 7,900 | 5,500 |
Total number of residential rental projects | 104 | 96 | 88 |
Total number of seniors’ housing projects | 27 | 40 | 45 |
Total number of self-storage projects | 36 | 50 | 48 |
Total number of office building projects | 8 | 7 | 10 |
Total number of hotel projects | 3 | 4 | 5 |
Total number of condominium developments | 95 | 72 | 46 |
Total number of townhome developments | 10 | 15 | 14 |
Total number of future projects currently in development planning stage | 283 | 284 | 256 |
Financial Information | |||
Total assets(1) | 11,293,248 | 10,724,492 | 9,928,467 |
Investment properties – GAAP | 9,847,078 | 8,850,390 | 9,050,066 |
Investment properties – non-GAAP(3) | 10,684,529 | 9,400,584 | 9,466,501 |
Total unencumbered assets(2) | 6,640,600 | 5,835,600 | 5,696,100 |
Debt – GAAP | 4,854,527 | 5,210,123 | 4,225,933 |
Debt – non-GAAP(3) | 4,983,078 | 5,261,360 | 4,290,826 |
Debt to Aggregate Assets (%)(2)(3)(4) | 42.9 | 44.6 | 42.3 |
Debt to Gross Book Value (%)(2)(3)(4) | 50.8 | 50.1 | 49.0 |
Unsecured to Secured Debt Ratio(2)(3)(4) | 71%/29% | 68%/32% | 63%/37% |
Unencumbered assets to unsecured debt(2)(3)(4) | 1.9X | 1.9X | 2.1X |
Weighted average interest rate (%)(2)(3) | 3.11 | 3.28 | 3.55 |
Weighted average term of debt (in years) | 4.8 | 5.0 | 5.0 |
Interest coverage ratio(2)(3)(4) | 3.4X | 3.2X | 3.5X |
Adjusted Debt to Adjusted EBITDA (net of cash)(2)(3)(4) | 9.2X | 8.5X | 8.0X |
Equity (book value)(1) | 5,841,315 | 5,166,975 | 5,367,752 |
Weighted average number of units outstanding – diluted | 173,748,819 | 172,971,603 | 170,581,531 |
(1) | Represents a GAAP measure. | |
(2) | 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 definitions and basis of presentation of the Trust’s non-GAAP measures, refer to “Presentation of Certain Terms Including Non-GAAP Measures” and “Non-GAAP Measures” in the Trust’s MD&A. | |
(3) | Includes the Trust’s proportionate share of equity accounted investments. | |
(4) | As at December 31, 2021, cash-on-hand of $80.0 million was excluded for the purposes of calculating the applicable ratios (December 31, 2020 – $754.4 million, December 31, 2019 – $37.0 million). | |
Year-to-Date Comparison to Prior Year
The following table presents key financial, per Unit, and payout ratio information for the years ended December 31, 2021 and December 31, 2020:
(in thousands of dollars, except per Unit information) | 2021 | 2020 | Variance | ||||||
(A) | (B) | (A–B) | |||||||
Financial Information | |||||||||
Rentals from investment properties and other(1) | 780,758 | 781,253 | (495 | ) | |||||
Net base rent(1) | 494,992 | 496,135 | (1,143 | ) | |||||
Total recoveries(1) | 253,032 | 263,802 | (10,770 | ) | |||||
Miscellaneous revenue(1) | 17,891 | 11,182 | 6,709 | ||||||
Service and other revenues(1) | 14,843 | 10,134 | 4,709 | ||||||
Net income and comprehensive income(1) | 987,676 | 89,940 | 897,736 | ||||||
Net income and comprehensive income excluding fair value adjustments(2)(3) | 342,609 | 337,863 | 4,746 | ||||||
Cash flows provided by operating activities(1) | 371,624 | 295,982 | 75,642 | ||||||
Net rental income and other(1) | 485,802 | 460,711 | 25,091 | ||||||
NOI(2) | 518,084 | 519,105 | (1,021 | ) | |||||
NOI excluding condominium sales(2) | 497,613 | 471,548 | 26,065 | ||||||
Change in net rental income and other(2) | 5.4 | % | (8.8 | )% | 14.2 | % | |||
Change in SPNOI(2) | 3.5 | % | (6.9 | )% | 10.4 | % | |||
Change in SPNOI excluding ECL(2) | (2.0 | )% | (1.1 | )% | (0.9 | )% | |||
FFO(2)(3)(4)(5) | 380,070 | 367,967 | 12,103 | ||||||
FFO with adjustments(2)(3)(4) | 383,296 | 379,921 | 3,375 | ||||||
FFO with adjustments and Transactional FFO(2)(3)(4) | 385,219 | 380,665 | 4,554 | ||||||
FFO excluding condominium sales(2)(3)(4) | 361,323 | 323,188 | 38,135 | ||||||
FFO with adjustments excluding condominium sales(2)(3)(4) | 364,549 | 335,142 | 29,407 | ||||||
ACFO(2)(3)(4)(5) | 353,055 | 353,409 | (354 | ) | |||||
ACFO with adjustments(2)(3)(4) | 356,281 | 365,363 | (9,082 | ) | |||||
ACFO excluding condominium sales(2)(3)(4) | 332,585 | 305,852 | 26,733 | ||||||
Distributions declared | 318,753 | 318,758 | (5 | ) | |||||
Surplus (shortfall) of cash provided by operating activities over distributions declared(2) | 52,871 | (22,776 | ) | 75,647 | |||||
Surplus of ACFO over distributions declared(2) | 34,302 | 34,651 | (349 | ) | |||||
Units outstanding(6) | 178,091,581 | 172,221,212 | 5,870,369 | ||||||
Weighted average – basic | 172,447,334 | 171,973,301 | 474,033 | ||||||
Weighted average – diluted(7) | 173,748,819 | 172,971,603 | 777,216 | ||||||
Per Unit Information (Basic/Diluted) | |||||||||
Net income and comprehensive income(1) | $5.73/$5.68 | $0.52/$0.52 | $5.21/$5.16 | ||||||
Net income and comprehensive income excluding fair value adjustments(2)(3) | $1.99/$1.97 | $1.96/$1.95 | $0.03/$0.02 | ||||||
FFO(2)(3)(4)(5) | $2.20/$2.19 | $2.14/$2.13 | $0.06/$0.06 | ||||||
FFO with adjustments(2)(3)(4) | $2.22/$2.21 | $2.21/$2.20 | $0.01/$0.01 | ||||||
FFO with adjustments and Transactional FFO(2)(3)(4) | $2.23/$2.22 | $2.21/$2.20 | $0.02/$0.02 | ||||||
Distributions declared | $1.850 | $1.850 | $— | ||||||
Payout Ratio Information | |||||||||
Payout Ratio to ACFO(2)(3)(4)(5) | 90.3 | % | 90.2 | % | 0.1 | % | |||
Payout Ratio to ACFO with adjustments(2)(3)(4) | 89.5 | % | 87.2 | % | 2.3 | % |
(1) | Represents a GAAP measure. | |
(2) | 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 definitions and basis of presentation of the Trust’s non-GAAP measures, refer to “Presentation of Certain Terms Including Non-GAAP Measures” and “Non-GAAP Measures” in the Trust’s MD&A. | |
(3) | Includes the Trust’s proportionate share of equity accounted investments. | |
(4) | See “Other Measures of Performance” in the Trust’s MD&A for a reconciliation of these measures to the nearest consolidated financial statement measure. | |
(5) | The calculation of the Trust’s FFO and ACFO and related payout ratios, including comparative amounts, are financial metrics that were determined based on the February 2019 REALpac White Paper on FFO and ACFO, respectively. Comparison with other reporting issuers may not be appropriate. The payout ratio to FFO and the payout ratio to ACFO are calculated as declared distributions divided by FFO and ACFO, respectively. | |
(6) | Total Units outstanding include Trust Units and LP Units, including Units classified as liabilities. LP Units classified as equity in the consolidated financial statements are presented as non-controlling interests. | |
(7) | The diluted weighted average includes the vested portion of the deferred units issued pursuant to the deferred unit plan. | |
Operational Highlights
For the three months ended December 31, 2021, net income and comprehensive income (as noted in the table above) increased by $603.7 million as compared to the same period last year. This increase was primarily attributed to the following:
Partially offset by the following:
For the year ended December 31, 2021, net income and comprehensive income (as noted in the table above) increased by $897.7 million as compared to the same period last year. This increase was primarily attributed to the following:
Partially offset by the following:
FFO Highlights
For the three months ended December 31, 2021, FFO increased by $10.8 million or 12.4% to $97.5 million. This increase was primarily attributed to:
Partially offset by:
For the three months ended December 31, 2021, FFO with adjustments decreased by $0.5 million or 0.5% to $98.1 million.
For the year ended December 31, 2021, FFO increased by $12.1 million or 3.3% to $380.1 million. This increase was primarily attributed to:
Partially offset by:
For the year ended December 31, 2021, FFO with adjustments increased by $3.4 million or 0.9% to $383.3 million.
ACFO Highlights
For the three months ended December 31, 2021, ACFO decreased by $0.6 million or 0.8% to $83.3 million compared to the same period in 2020, which was primarily due to the items previously identified (see “Results of Operations” in the Trust’s MD&A).
For the year ended December 31, 2021, ACFO decreased by $0.4 million or 0.1% to $353.1 million compared to the same period in 2020, which was primarily due to the items previously identified (see “Results of Operations” in the Trust’s MD&A).
Development and Intensification Summary
The following table summarizes the 283 identified mixed-use, recurring rental income and development income initiatives, which are included in the Trust’s large development pipeline:
Underway | Active | Future | ||||
Description | (Construction underway or expected to commence within next 2 years) | (Construction expected to commence within next 3–5 years) | (Construction expected to commence after 5 years) | Total | ||
Number of projects in which the Trust has an ownership interest | ||||||
Residential Rental | 20 | 24 | 60 | 104 | ||
Seniors’ Housing | 4 | 9 | 14 | 27 | ||
Self-storage | 9 | 10 | 17 | 36 | ||
Office Buildings | — | 1 | 7 | 8 | ||
Hotels | — | — | 3 | 3 | ||
Subtotal – Recurring rental income initiatives | 33 | 44 | 101 | 178 | ||
Condominium developments | 24 | 24 | 47 | 95 | ||
Townhome developments | 2 | 3 | 5 | 10 | ||
Subtotal – Development income initiatives | 26 | 27 | 52 | 105 | ||
Total | 59 | 71 | 153 | 283 | ||
Trust’s share of project area (in thousands of sq. ft.) | ||||||
Recurring rental income initiatives | 3,600 | 4,900 | 12,000 | 20,500 | ||
Development income initiatives | 5,800 | 4,300 | 10,000 | 20,100 | ||
Total Trust’s share of project area (in thousands of sq. ft.) | 9,400 | 9,200 | 22,000 | 40,600 | ||
Trust’s share of such estimated costs (in millions of dollars) | 5,000 | 4,800 | – (1) | 9,800 |
(1) | The Trust does not fully determine the costs attributable to future projects expected to commence after five years and as such they are not included in this table. |
As noted in the table above, the Trust is currently working on initiatives for the development of many properties, for which final municipal approvals have been obtained or are being actively pursued including:
Non-GAAP Measures
The non-GAAP measures used in this Press Release, including but not limited FFO, Transactional FFO, ACFO, NOI, Same Property NOI, average yield rates, and payout ratio do not have any standardized meaning prescribed by International Financial Reporting Standards (“IFRS”) and are therefore unlikely to be comparable to similar measures presented by other issuers. These non-GAAP measures are more fully defined and discussed in 'Management’s Discussion and Analysis' ("MD&A") of the Trust for the year ended December 31, 2021, available on SEDAR at www.sedar.com.
Full reports of the financial results of the Trust for the year ended December 31, 2021 are outlined in the consolidated financial statements and the related MD&A of the Trust for the year ended December 31, 2021, which are available on SEDAR at www.sedar.com.
Conference Call
SmartCentres will hold a conference call on Wednesday, February 16, 2022 at 11:00 a.m. (ET). Participating on the call will be members of SmartCentres’ senior management.
Investors are invited to access the call by dialing 1-855-353-9183 and then keying in the participant access code 20510#. You will be required to identify yourself and the organization on whose behalf you are participating.
A recording of this call will be made available Wednesday, February 16, 2022 beginning at 8:30 p.m. (ET) through to 8:30 p.m. (ET) on Wednesday, February 23, 2022. To access the recording, please call 1-855-201-2300, enter the conference access code 20510# and then key in the participant access code 0111875#.
About SmartCentres
SmartCentres Real Estate Investment Trust is one of Canada’s largest fully integrated REITs, with a best-in-class portfolio featuring 174 strategically located properties in communities across the country. SmartCentres has approximately $11.3 billion in assets and owns 34.1 million square feet of income producing value-oriented retail and first-class office space with 97.6% occupancy, on 3,500 acres of owned land across Canada.
SmartCentres continues to focus on enhancing the lives of Canadians by planning and developing complete, connected, mixed-use communities on its existing retail properties. Project 512, a publicly announced $15.2 billion intensification program ($9.8 billion at SmartCentres' share) represents the REIT’s current major development focus on which construction is expected to commence within the next five years. This intensification program consists of rental apartments, condos, seniors’ residences and hotels, to be developed under the SmartLiving banner, and retail, office, and storage facilities, to be developed under the SmartCentres banner.
SmartCentres' intensification program is expected to produce an additional 58.6 million square feet (40.6 million square feet at SmartCentres’ share) of space, 28.6 million square feet (18.6 million square feet at SmartCentres’ share) of which has or will commence construction within the next five years. From shopping centres to city centres, SmartCentres is uniquely positioned to reshape the Canadian urban and urban-suburban landscape.
Included in this intensification program is the Trust’s share of SmartVMC which, when completed, is expected to include approximately 20.0 million square feet of mixed-use space in Vaughan, Ontario. Construction of the first five sold-out phases of Transit City Condominiums that represent 2,789 residential units continues to progress. Final closings of the first three phases of Transit City Condominiums began ahead of budget and ahead of schedule in August 2020 and all 1,741 units in these phases have now closed. In addition, the 22 sold-out townhomes that complete this phase of the project, are expected to close in 2022. The fourth and fifth sold-out phases representing 1,026 units are currently under construction and are expected to close in 2023.
Certain statements in this Press Release are "forward-looking statements" that reflect management's expectations regarding the Trust's future growth, results of operations, performance and business prospects and opportunities. More specifically, certain statements including, but not limited to, statements related to SmartCentres’ expected or planned development plans and joint venture projects, including the described type, scope, costs and other financial metrics and the expected timing of construction and condominium closings and statements that contain words such as "could", "should", "can", "anticipate", "expect", "believe", "will", "may" and similar expressions and statements relating to matters that are not historical facts, constitute "forward-looking statements". These forward-looking statements are presented for the purpose of assisting the Trust's Unitholders and financial analysts in understanding the Trust's operating environment, and may not be appropriate for other purposes. Such forward-looking statements reflect management's current beliefs and are based on information currently available to management.
However, such forward-looking statements involve significant risks and uncertainties. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements, including risks associated with potential acquisitions not being completed or not being completed on the contemplated terms, public health crises such as the COVID-19 pandemic, real property ownership and development, debt and equity financing for development, interest and financing costs, construction and development risks, ability to obtain commercial and municipal consents for development. These risks and others are more fully discussed under the heading “Risks and Uncertainties” and elsewhere in SmartCentres’ most recent Management’s Discussion and Analysis, as well as under the heading “Risk Factors” in SmartCentres’ most recent annual information form. Although the forward-looking statements contained in this press release are based on what management believes to be reasonable assumptions, SmartCentres cannot assure investors that actual results will be consistent with these forward-looking statements. The forward-looking statements contained herein are expressly qualified in their entirety by this cautionary statement. These forward-looking statements are made as at the date of this Press Release and SmartCentres assumes no obligation to update or revise them to reflect new events or circumstances unless otherwise required by applicable securities legislation.
Material factors or assumptions that were applied in drawing a conclusion or making an estimate set out in the forward-looking information may include, but are not limited to: a stable retail environment; relatively low and stable interest costs; a continuing trend toward land use intensification, including residential development in urban markets and continued growth along transportation nodes; access to equity and debt capital markets to fund, at acceptable costs, future capital requirements and to enable our refinancing of debts as they mature; that requisite consents for development will be obtained in the ordinary course, construction and permitting costs consistent with the past year and recent inflation trends.
For more information, please visit www.smartcentres.com or contact:
Mitchell Goldhar | Peter Sweeney | |
Executive Chairman and CEO | Chief Financial Officer | |
SmartCentres | SmartCentres | |
(905) 326-6400 ext. 7674 | (905) 326-6400 ext. 7865 | |
[email protected] | [email protected] |
The Toronto Stock Exchange neither approves nor disapproves of the contents of this Press Release.
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