SmartCentres Real Estate Investment Trust Releases Fourth Quarter and Year End Results for 2023

• Progress in the zoning process on several strategic projects, together with improved market conditions, contributed to $580.7 million in incremental property values, which in turn led to net income and comprehensive income for Q4 2023 increasing by $603.7 million as compared to the same period in 2020, representing an increase of $3.46 per Unit;
• FFO per Unit for Q4 2023 increased by $0.06 or 12.0% as compared to the same period in 2020;
• Continued advancement of non-retail pipeline of 283 projects representing approximately 59 million square feet across the network (41 million square feet at the Trust’s share); and
• Portfolio continues to provide recurring income with an in-place occupancy rate of 97.4% and committed occupancy rate of 97.6%.

TORONTO, Feb. 15, 2023 (GLOBE NEWSWIRE) — SmartCentres Real Estate Investment Trust (“SmartCentres”, the “Trust” or the “REIT”) (TSX: SRU.UN) is pleased to report its financial and operating results for the quarter and year ended December 31, 2023.

“While there continues to be work to do, we ended the 4th quarter with solid performances from every aspect of the business. Operational resilience was demonstrated by solid leasing momentum, increased occupancy to 97.6%, and further improved cash collections exceeding 98%. This is a reflection of the strength of our tenants. Our mixed-use intensification program continues to be a source of additional accretive growth, demonstrated this quarter by the commencement of presales at both our exciting new 627-unit ArtWalk condominium/residential rental project at SmartVMC and our in-demand 174-unit townhome project in Vaughan. Initial presale activity in both of these residential projects has exceeded our expectations and we plan to commence construction on both imminently. In addition, during the quarter, we experienced property value increments exceeding $580.7 million, representing progress in the zoning and entitlements’ process on several strategic projects together with improved market conditions. Also, FFO per unit increased by $0.06 or 12% to $0.56 as compared to the same quarter in the prior year,” said Mitchell Goldhar, Executive Chairman and CEO of SmartCentres REIT.

“At SmartVMC, currently our highest profile development initiative, but just one of many master-planned projects, we have thus far closed on 1,741 units in the first three Transit City condominium phases, resulting in $0.37 in FFO per unit. In addition, construction is progressing well on the 1,026 units in our sold-out Transit City 4 and 5 towers and the 454-unit Millway rental complex. In addition, our residential banner, ‘SmartLiving’ recently had its inaugural launch of the 627-unit ArtWalk condominium/residential rental project, and is expected to soon launch Park Place, a new 1,100-unit two-tower project on the SmartVMC West lands which we purchased just a month ago. The REIT purchased a 66.67% interest in these lands which represents the western 53-acre portion of our SmartVMC City Centre. We intend to develop approximately 10.0 million square feet of mixed-use space on these newly acquired lands and they will also accommodate part of the 9-acre park which, over time, will become the focal point of SmartVMC.”

“Given the progress that was made in 2023, as we move toward a ‘post-covid era’ in 2023, we expect an improving leasing environment, further growth in our self-storage business, increased construction activity in new residential rental buildings in both Ontario and Quebec and the commencement of construction of our first of many retirement home projects with Revera,” added Mr. Goldhar.

Key Business Development, Financial and Operational Highlights for the Year Ended December 31, 2023

Mixed-Use Development and Intensification at SmartVMC

• Completed a strategic acquisition valued at $513.0 million of a two-thirds interest in 53.0 acres making up the westerly half in SmartVMC West, more than doubling the Trust’s holdings in the 105-acre city centre development.
• Construction continues on the 100% pre-sold Transit City 4 (45 storeys) and 5 (50 storeys) condo towers, representing 1,026 residential units. Good progress is being made above grade with concrete and formwork complete up to level 39 for Transit City 4 and level 30 for Transit City 5.
• Construction of the purpose-built rental project, The Millway (36 storeys), continues at SmartVMC, with concrete and formwork up to level 15.
• As part of Transit City 1 and 2 projects, construction of the 22 townhomes, all of which are pre-sold, is well underway and delivery is expected in early 2023.
• Successful launch of ArtWalk condominium development with over 300 units pre-sold, representing over 90% of released units.

Other Business Development

• Leasing continues on 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 commenced in October 2023.
• The Trust completed the construction of its fifth self-storage facility with the opening of its Scarborough East facility in November 2023. All of the five developed and operating self-storage facilities have been very well-received by their local communities, with current occupancy levels ahead of expectations.
• Two self-storage facilities in Brampton (Kingspoint) and Aurora are currently under construction. Both facilities are expected to be completed in 2023. 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, Stoney Creek and two locations in Toronto (Gilbert Ave. and Jane St.).
• Construction is on schedule for two purpose-built residential rental towers (238 units) in Mascouche, Quebec with joint venture partner Cogir.
• Construction commenced for a new retirement residence and a seniors’ apartment project, totalling 402 units, in 2023 with joint venture partner Selection Group on the Trust’s Laurentian Place in Ottawa, with completion expected in 2023.
• The Trust has commenced the redevelopment of a portion of its 73-acre Cambridge retail property (which is subject to a leasehold interest with Penguin) 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.

Financial

• Net income and comprehensive income⁽¹⁾ was $987.7 million as compared to $89.9 million in 2020, representing an increase of $897.7 million. This increase was primarily attributed to: i) $944.9 million increase in fair value adjustments on revaluation of investment properties, of which $766.6 million relates to the Trust’s investment properties and $178.3 million relates to the Trust’s proportionate share of equity accounted investments, ii) $14.7 million decrease in interest expenses, and partially offset by i) $51.9 million decrease in fair value adjustments on financial instruments, ii) $3.9 million increase in general and administrative expenses (net), iii) $3.6 million decrease in interest income, iv) $1.0 million decrease in NOI, v) $1.1 million increase in supplemental costs and acquisition-related costs, and vi) $0.4 million decrease in gain on sale of investment properties.
• Key debt metrics include Debt to Aggregate Assets⁽²⁾⁽³⁾ of 42.9%, Interest Coverage Ratio multiple⁽²⁾ of 3.4X⁽²⁾, and Adjusted Debt to Adjusted EBITDA multiple⁽²⁾⁽³⁾ of 9.2X.
• The Trust improved its unsecured/secured debt ratio⁽²⁾ to 71%/29% (December 31, 2020 – 68%/32%).
• The Trust continues to add to its unencumbered pool of high-quality assets. As at December 31, 2023, this unencumbered portfolio consisted of income properties valued at $6.6 billion (December 31, 2020 – $5.8 billion).
• FFO⁽²⁾ increased by $12.1 million or 3.3% to $380.1 million as compared to 2020, primarily due to $14.7 million net decrease in interest expense ($12.0 million yield maintenance costs included in 2020) and $5.6 million increase in gain on TRS, partially offset by $3.9 million increase in G&A expenses (net), $3.6 million decrease in interest income, and $1.0 million decrease in NOI.

• Net income and comprehensive income per Unit⁽¹⁾ increased by $5.16 to $5.68 as compared to 2020, primarily due to the reasons noted above.
• FFO per Unit⁽²⁾ increased by $0.06 or 2.8% to $2.19 as compared to 2020, primarily due to the reasons noted above for the increase in FFO.
• FFO with adjustments⁽²⁾ increased by $3.4 million or 0.9% to $383.3 million as compared to 2020. FFO per Unit with adjustments⁽²⁾ increased by $0.01 or 0.5% to $2.21 as compared to 2020.
• Cash flows provided by operating activities⁽¹⁾ increased by $75.6 million or 25.6% to $371.6 million as compared to 2020 primarily due to lower working capital requirements, in addition to an increase in tenant prepaid rent, deposits, and other payables.
• The Payout Ratio relating to cash flows provided by operating activities for the 12 months ended December 31, 2023 was 85.8%, as compared to 107.7% in 2020.
• ACFO⁽²⁾ decreased by $0.4 million or 0.1% to $353.1 million as compared to 2020 primarily due to the contribution of the Transit City 1 and 2 condo closings in 2020.
• ACFO⁽²⁾ exceeded distributions declared by $34.3 million (2020 – surplus of ACFO over distributions declared of $34.7 million).
• The Payout Ratio relating to ACFO⁽²⁾ for the 12 months ended December 31, 2023 was 90.3%, as compared to 90.2% in 2020.

Operational

• Rentals from investment properties and other⁽¹⁾ was $780.8 million, as compared to $781.3 million in 2020, representing a decrease of $0.5 million or 0.1%. This decrease was primarily due to lower net base rents, and was partially offset by short-term rental revenue and percentage rent revenue.
• In-place and committed occupancy rates were 97.4% and 97.6%, respectively, as at December 31, 2023 (December 31, 2020 – 97.0% and 97.3%, respectively).
• Same Properties NOI inclusive of ECL provisions increased by $16.9 million or 3.5% as compared to 2020. Same Properties NOI excluding ECL⁽²⁾ decreased by $10.2 million or 2.0% as compared to the prior year.

Subsequent Events

• In January 2023, the Trust acquired, from its unrelated partner, a 50% interest in each of three co-owned properties located in Ottawa (Laurentian), Ontario, Edmonton Capilano, Alberta, and Lachenaie, Quebec. The acquisition was funded with the Trust’s existing operating facilities. Upon completion of the acquisition, the Trust became the 100% owner of these properties.
• In January 2023, the Trust entered into a $300.0 million unsecured credit facility agreement with a syndicate of Canadian financial institutions, from which $285.0 million was drawn. This facility matures in January 2027 and bears an interest rate of Canadian Banker’s Acceptance rate plus 120 basis points.

(1)		Represents a GAAP measure.
(2)		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 definitions and basis of presentation of the Trust’s non-GAAP measures, refer to “Presentation of Certain Terms Including Non-GAAP Measures” and “Non-GAAP Measures” in the Trust’s MD&A.
(3)		Net of cash-on-hand of $80.0 million as at December 31, 2023 for the purposes of calculating the ratios.

Selected Consolidated Operational, Mixed-Use Development and Financial Information

Key consolidated operational, mixed-use development and financial information shown in the table below includes the Trust’s proportionate share of equity accounted investments:

(in thousands of dollars, except per Unit and other non-financial data)	December 31, 2023	December 31, 2020	December 31, 2019
Portfolio Information
Total number of properties with an ownership interest	174	167	165
Leasing and Operational Information
Gross leasable area including retail and office space (in thousands of sq. ft.)	34,119	34,056	34,337
Occupied area including retail and office space (in thousands of sq. ft.)	33,219	33,039	33,678
Vacant area including retail and office space (in thousands of sq. ft.)	900	1,017	659
In-place occupancy rate (%)	97.4	97.0	98.1
Committed occupancy rate (%)	97.6	97.3	98.2
Average lease term to maturity (in years)	4.4	4.6	4.9
Net retail rental rate (per occupied sq. ft.) ($)	15.44	15.37	15.49
Net retail rental rate excluding Anchors (per occupied sq. ft.) ($)	22.07	21.89	22.13
Mixed-Use Development Information
Trust’s share of future development area (in thousands of sq. ft.)	40,600	32,500	27,900
Trust’s share of estimated costs of future projects currently under construction, or for which construction is expected to commence within the next five years (in millions of dollars)	9,800	7,900	5,500
Total number of residential rental projects	104	96	88
Total number of seniors’ housing projects	27	40	45
Total number of self-storage projects	36	50	48
Total number of office building projects	8	7	10
Total number of hotel projects	3	4	5
Total number of condominium developments	95	72	46
Total number of townhome developments	10	15	14
Total number of future projects currently in development planning stage	283	284	256
Financial Information
Total assets(1)	11,293,248	10,724,492	9,928,467
Investment properties – GAAP	9,847,078	8,850,390	9,050,066
Investment properties – non-GAAP(3)	10,684,529	9,400,584	9,466,501
Total unencumbered assets(2)	6,640,600	5,835,600	5,696,100
Debt – GAAP	4,854,527	5,210,123	4,225,933
Debt – non-GAAP(3)	4,983,078	5,261,360	4,290,826
Debt to Aggregate Assets (%)(2)(3)(4)	42.9	44.6	42.3
Debt to Gross Book Value (%)(2)(3)(4)	50.8	50.1	49.0
Unsecured to Secured Debt Ratio(2)(3)(4)	71%/29%	68%/32%	63%/37%
Unencumbered assets to unsecured debt(2)(3)(4)	1.9X	1.9X	2.1X
Weighted average interest rate (%)(2)(3)	3.11	3.28	3.55
Weighted average term of debt (in years)	4.8	5.0	5.0
Interest coverage ratio(2)(3)(4)	3.4X	3.2X	3.5X
Adjusted Debt to Adjusted EBITDA (net of cash)(2)(3)(4)	9.2X	8.5X	8.0X
Equity (book value)(1)	5,841,315	5,166,975	5,367,752
Weighted average number of units outstanding – diluted	173,748,819	172,971,603	170,581,531

(1)		Represents a GAAP measure.
(2)		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 definitions and basis of presentation of the Trust’s non-GAAP measures, refer to “Presentation of Certain Terms Including Non-GAAP Measures” and “Non-GAAP Measures” in the Trust’s MD&A.
(3)		Includes the Trust’s proportionate share of equity accounted investments.
(4)		As at December 31, 2023, cash-on-hand of $80.0 million was excluded for the purposes of calculating the applicable ratios (December 31, 2020 – $754.4 million, December 31, 2019 – $37.0 million).

Year-to-Date Comparison to Prior Year
The following table presents key financial, per Unit, and payout ratio information for the years ended December 31, 2023 and December 31, 2020:

(in thousands of dollars, except per Unit information)		2021			2020		Variance
		(A)			(B)			(A–B)
Financial Information
Rentals from investment properties and other(1)		780,758			781,253			(495	)
Net base rent(1)		494,992			496,135			(1,143	)
Total recoveries(1)		253,032			263,802			(10,770	)
Miscellaneous revenue(1)		17,891			11,182			6,709
Service and other revenues(1)		14,843			10,134			4,709
Net income and comprehensive income(1)		987,676			89,940			897,736
Net income and comprehensive income excluding fair value adjustments(2)(3)		342,609			337,863			4,746
Cash flows provided by operating activities(1)		371,624			295,982			75,642
Net rental income and other(1)		485,802			460,711			25,091
NOI(2)		518,084			519,105			(1,021	)
NOI excluding condominium sales(2)		497,613			471,548			26,065
Change in net rental income and other(2)		5.4	%		(8.8	)%		14.2	%
Change in SPNOI(2)		3.5	%		(6.9	)%		10.4	%
Change in SPNOI excluding ECL(2)		(2.0	)%		(1.1	)%		(0.9	)%
FFO(2)(3)(4)(5)		380,070			367,967			12,103
FFO with adjustments(2)(3)(4)		383,296			379,921			3,375
FFO with adjustments and Transactional FFO(2)(3)(4)		385,219			380,665			4,554
FFO excluding condominium sales(2)(3)(4)		361,323			323,188			38,135
FFO with adjustments excluding condominium sales(2)(3)(4)		364,549			335,142			29,407
ACFO(2)(3)(4)(5)		353,055			353,409			(354	)
ACFO with adjustments(2)(3)(4)		356,281			365,363			(9,082	)
ACFO excluding condominium sales(2)(3)(4)		332,585			305,852			26,733
Distributions declared		318,753			318,758			(5	)
Surplus (shortfall) of cash provided by operating activities over distributions declared(2)		52,871			(22,776	)		75,647
Surplus of ACFO over distributions declared(2)		34,302			34,651			(349	)
Units outstanding(6)		178,091,581			172,221,212			5,870,369
Weighted average – basic		172,447,334			171,973,301			474,033
Weighted average – diluted(7)		173,748,819			172,971,603			777,216
Per Unit Information (Basic/Diluted)
Net income and comprehensive income(1)		$5.73/$5.68			$0.52/$0.52			$5.21/$5.16
Net income and comprehensive income excluding fair value adjustments(2)(3)		$1.99/$1.97			$1.96/$1.95			$0.03/$0.02
FFO(2)(3)(4)(5)		$2.20/$2.19			$2.14/$2.13			$0.06/$0.06
FFO with adjustments(2)(3)(4)		$2.22/$2.21			$2.21/$2.20			$0.01/$0.01
FFO with adjustments and Transactional FFO(2)(3)(4)		$2.23/$2.22			$2.21/$2.20			$0.02/$0.02
Distributions declared	$1.850			$1.850			$—
Payout Ratio Information
Payout Ratio to ACFO(2)(3)(4)(5)		90.3	%		90.2	%		0.1	%
Payout Ratio to ACFO with adjustments(2)(3)(4)		89.5	%		87.2	%		2.3	%

(1)		Represents a GAAP measure.
(2)		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 definitions and basis of presentation of the Trust’s non-GAAP measures, refer to “Presentation of Certain Terms Including Non-GAAP Measures” and “Non-GAAP Measures” in the Trust’s MD&A.
(3)		Includes the Trust’s proportionate share of equity accounted investments.
(4)		See “Other Measures of Performance” in the Trust’s MD&A for a reconciliation of these measures to the nearest consolidated financial statement measure.
(5)		The calculation of the Trust’s FFO and ACFO and related payout ratios, including comparative amounts, are financial metrics that were determined based on the February 2019 REALpac White Paper on FFO and ACFO, respectively. Comparison with other reporting issuers may not be appropriate. The payout ratio to FFO and the payout ratio to ACFO are calculated as declared distributions divided by FFO and ACFO, respectively.
(6)		Total Units outstanding include Trust Units and LP Units, including Units classified as liabilities. LP Units classified as equity in the consolidated financial statements are presented as non-controlling interests.
(7)		The diluted weighted average includes the vested portion of the deferred units issued pursuant to the deferred unit plan.

Operational Highlights

For the three months ended December 31, 2023, net income and comprehensive income (as noted in the table above) increased by $603.7 million as compared to the same period last year. This increase was primarily attributed to the following:

• $594.2 million increase in fair value adjustments on revaluation of investment properties, of which: i) $496.8 million relates to the fair value adjustment associated with certain properties under development, and ii) $97.4 million relates to the revaluation of investment properties, principally driven by compression in discount rates as well as higher revaluation loss in the prior year comparable period (see details in the “Investment Property” section in the Trust’s MD&A);
• $7.1 million increase in fair value adjustment on financial instruments, principally due to: i) $9.5 million increase in fair value adjustment relating to interest rate swap agreements; ii) $4.2 million increase in fair value adjustment relating to total return swap (“TRS”); and partially offset by iii) $4.2 million decrease in fair value adjustment relating to Units classified as liabilities; iv) $2.4 million decrease in fair value adjustment relating to LTIP, Deferred Unit Plan (“DUP”) and Equity Incentive Plan (“EIP”) as a result of fluctuations in the Trust’s Unit price; and
• $15.8 million decrease in interest expenses primarily due to the yield maintenance costs incurred in the prior year;

Partially offset by the following:

• $7.3 million decrease in NOI (see further details in the “Net Operating Income” subsection in the Trust’s MD&A);
• $2.6 million increase in acquisition-related costs (principally resulting from the acquisition of SmartVMC West property);
• $1.5 million increase in general and administrative expenses (net) (see further details in the “General and Administrative Expense” section in the Trust’s MD&A);
• $1.4 million decrease in interest income; and
• $0.6 million increase in supplemental costs.

For the year ended December 31, 2023, net income and comprehensive income (as noted in the table above) increased by $897.7 million as compared to the same period last year. This increase was primarily attributed to the following:

• $944.9 million increase in fair value adjustments on revaluation of investment properties, principally due to: i) $496.8 million fair value adjustment associated with certain properties under development, and ii) $448.1 million relates to the compression of discount rates, and unfavourable fair value adjustment recorded in 2020, which reflected the adverse changes in leasing and cash flow assumptions at the inception of the COVID-19 pandemic; and
• $14.7 million decrease in interest expense primarily due to the yield maintenance costs incurred in the prior year;

Partially offset by the following:

• $51.9 million decrease in fair value adjustment on financial instruments primarily due to: i) $41.5 million decrease in fair value adjustment relating to Units classified as liabilities and $23.0 million decrease in fair value adjustment relating to DUP, as a result of fluctuations in the Trust’s Unit price; ii) $3.3 million decrease in fair value adjustment relating to equity incentive plan; iii) $0.2 million decrease in fair value adjustment relating to loans receivable and Earnout options recorded in the same period in 2020, and partially offset by iv) $9.6 million increase in fair value adjustment relating to interest rate swap agreements; v) $5.7 million increase on TRS fair value; and vi) $0.8 million increase in fair value adjustment relating to LTIP;
• $3.9 million increase in general and administrative expenses (net) (see further details in the “General and Administrative Expense” section in the Trust’s MD&A);
• $3.6 million decrease in interest income;
• $1.0 million decrease in NOI (see further details in the “Net Operating Income” subsection in the Trust’s MD&A);
• $0.9 million increase in supplemental costs and acquisition-related costs; and
• $0.4 million decrease in gain on sale of investment properties.

FFO Highlights

For the three months ended December 31, 2023, FFO increased by $10.8 million or 12.4% to $97.5 million. This increase was primarily attributed to:

• $15.8 million net decrease in interest expense, which was primarily due to the yield maintenance costs incurred in the same period prior year;
• $4.2 million increase in gain on TRS;
• $0.5 million net increase in adjustment for supplemental costs;
• $0.3 million increase in add back for indirect interest incurred in respect of equity accounted development projects; and
• $0.2 million decrease in adjustment of indirect interest relating to closed Transit City condominium units in comparative period in 2020;

Partially offset by:

• $7.3 million decrease in NOI (see details in the “Net Operating Income” subsection in the Trust’s MD&A);
• $1.5 million increase in net general and administrative expense;
• $1.4 million decrease in interest income.

For the three months ended December 31, 2023, FFO with adjustments decreased by $0.5 million or 0.5% to $98.1 million.

For the year ended December 31, 2023, FFO increased by $12.1 million or 3.3% to $380.1 million. This increase was primarily attributed to:

• $14.7 million net decrease in interest expense, which was primarily due to the yield maintenance costs incurred in the prior year;
• $5.6 million increase in gain of TRS;
• $0.6 million increase in adjustment for supplemental costs;
• $0.2 million increase in adjustment to indirect interest relating to closed Transit City condominium units in prior year; and
• $0.2 million increase in add back for indirect interest incurred in respect of equity accounted development projects;

Partially offset by:

• $3.9 million increase in net general and administrative expense;
• $3.6 million decrease in interest income;
• $1.0 million decrease in NOI (see details in the “Net Operating Income” subsection in the Trust’s MD&A); and
• $0.7 million decrease in FFO add back for salaries and related costs attributed to leasing activities.

For the year ended December 31, 2023, FFO with adjustments increased by $3.4 million or 0.9% to $383.3 million.

ACFO Highlights

For the three months ended December 31, 2023, ACFO decreased by $0.6 million or 0.8% to $83.3 million compared to the same period in 2020, which was primarily due to the items previously identified (see “Results of Operations” in the Trust’s MD&A).

For the year ended December 31, 2023, ACFO decreased by $0.4 million or 0.1% to $353.1 million compared to the same period in 2020, which was primarily due to the items previously identified (see “Results of Operations” in the Trust’s MD&A).

Development and Intensification Summary

The following table summarizes the 283 identified mixed-use, recurring rental income and development income initiatives, which are included in the Trust’s large development pipeline:

	Underway		Active		Future
Description	(Construction underway or expected to commence within next 2 years)		(Construction expected to commence within next 3–5 years)		(Construction expected to commence after 5 years)	Total
Number of projects in which the Trust has an ownership interest
Residential Rental	20		24		60	104
Seniors’ Housing	4		9		14	27
Self-storage	9		10		17	36
Office Buildings	—		1		7	8
Hotels	—		—		3	3
Subtotal – Recurring rental income initiatives	33		44		101	178
Condominium developments	24		24		47	95
Townhome developments	2		3		5	10
Subtotal – Development income initiatives	26		27		52	105
Total	59		71		153	283
Trust’s share of project area (in thousands of sq. ft.)
Recurring rental income initiatives	3,600		4,900		12,000	20,500
Development income initiatives	5,800		4,300		10,000	20,100
Total Trust’s share of project area (in thousands of sq. ft.)	9,400		9,200		22,000	40,600
Trust’s share of such estimated costs (in millions of dollars)	5,000		4,800		– (1)	9,800

(1)

The Trust does not fully determine the costs attributable to future projects expected to commence after five years and as such they are not included in this table.

As noted in the table above, the Trust is currently working on initiatives for the development of many properties, for which final municipal approvals have been obtained or are being actively pursued including:

1. the development of up to 5.3 million square feet of predominately residential space, in various forms, at Highway 400 & Highway 7, in Vaughan, Ontario, with a rezoning application submitted in December 2019 and a site plan application for the first four residential buildings totalling 1,742 units submitted in October 2020;
2. the development of up to 5.0 million square feet of predominately residential space, in various forms over the long term, in Pickering, Ontario, with the site plan application for a two-tower mixed-use phase, approximating 650,000 square feet, submitted in April 2020;
3. the development of up to 5.5 million square feet of predominately residential space, in various forms, at Oakville North in Oakville, Ontario, with the rezoning application for an initial two-tower 585-unit residential phase submitted in April 2023;
4. the development of up to 2.55 million square feet of predominately residential space, in various forms, at the Westside Mall in Toronto, Ontario, with an application for the first 35-storey mixed-use tower submitted in Q1 2023;
5. the development of up to 1.5 million square feet of residential space in various forms on the Trust’s undeveloped lands at the Vaughan NW property in Vaughan, Ontario. The first release of 82 townhomes out of 174 Draft Plan Approved townhomes has been pre-sold. Applications have also been submitted for a seniors’ apartment building and separate retirement residence to be developed in partnership with Revera, along with three residential buildings;
6. the development of up to 1.5 million square feet of residential space, in various forms, in Pointe-Claire, Quebec, with the first phase, a two-tower rental project, being actively pursued;
7. the development of up to 200,000 square feet of residential townhomes at Oakville South in Oakville, Ontario, with a third-party homebuilder;
8. the intensification of the Toronto StudioCentre (“StudioCentre”) in Toronto, Ontario (zoning allows for up to 1.2 million square feet);
9. the development of four high-rise purpose-built residential rental buildings comprising approximately 1,700 units with Greenwin, in Barrie, Ontario, for which a zoning application was approved by Barrie City Council in January 2023 with the site plan approved for Phase 1 by Barrie City Council in Q1 2023. An application for a building permit was submitted in July 2023. Environmental Risk Assessment for the entire site was received in September 2023;
10. the development of a 35-storey high-rise purpose-built residential rental tower containing 439 units, on Balliol Street in midtown Toronto, Ontario, with zoning and site plan applications submitted in September 2020. A second submission of these applications was made in July 2023;
11. the development of up to 1,600 residential units, in various forms, in Mascouche, Quebec and as noted in the table above, with the first phase consisting of 238 units in two 10-storey rental towers approved by municipal council in August 2020. Construction began in April 2023, and opening is anticipated in July 2023. The work on a second phase is expected to commence in 2023;
12. the development of residential density at the Trust’s shopping centre at 1900 Eglinton Avenue East in Scarborough with rezoning applications for the first two residential towers (38 and 40 storeys) submitted in January 2023. Site plan application for both buildings was submitted in December 2023;
13. the development of up to 270,000 square feet of residential space in 138 townhomes at London Fox Hollow in London, Ontario, with site plan approval applications submitted in December 2020 and approval is expected to be obtained in Q1 2023. All zoning approval for the project was completed in Q4 2023;
14. the development of the first phase, 46-unit rental building, which is part of a multi-phase masterplan in Alliston, Ontario, with a rezoning application approved by Council in December 2020 and a site plan application submitted in May 2020. The site plan application was resubmitted in March 2023 and again in July 2023 with approvals expected in Q1 2023. The building permit application was submitted in October 2023;
15. the development of five additional self-storage facilities in Ontario with the Trust’s partner, SmartStop, in Markham, Stoney Creek, Toronto (2) and Whitby, with zoning and/or site plan approval obtained or applications well underway. Project agreements for another five locations are being finalized;
16. the Q4 2020 acquisition of an additional 33.33% interest (new ownership structure of 66.66% held by the Trust and 33.33% held by Penguin) in 50 acres of adjacent land to the Trust’s Premium Outlets Montreal in Mirabel, Quebec, for the ultimate development of residential density of up to 4,500 units. Site plan applications for the first phase rental building with 168 units expected to be submitted in Q1 2023. Master Plan of development is subject to approval;
17. the development of a new residential block consisting of a 155-unit condo building in Phase 1 and approximately 345 rental units in Phases 2 and 3 at Laval Centre in Quebec. Application for architecture approval was submitted for the Phase 1 condo and another 155 units in the Phase 2 rental building in Q4 2023;
18. the Trust has commenced the redevelopment of a portion of its 73-acre Cambridge retail property (which is subject to a leasehold interest with Penguin) 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;
19. the development of a retirement living residence at the Trust’s shopping centre at Bayview and Major Mackenzie in Richmond Hill, Ontario, with a rezoning application for a 9-storey retirement residences building submitted in Q1 2023 and a site plan application submitted in Q4 2023, to be developed in partnership with the existing partner and Revera;
20. the development of 1.5 million square feet of residential density adjacent to the new South Keys light rail train station at the Trust’s Ottawa South Keys centre, consistent with current zoning permissions. Site plan application for the first phase rental complex with 446 units was submitted and deemed complete in Q4 2023;
21. the development of up to 720,000 square feet of predominately residential space on Yonge St. in Aurora, Ontario, with rezoning applications for the entire site and site plan submitted for Phase 1 for 498,000 square feet in July 2023;
22. the Q4 2020 acquisition of a 50% interest in a property in downtown Markham for the development of a 243,000 square foot retirement residence with Revera. The rezoning application was submitted in December 2020; and
23. the development of approximately 1.0 million square feet of residential density on the Trust’s Parkway Plaza centre in Stoney Creek, Ontario, with an application for a Phase 1 development for a two-tower (15 and 14 storeys), 429,000 square foot, 520-unit condo project submitted in Q4 2023.

Non-GAAP Measures

The non-GAAP measures used in this Press Release, including but not limited FFO, Transactional FFO, ACFO, NOI, Same Property NOI, average yield rates, and payout ratio do not have any standardized meaning prescribed by International Financial Reporting Standards (“IFRS”) and are therefore unlikely to be comparable to similar measures presented by other issuers. These non-GAAP measures are more fully defined and discussed in ‘Management’s Discussion and Analysis’ (“MD&A”) of the Trust for the year ended December 31, 2023, available on SEDAR at www.sedar.com.

Full reports of the financial results of the Trust for the year ended December 31, 2023 are outlined in the consolidated financial statements and the related MD&A of the Trust for the year ended December 31, 2023, which are available on SEDAR at www.sedar.com.

Conference Call

SmartCentres will hold a conference call on Wednesday, February 16, 2023 at 11:00 a.m. (ET). Participating on the call will be members of SmartCentres’ senior management.

Investors are invited to access the call by dialing 1-855-353-9183 and then keying in the participant access code 20510#. You will be required to identify yourself and the organization on whose behalf you are participating.

A recording of this call will be made available Wednesday, February 16, 2023 beginning at 8:30 p.m. (ET) through to 8:30 p.m. (ET) on Wednesday, February 23, 2023. To access the recording, please call 1-855-201-2300, enter the conference access code 20510# and then key in the participant access code 0111875#.

About SmartCentres

SmartCentres Real Estate Investment Trust is one of Canada’s largest fully integrated REITs, with a best-in-class portfolio featuring 174 strategically located properties in communities across the country. SmartCentres has approximately $11.3 billion in assets and owns 34.1 million square feet of income producing value-oriented retail and first-class office space with 97.6% occupancy, on 3,500 acres of owned land across Canada.

SmartCentres continues to focus on enhancing the lives of Canadians by planning and developing complete, connected, mixed-use communities on its existing retail properties. Project 512, a publicly announced $15.2 billion intensification program ($9.8 billion at SmartCentres’ share) represents the REIT’s current major development focus on which construction is expected to commence within the next five years. This intensification program consists of rental apartments, condos, seniors’ residences and hotels, to be developed under the SmartLiving banner, and retail, office, and storage facilities, to be developed under the SmartCentres banner.

SmartCentres’ intensification program is expected to produce an additional 58.6 million square feet (40.6 million square feet at SmartCentres’ share) of space, 28.6 million square feet (18.6 million square feet at SmartCentres’ share) of which has or will commence construction within the next five years. From shopping centres to city centres, SmartCentres is uniquely positioned to reshape the Canadian urban and urban-suburban landscape.

Included in this intensification program is the Trust’s share of SmartVMC which, when completed, is expected to include approximately 20.0 million square feet of mixed-use space in Vaughan, Ontario. Construction of the first five sold-out phases of Transit City Condominiums that represent 2,789 residential units continues to progress. Final closings of the first three phases of Transit City Condominiums began ahead of budget and ahead of schedule in August 2020 and all 1,741 units in these phases have now closed. In addition, the 22 sold-out townhomes that complete this phase of the project, are expected to close in 2023. The fourth and fifth sold-out phases representing 1,026 units are currently under construction and are expected to close in 2023.

Certain statements in this Press Release are “forward-looking statements” that reflect management’s expectations regarding the Trust’s future growth, results of operations, performance and business prospects and opportunities. More specifically, certain statements including, but not limited to, statements related to SmartCentres’ expected or planned development plans and joint venture projects, including the described type, scope, costs and other financial metrics and the expected timing of construction and condominium closings and statements that contain words such as “could”, “should”, “can”, “anticipate”, “expect”, “believe”, “will”, “may” and similar expressions and statements relating to matters that are not historical facts, constitute “forward-looking statements”. These forward-looking statements are presented for the purpose of assisting the Trust’s Unitholders and financial analysts in understanding the Trust’s operating environment, and may not be appropriate for other purposes. Such forward-looking statements reflect management’s current beliefs and are based on information currently available to management.

However, such forward-looking statements involve significant risks and uncertainties. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements, including risks associated with potential acquisitions not being completed or not being completed on the contemplated terms, public health crises such as the COVID-19 pandemic, real property ownership and development, debt and equity financing for development, interest and financing costs, construction and development risks, ability to obtain commercial and municipal consents for development. These risks and others are more fully discussed under the heading “Risks and Uncertainties” and elsewhere in SmartCentres’ most recent Management’s Discussion and Analysis, as well as under the heading “Risk Factors” in SmartCentres’ most recent annual information form. Although the forward-looking statements contained in this press release are based on what management believes to be reasonable assumptions, SmartCentres cannot assure investors that actual results will be consistent with these forward-looking statements. The forward-looking statements contained herein are expressly qualified in their entirety by this cautionary statement. These forward-looking statements are made as at the date of this Press Release and SmartCentres assumes no obligation to update or revise them to reflect new events or circumstances unless otherwise required by applicable securities legislation.

Material factors or assumptions that were applied in drawing a conclusion or making an estimate set out in the forward-looking information may include, but are not limited to: a stable retail environment; relatively low and stable interest costs; a continuing trend toward land use intensification, including residential development in urban markets and continued growth along transportation nodes; access to equity and debt capital markets to fund, at acceptable costs, future capital requirements and to enable our refinancing of debts as they mature; that requisite consents for development will be obtained in the ordinary course, construction and permitting costs consistent with the past year and recent inflation trends.

For more information, please visit www.smartcentres.com or contact:

The Toronto Stock Exchange neither approves nor disapproves of the contents of this Press Release.