TORONTO, Aug. 09, 2018 (GLOBE NEWSWIRE) -- SmartCentres Real Estate Investment Trust ("SmartCentres" or the "Trust") (TSX: SRU.UN) is pleased to report positive financial and operating results for the second quarter ended June 30, 2018.
Key business development highlights for the three months ended June 30, 2018 include the following:
Financial and operational highlights for the three months ended June 30, 2018 include the following:
(1) Represents a GAAP measure.
(2) Represents a non-GAAP measure.
Subsequent to Quarter End:
“Our strong retail portfolio continues to provide stable operating results such that we are pleased to announce a further increase in our annual distributions from $1.75 per Unit to $1.80 per Unit effective for the November distribution payment. It also provides a solid foundation for our exciting development and intensification initiatives,” said Peter Forde, President & CEO. “We are unique among our peers in that we are initiating developments on our existing sites in a very diverse set of businesses. We continue to conduct a thorough analysis of every one of our centres and expect to identify a growing number of opportunities in residential - rentals, condos, and townhouses, seniors’ residences, self storage, hotel, medical and office,” added Mr. Forde.
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 and represents key financial and operational information for the three months ended June 30, 2018, December 31, 2017 and June 30, 2017. With the exception of net income and comprehensive income, cash flows provided by operating activities, total assets, and equity, all other items represent non-GAAP financial measures.
(in thousands of dollars, except per Unit and other non-financial data) | June 30, 2018 | December 31, 2017 | June 30, 2017 | |||
Consolidated Financial and Operational Information | ||||||
Net income and comprehensive income(1) | 103,748 | 101,911 | 124,070 | |||
Cash flows provided by operating activities(1) | 101,060 | 137,492 | 74,285 | |||
Rentals from investment properties(1) | 193,808 | 193,925 | 181,511 | |||
Net income and comprehensive income excluding loss on disposition and fair value adjustments(2) | 93,041 | 99,108 | 82,200 | |||
Number of retail and other properties | 154 | 154 | 142 | |||
Number of properties under development | 7 | 7 | 8 | |||
Number of office properties | 1 | 1 | 1 | |||
Number of mixed-use properties | 2 | 1 | 1 | |||
Total number of properties with an ownership interest | 164 | 163 | 152 | |||
Gross leasable area (in thousands of sq. ft.) | 34,207 | 34,157 | 31,940 | |||
Future estimated development area (in thousands of sq. ft.) | 4,046 | 4,038 | 4,089 | |||
Lands under Mezzanine Financing (in thousands of sq. ft.) | 615 | 614 | 615 | |||
Committed occupancy rate | 98.2% | 98.3% | 98.5% | |||
In-place occupancy rate | 98.0% | 98.2% | 98.4% | |||
Average lease term to maturity | 5.7 years | 5.8 years | 6.0 years | |||
Net rental rate (per occupied sq. ft.) | $15.29 | $15.28 | $15.24 | |||
Net rental rate excluding Anchors (per occupied sq. ft.) | $21.62 | $21.61 | $21.80 | |||
Financial Information | ||||||
Investment properties(2)(3) | 9,046,739 | 8,952,467 | 8,453,702 | |||
Total assets(1) | 9,513,881 | 9,380,232 | 8,843,016 | |||
Total unencumbered assets(2) | 3,940,600 | 3,387,000 | 2,914,000 | |||
Debt(2)(3) | 4,296,836 | 4,318,330 | 3,909,966 | |||
Debt to Aggregate Assets(2)(3) | 44.7% | 45.4% | 43.9% | |||
Debt to Gross Book Value(2)(3) | 51.4% | 52.3% | 51.5% | |||
Interest Coverage(2)(3) | 3.1X | 3.1X | 3.1X | |||
Debt to Adjusted EBITDA(2)(3) | 8.5X | 8.4X | 8.4X | |||
Equity (book value)(1) | 4,921,463 | 4,827,457 | 4,739,552 |
(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. | |||
(3) | Includes the Trust's share of equity accounted investments. | |||
Key Financial Highlights
Quarterly Comparison to Prior Year
The following table represents key financial, per Unit, and payout ratio information for the three months ended June 30, 2018 and June 30, 2017.
(in thousands of dollars, except per Unit information) | Three Months Ended June 30, 2018 | Three Months Ended June 30, 2017 | Variance | |
Financial Information | ||||
Net income and comprehensive income(1) | 103,748 | 124,070 | (20,322) | |
Rentals from investment properties(1) | 193,808 | 181,511 | 12,297 | |
Net income and comprehensive income excluding gain (loss) on disposition and fair value adjustments(2) | 93,041 | 82,200 | 10,841 | |
NOI(2)(3) | 126,708 | 117,107 | 9,601 | |
FFO(2)(3) | 91,036 | 85,634 | 5,402 | |
FFO with one time adjustment and before transactional FFO(2)(3) | 92,538 | 85,815 | 6,723 | |
FFO with one time adjustment and transactional FFO(2)(3) | 95,012 | 88,939 | 6,073 | |
ACFO(2)(3)(4) | 88,355 | 84,997 | 3,358 | |
ACFO with one time adjustment(2)(3) | 88,355 | 85,178 | 3,177 | |
Distributions declared | 70,634 | 66,806 | 3,828 | |
Surplus of ACFO with one time adjustment over distributions declared(2) | 17,721 | 18,372 | (651) | |
Surplus of ACFO with one time adjustment over distributions paid(2) | 31,617 | 30,672 | 945 | |
Units outstanding(5) | 160,704,177 | 156,455,314 | 4,248,863 | |
Weighted average – basic | 160,415,583 | 156,256,467 | 4,159,116 | |
Weighted average – diluted(6) | 161,220,808 | 156,916,777 | 4,304,031 | |
Per Unit Information (Basic/Diluted) | ||||
Net income and comprehensive income | $0.65/$0.64 | $0.79/$0.79 | $-0.14/$-0.15 | |
Net income and comprehensive income excluding fair value adjustments | $0.58/$0.58 | $0.53/$0.52 | $0.05/$0.06 | |
FFO with one time adjustment and before transactional FFO(2)(3) | $0.58/$0.57 | $0.55/$0.55 | $0.03/$0.02 | |
FFO with one time adjustment and transactional FFO(2)(3) | $0.59/$0.59 | $0.57/$0.57 | $0.02/$0.02 | |
Distributions declared | $0.437 | $0.425 | $0.012 | |
Payout ratio Information | ||||
Payout ratio to ACFO(2)(3)(4) | 79.9% | 78.6% | 1.3% | |
Payout ratio to ACFO with one time adjustment(2)(3) | 79.9% | 78.4% | 1.5% |
(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. | |||
(3) | Includes the Trust's share of equity accounted investments. | |||
(4) | The calculation of the Trust’s ACFO and related ACFO payout ratio, including comparative amounts, is a new financial metric pursuant to the February 2018 REALpac White Paper on ACFO. Comparison with other reporting issuers may not be appropriate. Payout ratio is calculated as declared distributions divided by ACFO. | |||
(5) | 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. | |||
(6) | 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, 2018 and June 30, 2017.
(in thousands of dollars, except per Unit information) | Six Months Ended June 30, 2018 | Six Months Ended June 30, 2017 | Variance | |
Financial Information | ||||
Net income and comprehensive income(1) | 204,214 | 184,069 | 20,145 | |
Rentals from investment properties(1) | 389,190 | 363,066 | 26,124 | |
Net income and comprehensive income excluding gain (loss) on disposition and fair value adjustments(2) | 177,856 | 158,904 | 18,952 | |
NOI(2)(3) | 249,547 | 234,201 | 15,346 | |
FFO(2)(3) | 180,323 | 166,821 | 13,502 | |
FFO with one time adjustment and before transactional FFO(2)(3) | 181,825 | 169,542 | 12,283 | |
FFO with one time adjustment and transactional FFO(2)(3) | 184,789 | 172,666 | 12,123 | |
ACFO(2)(3)(4) | 170,163 | 160,397 | 9,766 | |
ACFO with one time adjustment(2)(3) | 170,163 | 163,118 | 7,045 | |
Distributions declared | 141,042 | 133,456 | 7,586 | |
Surplus of ACFO with one time adjustment over distributions declared(2) | 29,121 | 26,941 | 2,180 | |
Surplus of ACFO with one time adjustment over distributions paid(2) | 56,411 | 54,211 | 2,200 | |
Units outstanding(5) | 160,704,177 | 156,455,314 | 4,248,863 | |
Weighted average – basic | 160,180,885 | 156,070,563 | 4,110,322 | |
Weighted average – diluted(6) | 160,945,056 | 156,709,817 | 4,235,239 | |
Per Unit Information (Basic/Diluted) | ||||
Net income and comprehensive income | $1.27/$1.27 | $1.18/$1.17 | $0.09/$0.10 | |
Net income and comprehensive income excluding fair value adjustments | $1.11/$1.11 | $1.02/$1.01 | $0.09/$0.10 | |
FFO with one time adjustment and before transactional FFO(2)(3) | $1.14/$1.13 | $1.09/$1.08 | $0.05/$0.05 | |
FFO with one time adjustment and transactional FFO(2)(3) | $1.15/$1.15 | $1.11/$1.10 | $0.04/$0.05 | |
Distributions declared | $0.875 | $0.850 | $0.025 | |
Payout ratio Information | ||||
Payout ratio to ACFO(2)(3)(4) | 82.9% | 83.2% | (0.3)% | |
Payout ratio to ACFO with one time adjustment(2)(3) | 82.9% | 81.8% | 1.1% |
(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. | |||
(3) | Includes the Trust's share of equity accounted investments. | |||
(4) | The calculation of the Trust’s ACFO and related ACFO payout ratio, including comparative amounts, is a new financial metric pursuant to the February 2018 REALpac White Paper on ACFO. Comparison with other reporting issuers may not be appropriate. Payout ratio is calculated as declared distributions divided by ACFO. | |||
(5) | 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. | |||
(6) | The diluted weighted average includes the vested portion of the deferred unit plan. | |||
Operational Highlights
For the three months ended June 30, 2018, net income and comprehensive income decreased by $20.3 million or 16.4% compared to the same quarter in 2017. The primary reasons for the decrease pertain to:
Offset by the following factors:
For the three months ended June 30, 2018, NOI increased by $9.6 million or 8.2% compared to the same quarter in 2017, which was primarily due to:
For the six months ended June 30, 2018, net income and comprehensive income increased by $20.1 million or 10.9% compared to the same period in 2017. The primary reasons for the increase pertain to:
Offset by the following factors:
For the six months ended June 30, 2018, NOI increased by $15.3 million or 6.6% compared to the same period in 2017, which was primarily due to:
FFO Highlights
For the three months ended June 30, 2018, FFO with one time adjustment and Transactional FFO increased by $6.1 million or 6.8% to $95.0 million, and by $0.02 or 3.5% to $0.59 on a per Unit basis, which was primarily due to the following:
Offset by the following factors:
For the six months ended June 30, 2018, FFO with one time adjustment and Transactional FFO increased by $12.1 million or 7.0% to $184.8 million, and by $0.05 or 4.5% to $1.15 on a per Unit basis, which was primarily due to the following:
Partially offset by the following factor:
ACFO Highlights
For the three months ended June 30, 2018, ACFO with one time adjustment increased by $3.2 million or 3.7% to $88.4 million compared to the same quarter in 2017, which was primarily due to the following:
Partially offset by the following factors:
The payout ratio relating to ACFO with one time adjustment for the three months ended June 30, 2018 increased by 1.5% to 79.9% compared to the same quarter last year, for the reasons noted above.
For the six months ended June 30, 2018, ACFO with one time adjustment increased by $7.0 million to $170.2 million compared to the same period in 2017, which was primarily due to the following:
Partially offset by the following factor:
The payout ratio relating to ACFO with one time adjustment for the six months ended June 30, 2018 increased by 1.1% to 82.9% compared to the same period last year, for the reasons noted above.
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, 2018, available on SEDAR at www.sedar.com.
Full reports of the financial results of the Trust for the three months ended June 30, 2018 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 9, 2018 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 1-800-239-9838. 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 9, 2018 beginning at 8:30 p.m. (ET) through to 8:30 p.m. (ET) on Thursday, August 16, 2018. To access the recording, please call 1-888-203-1112 and enter the Replay Passcode 9887545#.
About SmartCentres
SmartCentres is one of Canada’s largest real estate investment trusts with total assets of approximately $9.5 billion. It owns and manages 34 million square feet of retail space in value-oriented, principally Walmart-anchored retail centres, having the strongest national and regional retailers as well as strong neighbourhood merchants. The retail centres continue to experience industry-leading occupancy levels of 98.0%. In addition, SmartCentres is a jointventure partner in the Premium Outlets locations in Toronto and Montreal with Simon Property Group.
SmartCentres is expanding 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 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 outlined under the headings "Business Overview and Strategic Direction" and "Outlook". 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 three months ended June 30, 2018 and under the heading "Risk Factors" in its Annual Information Form for the year ended December 31, 2017. 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 & Chief Executive Officer | Chief Financial Officer | ||||||||||||
SmartCentres | SmartCentres | ||||||||||||
(905) 326-6400 ext. 7615 | (905) 326-6400 ext. 7865 | ||||||||||||
[email protected] | [email protected] |
The Toronto Stock Exchange neither approves nor disapproves of the contents of this Press Release.