TORONTO, Aug. 08, 2024 (GLOBE NEWSWIRE) -- SmartCentres Real Estate Investment Trust ("SmartCentres" or the "Trust") (TSX:SRU) is pleased to report its financial and operating results for the quarter ended June 30, 2024. "Building on Q1, we are pleased to report strong continued momentum in leasing demand and lease deals executed for space in Q2", said Mitchell Goldhar, CEO of SmartCentres. "Occupancy has improved by 50 basis points to 98.2% with approximately 272,000 square feet of vacant space leased during the quarter and rent growth of 8.5% (excluding anchors). The Millway, our purpose-built rental project in the VMC continues to experience strong leasing momentum with occupancy at 88% by the end of the quarter, 90% currently, and expected to exceed 95% by year-end, all at average rental rates above our original budget. Our mixed-use development pipeline continues to add to the bottom-line with the completion this quarter of our self-storage project in Markham and the closing of 25 townhomes at our Vaughan NW project. Subsequent to quarter end, we also raised $350 million via a debenture issuance to repay our upcoming $100 million debenture maturity and outstanding floating rate debt on our operating lines, on an accretive basis, and extended the debt ladder maturity." 2024 Second Quarter Highlights Operations Same Properties NOI excluding Anchors(1) for the three months ended June 30, 2024 increased by 2.2% and for the six months ending June 30, 2024 increased by 3.0% (1.3% and 1.9% respectively, including anchors) compared to the same period in 2023. The increase was driven by lease-up activities and lease extensions at improved rental rates. Strong leasing momentum continued with approximately 272,000 square feet of vacant space leased in the quarter resulting in an in-place and committed occupancy rate of 98.2%, an improvement of 50 basis points compared to the prior quarter. Renewed and extended 86.2% of all space maturing in 2024, with strong rent growth of 8.5% (excluding anchors). Development Our significant development pipeline will provide constant portfolio expansion and decades of profitable growth from the approximately 57.5 million square feet (at the Trust's share) of zoned mixed-use development permissions, including 0.8 million square feet of sites currently under construction. The Millway, a 458-unit purpose-built rental located in VMC, was completed in Q4 2023. Leasing activity is on track with 88% of the units leased and committed by quarter-end at average rental rates above budget. Leased and reserved units are expected to exceed 95% by year-end from continuing strong leasing momentum. Siteworks for the 224,000 square foot Canadian Tire and ancillary retail units project on Laird Drive in Toronto continues, and possession is expected in approximately 20 months. Construction of Phase I of the Vaughan NW townhomes is well underway, with 25 units completed and closed in Q2 2024, and approximately 83% of the Phase I townhomes have been pre-sold. Self-storage facility in Markham opened in May 2024. This portfolio has now increased to ten operating facilities with four additional sites currently under construction. Financial Net rental income and other increased by $3.3 million or 2.6% for the three months ended June 30, 2024 compared to the same period in 2023, mainly attributable to the increase in base rent resulting from lease-up activities and rental renewals with higher rates. FFO per Unit for the three months ended June 30, 2024 was $0.50 compared to $0.55 for the same period in 2023. This decline is primarily due to condo closings in the prior year which is not reflected this year, an increase in net interest expense due to higher interest rates and lower capitalization due to completion of development projects, partially offset by an increase in fair value adjustment on the TRS resulting from fluctuations in the Trust's Unit price. FFO per Unit with adjustments for the three months ended June 30, 2024 was $0.51 compared to $0.54 for the same period in 2023. The decrease was primarily due to an increase in net interest expense due to higher interest rates and lower interest capitalization. Net income and comprehensive income per Unit was $0.71 for the three months ended June 30, 2024 (three months ended June 30, 2023 – $0.93). The decrease was primarily due to a loss in the fair value adjustment on financial instruments related to the mark-to-market on interest rate swap agreements and unit price change in units classified as liabilities, as well as higher net interest expense related to higher interest rates and lower interest capitalization due to completed development projects. In June 2024, the Trust renewed and amended its $500 million unsecured revolving operating facility. The amendment increased the facility amount from $500 million to $750 million and extended the maturity from March 2028 to June 2029. Subsequent to the quarter, the Trust closed an offering of $350 million principal amount of Series AA senior unsecured debentures by way of a private placement (the "Series AA Debentures"). The Series AA Debentures bear interest at a rate of 5.162% per annum, with a maturity date of August 1, 2030. The Trust intends to use the net proceeds of the offering to refinance existing debt, including the repayment of its $100 million Series O senior unsecured debentures due August 28, 2024, and for general corporate purposes. (1)   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 additional information, please see "Non-GAAP Measures" in this Press Release. Selected Consolidated Operational, Mixed-Use Development and Financial Information(in thousands of dollars, except per Unit and other non-financial data)   As at   June 30, 2024 December 31, 2023 June 30, 2023 Portfolio Information (Number of properties)         Retail properties     155     155     155   Office properties     4     4     4   Self-storage properties     10     8     8   Residential properties     3     3     2   Industrial properties     1     1     —   Properties under development     22     20     20   Total number of properties with an ownership interest     195     191     189   Leasing and Operational Information(1)         Gross leasable retail, office and industrial area (in thousands of sq. ft.)     35,199     35,045     34,922   In-place and committed occupancy rate     98.2 %   98.5 %   98.2 % Average lease term to maturity (in years)     4.3     4.3     4.2   In-place net retail rental rate excluding Anchors (per occupied sq. ft.)   $ 23.14   $ 22.59   $ 22.27   Financial Information         Investment properties(2)     10,556,877     10,564,269     10,419,239   Total unencumbered assets(3)     9,309,221     9,170,121     8,844,821   Debt to Aggregate Assets(3)(4)(5)     43.7 %   43.1 %   43.2 % Adjusted Debt to Adjusted EBITDA(3)(4)(5)   9.9X 9.6X 9.9X Weighted average interest rate(3)(4)     4.25 %   4.15 %   4.03 % Weighted average term of debt (in years)     3.1     3.6     4.1   Interest coverage ratio(3)(4)   2.5X 2.7X 2.8X             Three Months Ended June 30 Six Months Ended June 30   2024     2023     2024     2023   Financial Information         Rentals from investment properties and other(2) 228,051     206,950     445,290     417,544   Net income and comprehensive income (2) 128,916     167,902     107,741     280,763   FFO(3)(4)(6) 90,780     98,534     177,737     195,667   AFFO(3)(4)(6) 83,386     87,848     164,773     176,449   Cash flows provided by operating activities(2) 76,991     61,322     146,710     143,253   Net rental income and other(2) 133,222     129,887     263,950     254,708   NOI(3)(4) 139,062     147,105     275,137     280,573   Change in SPNOI(3)(4) 1.3 %   3.2 %   1.9 %   3.7 % Change in SPNOI excluding Anchors(3)(4) 2.2 %   5.4 %   3.0 %   6.4 % Weighted average number of units outstanding – diluted(7) 180,664,749     180,045,789     180,472,496     179,968,836   Net income and comprehensive income per Unit(2) $0.72/$0.71 $0.94/$0.93 $0.60/$0.60 $1.58/$1.56 FFO per Unit(3)(4)(6) $0.51/$0.50 $0.55/$0.55 $1.00/$0.98 $1.10/$1.09 FFO with adjustments per Unit(3)(4) $0.52/$0.51 $0.55/$0.54 $1.04/$1.03 $1.06/$1.05 AFFO per Unit(3)(4)(6) $0.47/$0.46 $0.49/$0.49 $0.92/$0.91 $0.99/$0.98 AFFO with adjustments per Unit(3)(4) $0.48/$0.47 $0.49/$0.48 $0.97/$0.96 $0.95/$0.94 Payout Ratio to AFFO(3)(4)(6) 98.8 %   93.8 %   100.0 %   93.4 % Payout Ratio to AFFO with adjustments(3)(4) 96.9 %   95.2 %   95.6 %   97.5 % Payout Ratio to cash flows provided by operating activities 107.0 %   134.4 %   112.3 %   115.1 % (1)   Excluding residential and self-storage area.(2)   Represents a Generally Accepted Accounting Principles ("GAAP") measure.(3)   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 additional information, please see "Non-GAAP Measures" in this Press Release.(4)   Includes the Trust's proportionate share of equity accounted investments. (5)   As at June 30, 2024, cash-on-hand of $43.4 million was excluded for the purposes of calculating the applicable ratios (December 31, 2023 – $31.4 million, June 30, 2023 – $43.3 million).(6)   The calculation of the Trust's FFO and AFFO and related payout ratios, including comparative amounts, are financial metrics that were determined based on the REALpac White Paper on FFO and AFFO issued in January 2022 ("REALpac White Paper"). Comparison with other reporting issuers may not be appropriate. The payout ratio to AFFO is calculated as declared distributions divided by AFFO. (7)   The diluted weighted average includes the vested portion of the deferred issued pursuant to the deferred unit plan and vested EIPs granted pursuant to the equity incentive plan. Development and Intensification Summary The following table provides additional details on the Trust's 9 development initiatives that are currently under construction or where initial siteworks have begun (in order of estimated initial occupancy/closing date): Projects under construction (Location/Project Name) Type Trust's share Actual / estimated initial occupancy / closing date % of capital spend GFA(1) (sq. ft.) No. of units               Mixed-use Developments             Vaughan NW Townhomes 50 % Q1 2024 55 % 366,000 174 Stoney Creek Self-Storage Self-Storage 50 % Q4 2024 69 % 138,000 973 Toronto (Gilbert Ave.) Self-Storage Self-Storage 50 % Q1 2025 62 % 177,000 1,540 Dorval (St-Regis Blvd.) Self-Storage Self-Storage 50 % Q2 2025 46 % 164,000