SmartCentres Real Estate Investment Trust reported its financial and operating results for the quarter ended June 30, 2021.
“Our second quarter results reflect the continued strength of our portfolio that experienced collection levels of approximately 95%. Our occupancy level improved to 97.1%, our payout ratio declined to 84.5% and our various debt metrics all reflected improved levels over the prior quarter. These results are encouraging and reflective of our confidence in our assets, which supports our decision not to have cut distributions,” said Mitchell Goldhar, Executive Chairman of SmartCentres.
“As Canadians return to previous patterns, we are seeing signs of improvement in leasing activity, tenant collections, and customer traffic at our properties. In addition, our results were further improved with earnings from the closings of 439 units in Transit City 3, contributing $12.9 million in FFO during the quarter. 2021 represents the second consecutive year of income derived from its on-site intensification program. The many exciting non-retail projects in our pipeline now represent over 55 million square feet, inclusive of partners’ share, and are expected to be a strong source of income, add considerable FFO and NAV growth for Unitholders, for many years to come. In this regard, significant progress has been made under SmartLiving, the REIT’s wholly-owned in-house residential development brand. This quarter, SmartLiving commenced construction on two rental apartment buildings in Montreal and two rental seniors’ residences in Ottawa. Further, in the coming months, we expect to launch ArtWalk, the next phase of condominiums at SmartVMC with over 600 high-rise condominium units, and will bring over 175 townhome units to market at our Vaughan Northwest property”, added Mr. Goldhar.
As of July 21, 2021, the Trust has collected 94.4% of gross monthly billings for the month of July 2021.
While collections have recovered to 95%, the challenges associated with the COVID-19 pandemic have continued to impact the remaining 5%. Accordingly, in the first six months of 2021, the Trust recorded additional bad debt expense/expected credit loss (“ECL”) provisions totalling $4.6 million. The following table provides some additional details on the Trust’s tenant billings, amounts received, abatements and deferral arrangements up to July 21, 2021, and the remaining balance outstanding subject to deferral arrangements under negotiation and before ECL provision:
Mixed-Use Development and Intensification at SmartVMC
– Occupancy of the 55-storey Transit City 3 condo tower representing 631 residential units commenced in May 2021, with 439 units closed by the end of June 2021 and the remaining 192 units are expected to close in Q3 of 2021.
– Construction continues on Transit City 4 (45 storeys) and 5 (50 storeys) condo towers, representing 1,026 sold residential units. Construction is complete on the multi-level underground parking garage. Above grade, concrete and formwork is up to level 6 for Transit City 4 and level 4 for Transit City 5.
– Construction continues on the 36-storey, 362-unit purpose-built residential rental building at SmartVMC, with concrete and formwork up to level 2. There are also an additional 92 purpose-built rental units located within a portion of the Transit City 4 and Transit City 5 podiums.
– As part of the Transit City 1 and 2 projects, construction is well underway and delivery is expected in early 2022 of the 22 townhomes, which are 100% pre-sold.
– Preparation is underway for the launch of the next phase of high-rise condominium development in 2021 which is expected to include 627 units.
Other Business Development
– The completed first phase of the two-phase, purpose-built residential rental project in Laval, Quebec, which had initial occupancy by tenants commencing in March 2020 and, to date, approximately 90% of the 171-unit building has been leased. Construction of the next phase is expected to commence in fall 2021.
– The Trust completed construction of its two self-storage facilities in Brampton and Vaughan NW, each of which has been very well received by the local communities, with current occupancy levels ahead of expectations.
– Construction started in April 2021 on two purpose-built residential rental towers in Mascouche, Quebec with joint venture partner Cogir.
– Construction commenced for a new retirement residence and a seniors’ apartment in May 2021 with joint venture partner Selection Group in Ottawa.
– Three additional self-storage facilities in Oshawa, Aurora and Scarborough are currently under construction of which two are expected to be completed in 2021. Additional self-storage facilities have been approved by the Board of Trustees and the Trust is in the process of obtaining municipal approvals in Whitby, Markham and an additional location in Brampton.
– With the Minister’s Zoning Order issued in Q4 2020, the Trust has commenced the redevelopment of a portion of its 73-acre Cambridge retail property which now allows various forms of residential, retail, office, institutional, and commercial uses providing for the creation of a vibrant urban community with the potential for over 12.0 million square feet of development. The initial phase of the redevelopment will include various forms of residential development including townhouses as well as mid-rise and high-rise residential buildings.
– During the COVID-19 pandemic, the Trust has been aggressively pursuing final municipal approvals for mixed-use density on many of its shopping centres.