SmartCentres Real Estate Investment Trust reported higher retail occupancy, continued leasing activity and growth in same-property net operating income in the third quarter of 2026, while advancing several retail and residential development projects across Canada.
The Toronto-based REIT said occupancy reached 98.2 per cent as of Sept. 30, up 10 basis points from the previous quarter. Same-property net operating income increased 2.5 per cent compared with the third quarter of 2025, or 3.8 per cent excluding anchor tenants, as leasing and renewal activity contributed to higher rental income.
The results also reflect the company’s continued investment in retail development and self-storage properties, alongside efforts to strengthen its balance sheet through $450 million in additional unsecured debentures issued after the quarter ended.
Retail leasing and rental growth
SmartCentres leased approximately 104,000 square feet of previously vacant retail space during the quarter, bringing its total leased area to approximately 408,000 square feet year to date. Demand for new retail construction also continued, with approximately 330,000 square feet in executed leases during the quarter and 393,000 square feet for the year.
The REIT extended approximately 57,000 square feet of lease maturities, reporting rent growth of 11.8 per cent on renewals excluding anchor tenants and 6.8 per cent when anchors were included. It has now extended 89 per cent of leases scheduled to mature in 2026.
Net operating income reached $141.8 million, up $500,000, or 0.4 per cent, from the same quarter last year. However, funds from operations per unit declined to 54 cents from 59 cents, primarily because of higher interest expenses and a decrease in fair value adjustments on total return swaps.
Net income and comprehensive income increased to $179.5 million from $81 million a year earlier, reflecting gains on financial instruments and a $39.9-million fair value gain on investment properties.
Development pipeline advances
The company’s retail development program includes three previously announced Walmart-anchored SmartCentres projects in Kingston and Lindsay, Ont., and Winnipeg. A long-term lease with Walmart has been signed for the Kingston development, with construction expected to begin in the fourth quarter of 2026.
Construction is also progressing on a 200,000-square-foot Canadian Tire flagship store in Toronto’s Leaside neighbourhood, with delivery to the tenant expected in the fourth quarter.
At the Vaughan Metropolitan Centre, approximately 93 per cent of the 340 units in the ArtWalk condominium project have been pre-sold. Construction has reached the 18th floor, while work has begun on a separate 65-unit rental building within the development.
SmartCentres also completed construction of self-storage facilities in Montreal and Laval East, Que., bringing its operating portfolio to 16 facilities. Three additional facilities in Burnaby and Victoria, B.C., and Edmonton are expected to open in 2027.
Debt issuance strengthens balance sheet
On Oct. 14, following the quarter’s end, SmartCentres issued $450 million in unsecured debentures to refinance maturing debt and repay outstanding balances on its revolving operating facilities.
The issuance included $150 million in additional Series AC debentures carrying a 3.599 per cent annual coupon and maturing in June 2029, as well as $300 million in Series AE debentures carrying a 4.795 per cent coupon and maturing in January 2032.
The REIT said the transactions extended its debt maturity profile and provided additional financial flexibility to support future growth.
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