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 ended September 30,
2022.
“Customer traffic to our Walmart-anchored
shopping centre portfolio continues to gain post-pandemic momentum
which, in turn, is generating steadily increasing levels of leasing
activity that began earlier in 2022,” said Mitchell Goldhar,
Executive Chairman and CEO of SmartCentres.
“We anticipate that this trend will continue
into 2023 and will have a positive impact on both our occupancy and
earnings levels. We are pleased with the noticeable increase in
leasing activity in the third quarter and the associated
improvement in cash collections.
Our development business is progressing well,
with over 735,000 square feet (approximate) of municipal approvals
received for residential and mixed-uses in this quarter alone. This
brings 6,000,000 square feet of potential on-site growth so far
this year. Current projects under construction include over 400,000
square feet of self-storage space across three properties, more
than 1,000 condominium units and a further 174 townhomes, over 900
residential rental suites in three separate projects, and a further
413 seniors housing units. Construction has also commenced on a
241,000 square foot industrial project. We expect each of these
projects to begin contributing to FFO(1) during 2023 or 2024.
In the immediate term, the next two 45-storey
and 50-storey condominium towers at Transit City are sold out and
construction is progressing on time and on budget. Closings are
expected to commence early in 2023. In addition, The Millway, a
454-unit, 36-storey rental tower, is also proceeding on time and on
budget with initial occupancy and rent commencement expected to
begin early in 2023. Also, the first phase of our Artwalk
condominium project is sold out and construction is expected to
commence by spring 2023.
We are also pleased to confirm that we expect to
publish our inaugural ESG report in the coming weeks. With respect
to the changing economic conditions, we plan on applying discipline
when assessing new opportunities for growth. Our focus remains on
the long term, including the development of mixed-use projects on
our strategically located shopping centre sites which will extract
deeply embedded value wherever possible for many years to come,”
added Mr. Goldhar.
(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.Key Business Development,
Financial and Operational Highlights for the Three
Months Ended September 30, 2022
Mixed-Use Development and Intensification at
SmartVMC
- Park Place condo pre-development is underway on the 53.0 acre
SmartVMC West lands strategically acquired in December 2021.
Pre-sales for this development have commenced. The Trust’s
acquisition in December 2021 of a two-thirds interest in the
SmartVMC West lands more than doubled the Trust’s holdings in the
105 acre SmartVMC city centre development.
- Construction continues on budget on
the 100% pre-sold Transit City 4 (45 storeys) and 5 (50 storeys)
1,026-suite condo towers. Concrete and formwork have been completed
for both towers, with building envelope and interior finishes
ongoing. Closings are expected to commence in early 2023.
- Construction of the purpose-built
rental project, the Millway (36 storeys), continues at SmartVMC.
Both formwork and concrete have been completed. Building envelope
is ongoing with interior finishes underway. Initial occupancy and
rent commencement are expected in spring 2023.
- ArtWalk condominium sales of 320
released units in Phase 1 are sold out (construction expected to
begin early in 2023).
Other Business Development
- The Trust completed the purchase of
approximately 38 acres of industrial lands in Pickering, adjacent
to Hwy 407, on which the Trust received approval to build 241,000
square feet of industrial space for the 16 acre Phase 1
development, of which 53% has already been pre-leased to a leading
Canadian furniture retailer, with completion currently scheduled
for 2023.
- Leasing continues on the completed
first phase of the two-phase, purpose-built residential rental
project in Laval, Quebec, with more than 99% of the 171 units
rented. Construction continues on the next phase that commenced in
October 2021, with a target completion date of Q2 2023.
- Initial occupancy and rent
commencement in the two purpose-built residential rental towers
(238 units) in Mascouche, Quebec began in July 2022. More than 130
units have been leased and current lease-up activity is in line
with initial expectations.
- All of the five developed and
operating self-storage facilities (Toronto (Leaside), Vaughan NW,
Brampton, Oshawa South and Scarborough East) have been
well-received by their local communities; current occupancy levels
are ahead of expectations.
- Three self-storage facilities in
Markham, Brampton (Kingspoint) and Aurora are currently under
construction and on budget, with the latter two facilities expected
to be completed in late 2022. 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, Stoney Creek
and two locations in Toronto (Gilbert Ave. and Jane St.). In
addition, the municipal approval process is underway in New
Westminster and on a newly acquired property in Burnaby, British
Columbia.
- Construction continues on a new
retirement residence and a seniors’ apartment project, totalling
402 units, at the Trust's Laurentian Place in Ottawa, with
completion expected in Q1 2024.
- The Trust intends to commence the
redevelopment of a portion of its 73 acre Cambridge retail property
(which is subject to a leasehold interest with Penguin) which is
now zoned for 12.0 million square feet of residential and
commercial uses. Over the coming years, this high profile property
will transform into a vibrant urban city center away from the GTA,
but strategically within its orbit.
- The Trust, together with its
partner, Penguin, have also commenced preliminary siteworks for the
215,000 square feet retail project on Laird Drive in Toronto, that
is expected to feature a flagship 190,000 square foot Canadian Tire
store together with 25,000 square feet of additional retail space.
Canadian Tire is expected to take possession in 2024.
Financial
- Net income and comprehensive
income(1) was $3.5 million as compared to $178.1 million for the
same period in 2021, representing a decrease of $174.6 million.
This decrease was primarily attributed to: i) $177.7 million
decrease in fair value adjustment on revaluation of investment
properties; ii) $4.3 million increase in interest expense; iii)
$2.3 million decrease in net operating income; iv) $2.2 million
increase in general and administrative expenses (net); v) $0.6
million net income decrease relating to other items; and was
partially offset by vi) $9.9 million increase in fair value
adjustments on financial instruments; and vii) $2.7 million
increase in interest income.
- The Trust increased its
unsecured/secured debt ratio(2)(3) to 77%/23% (December 31,
2021 – 71%/29%).
- The Trust continues to add to its
unencumbered pool of high-quality assets. As at September 30, 2022,
this unencumbered portfolio consisted of investment properties
valued at $8.4 billion (September 30, 2021 – $6.0 billion).
- The Trust’s fixed rate/variable
rate debt ratio(2)(3) was 83%/17% as at September 30, 2022
(December 31, 2021 – 89%/11%).
- FFO with adjustments excluding
impact of ECL, TRS, condominium and townhome closings, and SmartVMC
West acquisition(2) was $93.8 million as compared to $93.9 million
in the same period last year.
- During the quarter, 941,990
additional notional Units were added at a weighted average price of
$27.42 per Unit to the Total Return Swap.
- Net income and comprehensive income
per Unit(1) decreased by $1.01 or 98% to $0.02 as compared to the
same period in 2021, primarily resulting from fair value
adjustments on revaluation of investment properties in amount of
$177.7 million or $0.99 per Unit.
- FFO with adjustments excluding
impact of ECL, TRS, condominium and townhome closings, and SmartVMC
West acquisition per Unit(2) was $0.54, which remained the same as
compared to the same period in 2021.
- Cash flows provided by operating
activities(1) increased by $0.7 million or 0.7% to $97.0 million as
compared to the same period in 2021. Surplus of cash flows provided
by operating activities(1) over distributions declared amounted to
$14.6 million (three months ended September 30, 2021 – surplus
of $16.6 million).
- The Payout Ratio relating to cash
flows provided by operating activities for the rolling 12 months
ended September 30, 2022 was 86.6%, as compared to 96.8% for
the same period ended September 30, 2021. The Payout Ratio
relating to cash flows provided by operating activities for the
rolling 24 months ended September 30, 2022 was 91.3%, as
compared to 95.8% for the same period ended September 30,
2021.
- For the three months ended
September 30, 2022, ACFO(2) decreased by $9.3 million or 10.3%
to $81.1 million as compared to the same period in 2021.
- For the three months ended
September 30, 2022, there was a shortfall of ACFO(2) over
distributions declared of $1.3 million (three months ended
September 30, 2021 – surplus of $10.7 million).
- The Payout Ratio to ACFO(2) for the
rolling 12 months ended September 30, 2022 was 98.9%, as
compared to 90.1% for the same period ended September 30,
2021. Excluding SmartVMC West LP Class D distributions, the Payout
Ratio to ACFO(2) for the rolling 12 months ended September 30,
2022 was 96.7%, as compared to 90.1% for the same period ended
September 30, 2021.
- The Payout Ratio to ACFO(2) for the
rolling 24 months ended September 30, 2022 was 94.4%, as
compared to 91.0% for the same period ended September 30,
2021. Excluding SmartVMC West LP Class D distributions, the Payout
Ratio to ACFO(2) for the rolling 24 months ended September 30,
2022 was 93.3%, as compared to 91.0% for the same period ended
September 30, 2021.
Operational
- Rentals from investment properties
and other(1) was $196.7 million, as compared to $195.2 million for
the same period in 2021, representing an increase of $1.5 million
or 0.8%, primarily due to the acquisition of an additional interest
in investment properties in Q1 2022, higher rental income from
Premium Outlets locations in both Toronto and Montreal, additional
self-storage facility and parking rental revenue, and higher
miscellaneous revenue.
- In-place and committed occupancy
rates were 97.6% and 98.1%, respectively, as at September 30, 2022
(June 30, 2022 – 97.2% and 97.6%, respectively).
- Same Properties NOI inclusive of
ECL(2) increased by $3.9 million or 3.1% as compared to the same
period in 2021. Same Properties NOI excluding ECL(2) increased by
$3.0 million or 2.3% as compared to the same period in 2021.
Subsequent Event
- Subsequent to September 30, 2022,
certain mortgages receivable with Penguin in the amount of $101.4
million were repaid in cash and the proceeds were primarily used to
repay a portion of the balance outstanding on the Trust’s revolving
operating facility.
(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 additional information, please see “Non-GAAP
Measures” in this Press Release.(3) Net of
cash-on-hand of $150.0 million as at September 30, 2022 for
the purposes of calculating the applicable ratios.
Selected Consolidated Operational,
Mixed-Use Development and Financial Information
Key consolidated operational, mixed-use
development and financial information shown in the table below
includes the Trust’s proportionate share of equity accounted
investments:
(in thousands of dollars, except per Unit and other non-financial
data) |
September 30, 2022 |
|
December 31, 2021 |
|
September 30, 2021 |
|
Portfolio Information |
|
|
|
|
|
|
Number of retail properties |
155 |
|
155 |
|
156 |
|
Number of office properties |
4 |
|
4 |
|
4 |
|
Number of self-storage properties |
6 |
|
6 |
|
5 |
|
Number of residential properties |
1 |
|
1 |
|
1 |
|
Number of properties under development |
19 |
|
17 |
|
15 |
|
Total number of properties with an ownership interest |
185 |
|
183 |
|
181 |
|
Leasing and
Operational Information(1) |
|
|
|
|
|
|
Gross leasable retail and office area (in thousands of sq.
ft.) |
34,685 |
|
34,119 |
|
34,225 |
|
Occupied retail and office area (in thousands of sq. ft.) |
33,843 |
|
33,219 |
|
33,312 |
|
Vacant retail and office area (in thousands of sq. ft.) |
842 |
|
900 |
|
913 |
|
In-place occupancy rate (%) |
97.6 |
|
97.4 |
|
97.3 |
|
Committed occupancy rate (%) |
98.1 |
|
97.6 |
|
97.6 |
|
Average lease term to maturity (in years) |
4.3 |
|
4.4 |
|
4.5 |
|
Net annualized retail rental rate (per occupied sq. ft.) ($) |
15.52 |
|
15.44 |
|
15.40 |
|
Net annualized retail rental rate excluding Anchors (per occupied
sq. ft.) ($) |
22.40 |
|
22.07 |
|
21.91 |
|
Mixed-Use Development Information |
|
|
|
|
|
|
Trust’s share of future development area (in thousands of sq.
ft.) |
39,500 |
|
40,600 |
|
32,200 |
|
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 |
|
9,800 |
|
7,700 |
|
Total number of residential rental projects |
107 |
|
104 |
|
97 |
|
Total number of seniors’ housing projects |
25 |
|
27 |
|
39 |
|
Total number of self-storage projects |
35 |
|
36 |
|
46 |
|
Total number of office building projects |
8 |
|
8 |
|
7 |
|
Total number of hotel projects |
3 |
|
3 |
|
4 |
|
Total number of condominium developments |
89 |
|
95 |
|
73 |
|
Total number of townhome developments |
8 |
|
10 |
|
15 |
|
Total number of estimated future projects currently in development
planning stage |
275 |
|
283 |
|
281 |
|
(in thousands of dollars, except per Unit and other
non-financial data) |
September 30, 2022 |
|
December 31, 2021 |
|
September 30, 2021 |
|
Financial Information |
|
|
|
|
|
|
Total assets – GAAP(2) |
11,862,633 |
|
11,293,248 |
|
10,191,592 |
|
Total assets – non-GAAP(3)(4) |
12,219,429 |
|
11,494,377 |
|
10,382,086 |
|
Investment properties – GAAP(2) |
10,211,384 |
|
9,847,078 |
|
8,892,656 |
|
Investment properties – non-GAAP(3)(4) |
11,135,415 |
|
10,684,529 |
|
9,623,548 |
|
Total unencumbered assets(3) |
8,383,900 |
|
6,640,600 |
|
6,002,800 |
|
Debt – GAAP(2) |
5,159,860 |
|
4,854,527 |
|
4,539,594 |
|
Debt – non-GAAP(3)(4) |
5,410,319 |
|
4,983,078 |
|
4,647,648 |
|
Debt to Aggregate Assets (%)(3)(4)(5) |
43.7 |
|
42.9 |
|
44.5 |
|
Debt to Gross Book Value (%)(3)(4)(5) |
52.1 |
|
50.8 |
|
50.4 |
|
Unsecured to Secured Debt Ratio(3)(4)(5) |
77%/23% |
|
71%/29% |
|
70%/30% |
|
Unencumbered assets to unsecured debt(3)(4)(5) |
2.1X |
|
1.9X |
|
1.9X |
|
Weighted average interest rate (%)(3)(4) |
3.67 |
|
3.11 |
|
3.25 |
|
Weighted average term of debt (in years) |
4.2 |
|
4.8 |
|
5 |
|
Interest coverage ratio(3)(4)(5) |
3.3X |
|
3.4X |
|
3.3X |
|
Adjusted Debt to Adjusted EBITDA (net of cash)(3)(4)(5) |
10.0X |
|
9.2X |
|
8.5X |
|
Adjusted Debt to Adjusted EBITDA (net of cash and
TRS)(3)(4)(5) |
9.8X |
|
9.1X |
|
8.5X |
|
Fixed Rate to Variable Rate Debt Ratio(3)(4)(5) |
83%/17% |
|
89%/11% |
|
94%/6% |
|
Equity (book value)(2) |
6,141,317 |
|
5,841,315 |
|
5,268,176 |
|
Weighted average number of units outstanding – diluted |
179,644,083 |
|
173,748,819 |
|
173,535,843 |
|
(1) Excluding residential and
self-storage area.(2) Represents a 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 September 30, 2022, cash-on-hand of
$150.0 million was excluded for the purposes of calculating the
applicable ratios (December 31, 2021 – $80.0 million,
September 30, 2021 – $50.0 million).
Quarterly Comparison to Prior
Year
The following table presents key financial, per
Unit, and payout ratio information for the three months ended
September 30, 2022 and September 30, 2021:
(in thousands of dollars, except per Unit information) |
September 30, 2022 |
|
September 30, 2021 |
|
Variance |
|
|
(A) |
|
(B) |
|
(A–B) |
|
Financial Information |
|
|
|
|
|
|
Rentals from investment properties and other(1) |
196,678 |
|
195,171 |
|
1,507 |
|
Net base rent(1) |
127,576 |
|
125,125 |
|
2,451 |
|
Total recoveries(1) |
59,391 |
|
60,565 |
|
(1,174 |
) |
Miscellaneous revenue(1) |
4,683 |
|
4,573 |
|
110 |
|
Service and other revenues(1) |
5,028 |
|
4,908 |
|
120 |
|
Net income and comprehensive income(1) |
3,548 |
|
178,051 |
|
(174,503 |
) |
Net income and comprehensive
income excluding fair value adjustments(2)(3) |
83,927 |
|
90,691 |
|
(6,764 |
) |
Cash flows provided by operating activities(1) |
97,011 |
|
96,298 |
|
713 |
|
Net rental income and other(1) |
127,197 |
|
123,617 |
|
3,580 |
|
NOI from condominium and townhome closings and other
adjustments(2) |
(244 |
) |
6,444 |
|
(6,688 |
) |
NOI(2) |
130,986 |
|
133,333 |
|
(2,347 |
) |
Change in net rental income and other(2) |
2.9 |
% |
9.2 |
% |
(6.3 |
)% |
Change in SPNOI(2) |
3.1 |
% |
6.6 |
% |
(3.5 |
)% |
Change in SPNOI excluding ECL(2) |
2.3 |
% |
(1.0 |
)% |
3.3 |
% |
|
|
|
|
FFO(2)(3)(4)(5) |
88,403 |
|
97,887 |
|
(9,484 |
) |
Other adjustments |
669 |
|
1,706 |
|
(1,037 |
) |
FFO with adjustments(2)(3)(4) |
89,072 |
|
99,593 |
|
(10,521 |
) |
Adjusted for: |
|
|
|
ECL |
(271 |
) |
670 |
|
(941 |
) |
Loss (gain) on derivative – TRS |
4,900 |
|
(392 |
) |
5,292 |
|
FFO sourced from condominium and townhome closings |
216 |
|
(5,922 |
) |
6,138 |
|
FFO sourced from SmartVMC West acquisition |
(154 |
) |
— |
|
(154 |
) |
FFO with adjustments excluding impact of ECL, TRS, condominium and
townhome closings, and SmartVMC West acquisition(2)(3)(4) |
93,763 |
|
93,949 |
|
(186 |
) |
|
|
|
|
ACFO(2)(3)(4)(5) |
81,060 |
|
90,342 |
|
(9,282 |
) |
Other adjustments |
669 |
|
1,706 |
|
(1,037 |
) |
ACFO with adjustments(2)(3)(4) |
81,729 |
|
92,048 |
|
(10,319 |
) |
Adjusted for: |
|
|
|
Loss (gain) on derivative – TRS |
4,900 |
|
(392 |
) |
5,292 |
|
ACFO sourced from condominium and townhome closings |
244 |
|
(6,444 |
) |
6,688 |
|
ACFO sourced from SmartVMC West acquisition |
(154 |
) |
— |
|
(154 |
) |
ACFO with adjustments excluding impact of TRS, condominium and
townhome closings, and SmartVMC West acquisition(2)(3)(4) |
86,719 |
|
85,212 |
|
1,507 |
|
|
|
|
|
Distributions declared |
82,382 |
|
79,683 |
|
2,699 |
|
Surplus of cash provided by operating activities over distributions
declared(2) |
14,629 |
|
16,615 |
|
(1,986 |
) |
(Shortfall) surplus of ACFO over distributions declared(2) |
(1,322 |
) |
10,659 |
|
(11,981 |
) |
Surplus of ACFO with adjustments excluding impact of TRS,
condominium and townhome closings, and SmartVMC West acquisition
over distributions declared(2) |
4,337 |
|
5,529 |
|
(1,192 |
) |
Units outstanding(6) |
178,126,285 |
|
172,287,950 |
|
5,838,335 |
|
Weighted average – basic |
178,123,918 |
|
172,285,503 |
|
5,838,415 |
|
Weighted average – diluted(7) |
179,678,009 |
|
173,644,091 |
|
6,033,918 |
|
(in thousands of dollars, except per Unit information) |
September 30, 2022 |
|
September 30, 2021 |
|
Variance |
|
|
(A) |
|
(B) |
|
(A–B) |
|
|
|
|
|
|
|
|
Per Unit Information (Basic/Diluted) |
|
|
|
|
|
|
Net income and comprehensive income(1) |
$0.02/$0.02 |
|
$1.03/$1.03 |
|
$-1.01/$-1.01 |
|
Net
income and comprehensive income excluding fair value
adjustments(2)(3) |
$0.47/$0.47 |
|
$0.53/$0.52 |
|
$-0.06/$-0.05 |
|
|
|
|
|
|
|
|
FFO(2)(3)(4)(5) |
$0.50/$0.49 |
|
$0.57/$0.56 |
|
$-0.07/$-0.07 |
|
Other adjustments |
$0.00/$0.01 |
|
$0.01/$0.01 |
|
$-0.01/$0.00 |
|
FFO with adjustments(2)(3)(4) |
$0.50/$0.50 |
|
$0.58/$0.57 |
|
$-0.08/$-0.07 |
|
Adjusted for: |
|
|
|
|
|
|
ECL(8) |
$0.00/$0.00 |
|
$0.00/$0.00 |
|
$0.00/$0.00 |
|
Loss (gain) on derivative – TRS |
$0.03/$0.03 |
|
$0.00/$0.00 |
|
$0.03/$0.03 |
|
FFO sourced from condominium and townhome closings |
$0.00/$0.00 |
|
$-0.03/$-0.03 |
|
$0.03/$0.03 |
|
FFO units impact from SmartVMC West LP Class D Units |
$0.01/$0.01 |
|
$0.00/$0.00 |
|
$0.01/$0.01 |
|
FFO with adjustments excluding impact of ECL, TRS, condominium and
townhome closings, and SmartVMC West acquisition(2)(3)(4) |
$0.54/$0.54 |
|
$0.55/$0.54 |
|
$-0.01/$0.00 |
|
|
|
|
|
|
|
|
Distributions declared |
$0.463 |
|
$0.463 |
|
$— |
|
|
|
|
|
|
|
|
Payout Ratio Information |
|
|
|
|
|
|
Payout Ratio to cash flows provided by operating activities |
84.9 |
% |
82.7 |
% |
2.2 |
% |
Payout Ratio to ACFO(2)(3)(4)(5) |
101.6 |
% |
88.2 |
% |
13.4 |
% |
Payout Ratio to ACFO with adjustments(2)(3)(4) |
100.8 |
% |
86.6 |
% |
14.2 |
% |
Payout Ratio to ACFO with adjustments excluding impact of TRS,
condominium and townhome sales, and SmartVMC West
acquisition(2)(3)(4) |
91.9 |
% |
93.5 |
% |
(1.6 |
)% |
|
|
|
|
|
|
|
(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 additional information, please see “Non-GAAP
Measures” in this Press Release. (3) Includes the
Trust’s proportionate share of equity accounted investments.
(4) See “Non-GAAP Measures” in this Press Release
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 REALpac White Paper on FFO issued in January 2022 and
REALpac White Paper on ACFO issued in February 2019, 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. (8) The impact of ECL on FFO per
Unit is less than $0.01 and therefore it is shown as $0.00 in the
table above for the three months ended September 30, 2022.
Year-to-Date Comparison to Prior
Year
The following table presents key financial, per
Unit, and payout ratio information for the nine months ended
September 30, 2022 and September 30, 2021:
(in thousands of dollars, except per Unit information) |
September 30, 2022 |
|
September 30, 2021 |
|
Variance |
|
|
(A) |
|
(B) |
|
(A–B) |
|
Financial Information |
|
|
|
|
|
|
Rentals from investment properties and other(1) |
597,497 |
|
587,946 |
|
9,551 |
|
Net base rent(1) |
380,082 |
|
369,955 |
|
10,127 |
|
Total recoveries(1) |
196,896 |
|
196,342 |
|
554 |
|
Miscellaneous revenue(1) |
10,414 |
|
10,412 |
|
2 |
|
Service and other revenues(1) |
10,105 |
|
11,237 |
|
(1,132 |
) |
Net income and comprehensive income(1) |
535,655 |
|
335,595 |
|
200,060 |
|
Net income and comprehensive
income excluding fair value adjustments(2)(3) |
253,910 |
|
260,400 |
|
(6,490 |
) |
Cash flows provided by operating activities(1) |
243,800 |
|
237,950 |
|
5,850 |
|
Net rental income and other(1) |
372,575 |
|
358,886 |
|
13,689 |
|
NOI from condominium and townhome closings and other
adjustments(2) |
496 |
|
20,538 |
|
(20,042 |
) |
NOI(2) |
384,888 |
|
388,405 |
|
(3,517 |
) |
Change in net rental income and other(2) |
3.8 |
% |
4.7 |
% |
(0.9 |
)% |
Change in SPNOI(2) |
3.3 |
% |
3.4 |
% |
(0.1 |
)% |
Change in SPNOI excluding ECL(2) |
5.5 |
% |
(2.1 |
)% |
7.6 |
% |
|
|
|
|
FFO(2)(3)(4)(5) |
269,102 |
|
282,620 |
|
(13,518 |
) |
Other adjustments |
2,566 |
|
2,566 |
|
— |
|
FFO with adjustments(2)(3)(4) |
271,668 |
|
285,186 |
|
(13,518 |
) |
Adjusted for: |
|
|
|
ECL |
(2,547 |
) |
5,251 |
|
(7,798 |
) |
Loss (gain) on derivative – TRS |
11,138 |
|
(1,462 |
) |
12,600 |
|
FFO sourced from condominium and townhome closings |
(860 |
) |
(18,813 |
) |
17,953 |
|
FFO sourced from SmartVMC West acquisition |
(613 |
) |
— |
|
(613 |
) |
FFO with adjustments excluding impact of ECL, TRS, condominium and
townhome closings, and SmartVMC West acquisition(2)(3)(4) |
278,786 |
|
270,162 |
|
8,624 |
|
|
|
|
|
FFO with adjustments and Transactional FFO(2)(3)(4) |
271,668 |
|
286,773 |
|
(15,105 |
) |
|
|
|
|
ACFO(2)(3)(4)(5) |
247,085 |
|
269,743 |
|
(22,658 |
) |
Other adjustments |
2,566 |
|
2,566 |
|
— |
|
ACFO with adjustments(2)(3)(4) |
249,651 |
|
272,309 |
|
(22,658 |
) |
Adjusted for: |
|
|
|
Loss (gain) on derivative – TRS |
11,138 |
|
(1,462 |
) |
12,600 |
|
ACFO sourced from condominium and townhome closings |
(496 |
) |
(20,538 |
) |
20,042 |
|
ACFO sourced from SmartVMC West acquisition |
(613 |
) |
— |
|
(613 |
) |
ACFO with adjustments excluding impact of TRS, condominium and
townhome closings, and SmartVMC West acquisition(2)(3)(4) |
259,680 |
|
250,309 |
|
9,371 |
|
|
|
|
|
Distributions declared |
247,145 |
|
239,028 |
|
8,117 |
|
Shortfall of cash flows provided by operating activities over
distributions declared(2) |
(3,345 |
) |
(1,078 |
) |
(2,267 |
) |
(Shortfall) surplus of ACFO over distributions declared(2) |
(60 |
) |
30,715 |
|
(30,775 |
) |
Surplus of ACFO with adjustments excluding impact of TRS,
condominium and townhome closings, and SmartVMC West acquisition
over distributions declared(2) |
12,535 |
|
11,281 |
|
1,254 |
|
Units outstanding(6) |
178,126,285 |
|
172,287,950 |
|
5,838,335 |
|
Weighted average – basic |
178,118,504 |
|
172,266,602 |
|
5,851,902 |
|
Weighted average – diluted(7) |
179,644,083 |
|
173,535,843 |
|
6,108,240 |
|
(in thousands of dollars, except per Unit information) |
September 30, 2022 |
|
September 30, 2021 |
|
Variance |
|
|
(A) |
|
(B) |
|
(A–B) |
|
|
|
|
|
|
|
|
Per Unit Information (Basic/Diluted) |
|
|
|
|
|
|
Net income and comprehensive income(1) |
$3.01/$2.98 |
|
$1.95/$1.93 |
|
$1.06/$1.05 |
|
Net
income and comprehensive income excluding fair value
adjustments(2)(3) |
$1.43/$1.41 |
|
$1.51/$1.50 |
|
$-0.08/$-0.09 |
|
|
|
|
|
|
|
|
FFO(2)(3)(4)(5) |
$1.51/$1.50 |
|
$1.64/$1.63 |
|
$-0.13/$-0.13 |
|
Other adjustments |
$0.02/$0.01 |
|
$0.02/$0.01 |
|
$0.00/$0.00 |
|
FFO with
adjustments(2)(3)(4) |
$1.53/$1.51 |
|
$1.66/$1.64 |
|
$-0.13/$-0.13 |
|
Adjusted for: |
|
|
|
|
|
|
ECL |
$-0.01/$-0.01 |
|
$0.03/$0.03 |
|
$-0.04/$-0.04 |
|
Loss (gain) on derivative – TRS |
$0.06/$0.06 |
|
$-0.01/$-0.01 |
|
$0.07/$0.07 |
|
FFO sourced from condominium and townhome closings |
$0.00/$0.00 |
|
$-0.11/$-0.10 |
|
$0.11/$0.10 |
|
FFO units impact from SmartVMC West LP Class D Units |
$0.04/$0.04 |
|
$0.00/$0.00 |
|
$0.04/$0.04 |
|
FFO with adjustments excluding impact of ECL, TRS, condominium and
townhome closings, and SmartVMC West acquisition(2)(3)(4) |
$1.62/$1.60 |
|
$1.57/$1.56 |
|
$0.05/$0.04 |
|
|
|
|
|
|
|
|
FFO
with adjustments and Transactional FFO(2)(3)(4) |
$1.53/$1.51 |
|
$1.66/$1.65 |
|
$-0.13/$-0.14 |
|
Distributions declared |
$1.39 |
|
$1.39 |
|
$— |
|
|
|
|
|
|
|
|
Payout Ratio Information |
|
|
|
|
|
|
Payout Ratio to cash flows provided by operating activities |
101.4 |
% |
100.5 |
% |
0.9 |
% |
Payout Ratio to ACFO(2)(3)(4)(5) |
100.0 |
% |
88.6 |
% |
11.4 |
% |
Payout Ratio to ACFO with adjustments(2)(3)(4) |
99.0 |
% |
87.8 |
% |
11.2 |
% |
Payout Ratio to ACFO with adjustments excluding impact of TRS,
condominium and townhome sales, and SmartVMC West
acquisition(2)(3)(4) |
92.1 |
% |
95.5 |
% |
(3.4 |
)% |
|
|
|
|
|
|
|
(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 additional information, please see “Non-GAAP
Measures” in this Press Release. (3) Includes the
Trust’s proportionate share of equity accounted investments.
(4) See “Non-GAAP Measures” in this Press Release
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 REALpac White Paper on FFO issued in January 2022 and
REALpac White Paper on ACFO issued in February 2019, 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 September 30,
2022, net income and comprehensive income decreased by
$174.5 million as compared to the same period in 2021. This
decrease was primarily attributed to the following:
- $177.7 million decrease in fair
value adjustments on revaluation of investment properties (see
details in the “Investment Property” section in the Trust’s
MD&A);
- $4.3 million increase in interest
expense (see further details in the “Interest Income and Interest
Expense” subsection in the Trust’s MD&A);
- $2.3 million decrease in NOI (see
further details in the “Net Operating Income” subsection in the
Trust’s MD&A);
- $2.2 million increase in general
and administrative expenses (net) (see further details in the
“General and Administrative Expense” section in the Trust’s
MD&A);
- $0.5 million higher loss on sale of
investment properties; and
- $0.1 million increase in
supplemental costs;
Partially offset by the following:
- $9.9 million increase in fair value
adjustment on financial instruments primarily due to: i) $12.8
million higher fair value gains on those Units classified as
liabilities due to fluctuation in the Trust’s Unit price, ii) $3.9
million higher fair value gains relating to unit-based incentive
programs due to fluctuation in the Trust’s Unit price, and
partially offset by: iii) $5.3 million higher fair value loss of
TRS due to fluctuation in the Trust’s Unit price, and iv) $1.5
million decrease in fair value adjustments of interest rate swap
agreements (see further details in the “Debt” subsection in the
Trust’s MD&A); and
- $2.7 million increase in interest
income mainly due to higher interest rates.
For the nine months ended September 30,
2022, net income and comprehensive income increased by $200.1
million as compared to the same period in 2021. This increase was
primarily attributed to the following:
- $114.6 million increase in fair
value adjustment on financial instruments primarily due to: i)
$63.1 million higher fair value gains on those Units classified as
liabilities due to fluctuation in the Trust’s Unit price, ii) $40.6
million increase in fair value adjustments pertaining to interest
rate swap agreements (see further details in the “Debt” subsection
in the Trust’s MD&A), iii) $23.5 million higher fair value
gains relating to unit-based incentive programs also due to
fluctuation in the Trust’s Unit price, and partially offset by: iv)
$12.6 million higher fair value loss on the TRS due to fluctuation
in the Trust’s Unit price;
- $92.0 million increase in fair
value adjustments on revaluation of investment properties, of
which: i) $237.7 million increase relates to the fair value
adjustment associated with certain properties under development,
ii) $251.2 million decrease relates to cap rate changes, iii) $14.2
million increase relates to gain from acquisition, and iv) $91.3
million increase relates to the revaluation of investment
properties, principally driven by leasing and assumption updates
(see details in the “Investment Property” section in the Trust’s
MD&A);
- $1.9 million increase in interest
income mainly due to higher interest rates; and
- $0.7 million decrease in interest
expense (see further details in the “Interest Income and Interest
Expense” section in the Trust’s MD&A);
Partially offset by the following:
- $3.5 million decrease in NOI (see
further details in the “Net Operating Income” subsection in the
Trust’s MD&A);
- $2.4 million increase in
supplemental costs;
- $2.3 million increase in general
and administrative expenses (net) (see further details in the
“General and Administrative Expense” section in the Trust’s
MD&A);
- $0.5 million higher loss on sale of
investment properties; and
- $0.3 million increase in
acquisition-related costs.
Development and Intensification
SummaryThe following table summarizes the 275 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 |
29 |
|
20 |
|
58 |
|
107 |
|
Seniors’ Housing |
4 |
|
8 |
|
13 |
|
25 |
|
Self-storage |
12 |
|
7 |
|
16 |
|
35 |
|
Office Buildings |
— |
|
1 |
|
7 |
|
8 |
|
Hotels |
— |
|
— |
|
3 |
|
3 |
|
Subtotal – Recurring rental income
initiatives |
45 |
|
36 |
|
97 |
|
178 |
|
Condominium developments |
23 |
|
20 |
|
46 |
|
89 |
|
Townhome developments |
2 |
|
1 |
|
5 |
|
8 |
|
Subtotal – Development income
initiatives |
25 |
|
21 |
|
51 |
|
97 |
|
Total |
70 |
|
57 |
|
148 |
|
275 |
|
Trust’s share of project area
(in thousands of sq. ft.) |
|
|
|
|
|
|
|
|
Recurring rental income initiatives |
5,600 |
|
3,900 |
|
11,900 |
|
21,400 |
|
Development income initiatives |
5,100 |
|
3,500 |
|
9,500 |
|
18,100 |
|
Total Trust’s share of project area (in thousands of sq.
ft.) |
10,700 |
|
7,400 |
|
21,400 |
|
39,500 |
|
Trust’s
share of such estimated costs (in millions of dollars) |
5,750 |
|
4,050 |
|
– (1) |
|
9,800 |
|
(1) The Trust has not
fully determined the costs attributable to future projects expected
to commence after five years and as such they are not included in
this table.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. Completion,
milestone or occupancy dates of each of the projects described
below may be delayed or adversely impacted as a result of, among
other things, restrictions or delays related to the COVID-19
pandemic.
- 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. Currently working with the
City of Vaughan on advancement of Weston & Highway 7 Secondary
Plan;
- 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 zoning
for five towers with a gross floor area of approximately 1,400,000
square feet and site plan application for a three-tower mixed-use
phase, approximating 700,000 square feet, approved by Council in
June 2022;
- 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 official
plan and zoning amendment applications for an initial two-tower
587-unit residential phase submitted in April 2021;
- the development of up to 2.6
million square feet of predominately residential space, in various
forms, at the Westside Mall in Toronto, Ontario, with a zoning
application for the first 35-storey mixed-use tower submitted in Q1
2021, and targeting site plan application by the end of the
year;
- 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. Approximately 60% of the 174 draft plan approved townhomes
have been pre-sold and construction is soon expected to commence.
Rezoning application for a seniors’ apartment building and separate
retirement residence, both of which are to be developed in
partnership with Revera, along with three other residential
buildings, was approved by Council in June 2022;
- 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, but subject to the urban planning
revision process by the city of Pointe-Claire;
- the development of up to 200,000
square feet of residential townhomes at Oakville South in Oakville,
Ontario;
- the intensification of the Toronto
StudioCentre (“StudioCentre”) in Toronto, Ontario (zoning allows
for up to 1.2 million square feet);
- 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 2021
with the site plan approved for Phase 1 by Barrie City Council in
June 2021. An application for a building permit was submitted in
July 2021. Environmental Risk Assessment was approved for the
entire site in September 2021 and the application of Certificate of
Property Use was submitted in February 2022 and approved in
September 2022;
- the development of a 35-storey
high-rise purpose-built residential rental tower containing 437
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 2021. A third
submission of these applications was made in March 2022. Zoning
approval was received in July 2022 and site plan approval is
expected in Q4 2022;
- the development of up to 1,600
residential units, in various forms, in Mascouche, Quebec, 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 2021, and the first four floors opened in July 2022 and
another five floors have since opened, with the last floor
scheduled to open in November 2022. Construction of a second phase
is expected to commence in Q2 2023;
- the development of residential
density at the Trust’s shopping centre at 1900 Eglinton Avenue East
in Scarborough, Ontario, with rezoning applications for the first
two residential towers (46 and 48 storeys) submitted in January
2021. Site plan application for both buildings was submitted in
December 2021;
- the development of the first phase,
46-unit rental building, which is part of a multi-phase master plan
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 2021
and again in July 2021 and approved in July 2022. The building
permit application was submitted in October 2021 and a partial
permit was received in September 2022;
- besides the eight self-storage
projects completed or under construction, there are six additional
self-storage facilities in Ontario and British Columbia with the
Trust’s partner, SmartStop, in Stoney Creek, Toronto (2), Whitby,
New Westminster and Burnaby with zoning and/or site plan approval
obtained or applications well underway. Project agreements for
another three locations are being finalized;
- 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 Q4 2022. Master plan of
development for the site is subject to approval;
- the development of a new
residential block consisting of a 155-unit building in Phase 1 and
approximately 345 rental units in Phases 2 and 3 at Laval Centre in
Quebec. The application for architecture approval for Phase 1 and
Phase 2 (155 units) was submitted in Q4 2021 and approved in Q3
2022;
- the Trust has commenced the
redevelopment of a portion of its 73-acre Cambridge retail property
(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 on the overall property once completed;
- 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 nine-storey retirement residences building
submitted in Q1 2021 and a site plan application submitted in Q4
2021, to be developed in partnership with the existing partner and
Revera;
- 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 2021 and work is ongoing on a second
submission to respond to agency comments on the application;
- the development of up to 900,000
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 in July 2021 and resubmitted in
April 2022;
- 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 an appeal was filed
in July 2022 for the initial Official Plan Amendment & Zoning
By-law Amendment submission;
- the development of approximately
900,000 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 (20 and 15 storeys), 400,000
square foot, 520-unit condo project submitted in Q4 2021; and
- during the second quarter of 2022,
the Trust completed the purchase of approximately 38 acres of
industrial lands in Pickering, adjacent to Hwy 407, on which the
Trust received approval to build 241,000 square feet of space for
the 16-acre Phase 1 development, of which 53% has already been
pre-leased, and completion is currently scheduled for 2023.
Proportionately Consolidated Balance
Sheets (including the Trust’s interests in equity accounted
investments)
The following table presents the proportionately
consolidated balance sheets, which includes a reconciliation of the
Trust’s proportionate share of equity accounted investments:
(in thousands of dollars) |
September 30, 2022 |
December 31, 2021 |
|
GAAP Basis |
|
Proportionate Share Reconciliation |
|
Total Proportionate Share(1) |
|
GAAP Basis |
|
Proportionate Share Reconciliation |
|
Total Proportionate Share(1) |
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
Non-current assets |
|
|
|
|
|
|
|
|
|
|
|
|
Investment properties |
10,211,384 |
|
924,031 |
|
11,135,415 |
|
9,847,078 |
|
837,451 |
|
10,684,529 |
|
Equity accounted investments |
646,393 |
|
(646,393 |
) |
— |
|
654,442 |
|
(654,442 |
) |
— |
|
Mortgages, loans and notes receivable |
281,128 |
|
(79,910 |
) |
201,218 |
|
345,089 |
|
(69,576 |
) |
275,513 |
|
Other financial assets |
289,477 |
|
— |
|
289,477 |
|
97,148 |
|
— |
|
97,148 |
|
Other assets |
82,495 |
|
7,600 |
|
90,095 |
|
80,940 |
|
7,465 |
|
88,405 |
|
Intangible assets |
44,140 |
|
— |
|
44,140 |
|
45,139 |
|
— |
|
45,139 |
|
|
11,555,017 |
|
205,328 |
|
11,760,345 |
|
11,069,836 |
|
120,898 |
|
11,190,734 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
|
|
|
|
Residential development inventory |
31,891 |
|
105,544 |
|
137,435 |
|
27,399 |
|
67,828 |
|
95,227 |
|
Current portion of mortgages, loans and notes receivable |
144,490 |
|
— |
|
144,490 |
|
71,947 |
|
— |
|
71,947 |
|
Amounts receivable and other |
61,573 |
|
(9,064 |
) |
52,509 |
|
49,542 |
|
(8,637 |
) |
40,905 |
|
Prepaid expenses, deposits and deferred financing costs |
50,187 |
|
19,141 |
|
69,328 |
|
12,289 |
|
13,118 |
|
25,407 |
|
Cash and cash equivalents |
19,475 |
|
35,847 |
|
55,322 |
|
62,235 |
|
7,922 |
|
70,157 |
|
|
307,616 |
|
151,468 |
|
459,084 |
|
223,412 |
|
80,231 |
|
303,643 |
|
Total assets |
11,862,633 |
|
356,796 |
|
12,219,429 |
|
11,293,248 |
|
201,129 |
|
11,494,377 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Debt |
4,746,915 |
|
193,003 |
|
4,939,918 |
|
4,176,121 |
|
93,465 |
|
4,269,586 |
|
Other financial liabilities |
265,462 |
|
— |
|
265,462 |
|
326,085 |
|
— |
|
326,085 |
|
Other payables |
17,283 |
|
46 |
|
17,329 |
|
18,243 |
|
— |
|
18,243 |
|
|
5,029,660 |
|
193,049 |
|
5,222,709 |
|
4,520,449 |
|
93,465 |
|
4,613,914 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Current portion of debt |
412,945 |
|
57,456 |
|
470,401 |
|
678,406 |
|
35,086 |
|
713,492 |
|
Accounts payable and current portion of other payables |
278,711 |
|
106,291 |
|
385,002 |
|
253,078 |
|
72,578 |
|
325,656 |
|
|
691,656 |
|
163,747 |
|
855,403 |
|
931,484 |
|
107,664 |
|
1,039,148 |
|
Total liabilities |
5,721,316 |
|
356,796 |
|
6,078,112 |
|
5,451,933 |
|
201,129 |
|
5,653,062 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
Trust Unit equity |
5,111,730 |
|
— |
|
5,111,730 |
|
4,877,961 |
|
— |
|
4,877,961 |
|
Non-controlling interests |
1,029,587 |
|
— |
|
1,029,587 |
|
963,354 |
|
— |
|
963,354 |
|
|
6,141,317 |
|
— |
|
6,141,317 |
|
5,841,315 |
|
— |
|
5,841,315 |
|
Total liabilities and equity |
11,862,633 |
|
356,796 |
|
12,219,429 |
|
11,293,248 |
|
201,129 |
|
11,494,377 |
|
(1) This column contains
non-GAAP measures because it includes figures that are recorded in
equity accounted investments. 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.
Proportionately Consolidated Statements
of Income and Comprehensive Income (including the Trust’s Interests
in Equity Accounted Investments)The following tables
present the proportionately consolidated statements of income and
comprehensive income, which include a reconciliation of the Trust’s
proportionate share of equity accounted investments:
Quarterly Comparison to Prior
Year
(in thousands of dollars) |
Three Months Ended September 30, 2022 |
|
Three Months Ended September 30, 2021 |
|
|
|
|
GAAP Basis |
|
Proportionate Share Reconciliation |
|
Total Proportionate Share(1) |
|
GAAP Basis |
|
Proportionate Share Reconciliation |
|
Total Proportionate Share(1) |
|
Variance of Total Proportionate Share(1) |
|
Net rental income and other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rentals from investment properties and other |
196,678 |
|
7,570 |
|
204,248 |
|
195,171 |
|
5,486 |
|
200,657 |
|
3,591 |
|
Property operating costs and other |
(69,451 |
) |
(3,567 |
) |
(73,018 |
) |
(71,554 |
) |
(2,214 |
) |
(73,768 |
) |
750 |
|
|
127,227 |
|
4,003 |
|
131,230 |
|
123,617 |
|
3,272 |
|
126,889 |
|
4,341 |
|
Condo and townhome closings revenue and other(2) |
— |
|
7 |
|
7 |
|
— |
|
23,904 |
|
23,904 |
|
(23,897 |
) |
Condo and townhome cost of sales and other |
(30 |
) |
(221 |
) |
(251 |
) |
— |
|
(17,460 |
) |
(17,460 |
) |
17,209 |
|
|
(30 |
) |
(214 |
) |
(244 |
) |
— |
|
6,444 |
|
6,444 |
|
(6,688 |
) |
NOI |
127,197 |
|
3,789 |
|
130,986 |
|
123,617 |
|
9,716 |
|
133,333 |
|
(2,347 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income and expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative expense, net |
(10,696 |
) |
(3 |
) |
(10,699 |
) |
(8,435 |
) |
(71 |
) |
(8,506 |
) |
(2,193 |
) |
Earnings from equity accounted investments |
1,101 |
|
(1,101 |
) |
— |
|
14,302 |
|
(14,302 |
) |
— |
|
— |
|
Earnings from other(3) |
284 |
|
(284 |
) |
— |
|
— |
|
— |
|
— |
|
— |
|
Fair value adjustment on revaluation of investment properties |
(92,557 |
) |
411 |
|
(92,146 |
) |
79,015 |
|
6,509 |
|
85,524 |
|
(177,670 |
) |
Loss (gain) on sale of investment properties |
(112 |
) |
(241 |
) |
(353 |
) |
149 |
|
— |
|
149 |
|
(502 |
) |
Interest expense |
(39,175 |
) |
(1,553 |
) |
(40,728 |
) |
(35,032 |
) |
(1,348 |
) |
(36,380 |
) |
(4,348 |
) |
Interest income |
5,714 |
|
(375 |
) |
5,339 |
|
2,599 |
|
22 |
|
2,621 |
|
2,718 |
|
Supplemental costs |
— |
|
(643 |
) |
(643 |
) |
— |
|
(526 |
) |
(526 |
) |
(117 |
) |
Fair value adjustment on financial instruments |
11,767 |
|
— |
|
11,767 |
|
1,836 |
|
— |
|
1,836 |
|
9,931 |
|
Acquisition-related costs |
25 |
|
— |
|
25 |
|
— |
|
— |
|
— |
|
25 |
|
Net income and comprehensive income |
3,548 |
|
— |
|
3,548 |
|
178,051 |
|
— |
|
178,051 |
|
(174,503 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) This column contains
non-GAAP measures because it includes figures that are recorded in
equity accounted investments. 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.(2) Includes additional partnership profit
and other revenues.(3) Represents SmartVMC West’s
operating results. Year-to-Date Comparison to Prior
Year
(in thousands of dollars) |
Nine Months Ended September 30, 2022 |
|
Nine Months Ended September 30, 2021 |
|
|
|
|
GAAP Basis |
|
Proportionate Share Reconciliation |
|
Total Proportionate Share(1) |
|
GAAP Basis |
|
Proportionate Share Reconciliation |
|
Total Proportionate Share(1) |
|
Variance of Total Proportionate Share(1) |
|
Net rental income and other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rentals from investment properties and other |
597,497 |
|
21,080 |
|
618,577 |
|
587,946 |
|
15,556 |
|
603,502 |
|
15,075 |
|
Property operating costs and other |
(224,497 |
) |
(9,688 |
) |
(234,185 |
) |
(229,060 |
) |
(6,575 |
) |
(235,635 |
) |
1,450 |
|
|
373,000 |
|
11,392 |
|
384,392 |
|
358,886 |
|
8,981 |
|
367,867 |
|
16,525 |
|
Condo and townhome closings revenue and other(2) |
— |
|
4,524 |
|
4,524 |
|
— |
|
76,837 |
|
76,837 |
|
(72,313 |
) |
Condo and townhome cost of sales and other |
(425 |
) |
(3,603 |
) |
(4,028 |
) |
— |
|
(56,299 |
) |
(56,299 |
) |
52,271 |
|
|
(425 |
) |
921 |
|
496 |
|
— |
|
20,538 |
|
20,538 |
|
(20,042 |
) |
NOI |
372,575 |
|
12,313 |
|
384,888 |
|
358,886 |
|
29,519 |
|
388,405 |
|
(3,517 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income and expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative expense, net |
(25,479 |
) |
(107 |
) |
(25,586 |
) |
(23,219 |
) |
(76 |
) |
(23,295 |
) |
(2,291 |
) |
Earnings from equity accounted investments |
4,312 |
|
(4,312 |
) |
— |
|
51,371 |
|
(51,371 |
) |
— |
|
— |
|
Earnings from other(3) |
878 |
|
(878 |
) |
— |
|
— |
|
— |
|
— |
|
— |
|
Fair value adjustment on revaluation of investment properties |
188,457 |
|
2,042 |
|
190,499 |
|
71,110 |
|
27,439 |
|
98,549 |
|
91,950 |
|
Loss on sale of investment properties |
(216 |
) |
(241 |
) |
(457 |
) |
91 |
|
— |
|
91 |
|
(548 |
) |
Interest expense |
(108,360 |
) |
(3,952 |
) |
(112,312 |
) |
(108,886 |
) |
(4,082 |
) |
(112,968 |
) |
656 |
|
Interest income |
12,540 |
|
(955 |
) |
11,585 |
|
9,596 |
|
64 |
|
9,660 |
|
1,925 |
|
Supplemental costs |
— |
|
(3,910 |
) |
(3,910 |
) |
— |
|
(1,493 |
) |
(1,493 |
) |
(2,417 |
) |
Fair value adjustment on financial instruments |
91,246 |
|
— |
|
91,246 |
|
(23,354 |
) |
— |
|
(23,354 |
) |
114,600 |
|
Acquisition-related costs |
(298 |
) |
— |
|
(298 |
) |
— |
|
— |
|
— |
|
(298 |
) |
Net income and comprehensive income |
535,655 |
|
— |
|
535,655 |
|
335,595 |
|
— |
|
335,595 |
|
200,060 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) This column contains
non-GAAP measures because it includes figures that are recorded in
equity accounted investments. 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.(2) Includes additional partnership profit
and other revenues.(3) Represents SmartVMC West’s
operating results. FFO, FFO with adjustments, and FFO with
adjustments and Transactional FFO
The following tables reconciles net income and
comprehensive income to FFO, FFO with adjustments, and FFO with
adjustments and Transactional FFO:
Quarterly Comparison to Prior
Year
|
Three Months Ended |
|
Three Months Ended |
|
|
|
|
|
(in thousands of dollars, except per Unit amounts) |
September 30, 2022 |
|
September 30, 2021 |
|
Variance ($) |
|
Variance (%) |
|
Net income and comprehensive income |
3,548 |
|
178,051 |
|
(174,503 |
) |
(98.0 |
) |
Add (deduct): |
|
|
|
|
|
|
|
|
Fair value adjustment on revaluation of investment
properties(1) |
92,557 |
|
(79,015 |
) |
171,572 |
|
N/R(7) |
|
Fair value adjustment on financial instruments(2) |
(11,767 |
) |
(1,836 |
) |
(9,931 |
) |
N/R(7) |
|
(Loss) gain on derivative – TRS |
(4,900 |
) |
392 |
|
(5,292 |
) |
N/R(7) |
|
Loss (gain) on sale of investment properties |
112 |
|
(149 |
) |
261 |
|
N/R(7) |
|
Amortization of intangible assets |
333 |
|
333 |
|
— |
|
— |
|
Amortization of tenant improvement allowance and other |
1,961 |
|
1,662 |
|
299 |
|
18.0 |
|
Distributions on Units classified as liabilities recorded as
interest expense |
1,083 |
|
969 |
|
114 |
|
11.8 |
|
Distributions on vested deferred units recorded as interest
expense |
718 |
|
433 |
|
285 |
|
65.8 |
|
Salaries and related costs attributed to leasing activities(3) |
2,216 |
|
1,431 |
|
785 |
|
54.9 |
|
Acquisition-related costs |
(25 |
) |
— |
|
(25 |
) |
N/R(7) |
|
Adjustments relating to equity accounted investments: |
|
|
|
|
|
|
|
|
Rental revenue adjustment – tenant improvement amortization |
98 |
|
98 |
|
— |
|
— |
|
Indirect interest with respect to the development portion(4) |
1,996 |
|
1,706 |
|
290 |
|
17.0 |
|
Adjustment to capitalized interest with respect to Transit City
condo closings(4) |
— |
|
(205 |
) |
205 |
|
N/R(7) |
|
Fair value adjustment on revaluation of investment properties |
(411 |
) |
(6,509 |
) |
6,098 |
|
(93.7 |
) |
Loss on sale of investment properties |
241 |
|
— |
|
241 |
|
N/R(7) |
|
Adjustment for supplemental costs |
643 |
|
526 |
|
117 |
|
22.2 |
|
FFO(5) |
88,403 |
|
97,887 |
|
(9,484 |
) |
(9.7 |
) |
Adjustments: |
|
|
|
|
|
|
|
|
Other adjustments(6) |
669 |
|
1,706 |
|
(1,037 |
) |
(60.8 |
) |
FFO with adjustments(5) |
89,072 |
|
99,593 |
|
(10,521 |
) |
(10.6 |
) |
(1) Fair value adjustment on
revaluation of investment properties is described in “Investment
Properties” in the Trust’s MD&A.(2) Fair value
adjustment on financial instruments comprises the following
financial instruments: units classified as liabilities, Earnout
options, deferred unit plan (“DUP”), equity incentive plan (“EIP”),
long term incentive plan (“LTIP”), TRS, interest rate swap
agreement(s), and loans receivable and Earnout options recorded in
the same period in 2021. The significant assumptions made in
determining the fair value and fair value adjustments for these
financial instruments are more thoroughly described in the Trust’s
unaudited interim condensed consolidated financial statements for
the three and nine months ended September 30, 2022. For
details please see discussion in “Results of Operations” in the
Trust’s MD&A.(3) Salaries and related costs
attributed to leasing activities of $2.2 million were incurred in
the three months ended September 30, 2022 (three months ended
September 30, 2021 – $1.4 million) and were eligible to be
added back to FFO based on the definition of FFO, in the REALpac
White Paper published in January 2022, which provided for an
adjustment to incremental leasing expenses for the cost of salaried
staff. This adjustment to FFO results in more comparability between
Canadian publicly traded real estate entities that expensed their
internal leasing departments and those that capitalized external
leasing expenses. (4) Indirect interest is not
capitalized to properties under development and residential
development inventory of equity accounted investments under IFRS
but is a permitted adjustment under REALpac’s definition of FFO.
The amount is based on the total cost incurred with respect to the
development portion of equity accounted investments multiplied by
the Trust’s weighted average cost of
debt.(5) 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.(6) Represents
adjustments relating to $0.7 million of costs associated with
COVID-19 vaccination centres (three months ended September 30,
2021 – $0.9 million of compensation costs relating to previous
CEO and $0.8 million of non-recurring costs associated with
COVID-19 vaccination centres).(7) N/R – Not
representative.
Year-to-Date Comparison to Prior
Year
(in thousands of dollars, except per Unit amounts) |
Nine Months Ended September 30, 2022 |
|
Nine Months Ended September 30, 2021 |
|
Variance ($) |
|
Variance (%) |
|
Net income and comprehensive income |
535,655 |
|
335,595 |
|
200,060 |
|
59.6 |
|
Add (deduct): |
|
|
|
|
|
|
|
|
Fair value adjustment on revaluation of investment
properties(1) |
(188,457 |
) |
(71,110 |
) |
(117,347 |
) |
N/R(7) |
|
Fair value adjustment on financial instruments(2) |
(91,246 |
) |
23,354 |
|
(114,600 |
) |
N/R(7) |
|
(Loss) gain on derivative – TRS |
(11,138 |
) |
1,462 |
|
(12,600 |
) |
N/R(7) |
|
Loss (gain) on sale of investment properties |
216 |
|
(335 |
) |
551 |
|
N/R(7) |
|
Amortization of intangible assets |
999 |
|
999 |
|
— |
|
— |
|
Amortization of tenant improvement allowance and other |
5,198 |
|
5,430 |
|
(232 |
) |
(4.3 |
) |
Distributions on Units classified as liabilities recorded as
interest expense |
3,210 |
|
2,910 |
|
300 |
|
10.3 |
|
Distributions on vested deferred units recorded as interest
expense |
2,123 |
|
1,381 |
|
742 |
|
53.7 |
|
Adjustment on debt modification |
(1,960 |
) |
— |
|
(1,960 |
) |
N/R(7) |
|
Salaries and related costs attributed to leasing activities(3) |
5,994 |
|
4,133 |
|
1,861 |
|
45.0 |
|
Acquisition-related costs |
298 |
|
— |
|
298 |
|
N/R(7) |
|
Adjustments relating to equity accounted investments: |
|
|
|
|
|
|
|
|
Rental revenue adjustment – tenant improvement amortization |
289 |
|
298 |
|
(9 |
) |
(3.0 |
) |
Indirect interest with respect to the development portion(4) |
5,812 |
|
5,124 |
|
688 |
|
13.4 |
|
Adjustment to capitalized interest with respect to Transit City
condo closings(4) |
— |
|
(675 |
) |
675 |
|
N/R(7) |
|
Fair value adjustment on revaluation of investment properties |
(2,042 |
) |
(27,439 |
) |
25,397 |
|
(92.6 |
) |
Loss on sale of investment properties |
241 |
|
— |
|
241 |
|
N/R(7) |
|
Adjustment for supplemental costs |
3,910 |
|
1,493 |
|
2,417 |
|
N/R(7) |
|
FFO(5) |
269,102 |
|
282,620 |
|
(13,518 |
) |
(4.8 |
) |
Adjustments: |
|
|
|
|
|
|
|
|
Other adjustments(6) |
2,566 |
|
2,566 |
|
— |
|
— |
|
FFO with
adjustments(5) |
271,668 |
|
285,186 |
|
(13,518 |
) |
(4.7 |
) |
Transactional FFO – gain on sale of land to co-owners |
— |
|
1,587 |
|
(1,587 |
) |
N/R(7) |
|
FFO with adjustments and Transactional
FFO(5) |
271,668 |
|
286,773 |
|
(15,105 |
) |
(5.3 |
) |
(1) Fair value adjustment on
revaluation of investment properties is described in “Investment
Properties” in the Trust’s MD&A.(2) Fair value
adjustment on financial instruments comprises the following
financial instruments: units classified as liabilities, Earnout
options, DUP, EIP, LTIP, TRS, interest rate swap agreement(s), and
loans receivable and Earnout options recorded in the same period in
2021. The significant assumptions made in determining the fair
value and fair value adjustments for these financial instruments
are more thoroughly described in the Trust’s unaudited interim
condensed consolidated financial statements for the three and nine
months ended September 30, 2022. For details please see
discussion in “Results of Operations” in the Trust’s
MD&A.(3) Salaries and related costs attributed
to leasing activities of $6.0 million were incurred in the nine
months ended September 30, 2022 (nine months ended
September 30, 2021 – $4.1 million) and were eligible to be
added back to FFO based on the definition of FFO, in the REALpac
White Paper published in January 2022, which provided for an
adjustment to incremental leasing expenses for the cost of salaried
staff. This adjustment to FFO results in more comparability between
Canadian publicly traded real estate entities that expensed their
internal leasing departments and those that capitalized external
leasing expenses. (4) Indirect interest is not
capitalized to properties under development and residential
development inventory of equity accounted investments under IFRS
but is a permitted adjustment under REALpac’s definition of FFO.
The amount is based on the total cost incurred with respect to the
development portion of equity accounted investments multiplied by
the Trust’s weighted average cost of
debt.(5) 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.(6) Represents
adjustments relating to $2.6 million of costs associated with
COVID-19 vaccination centres (nine months ended September 30,
2021 – $0.9 million of compensation costs relating to previous CEO
and $1.7 million of non-recurring costs associated with COVID-19
vaccination centres).(7) N/R – Not
representative.The following table presents FFO excluding anomalous
transactions for the three and nine months ended September 30,
2022:
|
Three Months Ended September 30 |
|
Nine Months Ended September 30 |
|
(in thousands of dollars) |
2022 |
|
2021 |
|
Variance ($) |
|
2022 |
|
2021 |
|
Variance ($) |
|
FFO with adjustments(1) |
89,072 |
|
99,593 |
|
(10,521 |
) |
271,668 |
|
285,186 |
|
(13,518 |
) |
Adjusted for: |
|
|
|
|
|
|
ECL |
(271 |
) |
670 |
|
(941 |
) |
(2,547 |
) |
5,251 |
|
(7,798 |
) |
Loss (gain) on derivative – TRS |
4,900 |
|
(392 |
) |
5,292 |
|
11,138 |
|
(1,462 |
) |
12,600 |
|
FFO sourced from condominium and townhome closings |
216 |
|
(5,922 |
) |
6,138 |
|
(860 |
) |
(18,813 |
) |
17,953 |
|
FFO sourced from SmartVMC West acquisition |
(154 |
) |
— |
|
(154 |
) |
(613 |
) |
— |
|
(613 |
) |
FFO with adjustments excluding impact of ECL, TRS, condominium and
townhome closings, and SmartVMC West acquisition(1) |
93,763 |
|
93,949 |
|
(186 |
) |
278,786 |
|
270,162 |
|
8,624 |
|
(1) Represents a non-GAAP measure. The Trust’s
method of calculating non-GAAP measures may differ from other
reporting issuers’ methods and, accordingly, may not be comparable.
For additional information, please see “Non-GAAP Measures” in this
Press Release.
ACFO and ACFO with
adjustments
The following table reconciles cash flows
provided by operating activities to ACFO and ACFO with
adjustments:
Quarterly Comparison to Prior
Year
(in thousands of dollars) |
Three Months Ended September 30, 2022 |
|
Three Months Ended September 30, 2021 |
|
Variance ($)/(%) |
|
Cash flows provided by operating activities |
97,011 |
|
96,298 |
|
713 |
|
Adjustments to working capital
items that are not indicative of sustainable cash available for
distribution(1) |
12,287 |
|
421 |
|
11,866 |
|
Distributions on Units
classified as liabilities recorded as interest expense |
1,083 |
|
969 |
|
114 |
|
Distributions on vested
deferred units recorded as interest expense |
718 |
|
433 |
|
285 |
|
Expenditures on direct leasing costs and tenant incentives |
2,391 |
|
1,233 |
|
1,158 |
|
Expenditures on tenant
incentives for properties under development |
267 |
|
— |
|
267 |
|
Actual sustaining capital expenditures |
(2,655 |
) |
(4,078 |
) |
1,423 |
|
Actual sustaining leasing commissions |
(660 |
) |
(474 |
) |
(186 |
) |
Actual sustaining tenant improvements |
(1,755 |
) |
(439 |
) |
(1,316 |
) |
Non-cash interest expense, net of other financing costs |
(18,147 |
) |
(13,623 |
) |
(4,524 |
) |
Non-cash interest income |
2,755 |
|
2,042 |
|
713 |
|
Acquisition-related costs, net |
(25 |
) |
— |
|
(25 |
) |
Distributions from equity accounted investments |
(15,231 |
) |
(1,770 |
) |
(13,461 |
) |
Adjustments relating to equity accounted investments: |
|
|
|
Cash flows from operating activities including working capital
adjustments |
1,208 |
|
7,851 |
|
(6,643 |
) |
Notional interest capitalization(2) |
1,996 |
|
1,706 |
|
290 |
|
Adjustment to capitalized interest with respect to Transit City
condo closings(3) |
— |
|
(205 |
) |
205 |
|
Actual sustaining capital and leasing expenditures |
(58 |
) |
(16 |
) |
(42 |
) |
Non-cash interest expense |
(125 |
) |
(6 |
) |
(119 |
) |
ACFO(3) |
81,060 |
|
90,342 |
|
(9,282 |
) |
Other adjustments(4) |
669 |
|
1,706 |
|
(1,037 |
) |
ACFO with adjustments(3) |
81,729 |
|
92,048 |
|
(10,319 |
) |
|
|
|
|
ACFO(3) |
81,060 |
|
90,342 |
|
(9,282 |
) |
Distributions declared |
82,382 |
|
79,683 |
|
2,699 |
|
(Shortfall) surplus of ACFO over distributions declared |
(1,322 |
) |
10,659 |
|
(11,981 |
) |
|
|
|
|
Payout Ratio Information: |
|
|
|
Payout Ratio to ACFO(3) |
101.6 |
% |
88.2 |
% |
13.4 |
% |
Payout Ratio to ACFO with adjustments(3) |
100.8 |
% |
86.6 |
% |
14.2 |
% |
Payout
Ratio to ACFO with adjustments excluding impact of TRS, condominium
and townhome closings, and SmartVMC West acquisition(3)(5) |
91.9 |
% |
93.5 |
% |
(1.6 |
)% |
(1) Adjustments to working
capital items include, but are not limited to, changes in prepaid
expenses and deposits, accounts receivables, accounts payables and
other working capital items that are not indicative of sustainable
cash available for distribution. (2) See the
“Indirect interest with respect to the development portion” as
presented in the “Funds From Operations” subsection in the Trust’s
MD&A.(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) Represents
adjustments relating to $0.7 million of costs associated with
COVID-19 vaccination centres (three months ended September 30,
2021 – $0.9 million of compensation costs relating to previous
CEO and $0.8 million of non-recurring costs associated with
COVID-19 vaccination centres).(5) For the three
months ended September 30, 2022, excludes $2.7 million of
distributions declared in connection with SmartVMC West LP Class D
Units (three months ended September 30, 2021 – $nil).
Year-to-Date Comparison to Prior
Year
(in thousands of dollars) |
Nine Months Ended September 30, 2022 |
|
Nine Months Ended September 30, 2021 |
|
Variance ($)/(%) |
|
Cash flows provided by operating activities |
243,800 |
|
237,950 |
|
5,850 |
|
Adjustments to working capital
items that are not indicative of sustainable cash available for
distribution(1) |
33,159 |
|
7,882 |
|
25,277 |
|
Distributions on Units
classified as liabilities recorded as interest expense |
3,210 |
|
2,910 |
|
300 |
|
Distributions on vested
deferred units recorded as interest expense |
2,123 |
|
1,381 |
|
742 |
|
Expenditures on direct leasing costs and tenant incentives |
6,752 |
|
3,877 |
|
2,875 |
|
Expenditures on tenant
incentives for properties under development |
2,543 |
|
730 |
|
1,813 |
|
Actual sustaining capital expenditures |
(7,677 |
) |
(7,008 |
) |
(669 |
) |
Actual sustaining leasing commissions |
(1,589 |
) |
(2,329 |
) |
740 |
|
Actual sustaining tenant improvements |
(5,209 |
) |
(1,686 |
) |
(3,523 |
) |
Non-cash interest expense, net of other financing costs |
(27,100 |
) |
(2,434 |
) |
(24,666 |
) |
Non-cash interest income |
3,488 |
|
1,803 |
|
1,685 |
|
Acquisition-related costs, net |
298 |
|
— |
|
298 |
|
Gain on sale of land to co-owners |
— |
|
1,587 |
|
(1,587 |
) |
Distributions from equity accounted investments |
(17,190 |
) |
(3,340 |
) |
(13,850 |
) |
Adjustments relating to equity accounted investments: |
|
|
|
Cash flows from operating activities including working capital
adjustments |
5,004 |
|
24,055 |
|
(19,051 |
) |
Notional interest capitalization(2) |
5,812 |
|
5,124 |
|
688 |
|
Adjustment to capitalized interest with respect to Transit City
condo closings(2) |
— |
|
(675 |
) |
675 |
|
Actual sustaining capital and leasing expenditures |
(330 |
) |
(104 |
) |
(226 |
) |
Non-cash interest expense |
(9 |
) |
20 |
|
(29 |
) |
ACFO(3) |
247,085 |
|
269,743 |
|
(22,658 |
) |
Other adjustments(4) |
2,566 |
|
2,566 |
|
— |
|
ACFO with adjustments(3) |
249,651 |
|
272,309 |
|
(22,658 |
) |
|
|
|
|
ACFO(3) |
247,085 |
|
269,743 |
|
(22,658 |
) |
Distributions declared |
247,145 |
|
239,028 |
|
8,117 |
|
(Shortfall) surplus of ACFO over distributions declared |
(60 |
) |
30,715 |
|
(30,775 |
) |
|
|
|
|
Payout Ratio Information: |
|
|
|
Payout Ratio to ACFO(3) |
100.0 |
% |
88.6 |
% |
11.4 |
% |
Payout Ratio to ACFO with adjustments(3) |
99.0 |
% |
87.8 |
% |
11.2 |
% |
Payout
Ratio to ACFO with adjustments excluding impact of TRS, condominium
and townhome closings, and SmartVMC West acquisition(3)(5) |
92.1 |
% |
95.5 |
% |
(3.4 |
)% |
(1) Adjustments to working
capital items include, but are not limited to, changes in prepaid
expenses and deposits, accounts receivables, accounts payables and
other working capital items that are not indicative of sustainable
cash available for distribution. (2) See the
“Indirect interest with respect to the development portion” as
presented in the “Funds From Operations” subsection in the Trust’s
MD&A.(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) Represents
adjustments relating to $2.6 million of costs associated with
COVID-19 vaccination centres (nine months ended September 30,
2021 – $0.9 million of compensation costs relating to previous CEO,
and $1.7 million of non-recurring costs associated with COVID-19
vaccination centres).(5) For the nine months ended
September 30, 2022, excludes $8.0 million of distributions
declared in connection with SmartVMC West LP Class D Units (nine
months ended September 30, 2021 – $nil).The following table
presents ACFO excluding anomalous transactions for the three and
nine months ended September 30, 2022:
|
Three Months Ended September 30 |
|
Nine Months Ended September 30 |
|
(in thousands of dollars) |
2022 |
|
2021 |
|
Variance ($) |
|
2022 |
|
2021 |
|
Variance ($) |
|
ACFO with adjustments(1) |
81,729 |
|
92,048 |
|
(10,319 |
) |
249,651 |
|
272,309 |
|
(22,658 |
) |
Adjusted for: |
|
|
|
|
|
|
Loss (gain) on derivative – TRS |
4,900 |
|
(392 |
) |
5,292 |
|
11,138 |
|
(1,462 |
) |
12,600 |
|
ACFO sourced from condominium and townhome closings |
244 |
|
(6,444 |
) |
6,688 |
|
(496 |
) |
(20,538 |
) |
20,042 |
|
ACFO sourced from SmartVMC West acquisition |
(154 |
) |
— |
|
(154 |
) |
(613 |
) |
— |
|
(613 |
) |
ACFO with adjustments excluding impact of TRS, condominium and
townhome closings, and SmartVMC West acquisition(1) |
86,719 |
|
85,212 |
|
1,507 |
|
259,680 |
|
250,309 |
|
9,371 |
|
(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.
Net Operating Income
The following tables summarize NOI, related
ratios and recovery ratios, provide additional information, and
reflect the Trust’s proportionate share of equity accounted
investments, the sum of which represent a non-GAAP measure:
Quarterly Comparison to Prior
Year
(in thousands of dollars) |
Three Months Ended September 30, 2022 |
|
Three Months Ended September 30, 2021 |
|
|
|
|
Trust portion excluding EAI |
|
Equity Accounted Investments |
|
Total Proportionate Share(1) |
|
Trust portion excluding EAI |
|
Equity Accounted Investments |
|
Total Proportionate Share(1) |
|
Variance(1) |
|
|
|
|
|
|
(A) |
|
|
|
|
|
(B) |
|
(A–B) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net base rent |
127,576 |
|
4,727 |
|
132,303 |
|
125,125 |
|
3,362 |
|
128,487 |
|
3,816 |
|
Property tax and insurance
recoveries |
39,191 |
|
718 |
|
39,909 |
|
41,416 |
|
626 |
|
42,042 |
|
(2,133 |
) |
Property operating cost
recoveries |
20,200 |
|
1,150 |
|
21,350 |
|
19,149 |
|
826 |
|
19,975 |
|
1,375 |
|
Miscellaneous revenue |
4,683 |
|
975 |
|
5,658 |
|
4,573 |
|
672 |
|
5,245 |
|
413 |
|
Rentals from investment
properties |
191,650 |
|
7,570 |
|
199,220 |
|
190,263 |
|
5,486 |
|
195,749 |
|
3,471 |
|
Service
and other revenues |
5,028 |
|
— |
|
5,028 |
|
4,908 |
|
— |
|
4,908 |
|
120 |
|
Rentals
from investment properties and other(2) |
196,678 |
|
7,570 |
|
204,248 |
|
195,171 |
|
5,486 |
|
200,657 |
|
3,591 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recoverable tax and insurance costs |
(39,910 |
) |
(729 |
) |
(40,639 |
) |
(43,200 |
) |
(582 |
) |
(43,782 |
) |
3,143 |
|
Recoverable CAM costs |
(21,767 |
) |
(1,283 |
) |
(23,050 |
) |
(20,179 |
) |
(824 |
) |
(21,003 |
) |
(2,047 |
) |
Property management fees and
costs |
(1,258 |
) |
(237 |
) |
(1,495 |
) |
(422 |
) |
(173 |
) |
(595 |
) |
(900 |
) |
Non-recoverable operating costs |
(1,792 |
) |
(1,283 |
) |
(3,075 |
) |
(2,170 |
) |
(649 |
) |
(2,819 |
) |
(256 |
) |
ECL |
306 |
|
(35 |
) |
271 |
|
(684 |
) |
14 |
|
(670 |
) |
941 |
|
Property operating costs |
(64,421 |
) |
(3,567 |
) |
(67,988 |
) |
(66,655 |
) |
(2,214 |
) |
(68,869 |
) |
881 |
|
Other expenses |
(5,030 |
) |
— |
|
(5,030 |
) |
(4,899 |
) |
— |
|
(4,899 |
) |
(131 |
) |
Property operating costs and other(2) |
(69,451 |
) |
(3,567 |
) |
(73,018 |
) |
(71,554 |
) |
(2,214 |
) |
(73,768 |
) |
750 |
|
Net rental income and other |
127,227 |
|
4,003 |
|
131,230 |
|
123,617 |
|
3,272 |
|
126,889 |
|
4,341 |
|
Condo and townhome closings revenue |
— |
|
7 |
|
7 |
|
— |
|
23,904 |
|
23,904 |
|
(23,897 |
) |
Condo and townhome cost of sales |
— |
|
(4 |
) |
(4 |
) |
— |
|
(17,298 |
) |
(17,298 |
) |
17,294 |
|
Marketing and selling costs |
(30 |
) |
(217 |
) |
(247 |
) |
— |
|
(162 |
) |
(162 |
) |
(85 |
) |
Net profit on condo and townhome closings |
(30 |
) |
(214 |
) |
(244 |
) |
— |
|
6,444 |
|
6,444 |
|
(6,688 |
) |
NOI(3) |
127,197 |
|
3,789 |
|
130,986 |
|
123,617 |
|
9,716 |
|
133,333 |
|
(2,347 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net rental income and other as
a percentage of net base rent (%) |
99.7 |
|
84.7 |
|
99.2 |
|
98.8 |
|
97.3 |
|
98.8 |
|
0.4 |
|
Net rental income and other as
a percentage of rentals from investment properties (%) |
66.4 |
|
52.9 |
|
65.9 |
|
65.0 |
|
59.6 |
|
64.8 |
|
1.1 |
|
Net rental income and other as
a percentage of rentals from investment properties and other
(%) |
64.7 |
|
52.9 |
|
64.3 |
|
63.3 |
|
59.6 |
|
63.2 |
|
1.1 |
|
Recovery Ratio (including
prior year adjustments) (%) |
96.3 |
|
92.8 |
|
96.2 |
|
95.6 |
|
103.3 |
|
95.7 |
|
0.5 |
|
Recovery Ratio (excluding prior year adjustments) (%) |
93.3 |
|
92.9 |
|
93.3 |
|
95.0 |
|
102.0 |
|
95.2 |
|
(1.9 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) This column contains
non-GAAP measures because it includes figures that are recorded in
equity accounted investments – that are not explicitly disclosed
and/or presented in the unaudited interim condensed consolidated
financial statements for the three and nine months ended
September 30, 2022 and September 30, 2021. 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.(2) As reflected under the column
“Trust portion excluding EAI” in the table above, this amount
represents a 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.
Year-to-Date Comparison to Prior Year
(in thousands of dollars) |
Nine Months Ended September 30, 2022 |
|
Nine Months Ended September 30, 2021 |
|
|
|
|
Trust portion excluding EAI |
|
Equity Accounted Investments |
|
Total Proportionate Share(1) |
|
Trust portion excluding EAI |
|
Equity Accounted Investments |
|
Total Proportionate Share(1) |
|
Variance of Total Proportionate Share(1) |
|
|
|
|
|
|
(A) |
|
|
|
|
|
(B) |
|
(A–B) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net base rent |
380,082 |
|
13,118 |
|
393,200 |
|
369,955 |
|
9,564 |
|
379,519 |
|
13,681 |
|
Property tax and insurance
recoveries |
129,041 |
|
2,222 |
|
131,263 |
|
134,160 |
|
1,847 |
|
136,007 |
|
(4,744 |
) |
Property operating cost
recoveries |
67,855 |
|
3,107 |
|
70,962 |
|
62,182 |
|
2,429 |
|
64,611 |
|
6,351 |
|
Miscellaneous revenue |
10,414 |
|
2,633 |
|
13,047 |
|
10,412 |
|
1,716 |
|
12,128 |
|
919 |
|
Rentals from investment
properties |
587,392 |
|
21,080 |
|
608,472 |
|
576,709 |
|
15,556 |
|
592,265 |
|
16,207 |
|
Service
and other revenues |
10,105 |
|
— |
|
10,105 |
|
11,237 |
|
— |
|
11,237 |
|
(1,132 |
) |
Rentals
from investment properties and other(2) |
597,497 |
|
21,080 |
|
618,577 |
|
587,946 |
|
15,556 |
|
603,502 |
|
15,075 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recoverable tax and insurance
costs |
(133,058 |
) |
(2,287 |
) |
(135,345 |
) |
(140,224 |
) |
(1,813 |
) |
(142,037 |
) |
6,692 |
|
Recoverable CAM costs |
(74,059 |
) |
(3,224 |
) |
(77,283 |
) |
(66,303 |
) |
(2,313 |
) |
(68,616 |
) |
(8,667 |
) |
Property management fees and
costs |
(3,198 |
) |
(690 |
) |
(3,888 |
) |
(883 |
) |
(473 |
) |
(1,356 |
) |
(2,532 |
) |
Non-recoverable operating costs |
(6,731 |
) |
(3,378 |
) |
(10,109 |
) |
(5,152 |
) |
(1,980 |
) |
(7,132 |
) |
(2,977 |
) |
ECL |
2,656 |
|
(109 |
) |
2,547 |
|
(5,255 |
) |
4 |
|
(5,251 |
) |
7,798 |
|
Property operating costs |
(214,390 |
) |
(9,688 |
) |
(224,078 |
) |
(217,817 |
) |
(6,575 |
) |
(224,392 |
) |
314 |
|
Other expenses |
(10,107 |
) |
— |
|
(10,107 |
) |
(11,243 |
) |
— |
|
(11,243 |
) |
1,136 |
|
Property operating costs and other(2) |
(224,497 |
) |
(9,688 |
) |
(234,185 |
) |
(229,060 |
) |
(6,575 |
) |
(235,635 |
) |
1,450 |
|
Net rental income and other |
373,000 |
|
11,392 |
|
384,392 |
|
358,886 |
|
8,981 |
|
367,867 |
|
16,525 |
|
Condo and townhome closings revenue |
— |
|
4,524 |
|
4,524 |
|
— |
|
76,837 |
|
76,837 |
|
(72,313 |
) |
Condo and townhome cost of sales |
— |
|
(3,114 |
) |
(3,114 |
) |
— |
|
(56,102 |
) |
(56,102 |
) |
52,988 |
|
Marketing and selling costs |
(425 |
) |
(489 |
) |
(914 |
) |
— |
|
(197 |
) |
(197 |
) |
(717 |
) |
Net profit on condo and townhome closings |
(425 |
) |
921 |
|
496 |
|
— |
|
20,538 |
|
20,538 |
|
(20,042 |
) |
NOI(3) |
372,575 |
|
12,313 |
|
384,888 |
|
358,886 |
|
29,519 |
|
388,405 |
|
(3,517 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net rental income and other as
a percentage of net base rent (%) |
98.1 |
|
86.8 |
|
97.8 |
|
97.0 |
|
93.9 |
|
96.9 |
|
0.9 |
|
Net rental income and other as
a percentage of rentals from investment properties (%) |
63.5 |
|
54.0 |
|
63.2 |
|
62.2 |
|
57.7 |
|
62.1 |
|
1.1 |
|
Net rental income and other as
a percentage of rentals from investment properties and other
(%) |
62.4 |
|
54.0 |
|
62.1 |
|
61.0 |
|
57.7 |
|
61.0 |
|
1.1 |
|
Recovery Ratio (including
prior year adjustments) (%) |
95.1 |
|
96.7 |
|
95.1 |
|
95.1 |
|
103.6 |
|
95.2 |
|
(0.1 |
) |
Recovery Ratio (excluding prior year adjustments) (%) |
94.5 |
|
96.3 |
|
94.5 |
|
95.2 |
|
106.4 |
|
95.4 |
|
(0.9 |
) |
(1) This column contains
non-GAAP measures because it includes figures that are recorded in
equity accounted investments – that are not explicitly disclosed
and/or presented in the unaudited interim condensed consolidated
financial statements for the three and nine months ended
September 30, 2022 and September 30, 2021. 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.(2) As reflected under the column
“Trust portion excluding EAI” in the table above, this amount
represents a 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.Same
Properties NOI
NOI (a non-GAAP financial measure) from
continuing operations represents: i) rentals from investment
properties and other revenues less property operating costs and
other expenses, and ii) net profit from condominium sales.
Disclosing the NOI contribution from each of same properties,
acquisitions, dispositions, Earnouts and Development activities
highlights the impact each component has on aggregate NOI.
Straight-line rent, lease terminations and other adjustments, and
amortization of tenant incentives have been excluded from Same
Properties NOI, as have NOI from acquisitions, dispositions,
Earnouts and Development activities, and ECL. This has been done in
order to more directly highlight the impact of changes in
occupancy, rent uplift and productivity.
Quarterly Comparison to Prior
Year
|
Three Months Ended |
|
Three Months Ended |
|
|
|
|
|
(in thousands of dollars) |
September 30, 2022 |
|
September 30, 2021 |
|
Variance ($) |
|
Variance (%) |
|
Net rental income |
127,199 |
|
123,608 |
|
3,591 |
|
2.9 |
|
Service and other revenues |
5,028 |
|
4,908 |
|
120 |
|
2.4 |
|
Other expenses |
(5,030 |
) |
(4,899 |
) |
(131 |
) |
2.7 |
|
NOI(1) |
127,197 |
|
123,617 |
|
3,580 |
|
2.9 |
|
NOI from equity accounted investments(1) |
3,789 |
|
9,716 |
|
(5,927 |
) |
(61.0 |
) |
Total portfolio NOI before adjustments(1) |
130,986 |
|
133,333 |
|
(2,347 |
) |
(1.8 |
) |
|
|
|
|
|
|
|
|
|
Adjustments: |
|
|
|
|
|
|
|
|
Royalties |
305 |
|
266 |
|
39 |
|
14.7 |
|
Straight-line rent |
(22 |
) |
(640 |
) |
618 |
|
(96.6 |
) |
Lease termination and other adjustments |
12 |
|
(824 |
) |
836 |
|
N/R(2) |
|
Net profit on condo and townhome closings(3) |
244 |
|
(6,444 |
) |
6,688 |
|
N/R(2) |
|
Amortization of tenant incentives |
2,090 |
|
1,819 |
|
271 |
|
14.9 |
|
Total portfolio NOI after adjustments(1) |
133,615 |
|
127,510 |
|
6,105 |
|
4.8 |
|
|
|
|
|
|
|
|
|
|
NOI sourced from: |
|
|
|
|
|
|
|
|
Acquisitions |
(2,000 |
) |
(7 |
) |
(1,993 |
) |
N/R(2) |
|
Dispositions |
1 |
|
(427 |
) |
428 |
|
N/R(2) |
|
Earnouts and Developments |
(787 |
) |
(153 |
) |
(634 |
) |
N/R(2) |
|
Same Properties
NOI(1) |
130,829 |
|
126,923 |
|
3,906 |
|
3.1 |
|
Add
back: ECL |
(243 |
) |
690 |
|
(933 |
) |
N/R(2) |
|
Same Properties NOI excluding
ECL(1) |
130,586 |
|
127,613 |
|
2,973 |
|
2.3 |
|
(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. (2) N/R – Not
representative.(3) Includes marketing costs.
Year-to-Date Comparison to Prior
Year
|
Nine Months Ended |
|
Nine Months Ended |
|
|
|
|
|
(in thousands of dollars) |
September 30, 2022 |
|
September 30, 2021 |
|
Variance ($) |
|
Variance (%) |
|
Net rental income |
372,577 |
|
358,892 |
|
13,685 |
|
3.8 |
|
Service and other revenues |
10,105 |
|
11,237 |
|
(1,132 |
) |
(10.1 |
) |
Other expenses |
(10,107 |
) |
(11,243 |
) |
1,136 |
|
10.1 |
|
NOI(1) |
372,575 |
|
358,886 |
|
13,689 |
|
3.8 |
|
NOI from equity accounted investments(1) |
12,313 |
|
29,519 |
|
(17,206 |
) |
(58.3 |
) |
Total portfolio NOI before adjustments(1) |
384,888 |
|
388,405 |
|
(3,517 |
) |
(0.9 |
) |
|
|
|
|
|
|
|
|
|
Adjustments: |
|
|
|
|
|
|
|
|
Royalties |
816 |
|
675 |
|
141 |
|
20.9 |
|
Straight-line rent |
(403 |
) |
(729 |
) |
326 |
|
(44.7 |
) |
Lease termination and other adjustments |
(133 |
) |
(1,764 |
) |
1,631 |
|
(92.5 |
) |
Net profit on condo and townhome closings(3) |
(496 |
) |
(20,538 |
) |
20,042 |
|
(97.6 |
) |
Amortization of tenant incentives |
5,625 |
|
5,894 |
|
(269 |
) |
(4.6 |
) |
Total portfolio NOI after adjustments(1) |
390,297 |
|
371,943 |
|
18,354 |
|
4.9 |
|
|
|
|
|
|
|
|
|
|
Less NOI sourced from: |
|
|
|
|
|
|
|
|
Acquisitions |
(5,125 |
) |
104 |
|
(5,229 |
) |
N/R(2) |
|
Dispositions |
(12 |
) |
(1,465 |
) |
1,453 |
|
(99.2 |
) |
Earnouts and Developments |
(3,030 |
) |
(544 |
) |
(2,486 |
) |
N/R(2) |
|
Same Properties NOI(1) |
382,130 |
|
370,038 |
|
12,092 |
|
3.3 |
|
Add
back: ECL |
2,547 |
|
(5,251 |
) |
7,798 |
|
N/R(2) |
|
Same Properties NOI excluding
ECL(1) |
384,677 |
|
364,787 |
|
19,890 |
|
5.5 |
|
(1) Represents a non-GAAP
measure. The Trust’s method of calculating non-GAAP measures may
differ from other reporting issuers’ methods and, accordingly, may
not be comparable. For additional information, please see “Non-GAAP
Measures” in this Press Release.(2) N/R – Not
representative.(3) Includes marketing costs.
Adjusted EBITDAThe following table presents a
reconciliation of net income and comprehensive income to Adjusted
EBITDA:
|
Rolling
12 Months Ended |
|
|
(in thousands of dollars) |
September 30, 2022 |
|
September 30, 2021 |
|
Variance ($) |
|
Net income and comprehensive income |
1,187,736 |
|
383,975 |
|
803,761 |
|
Add (deduct) the following items: |
|
|
|
|
|
|
Interest expense |
152,339 |
|
153,843 |
|
(1,504 |
) |
Interest income |
(15,285 |
) |
(13,733 |
) |
(1,552 |
) |
Yield maintenance costs |
— |
|
11,954 |
|
(11,954 |
) |
Amortization of equipment and intangible assets |
3,676 |
|
4,955 |
|
(1,279 |
) |
Amortization of tenant improvements |
7,231 |
|
7,948 |
|
(717 |
) |
Fair value adjustments on revaluation of investment properties |
(771,207 |
) |
(85,059 |
) |
(686,148 |
) |
Fair value adjustments on revaluation of financial instruments |
(69,234 |
) |
41,331 |
|
(110,565 |
) |
Fair value adjustment on TRS |
(6,958 |
) |
1,462 |
|
(8,420 |
) |
Adjustment for supplemental costs |
5,035 |
|
2,084 |
|
2,951 |
|
Loss (gain) on sale of investment properties |
521 |
|
(116 |
) |
637 |
|
Gain on sale of land to co-owners (Transactional FFO) |
336 |
|
1,587 |
|
(1,251 |
) |
Acquisition-related costs |
3,089 |
|
166 |
|
2,923 |
|
Adjusted EBITDA(1) |
497,279 |
|
510,397 |
|
(13,118 |
) |
Less: Condo and townhome closings |
(394 |
) |
(36,623 |
) |
36,229 |
|
Add: ECL |
(4,041 |
) |
10,486 |
|
(14,527 |
) |
Adjusted EBITDA excluding condo and townhome closings and
ECL(1) |
492,844 |
|
484,260 |
|
8,584 |
|
(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.
Non-GAAP Measures
The non-GAAP measures used in this Press
Release, including but not limited to, FFO per Unit, Unencumbered
Assets, NOI, Debt to Aggregate Assets, Interest Coverage Ratio,
Adjusted Debt to Adjusted EBITDA, Unsecured/Secured Debt Ratio,
FFO, FFO with adjustments, FFO with adjustments excluding impact of
ECL, TRS, condominium and townhome closings, and SmartVMC West
acquisition, FFO per Unit with adjustments, Fixed Rate to Variable
Rate Debt Ratio, Transactional FFO, ACFO, ACFO with adjustments
excluding impact of TRS, condominium and townhome closings, and
SmartVMC West acquisition, Payout Ratio to ACFO, Same Properties
NOI, Total assets – non-GAAP, Investment properties – non-GAAP,
Debt – non-GAAP, Debt to Gross Book Value, Unencumbered Assets to
Unsecured Debt, Weighted Average Interest Rate, and Total
Proportionate Share, 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. Additional information regarding these
non-GAAP measures is available in the Management’s Discussion and
Analysis of the Trust for the three and nine months ended
September 30, 2022, dated November 11, 2022 (the
“MD&A), and is incorporated by reference. The information is
found in the “Presentation of Certain Terms Including Non-GAAP
Measures” and “Non-GAAP Measures” sections of the MD&A, which
is available on SEDAR at www.sedar.com. Reconciliations of non-GAAP
financial measures to the most directly comparable IFRS measures
are found in the following sections of this Press Release:
“Proportionately Consolidated Balance Sheets (including the Trust’s
interests in equity accounted investments)”, “Proportionately
Consolidated Statements of Income and Comprehensive Income
(including the Trust’s Interests in Equity Accounted Investments)”,
“FFO, FFO with adjustments, and FFO with adjustments and
Transactional FFO”, “ACFO and ACFO with adjustments”, “Net
Operating Income”, “Same Properties NOI”, and “Adjusted
EBITDA”.
Full reports of the financial results of the
Trust for the three and nine months ended September 30, 2022
are outlined in the unaudited interim condensed consolidated
financial statements and the related MD&A of the Trust for the
three and nine months ended September 30, 2022, which are
available on SEDAR at www.sedar.com.
Conference Call
SmartCentres will hold a conference call on
Monday, November 14, 2022 at 2:00 p.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 86995#. 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
Monday, November 14, 2022 beginning at 8:30 p.m. (ET) through
to 8:30 p.m. (ET) on Monday, November 21, 2022. To access the
recording, please call 1-855-201-2300, enter the conference access
code 86995# and then key in the playback access code 0112654#.
About SmartCentres
SmartCentres Real Estate Investment Trust is one
of Canada’s largest fully integrated REITs, with a best-in-class
portfolio featuring 185 strategically located properties in
communities across the country. SmartCentres has approximately
$11.9 billion in assets and owns 34.7 million square feet of income
producing value-oriented retail and first-class office space with
98.1% 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 57.0 million square feet (39.5
million square feet at SmartCentres’ share) of space, 27.8 million
square feet (18.1 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 addition to the 22
townhomes that complete these phases, have now closed. 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’ expectations relating to cash
collections and occupancy levels, expectations relating to the
SmartLiving platform, SmartCentres’ expected or planned development
plans and joint venture projects, including the described type,
scope, costs and other financial metrics including expected yields
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, and the
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; 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, and construction and permitting costs are
consistent with the past year and recent inflation trends.
For more information, please visit
www.smartcentres.com or contact:
Mitchell Goldhar |
Peter Slan |
Executive Chairman and CEO |
Chief Financial Officer |
SmartCentres |
SmartCentres |
(905) 326-6400 ext. 7674 |
(905) 326-6400 ext. 7571 |
mgoldhar@smartcentres.com |
pslan@smartcentres.com |
SmartCentres Real Estate... (TSX:SRU.UN)
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SmartCentres Real Estate... (TSX:SRU.UN)
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