Smartcentres Real Estate Investment Trust · TSX:SRU.UN
Smartcentres Real Estate Investment Trust — Q3 2024 Earnings Presentation
44 slides from Smartcentres Real Estate Investment Trust's earnings presentation, Nov 14, 2024
Slide 1: 2024 Q3 Investor Presentation
CANADA’S SHOPPING CENTRE FOR OVER THIRTY YEARS 2024 Q3 INVESTOR PRESENTATION NOVEMBER 2024
Slide 2: SmartVMC Vaughan, Oakville, Leaside
SMARTVMC VAUGHAN OAKVILLE LEASIDE SMARTCENTRES REIT | 2024 Q3 INVESTOR PRESENTATION 1
Slide 3: SmartVMC Vaughan, Oakville, Leaside
SMARTVMC VAUGHAN OAKVILLE LEASIDE SMARTCENTRES REIT | 2024 Q3 INVESTOR PRESENTATION 2
Slide 4: Forward Looking Statements and Non-GAAP Measures
FORWARD LOOKING NON-GAAP STATEMENTS MEASURES Certain statements in this document are "forward-looking statements" that constitute forward-looking information (within The non-GAAP measures and ratios used in the meaning of Canadian securities laws) and that reflect management's expectations regarding
Slide 5: Q3 2024 Highlights
Q3 2024 HIGHLIGHTS Leasing activity for The Renewed and extended Millway, a 458-unit 88% of all leases rental apartment maturing in 2024, with project accelerated strong rental growth of during the quarter with 8.9% (excluding 93% of the units leased anchors) and expected to exceed 95% by year- end
Slide 6: Q3 2024 Financial Highlights
Q3 2024 FINANCIAL HIGHLIGHTS Q3 2024 Q2 2024 Q3 2023 In-place and Committed 98.2% 98.5% 98.5% Occupancy Rate +0.3% - Renewed Rent Change (incl. Anchors) 6.1% 5.8% 6.2% +0.3% -0.1% SPNOI (YoY Change) 4.9% 1.3% 1.9% +3.6% +3.0% FFO / unit (diluted) $0.71 $0.50 $0.55 +$0.21 +$0.16 FFO / unit from Condo
Slide 7: About SmartCentres, Development Pipeline, ESG, Financial Flexibility
01 ABOUT SMARTCENTRES 02 LEADING DEVELOPMENT PIPELINE 03 ENVIRONMENTAL, SOCIAL AND GOVERNANCE 04 FINANCIAL FLEXIBILITY AND STRENGTH SMARTCENTRES REIT | 2024 Q3 INVESTOR PRESENTATION 6
Slide 8: About SmartCentres
ABOUT SMARTCENTRES SMARTCENTRES REIT | 2024 Q3 INVESTOR PRESENTATION 7
Slide 9: SmartCentres at a Glance
ABOUT SMARTCENTRES SMARTCENTRES AT A GLANCE Types of Shopping Centres • Anchored by food and general merchandise • SmartCentres’ portfolio includes an ownership interest in properties comprising • Value oriented tenants and seasonal retail shopping centres, mixed-use properties, and development land
Slide 10: Our Foundation Is Supported by Three Key Pillars
ABOUT SMARTCENTRES OUR FOUNDATION IS SUPPORTED BY THREE KEY PILLARS Resilient Walmart and Growing Income from Strategically Located Grocery-anchored Mixed-use Portfolio Development Pipeline Shopping Centers • Favourably located open-air • Diversified portfolio of • 86 million sq. ft. of projected sh
Slide 11: Evolution of SmartCentres into a Leading Player
ABOUT SMARTCENTRES EVOLUTION OF SMARTCENTRES INTO A LEADING PLAYER SMARTCENTRES SMARTCENTRES SMARTCENTRES AQUIRES $513M STRONG MOMENTUM WALMART JOINT LAUNCHES SMARTVMC WEST CONTINUES VENTURE WITH SMARTLIVING LANDS SMARTCENTRES’ Vaughan NW SMARTCENTRES PENGUIN PICKUP STRATEGIC FOCUS Residential growt
Slide 12: Recession Resistant Portfolio Provides Support for Sustainable Growth
ABOUT SMARTCENTRES RECESSION RESISTANT PORTFOLIO PROVIDES SUPPORT FOR SUSTAINABLE GROWTH Resilient Retail 30+ Year Significant Robust Exceptional Base with Strategic Development Financial Team Growing Partnership Pipeline Position Mixed-use with Walmart Portfolio SMARTCENTRES REIT | 2024 Q3 INVESTOR
Slide 13: Stable Tenants and Cashflows
ABOUT SMARTCENTRES TOP 1 0 TE N A N TS BY RE VE N U E 1 STABLE TENANTS AND CASHFLOWS 23.4% 4.6% 99+% rental receipts 4.5% 2.7% 95+% of tenants are national or regional 2.1% 2.1% 45+% of rental income from top 10 tenants 1.7% 1.6% 60+% of tenants provide consumers with essential services 1.6% 1.4% 1.
Slide 14: Majority Walmart Anchored with Leading Occupancy
ABOUT SMARTCENTRES MAJORITY WALMART ANCHORED WITH LEADING OCCUPANCY 113 shopping centres In-place and Committed Centre Profile anchored by Walmart3 Occupancy Rate Greater-VECTOM2 : 98.5% 72.3% BY Primary: Strong revenue supports REVENUE 16.2% stable distributions Secondary: 11.5% Attracts customers
Slide 15: Major Retailers Currently Accelerating Growth
ABOUT SMARTCENTRES MAJOR RETAILERS CURRENTLY ACCELERATING GROWTH Banks QSR Fitness SMARTCENTRES REIT | 2024 Q3 INVESTOR PRESENTATION 14
Slide 16: Upcoming Lease Maturities Provide Upside
ABOUT SMARTCENTRES UPCOMING MATURITIES PROVIDE UPSIDE 10.0 26% 8.0 In Millions of Square Feet 1 41% 42% NEXT 5 YEARS 18% MATURITY 6. 0 16% 14% 12% 4.0 10% 17% 2.0 3% 1% Average Expiring Rent $23.13 per sq. ft.3 - 2 Vacant 2024 2025 2026 2027 2028 2029 2030 & Beyond Average Market Rent $29.29 per sq.
Slide 17: Unparalleled Development Pipeline
ABOUT SMARTCENTRES UNPARALLELED Development as % DEVELOPMENT PIPELINE of Total Assets2 14% 86 Million sq. ft. of projected mixed-use development initiatives1 6% 5% % Supported by a strong financial position: 4%Peer Average: 4.4 3% 35.3 Million sq. ft. income-producing portfolio RioCan Choice Crombie
Slide 18: Exceptional Management Team with Significant Experience
ABOUT SMARTCENTRES Rudy Gobin EXCEPTIONAL Executive Vice President, Portfolio Management and Investments 30 Years MANAGEMENT TEAM WITH SIGNIFICANT EXPERIENCE Peter Slan Chief Financial Officer 29 Years ALIGNMENT AND ACCOMPLISHMENTS • Largest shareholder with Allan Scully 20+% equity interest Executi
Slide 19: Leading Development Pipeline
LEADING DEVELOPMENT PIPELINE SMARTCENTRES REIT | 2024 Q3 INVESTOR PRESENTATION 18
Slide 20: Experienced Developers Core to Our Growth Plan
LEADING DEVELOPMENT PIPELINE WE ARE EXPERIENCED DEVELOPERS WHICH IS CORE TO OUR GROWTH PLAN 1 2 3 30 Years of Strong Significant Landbank Development Relationships Experience • Less than 25% land • 150 person development • Strong long-term utilization currently team relationships with leading retail
Slide 21: Multiple Avenues for Future Growth
LEADING DEVELOPMENT PIPELINE MULTIPLE AVENUES FOR FUTURE GROWTH Recurring Development Innovation / Income Income Value-Add Services Shopping Centres / Retail Condos Space for Logistics Office Townhomes EV Charging Apartments Digital Signage Self-Storage Sustainability Initiatives Industrial and Park
Slide 22: Future Mixed-Use Development
LEADING DEVELOPMENT PIPELINE FUTURE MIXED-USE DEVELOPMENT 0.8 57.1 Million Million sq. ft. sq. ft. Zoning Approved UNDER 67% ZONING APPROVED CONSTRUCTION 85.7 Million Rezoning Total sq. ft. Application Submitted 12% 10.7 17.1 Million Million Under sq. ft. sq. ft. Construction In Planning 20% 1% REZO
Slide 23: Building Holistic Communities
LEADING DEVELOPMENT PIPELINE BUILDING HOLISTIC COMMUNITIES APARTMENTS • CONDOS • TOWNHOMES • SENIORS’ PUBLIC SPACES PARKS TRANSIT ARTS & & SQUARES & TRAILS CONNECTIVITY CULTURE Enhanced urban programming Pedestrian-focused greenspace Prime transit-connected locations Creativity and diversity are lev
Slide 24: Development Initiatives Under Construction
LEADING DEVELOPMENT PIPELINE DEVELOPMENT INITIATIVES UNDER CONSTRUCTION Projects Under Construction REIT’s Actual / Estimated Initial % of GFA1 No. of IN MILLIONS Type (Location/Project Name) Share (%) Occupancy / Closing Date Completion (sq. ft.) Units OF DOLLARS Vaughan NW Townhome 50% Q1 2024 59%
Slide 25: Creating Value by Partnering with Leading Players
LEADING DEVELOPMENT PIPELINE CREATING VALUE AND DIVERSIFYING BY PARTNERING WITH LEADING PLAYERS Continuing construction on RETAIL Penguin 200,000 sq. ft. Canadian Tire in Leaside The Millway, a 458-unit purpose-built rental in VMC, APARTMENTS Penguin expect to exceed 95% leased units by year-end Sit
Slide 26: Canadian Tire Corporation Retail, Leaside
RETAIL CANADIAN TIRE CORPORATION LEASIDE 224,000 sq. ft. Retail Project • 200,000 sq. ft. flagship Canadian Tire store • 24,000 sq. ft. of additional retail space • Canadian Tire expected to take possession in early 2026 • 50/50 joint venture with Penguin SMARTCENTRES REIT | 2024 Q3 INVESTOR PRESENT
Slide 27: The Millway Apartments
APARTMENTS • 458 purpose-built rental units (45 in THE MILLWAY • Transit City 4 podium, 47 in Transit City 5 podium, 366 in Millway Tower) 50% REIT ownership • 93% of the units leased SMARTCENTRES REIT | 2024 Q3 INVESTOR PRESENTATION 26
Slide 28: ArtWalk Condos
PHASE 1 320 CONDOS PHASE I: FULL ARTWALK BUILD-OUT: ARTWALK PRESOLD CONDO UNITS • • 3 mixed-use towers 550,000 sq. ft. • • 12 acres 12 buildings • 569 residential units • +4 Million sq. ft. • 50% REIT ownership • 4,600 residential units • Construction commenced in fall 2023 SMARTCENTRES REIT | 2024
Slide 29: Vaughan NW Townhomes
TOWNHOMES VAUGHAN NW Location: 1 km from Canada’s First Smart Retail & Self Storage: 304,000 sq. ft. Anchor: Walmart Major Mackenzie Dr W & Weston Rd Hospital (Opened 41 Acres February 2021) SMARTCENTRES REIT | 2024 Q3 INVESTOR PRESENTATION 28
Slide 30: SmartStop Self-Storage
SELF-STORAGE 19 SMARTSTOP SMARTSTOP Storage Units: 21,000 Over 1.25 Million sq. ft. of Operating GFA JV PROJECTS OPEN / IN LEASE-UP • Toronto (Dupont): Opened Oct. 2019 • Toronto (Leaside): Opened June 2020 • Brampton (Bramport): Opened Nov. 2020 • Vaughan NW: Opened Jan. 2021 • Oshawa South: Opened
Slide 31: City Centre Vaughan, ON
CITY CENTRE VAUGHAN, ON SMARTCENTRES REIT | 2024 Q3 INVESTOR PRESENTATION 30
Slide 32: SmartVMC: The New City Centre
CURRENT 400 PORTAGE PKWY HWY 7 JA NE 407 ST LEADING DEVELOPMENT PIPELINE SMARTVMC TRANSIT HUB ON SITE • TTC subway station WALMART • 140,000 sq. ft. YMCA • Opened on-site, The New City Centre • Regional bus terminal • Opened October 2020, April 2022 +100 Acre Land freeing up 15.5 acres of prime • VI
Slide 33: SmartVMC Vision
VISION SMARTVMC WEST SMARTVMC EAST 400 HWY 7 SMARTVMC WEST LAND 407 ACQUIRED DEC 2021 LEADING DEVELOPMENT PIPELINE SMARTVMC FULL SMARTVMC BUILD-OUT CAPABILITY: • 15 million sq. ft. of residential space, 3 million sq. ft. of office space and 2 million sq. ft. +20,000,000 sq. ft. on Completion of reta
Slide 34: Environmental, Social and Governance
ENVIRONMENTAL, SOCIAL AND GOVERNANCE SMARTCENTRES REIT | 2024 Q3 INVESTOR PRESENTATION 33
Slide 35: 2023 Highlights
ENVIRONMENTAL, SOCIAL AND GOVERNANCE 2023 HIGHLIGHTS ESG and sustainability considerations are woven into the fabric of SmartCentres of retail properties achieved 90% BOMA Best Gold certification for excellence in energy and environmental management 55% of retail tenant portfolio committed to net ze
Slide 36: Annual Highlights of ESG Strategy
ENVIRONMENTAL, SOCIAL AND GOVERNANCE ANNUAL HIGHLIGHTS OF ESG STRATEGY Implementation Roadmap Year 1: 2022 Year 2: 2023 Year 3: 2024 • Finalized first three-year ESG • Developed TCFD alignment • Commence development of Net Strategic Plan strategy Zero Strategy • Published first annual ESG Report • D
Slide 37: Governance
ENVIRONMENTAL, SOCIAL AND GOVERNANCE GOVERNANCE RECENT GOVERNANCE ENHANCEMENTS SMARTCENTRES ACTION • Newly elected Trustees limited to a maximum of Adopted Trustee Term Limits 15 years • Corporate Governance and Compensation Independence on Committees Committee became fully independent Formation of
Slide 38: Financial Flexibility and Strength
FINANCIAL FLEXIBILITY AND STRENGTH SMARTCENTRES REIT | 2024 Q3 INVESTOR PRESENTATION 37
Slide 39: Total Returns in Excess of Benchmarks
FINANCIAL FLEXIBILITY AND STRENGTH TOTAL RETURNS IN EXCESS OF BENCHMARKS Value of $100 (Assumes Reinvested Distributions)1 $1,250 $1,241 $1,000 12.1% Average Annual Return Since IPO1 $750 $723 $500 $611 $250 $0 14 12 11 17 18 10 13 15 16 19 24 22 21 20 23 03 05 06 09 04 02 07 08 20 20 20 20 20 20 20
Slide 40: Stable Cash Distributions During Pandemic
FINANCIAL FLEXIBILITY AND STRENGTH STABLE CASH DISTRIBUTIONS DURING PANDEMIC 10-Year Growth in Regular Distributions (12 Month Rolling)1 PREDICTABLE AND STABLE distributions 25% backed by robust cashflows +19% and strong balance sheet +17% +5% 0% RESILIENT AMID MARKET -3% VOLATILITY having avoided 2
Slide 41: Significant Unencumbered Asset Base
FINANCIAL FLEXIBILITY AND STRENGTH SIGNIFICANT UNENCUMBERED ASSET BASE Total Assets and Unencumbered Assets1 (In Billions of $) 1.90 23.4% CAGR 2 11.9 11.9 11.7 Annualized Distributions ($ per Unit) 11.3 1.80 10.7 since IPO 9.9 1.70 9.4 9.5 9.2 9.4 8.7 8.4 8.5 1.60 6.5 7.1 7.1 6.6 6.0 5.8 1.50 5.7 4
Slide 42: Balanced Capital Structure
FINANCIAL FLEXIBILITY AND STRENGTH BALANCED CAPITAL STRUCTURE Enterprise Value1: Debt metrics based on total debt including equity accounted investments $10.4B Interest Coverage 2.4x DBRS Credit Rating BBB Stable SECURED DEBT W.A. RATE: $0.7B W.A. Maturity Adj. Debt to Adj. EBITDA 3.96% 3.2 Years 9.
Slide 43: Conservative Debt Maturity Profile
FINANCIAL FLEXIBILITY AND STRENGTH CONSERVATIVE DEBT MATURITY PROFILE $2,000 $1,500 27% In Millions 1,2,3 19% $1,000 $868 15% $510 12% 12% 10% $424 $55 $500 $600 $650 3% $550 $450 3% $494 $250 $96 $25 $27 $60 $22 $44 $114 $159 $0 2024 2025 2026 2027 2028 2029 2030 Thereafter Secured Debt Unsecured D
Slide 44: Thank You
THANK YOU For more information, please contact: Investor Relations T 905 326 6400 https://smartcentres.com/investing/ investorrelations@smartcentres.com
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