TORONTO, Aug. 08, 2019 (GLOBE NEWSWIRE) -- SmartCentres Real Estate Investment Trust ("SmartCentres" or the "Trust") (TSX: SRU.UN) is pleased to report its financial and operating results for the second quarter ended June 30, 2019.
“The second quarter demonstrated both the resiliency of our retail portfolio and the strong impact of our development projects,” said Peter Forde, President & CEO. “Investors saw an increase in our ACFO and FFO while we move forward with the development of our intensification initiatives. Our development team is now actively pursuing 168 mixed use projects on our existing properties. SmartCentres is in an excellent position to provide unitholders with a steady and growing distribution stream.”
Key business development highlights for the three months ended June 30, 2019 include the following:
Operational
Financial
Development and Intensification
Subsequent to Quarter End:
(1) Represents a GAAP measure.
(2) Represents a non-GAAP measure. See “Presentation of Non-GAAP Measures” in the MD&A.
Selected Consolidated Financial and Operational Information
The consolidated financial and operational information shown in the table below includes the Trust’s share of equity accounted investments, see the “Equity Accounted Investments” section in the MD&A for details, and represents key operational and financial information as at June 30, 2019, December 31, 2018 and June 30, 2018.
(in thousands of dollars, except per Unit and other non-financial data) | June 30, 2019 | December 31, 2018 | June 30, 2018 | |||||||||
Operational Information | ||||||||||||
Number of retail and other properties | 152 | 152 | 154 | |||||||||
Number of properties under development | 7 | 7 | 7 | |||||||||
Number of office properties | 1 | 1 | 1 | |||||||||
Number of mixed-use properties | 4 | 4 | 2 | |||||||||
Total number of properties with an ownership interest | 164 | 164 | 164 | |||||||||
Gross leasable area (in thousands of sq. ft.) | 34,252 | 34,379 | 34,207 | |||||||||
Future estimated retail development area (in thousands of sq. ft.) | 3,340 | 3,214 | 4,046 | |||||||||
Lands under Mezzanine Financing (in thousands of sq. ft.) | 615 | 615 | 615 | |||||||||
Committed occupancy rate | 98.0% | 98.1% | 98.2% | |||||||||
In-place occupancy rate | 97.8% | 98.0% | 98.0% | |||||||||
Average lease term to maturity | 5.2 years | 5.4 years | 5.7 years | |||||||||
Net retail rental rate (per occupied sq. ft.) | $15.38 | $15.31 | $15.22 | |||||||||
Net retail rental rate excluding Anchors (per occupied sq. ft.) | $22.01 | $21.77 | $21.57 | |||||||||
Financial Information | ||||||||||||
Investment properties(2)(3) | 9,229,352 | 9,155,173 | 9,046,739 | |||||||||
Total assets(1) | 9,676,090 | 9,459,632 | 9,513,881 | |||||||||
Total unencumbered assets(2) | 4,499,700 | 4,250,800 | 3,940,600 | |||||||||
Debt(2)(3) | 4,127,264 | 4,236,364 | 4,296,836 | |||||||||
Debt to Aggregate Assets(2)(3) | 41.8% | 43.9% | 44.7% | |||||||||
Debt to Gross Book Value(2)(3) | 48.5% | 51.1% | 51.4% | |||||||||
Interest Coverage(2)(3) | 3.3X | 3.3X | 3.2X | |||||||||
Interest coverage (net of capitalized interest expense)(2)(3) | 3.8X | 3.8X | 3.8X | |||||||||
Debt to Adjusted EBITDA(2)(3) | 7.8X | 8.2X | 8.5X | |||||||||
Equity (book value)(1) | 5,286,865 | 5,008,331 | 4,921,463 |
(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 the “Presentation of Non-GAAP Measures” section in the MD&A. | |||
(3) | Includes the Trust’s share of equity accounted investments. | |||
Quarterly Comparison to Prior Year
The following table represents key financial, per Unit, and payout ratio information for the three months ended June 30, 2019 and June 30, 2018:
(in thousands of dollars, except per Unit information) | June 30, 2019 | June 30, 2018 | Variance | |||
(A) | (B) | (A–B) | ||||
Financial Information | ||||||
Rentals from investment properties and other(1) | 196,746 | 197,561 | (815) | |||
Net income and comprehensive income(1) | 95,513 | 103,748 | (8,235) | |||
Cash flows provided by operating activities(1) | 80,767 | 100,994 | (20,227) | |||
Net income and comprehensive income excluding loss on disposition and fair value adjustments(2)(3) | 86,158 | 87,135 | (977) | |||
NOI(2) | 128,217 | 126,708 | 1,509 | |||
FFO(2)(3)(4)(5) | 91,781 | 91,036 | 745 | |||
FFO with one time adjustment for yield maintenance costs(2)(3)(4) | 96,121 | 91,036 | 5,085 | |||
FFO with one time adjustments and Transactional FFO(2)(3)(4) | 96,121 | 95,012 | 1,109 | |||
ACFO(2)(3)(4)(5) | 91,244 | 88,355 | 2,889 | |||
ACFO with one time adjustment(2)(3)(4) | 95,584 | 88,355 | 7,229 | |||
Distributions declared | 76,985 | 70,634 | 6,351 | |||
Surplus of ACFO with one time adjustment over distributions declared(2) | 18,599 | 17,721 | 878 | |||
Surplus of ACFO with one time adjustment over distributions paid(2) | 35,676 | 31,617 | 4,059 | |||
Units outstanding(6) | 170,118,375 | 160,704,177 | 9,414,198 | |||
Weighted average – basic | 169,858,745 | 160,415,583 | 9,443,162 | |||
Weighted average – diluted(7) | 170,718,814 | 161,220,808 | 9,498,006 | |||
Per Unit Information (Basic/Diluted) | ||||||
Net income and comprehensive income | $0.56/$0.56 | $0.65/$0.64 | $-0.09/$-0.08 | |||
Net income and comprehensive income excluding loss on disposition and fair value adjustments | $0.51/$0.50 | $0.54/$0.54 | $-0.03/$-0.04 | |||
FFO(2)(3)(4)(5) | $0.54/$0.54 | $0.57/$0.56 | $-0.03/$-0.02 | |||
FFO with one time adjustment for yield maintenance costs(2)(3)(4) | $0.57/$0.56 | $0.57/$0.56 | $0.00/$0.00 | |||
FFO with one time adjustments and Transactional FFO(2)(3)(4) | $0.57/$0.56 | $0.59/$0.59 | $-0.02/$-0.03 | |||
Distributions declared | $0.450 | $0.437 | $0.013 | |||
Payout Ratio Information | ||||||
Payout ratio to FFO(2)(3)(4)(5) | 83.7% | 77.5% | 6.2% | |||
Payout ratio to FFO with one time adjustment for yield maintenance costs(2)(3)(4) | 79.9% | 77.5% | 2.4% | |||
Payout ratio to FFO with one time adjustments and Transactional FFO(2)(3)(4) | 79.9% | 74.2% | 5.7% | |||
Payout ratio to ACFO(2)(3)(4)(5) | 84.4% | 79.9% | 4.5% | |||
Payout ratio to ACFO with one time adjustment(2)(3)(4) | 80.5% | 79.9% | 0.6% |
(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 the “Presentation of Non-GAAP Measures” section in the MD&A. | |||
(3) | Includes the Trust’s share of equity accounted investments. | |||
(4) | See “Other Measures of Performance” 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 unaudited interim condensed consolidated financial statements are presented as non-controlling interests. | |||
(7) | The diluted weighted average includes the vested portion of the deferred unit plan. | |||
Year-to-Date Comparison to Prior Year
The following table represents key financial, per Unit, and payout ratio information for the six months ended June 30, 2019 and June 30, 2018:
(in thousands of dollars, except per Unit information) | June 30, 2019 | June 30, 2018 | Variance | |||
(A) | (B) | (A–B) | ||||
Financial Information | ||||||
Rentals from investment properties and other(1) | 403,179 | 395,994 | 7,185 | |||
Net income and comprehensive income(1)(3) | 175,486 | 204,214 | (28,728) | |||
Cash flows provided by operating activities(1) | 133,349 | 144,794 | (11,445) | |||
Net income and comprehensive income excluding loss on disposition and fair value adjustments(2)(3) | 169,062 | 170,834 | (1,772) | |||
NOI(2) | 254,152 | 249,547 | 4,605 | |||
FFO(2)(3)(4)(5) | 180,077 | 180,323 | (246) | |||
FFO with one time adjustment for yield maintenance costs(2)(3)(4) | 187,942 | 180,323 | 7,619 | |||
FFO with one time adjustments and Transactional FFO(2)(3)(4) | 187,942 | 184,789 | 3,153 | |||
ACFO(2)(3)(4)(5) | 171,620 | 170,163 | 1,457 | |||
ACFO with one time adjustment(2)(3)(4) | 179,485 | 170,163 | 9,322 | |||
Distributions declared | 153,701 | 141,042 | 12,659 | |||
Surplus of ACFO with one time adjustment over distributions declared(2) | 25,784 | 29,121 | (3,337) | |||
Surplus of ACFO with one time adjustment over distributions paid(2) | 59,855 | 56,411 | 3,444 | |||
Units outstanding(6) | 170,118,375 | 160,704,177 | 9,414,198 | |||
Weighted average – basic | 168,706,565 | 160,180,885 | 8,525,680 | |||
Weighted average – diluted(7) | 169,589,765 | 160,945,056 | 8,644,709 | |||
Per Unit Information (Basic/Diluted) | ||||||
Net income and comprehensive income | $1.04/$1.03 | $1.27/$1.27 | $-0.23/$-0.24 | |||
Net income and comprehensive income excluding loss on disposition and fair value adjustments | $1.00/$1.00 | $1.07/$1.06 | $-0.07/$-0.06 | |||
FFO(2)(3)(4)(5) | $1.07/$1.06 | $1.13/$1.12 | $-0.06/$-0.06 | |||
FFO with one time adjustment for yield maintenance costs(2)(3)(4) | $1.11/$1.11 | $1.13/$1.12 | $-0.02/$-0.01 | |||
FFO with one time adjustments and Transactional FFO(2)(3)(4) | $1.11/$1.11 | $1.15/$1.15 | $-0.04/$-0.04 | |||
Distributions declared | $0.900 | $0.875 | $0.025 | |||
Payout Ratio Information | ||||||
Payout ratio to FFO(2)(3)(4)(5) | 84.8% | 78.1% | 6.7% | |||
Payout ratio to FFO with one time adjustment for yield maintenance costs(2)(3)(4) | 81.2% | 78.1% | 3.1% | |||
Payout ratio to FFO with one time adjustments and Transactional FFO(2)(3)(4) | 81.2% | 76.2% | 5.0% | |||
Payout ratio to ACFO(2)(3)(4)(5) | 89.6% | 82.9% | 6.7% | |||
Payout ratio to ACFO with one time adjustment(2)(3)(4) | 85.6% | 82.9% | 2.7% |
(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 the “Presentation of Non-GAAP Measures” section in the MD&A. | |||
(3) | Includes the Trust’s share of equity accounted investments. | |||
(4) | See “Other Measures of Performance” 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 unaudited interim condensed consolidated financial statements are presented as non-controlling interests. | |||
(7) | The diluted weighted average includes the vested portion of the deferred unit plan. |
Operational Highlights
Excluding acquisition and disposition related gain or loss and fair value adjustments on both financial instruments and investment properties, net income for the three months ended June 30, 2019 decreased by $1.0 million or 1.1% as compared to the same period last year. This decrease was primarily attributed to the following:
Partially offset by:
Excluding acquisition and disposition related gain or loss and fair value adjustments on both financial instruments and investment properties, net income for the six months ended June 30, 2019 decreased by $1.8 million or 1.1% as compared to the same period last year. This decrease was primarily attributed to the following:
Partially offset by the following:
FFO Highlights
For the three months ended June 30, 2019, FFO with one time adjustment of yield maintenance costs increased by $5.1 million or 5.6% to $96.1 million, while per Unit amounts remained the same. This increase of $5.1 million was primarily attributed to the following:
For the six months ended June 30, 2019, FFO with one time adjustment of yield maintenance increased by $7.6 million or 4.2% to $187.9 million, and decreased by $0.01 or 0.9% to $1.11 on a per Unit basis primarily due to the dilutive impact of the $230.0 million equity offering in January 2019. This increase of $7.6 million was primarily attributed to the following:
ACFO Highlights
For the three months ended June 30, 2019, ACFO with one time adjustment increased by $7.2 million or 8.2% to $95.6 million as compared to the same quarter in 2018 (see the "Results of Operations" section in the MD&A).
The Payout Ratio relating to ACFO with one time adjustment for the three months ended June 30, 2019 increased by 0.8% to 80.5% as compared to the same quarter last year, primarily as a result of 7,360,000 Units being issued as part of the $230.0 million equity offering in January 2019.
For the six months ended June 30, 2019, ACFO with one time adjustment increased by $9.3 million or 5.5% to $179.5 million as compared to the same quarter in 2018 (see the "Results of Operations" section in the MD&A).
The Payout Ratio relating to ACFO with one time adjustment for the six months ended June 30, 2019 increased by 3.3% to 85.6% as compared to the same quarter last year, primarily as a result of 7,360,000 Units being issued as part of the $230.0 million equity offering in January 2019.
Development and Intensification Summary
Collectively, the Trust anticipates that the various new mixed-use initiatives that the Trust is planning will create substantial opportunities for inherent growth in both NAV and net income per unit. These initiatives are consistent with the Trust's diversification strategy that is designed to enable SmartCentres to leverage its existing portfolio of retail properties as a catalyst to propel substantive future growth. Currently, 168 intensification initiatives have been identified to commence over the next five years on 76 of the 164 properties owned by SmartCentres. In addition, the Trust continues to assess each of its existing properties to identify additional opportunities for mixed-use development. The table below identifies the current status of these 168 identified initiatives.
Description | # Projects Underway | # Projects In Active Planning | # Projects Identified for Future (Minimum) | Total Minimum # Projects Currently Underway, in Active Planning and Identified for Future | ||||
Apartment Rentals | 9 | 7 | 22 | 38 | ||||
Residential Condominiums | 7 | 9 | 13 | 29 | ||||
Residential Townhomes | 1 | 4 | 10 | 15 | ||||
Seniors’ Residences | 2 | 13 | 30 | 45 | ||||
Office | 1 | 2 | — | 3 | ||||
Self-Storage | 13 | 14 | 11 | 38 | ||||
Total | 33 | 49 | 86 | 168 | ||||
Because these various initiatives will be developed primarily on sites that are in the Trust's existing portfolio of properties across Canada, SmartCentres will not be required to purchase expensive development land. Most of these initiatives are being planned on properties that the Trust has owned for many years and that were developed by the in-house development team. This team is familiar with: i) the needs and concerns of the communities and their municipal administrations, ii) the existing complement of services and any proposed future improvements to infrastructure and services, iii) any geo-technical and environmental constraints, and iv) the realistic timeframes expected for rezoning and similar entitlements. The financial benefits associated with these various development initiatives will soon begin to contribute substantively to the Trust's operating results with the first closings of the Transit City condominium towers commencing in third quarter of 2020.
Non-GAAP Measures
The non-GAAP measures used in this Press Release, including 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 the 'Management Discussion and Analysis' ("MD&A") of the Trust for the three months ended June 30, 2019, available on SEDAR at www.sedar.com.
Full reports of the financial results of the Trust for the three months ended June 30, 2019 are outlined in the unaudited interim condensed consolidated financial statements and the related MD&A of the Trust, which are available on SEDAR at www.sedar.com. In addition, supplemental information is available on the Trust's website at www.smartcentres.com.
Conference Call
SmartCentres will hold a conference call on Thursday, August 8, 2019 at 5:30 p.m. (ET). Participating on the call will be members of SmartCentres’ senior management.
Investors are invited to access the call by dialing 1-888-254-3590. 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 Thursday, August 8, 2019 beginning at 8:30 p.m. (ET) through to 8:30 p.m. (ET) on Thursday, August 15, 2019. To access the recording, please call 1-888-203-1112 and enter the Replay Passcode 7921406#.
About SmartCentres
SmartCentres is one of Canada’s largest real estate investment trusts with total assets of approximately $9.7 billion. It owns and manages 34 million square feet in value-oriented, principally Walmart-anchored retail centres, having the strongest national and regional retailers as well as strong neighbourhood merchants. In addition, SmartCentres is a joint-venture partner in the Premium Outlets locations in Toronto and Montreal with Simon Property Group.
SmartCentres continues to expand the breadth of its portfolio to include residential (single-family, condominium and rental), retirement homes, office, and self-storage, either on its large urban properties such as SmartCentres Place at the Vaughan Metropolitan Centre or as an adjunct to its well-located existing shopping centres. For more information on SmartCentres, visit www.smartcentres.com.
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 as further outlined under the headings "Business Overview and Strategic Direction", "Other Measures of Performance" and "Outlook" in the Trust's Management's Discussion & Analysis for the period ended June 30, 2019. More specifically, certain statements contained in this Press Release, including statements related to the Trust's maintenance of productive capacity, estimated future development plans and costs, view of term mortgage renewals including rates and upfinancing amounts, timing of future payments of obligations, intentions to secure additional financing and potential financing sources, and vacancy and leasing assumptions, 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, including those discussed under the heading "Risks and Uncertainties" and elsewhere in the Trust's Management's Discussion & Analysis for the period ended June 30, 2019 and under the heading "Risk Factors" in its Annual Information Form for the year ended December 31, 2018. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements. Although the forward-looking statements contained in this Press Release are based on what management believes to be reasonable assumptions, the Trust 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 the Trust assumes no obligation to update or revise them to reflect new events or circumstances unless otherwise required by applicable securities legislation.
For more information, please contact:
Peter Forde | Peter Sweeney | |
President & CEO | Chief Financial Officer | |
SmartCentres | SmartCentres | |
(905) 326-6400 ext. 7615 | (905) 326-6400 ext. 7865 | |
pforde@smartcentres.com | psweeney@smartcentres.com |
The Toronto Stock Exchange neither approves nor disapproves of the contents of this Press Release.