SmartCentres Real Estate Investment Trust reported its financial and operating results for the quarter and year ended December 31, 2024, indicating strong demand for its retail properties.
“Reflecting on our 2024 results, I am pleased with our strong financial and operational performance,” said Mitchell Goldhar, CEO of SmartCentres. “Our net operating income has shown steady and consistent growth through the year fueled by strong leasing momentum in all areas, resulting in an industry-leading 98.7% in-place and committed occupancy rate up from 98.5% in the prior quarter.
“Same property NOI continued to deliver strong results in the fourth quarter, growing 3.8% from the same period a year earlier. The strong interest stems not only from our CRU and mid-size users, but also from large format retailers like Walmart, Costco, TJX, Canadian Tire and virtually all of the food stores. Walmart Canada recently announced it will open a new Supercentre later in 2025 in South Oakville, Ontario, Hopedale Mall as part of its announced $6.5 billion expansion in Canada.
“The Millway, our purpose-built rental project in the VMC achieved occupancy of approximately 95% by the end of the quarter, at average rental rates above our original budget. Our mixed-use development pipeline continues to add to the bottom-line with the completion of our self-storage facility in Stoney Creek this quarter, and the closing of 11 additional townhomes at our Vaughan NW project. We are executing on various levels adding FFO and NAV now and for the long term. Subsequent to the quarter end, we also raised $300 million via a 6.5-year term debenture which we used to repay our recent $160 million debenture maturity and outstanding floating rate debt on our operating lines, all on an accretive basis while filling gaps in our ladder and extending the average term to maturity of our debt.”
2024 Fourth Quarter Highlights
Retail Operations
- With growing demand for its retail centres, Same Properties NOI excluding Anchors for the three months ended December 31, 2024 increased by 6.0% (3.8% including Anchors) compared to the same period in 2023.
- 192,353 square feet of vacant space was leased during the quarter, resulting in an in-place and committed occupancy rate of 98.7% as of December 31, 2024 (September 30, 2024 – 98.5%). In addition to vacant space lease-up, there is growing demand for new build retail, for which it executed 253,000 square feet in the year.
- Renewed and extended over 91% of leases maturing in 2024 representing 5.0 million square feet at strong rental growth of 8.8% (excluding Anchors).
- Completed a deal with Costco for the vacant ex-Rona store at Highway 401 and Winston-Churchill Boulevard, which will open in the fall of this year.
Development
- Its significant stock of municipal approvals is expected to provide long-term portfolio expansion and profitable growth from the approximately 59.1 million square feet (at the Trust’s share) of zoned mixed-use development permissions, including 1.0 million square feet of sites currently under construction.
- The Millway, a 458-unit purpose-built rental, was completed in Q4 2023. Leasing activity is strong with approximately 95% of the units leased and committed by the end of 2024.
- Self-storage facility in Stoney Creek opened in October 2024. Construction of self-storage facilities in Toronto (Gilbert Ave.), Toronto (Jane St.), and Dorval (St-Regis Blvd.) is progressing, with all three facilities on schedule to open in 2025. Early site preparation and demolition works have commenced to facilitate the construction of three additional self-storage facilities in Montreal (Notre Dame St. W.), Laval E., Quebec, and Burnaby, British Columbia, which are expected to be completed in 2026.
- Construction of Phase I of the Vaughan NW townhomes is progressing well, with 11 units completed and closed in Q4 2024, bringing the total to 86% of the pre-sold units now closed.
- Siteworks and excavation are now complete at the ArtWalk condo Phase I and construction is advancing. Tower crane was erected and footings are underway, with approximately 93% of the 340 units in Tower A pre-sold.
- Siteworks for the 224,000 square foot Canadian Tire and ancillary retail units project on Laird Drive in Toronto have progressed and exterior services upgrades are almost complete. The below grade parking structure is substantially constructed and work is proceeding on the ground floor slab, with possession expected in Q2 2026.
The REIT said net rental income and other for the three months and year ended December 31, 2024 was $141.6 million and $547.5 million, respectively, representing an increase of $13.1 million or 10.2% and $33.9 million or 6.6% compared to the same periods in 2023. This increase was primarily due to lease-up activities for retail and mixed-use properties, an increase in CAM recoveries, and increase in residential closing revenue from townhome closings, it said.
SmartCentres is one of Canada’s largest fully integrated REITs, with a best-in-class and growing mixed-use portfolio featuring 195 strategically located properties in communities across the country. SmartCentres has approximately $11.9 billion in assets consisting of income producing value-oriented retail, purpose-built rental, first-class office and self-storage properties. SmartCentres owns 35.3 million square feet of leasable space with 98.5% in place and committed occupancy, on 3,500 acres of owned land across Canada.
