TORONTO--(BUSINESS WIRE)--Slate Grocery REIT (TSX: SGR.U) (TSX: SGR.UN) (the "REIT"), an owner and operator of U.S. grocery-anchored real estate, today announced its financial results and highlights for the three and twelve months ended December 31, 2024.
"Our fourth quarter and year-end financial results reaffirm the significant growth potential embedded within the REIT's portfolio of high-quality grocery-anchored real estate," said Blair Welch, Chief Executive Officer of Slate Grocery REIT. "Several quarters of high leasing volumes at double-digit spreads continue to translate into meaningful increases in the REIT's net operating income. At the same time, in a challenging financing environment, our team successfully financed $633.5 million of debt, reflecting the confidence our lenders have in the long-term growth outlook for our business. As the transaction market gains momentum in 2025, we continue to evaluate compelling opportunities that we believe can drive value for our unitholders."
For the CEO's letter to unitholders for the quarter, please follow the link here.
Highlights
- Achieved 4.3% or $6.7 million, same-property Net Operating Income ("NOI") growth on a trailing twelve-month basis, adjusting for completed redevelopments, driven by several consecutive quarters of strong leasing volumes at attractive spreads
- Completed 2.7 million square feet of total leasing throughout the year; new deals were completed at 28.0% above comparable average in-place rent and non-option renewals at 14.3% above expiring rents
- Portfolio occupancy remained stable at 94.8% as at December 31, 2024
- The REIT's average in-place rent of $12.65 per square foot remains well below the market average of $23.801, providing significant runway for continued rent increases
- Financed $633.5 million of debt throughout the year at interest rate spreads similar to the maturing debt, highlighting the quality of the REIT's portfolio and the demand for grocery-anchored real estate assets in the lending space
- The REIT's current portfolio valuation continues to provide significant positive leverage and embedded NOI growth, even as the cost of financing across the broader real estate market has increased
- The REIT's units continue to trade at a discount to net asset value, presenting a compelling investment opportunity for unitholders looking for an attractive total return
(1) CBRE Econometric Advisors, Q4 2024
Summary of Q4 2024 Results
Three months ended December 31, | |||||
(thousands of U.S. dollars, except per unit amounts) | 2024 | 2023 | Change % | ||
Rental revenue | $ | 53,077 | $ | 51,539 | 3.0% |
NOI 1 2 | $ | 41,462 | $ | 40,139 | 3.3% |
Net income 2 | $ | 15,731 | $ | 5,177 | 203.9% |
Same-property NOI (3 month period, 113 properties) 1 2 | $ | 40,901 | $ | 39,005 | 4.9% |
Same-property NOI (12 month period, 111 properties) 1 2 | $ | 158,394 | $ | 153,356 | 3.3% |
New leasing (square feet) 2 | 93,078 | 160,792 | (42.1)% | ||
New leasing spread 2 | 29.0% | 30.9% | (6.1)% | ||
Total leasing (square feet) 2 | 336,548 | 637,439 | (47.2)% | ||
Total leasing spread 2 | 14.9% | 15.4% | (3.2)% | ||
New leasing - anchor / junior anchor 2 | 35,000 | 106,455 | (67.1)% | ||
Weighted average number of units outstanding ("WA units") | 60,366 | 60,285 | 0.1% | ||
FFO 1 2 | $ | 15,080 | $ | 15,991 | (5.7)% |
FFO per WA units 1 2 | $ | 0.25 | $ | 0.27 | (5.8)% |
FFO payout ratio 1 2 | 86.0% | 81.1% | 6.0% | ||
AFFO 1 2 | $ | 11,807 | $ | 13,029 | (9.4)% |
AFFO per WA units 1 2 | $ | 0.20 | $ | 0.22 | (7.5)% |
AFFO payout ratio 1 2 | 109.8% | 99.5% | 10.3% | ||
Interest coverage ratio 1 | 2.61x | 2.87x | (10.0)% | ||
(thousands of U.S. dollars, except per unit amounts) | December 31, 2024 | December 31, 2023 | Change % | ||
Total assets | $ | 2,233,699 | $ | 2,235,798 | (0.1)% |
Total assets, proportionate interest 1 2 | $ | 2,444,143 | $ | 2,448,127 | (0.2)% |
Debt | $ | 1,166,655 | $ | 1,161,756 | 0.4% |
Debt, proportionate interest 1 2 | $ | 1,370,530 | $ | 1,369,053 | 0.1% |
Net asset value per unit | $ | 13.84 | $ | 13.97 | (0.9)% |
Number of properties 2 | 116 | 117 | (0.9)% | ||
Portfolio occupancy 2 | 94.8% | 94.7% | 0.1% | ||
Debt / GBV ratio | 52.2% | 52.0% | 0.4% | ||
(1) Refer to "Non-IFRS Measures" section below.
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Conference Call and Webcast
Senior management will host a live conference call at 9:00 am ET on February 12, 2025 to discuss the results and ongoing business initiatives of the REIT.
The conference call can be accessed dialing (289) 514-5100 or 1 (800) 717-1738. Additionally, the conference call will be available via simultaneous audio found at https://onlinexperiences.com/Launch/QReg/ShowUUID=FCDFB061-11E5-4AA4-B192-152A1985E211&LangLocaleID=1033. A replay will be accessible until February 26, 2025 via the REIT's website or by dialing (289) 819-1325 or 1 (888) 660-6264 (access code 31360#) approximately two hours after the live event.
About Slate Grocery REIT (TSX: SGR.U / SGR.UN)
Slate Grocery REIT is an owner and operator of U.S. grocery-anchored real estate. The REIT owns and operates approximately $2.4 billion of critical real estate infrastructure across major U.S. metro markets that communities rely upon for their everyday needs. The REIT's resilient grocery-anchored portfolio and strong credit tenants are expected to provide unitholders with durable cash flows and the potential for capital appreciation over the longer term. Visit slategroceryreit.com to learn more about the REIT.
About Slate Asset Management
Slate Asset Management is a global investor and manager focused on essential real estate and infrastructure assets. We focus on fundamentals with the objective of creating long-term value for our investors and partners across the real assets space. We are supported by exceptional people and flexible capital, which enable us to originate and execute on a wide range of compelling investment opportunities. Visit slateam.com to learn more, and follow Slate Asset Management on LinkedIn, X (Twitter), and Instagram.
Supplemental Information
All interested parties can access Slate Grocery's Supplemental Information online at slategroceryreit.com in the Investors section. These materials are also available on SEDAR+ or upon request to the REIT at info@slateam.com or (416) 644-4264.
Forward Looking Statements
Certain information herein constitutes "forward-looking information" as defined under Canadian securities laws which reflect management's expectations regarding objectives, plans, goals, strategies, future growth, results of operations, performance, business prospects and opportunities of the REIT. The words "plans", "expects", "does not expect", "forecasts", "scheduled", "estimates", "intends", "anticipates", "does not anticipate", "projects", "believes", or variations of such words and phrases or statements to the effect that certain actions, events or results "may", "will", "could", "would", "might", "occur", "be achieved", or "continue" and similar expressions identify forward-looking statements. Management believes that the expectations reflected in its forward-looking statements are based upon reasonable assumptions, however, management can give no assurance that actual results, performance or achievements will be consistent with these forward-looking statements. Such forward-looking statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations.
Forward-looking statements are necessarily based on a number of estimates and assumptions that, while considered reasonable by management as of the date hereof, are inherently subject to significant business, economic and competitive uncertainties and contingencies. When relying on forward-looking statements to make decisions, the REIT cautions readers not to place undue reliance on these statements, as forward-looking statements involve significant risks and uncertainties, and should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not the times at or by which such performance or results will be achieved. A number of factors could cause actual results to differ, possibly materially, from the results discussed in the forward-looking statements. Additional information about risks and uncertainties is contained in the filings of the REIT with securities regulators.
Non-IFRS Measures
This news release and accompanying financial statements are based on IFRS® Accounting Standards ("IFRS Accounting Standards"), as issued by the International Accounting Standards Board ("IASB").
We disclose a number of financial measures in this news release that are not measures used under IFRS Accounting Standards, including NOI, same-property NOI, FFO, FFO payout ratio, AFFO, AFFO payout ratio, adjusted EBITDA and the interest coverage ratio, in addition to certain measures on a per unit basis.
- NOI is defined as rental revenue less operating expenses, prior to straight-line rent, IFRIC 21, Levies ("IFRIC 21") property tax adjustments and adjustments for equity investments. Same-property NOI includes those properties owned by the REIT for each of the current period and the relevant comparative period, excluding those properties under development.
- FFO is defined as net income adjusted for certain items including transaction/disposition costs, change in fair value of properties, change in fair value of financial instruments, deferred income taxes, unit income (expense), adjustments for equity investments and IFRIC 21 property tax adjustments.
- AFFO is defined as FFO adjusted for straight-line rental revenue and revenue sustaining capital, leasing costs and tenant improvements.
- FFO payout ratio and AFFO payout ratio are defined as distributions declared divided by FFO and AFFO, respectively.
- FFO per WA unit and AFFO per WA unit are defined as FFO and AFFO divided by the weighted average class U equivalent units outstanding, respectively.
- Adjusted EBITDA is defined as NOI less general and administrative expenses.
- Interest coverage ratio is defined as adjusted EBITDA divided by cash interest paid.
- Net asset value is defined as the aggregate of the carrying value of the REIT's equity, deferred income taxes and exchangeable units of subsidiaries.
- Proportionate interest represents financial information adjusted to reflect the REIT's equity accounted joint ventures and financial real estate assets and its share of net income (losses) from equity accounted joint ventures and financial real estate assets on a proportionately consolidated basis at the REIT's ownership percentage of the related investment.
We utilize these measures for a variety of reasons, including measuring performance, managing the business, capital allocation and the assessment of risk. Descriptions of why these non-IFRS measures are useful to investors and how management uses each measure are included in Management's Discussion and Analysis. We believe that providing these performance measures on a supplemental basis to our IFRS Accounting Standards results is helpful to investors in assessing the overall performance of our businesses in a manner similar to management. These financial measures should not be considered as a substitute for similar financial measures calculated in accordance with IFRS Accounting Standards. We caution readers that these non-IFRS financial measures may differ from the calculations disclosed by other businesses, and as a result, may not be comparable to similar measures presented by others.
SGR-FR
Calculation and Reconciliation of Non-IFRS Measures
The table below summarizes a calculation of non-IFRS measures based on financial information in accordance with IFRS Accounting Standards.
Three months ended December 31, | ||||
(in thousands of U.S. dollars, except per unit amounts) | 2024 | 2023 | ||
Rental revenue | $ | 53,077 | $ | 51,539 |
Straight-line rent revenue | (109) | (95) | ||
Property operating expenses | (9,149) | (9,209) | ||
IFRIC 21 property tax adjustment | (7,671) | (7,360) | ||
Contribution from joint venture investments | 5,314 | 5,264 | ||
NOI 1 2 | $ | 41,462 | $ | 40,139 |
Cash flow from operations | $ | 16,131 | $ | 11,421 |
Changes in non-cash working capital items | 592 | 5,979 | ||
Disposition costs | 90 | - | ||
Finance charge and mark-to-market adjustments | (1,060) | (525) | ||
Interest, net and TIF note adjustments | 145 | 22 | ||
Adjustments for joint venture investments | 2,422 | 2,523 | ||
Non-controlling interest | (3,375) | (3,444) | ||
Taxes on dispositions | 3 | - | ||
Capital expenditures | (337) | (405) | ||
Leasing costs | (853) | (952) | ||
Tenant improvements | (1,951) | (1,590) | ||
AFFO 1 2 | $ | 11,807 | $ | 13,029 |
Net income 2 | $ | 15,731 | $ | 5,177 |
Change in fair value of financial instruments | (2,473) | 4,014 | ||
Disposition costs | 90 | - | ||
Change in fair value of properties | 11,218 | 12,475 | ||
Deferred income tax expense | 2,454 | 1,212 | ||
Unit (income) expense | (754) | 1,291 | ||
Adjustments for joint venture investments | 591 | 3,288 | ||
Non-controlling interest | (4,109) | (4,106) | ||
Taxes on dispositions | 3 | - | ||
IFRIC 21 property tax adjustment | (7,671) | (7,360) | ||
FFO 1 2 | $ | 15,080 | $ | 15,991 |
Straight-line rental revenue | (109) | (95) | ||
Capital expenditures | (337) | (405) | ||
Leasing costs | (853) | (952) | ||
Tenant improvements | (1,951) | (1,590) | ||
Adjustments for joint venture investments | (757) | (582) | ||
Non-controlling interest | 734 | 662 | ||
AFFO 1 2 | $ | 11,807 | $ | 13,029 |
(1) Refer to "Non-IFRS Measures" section above.
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Three months ended December 31, | ||||
(in thousands of U.S. dollars, except per unit amounts) | 2024 | 2023 | ||
NOI 1 2 | $ | 41,462 | $ | 40,139 |
General and administrative expenses | (4,294) | (4,016) | ||
Cash interest, net | (14,114) | (13,254) | ||
Finance charge and mark-to-market adjustments | (1,060) | (525) | ||
Current income tax expense | (779) | (183) | ||
Adjustments for joint venture investments | (2,892) | (2,739) | ||
Non-controlling interest | (3,375) | (3,446) | ||
Capital expenditures | (337) | (405) | ||
Leasing costs | (853) | (952) | ||
Tenant improvements | (1,951) | (1,590) | ||
AFFO 1 2 | $ | 11,807 | $ | 13,029 |
(1) Refer to "Non-IFRS Measures" section above.
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Three months ended December 31, | ||||
(in thousands of U.S. dollars, except per unit amounts) | 2024 | 2023 | ||
Net income 1 | $ | 15,731 | $ | 5,177 |
Interest and finance costs | 15,174 | 13,779 | ||
Change in fair value of financial instruments | (2,473) | 4,014 | ||
Disposition costs | 90 | - | ||
Change in fair value of properties | 11,218 | 12,475 | ||
Deferred income tax expense | 2,454 | 1,212 | ||
Current income tax expense | 782 | 183 | ||
Unit (income) expense | (754) | 1,291 | ||
Adjustments for joint venture investments | 2,509 | 5,447 | ||
Straight-line rent revenue | (109) | (95) | ||
IFRIC 21 property tax adjustment | (7,671) | (7,360) | ||
Adjusted EBITDA 1 2 | $ | 36,951 | $ | 36,123 |
NOI 1 2 | 41,462 | 40,139 | ||
General and administrative expenses 1 2 | (4,294) | (4,016) | ||
Adjusted EBITDA 1 2 | $ | 37,168 | $ | 36,123 |
Cash interest paid | (14,259) | (13,276) | ||
Interest coverage ratio 1 2 | 2.61x | 2.72x | ||
(1) Includes the REIT's share of joint venture investments.
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December 31, 2024 | December 31, 2023 | |||||||||||
(in thousands of U.S. dollars, except per unit amounts) | Statement of
| Joint Venture
| Proportionate
| Statement of
| Joint Venture
| Proportionate
| ||||||
ASSETS | ||||||||||||
Non-current assets | ||||||||||||
Properties | $ | 2,054,511 | $ | 310,400 | $ | 2,364,911 | $ | 2,062,599 | $ | 307,300 | $ | 2,369,899 |
Joint venture investments | 112,429 | (112,429) | - | 107,101 | (107,101) | - | ||||||
Interest rate swaps | 4,690 | - | 4,690 | 7,652 | 580 | 8,232 | ||||||
Other assets | 3,624 | - | 3,624 | 718 | 4,268 | 4,986 | ||||||
$ | 2,175,254 | $ | 197,971 | $ | 2,373,225 | $ | 2,178,070 | $ | 205,047 | $ | 2,383,117 | |
Current assets | ||||||||||||
Cash | 22,668 | 4,851 | 27,519 | 23,587 | 4,420 | 28,007 | ||||||
Accounts receivable | 23,417 | 1,723 | 25,140 | 22,172 | 1,813 | 23,985 | ||||||
Other assets | 4,327 | 4,629 | 8,956 | 6,985 | - | 6,985 | ||||||
Prepaids | 5,050 | 1,025 | 6,075 | 4,984 | 1,049 | 6,033 | ||||||
Interest rate swaps | 2,983 | 245 | 3,228 | - | - | - | ||||||
$ | 58,445 | $ | 12,473 | $ | 70,918 | $ | 57,728 | $ | 7,282 | $ | 65,010 | |
Total assets | $ | 2,233,699 | $ | 210,444 | $ | 2,444,143 | $ | 2,235,798 | $ | 212,329 | $ | 2,448,127 |
LIABILITIES | ||||||||||||
Non-current liabilities | ||||||||||||
Debt | $ | 1,120,616 | $ | 59,914 | $ | 1,180,530 | $ | 859,637 | $ | 205,831 | $ | 1,065,468 |
Deferred income taxes | 153,580 | 2 | 153,582 | 146,651 | 2 | 146,653 | ||||||
Other liabilities | 4,378 | 837 | 5,215 | 4,346 | 482 | 4,828 | ||||||
$ | 1,278,574 | $ | 60,753 | $ | 1,339,327 | $ | 1,010,634 | $ | 206,315 | $ | 1,216,949 | |
Current liabilities | ||||||||||||
Debt | 46,039 | 143,961 | 190,000 | 302,119 | 1,466 | 303,585 | ||||||
Accounts payable and accrued liabilities | 42,071 | 5,730 | 47,801 | 43,217 | 4,548 | 47,765 | ||||||
Exchangeable units of subsidiaries | 8,733 | - | 8,733 | 8,269 | - | 8,269 | ||||||
Distributions payable | 4,323 | - | 4,323 | 4,323 | - | 4,323 | ||||||
$ | 101,166 | $ | 149,691 | $ | 250,857 | $ | 357,928 | $ | 6,014 | $ | 363,942 | |
Total liabilities | $ | 1,379,740 | $ | 210,444 | $ | 1,590,184 | $ | 1,368,562 | $ | 212,329 | $ | 1,580,891 |
EQUITY | ||||||||||||
Unitholders' equity | $ | 673,474 | $ | - | $ | 673,474 | $ | 687,443 | $ | - | $ | 687,443 |
Non-controlling interest | 180,485 | - | 180,485 | 179,793 | - | 179,793 | ||||||
Total equity | $ | 853,959 | $ | - | $ | 853,959 | $ | 867,236 | $ | - | $ | 867,236 |
Total liabilities and equity | $ | 2,233,699 | $ | 210,444 | $ | 2,444,143 | $ | 2,235,798 | $ | 212,329 | $ | 2,448,127 |
Contacts
For Further Information
Investor Relations
Tel: +1 416 644 4264
E-mail: ir@slateam.com
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