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Slate Grocery REIT (TSE:SGR.UN)
TSX:SGR.UN
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Slate Grocery REIT
(TSX:SGR.UN)
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Rating:71Outperform
Price Target:
C$17.00
â–²(13.48% Upside)
Action:ReiteratedDate:02/18/26
The score is driven primarily by solid underlying financial performance (steady revenue and positive free cash flow) tempered by high and recently rising leverage. Support comes from constructive earnings-call fundamentals (strong leasing spreads, stable occupancy, refinancing progress, and low near-term lease expiries) and an attractive income profile via a high dividend yield, while technical indicators are mixed and limit near-term confidence.
Positive Factors
Leasing Momentum & Spreads
Sustained, multi-quarter leasing outperformance across renewals and new deals is a durable driver of NOI and cash flow. Strong spreads indicate the portfolio can capture mark-to-market rents over time, reducing vacancy risk and supporting income stability across 2–6 months and beyond.
High Occupancy & Low Rollover Risk
Stable high occupancy and limited near-term lease expiries materially lower renewal risk and support predictable rental income. With grocery-anchored tenants, this structural occupancy stability helps sustain cash flow and lowers short-term refinancing and operational stress over the medium term.
Material Rent Upside Runway
A large gap between in-place and market rents provides multi-period structural upside as leases roll and redevelopments complete. This embedded rent growth potential can drive low-single-digit NOI increases and improve cash generation durability over the next 2–6 months and further out.
Negative Factors
Elevated Leverage
A materially levered capital structure reduces balance-sheet flexibility and magnifies exposure to interest rates or asset-value declines. Even with recent partial fixes, higher debt limits the REIT’s capacity to opportunistically acquire or absorb shocks, affecting stability over the coming months.
Weakening Free Cash Flow Growth
Recent declines in free cash flow growth constrain the REIT’s ability to delever, fund redevelopments, or sustain distributions without relying on external capital. Persistently soft FCF trends materially reduce financial optionality and raise medium-term refinancing and payout risks.
Earnings Volatility & Lingering Vacancies
Remaining sizeable vacancies and prior swings in reported net income weaken predictability of cash flows. This volatility complicates budgeting and deleveraging plans, and until redevelopments/leases fully convert to income the REIT faces continued near-term earnings and payout uncertainty.
Slate Grocery REIT (SGR.UN) vs. iShares MSCI Canada ETF (EWC)
Market Cap
C$901.35M
Dividend Yield7.95%
Average Volume (3M)122.41K
Price to Earnings (P/E)14.3
Beta (1Y)0.82
Revenue Growth1.80%
EPS Growth46.83%
CountryCA
EmployeesN/A
SectorReal Estate
Sector Strength53
IndustryREIT - Retail
Share Statistics
EPS (TTM)0.25
Shares Outstanding59,147,583
10 Day Avg. Volume118,235
30 Day Avg. Volume122,413
Financial Highlights & Ratios
PEG Ratio2.46
Price to Book (P/B)1.00
Price to Sales (P/S)3.08
P/FCF Ratio10.84
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$15.10Price Target Upside0.80% Upside
Rating ConsensusHold
Number of Analyst Covering1
EPS Forecast (FY)0.99
Revenue Forecast (FY)C$241.85M
Slate Grocery REIT Business Overview & Revenue Model
Company DescriptionSlate Grocery REIT is an owner and operator of U.S. grocery-anchored real estate. The REIT owns and operates approximately U.S. $1.3 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 provide unitholders with durable cash flows and the potential for capital appreciation over the longer term.
How the Company Makes MoneySlate Grocery REIT generates revenue primarily through rental income from its portfolio of grocery-anchored retail properties. The REIT enters into long-term leases with tenants, which typically include major grocery chains and other essential retail businesses, ensuring a steady stream of cash flow. Additionally, the company benefits from annual rent escalations and potential revenue from property management fees. Strategic partnerships with leading grocery retailers enhance tenant quality, contributing to lower vacancy rates and increased rental income. The diversified nature of its tenant base, along with the essential nature of grocery retail, provides resilience against economic downturns, further stabilizing its revenue streams.
Slate Grocery REIT Earnings Call Summary
Earnings Call Date:Feb 10, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 12, 2026
Earnings Call Sentiment Positive
The call emphasized multiple operational and strategic positives: sustained strong leasing performance (14.9% renewal spreads; 34.9% new-lease spreads), stable 94.4% occupancy, a pipeline of redevelopments contributing to NOI, successful JV consolidation and a $90M portfolio refinance at favorable pricing (SOFR+180, ~5.3% all-in), and a balance sheet with ~87% fixed-rate debt. Lowlights were largely timing and transitional — modest trailing NOI growth (+2%), some lingering vacancies from earlier 2025, and a temporary uptick in reported leverage due to consolidation and refinancing timing. Overall, the highlights and strategic actions to delever and simplify structure outweigh the challenges, and management expressed confidence in continued rent growth and transaction opportunities in 2026.Q4-2025 Updates
Positive Updates
Robust Leasing Activity and Strong Spreads
Completed over 1.7 million square feet of leasing during the year; renewal spreads averaged 14.9% above expiring rents and new deals were completed at 34.9% above comparable average in-place rent, marking 11 straight quarters of strong leasing performance.
Same-Property NOI Growth
Adjusting for completed redevelopments, same-property net operating income increased by $3.3 million, or 2% on a trailing 12-month basis.
High and Stable Occupancy
Portfolio occupancy remained stable at 94.4%, supporting cash flow stability and leasing leverage.
Significant Rent Upside Opportunity
Portfolio average in-place rent is $12.86 per square foot versus a market average of $24.34 per square foot — approximately 47% below market — providing substantial runway for future rent increases.
Favorable Debt Profile and Recent Refinance
Weighted average interest rate is 5% with over 87% of debt at fixed rates, limiting near-term financing risk. Subsequent to quarter end the REIT refinanced an 8-property portfolio for $90 million (SOFR + 180bps; with a 12-month pay-fixed swap bringing the all-in to ~5.3%).
Positive Leverage and Lending Demand
Management notes the REIT's weighted average cap rate remains above its weighted average interest rate, preserving positive leverage. Lender demand for grocery-anchored real estate is described as strong and competitive.
Strategic JV Consolidation
Acquired the remaining minority interest in a 10-asset joint venture for $5.7 million, bringing ownership to 100%, enhancing refinancing flexibility and allowing capture of mark-to-market opportunities.
Non-Core Disposition to Delever
Sold a non-grocery-anchored property in Flower Mound, Texas at about a mid-7% cap rate, using proceeds to further delever the portfolio and simplify capital structure.
Low Rollover Risk in 2026
Less than 10% of gross leasable area (GLA) is expiring in 2026, reducing near-term renewal risk and supporting occupancy stability.
Asset Redevelopment Nearing Contribution
Redevelopment at Culver Ridge expected to bring the third and final tenant online later in 2026, contributing to NOI in the second half of the year.
Negative Updates
Modest Same-Property NOI Increase
Same-property NOI rose by only 2% (or $3.3 million) on a trailing 12-month basis, indicating modest near-term earnings growth despite strong leasing spreads.
Quarter-End Leverage Creeped Up (Timing Issue)
Reported leverage increased at quarter end due to acquisition consolidation and timing of refinancing; management describes the rise as a point-in-time issue and expects normalization through subsequent deleveraging and refinancing activities.
Lingering Vacancies from Earlier 2025
Some larger vacancies from earlier in 2025 remain, with management expecting leases and redevelopment contributions to flow through during 2026 — indicating near-term vacancy headwinds.
Transaction Market Friction Historically
Management noted prior bid-ask spread and borrowing cost mismatches constrained transaction volume; while the market is improving, historical market friction slowed acquisitions and required sellers/buyers to adjust expectations.
Low Current In-Place Rents (Double-Edged)
Average in-place rent of $12.86/sf — well below market — is positioned as upside but also reflects that current cash rents are materially lower than market levels, which limits near-term cash capture until renewals/mark-to-market take effect.
Company Guidance
Management guided that strong leasing momentum and disciplined capital allocation should drive continued rent and NOI growth, noting the REIT completed ~1.7 million sq ft of leasing in 2025 with 11 straight quarters of positive spreads (renewals +14.9%, new deals +34.9%), portfolio occupancy at 94.4% and average in-place rent of $12.86/sf versus a $24.34 market average (providing upside runway); same‑property NOI was up $3.3 million (+2% TTM, adj. for redevelopments) and management expects continued single‑digit NOI growth (low‑single digits, 2–5%), with less than 10% of GLA expiring in 2026; balance sheet actions include acquiring the remaining JV interest for $5.7 million, a post‑quarter $90 million 8‑property refinance (SOFR+180, all‑in ~5.3% with a 12‑month swap), repayment of revolver, over 87% of debt fixed and a weighted average interest rate of 5%, while the REIT’s weighted average cap rate remains above its borrowing cost (positive leverage); management reiterated a focus on deleveraging and opportunistic acquisitions given a healthy lending market (spreads ~170–185 bps) and recent disposals at about a mid‑7% cap.Slate Grocery REIT Financial Statement Overview
Summary
Steady revenue growth and consistently positive operating/free cash flow support a solid operating profile, but elevated leverage (and higher debt in 2025 with lower equity) plus meaningful net income volatility reduce balance-sheet resilience and earnings durability.Income Statement
Revenue has grown steadily over time (2020–2024 modest growth, with a sharp step-up in 2025), and profitability is positive in recent years with net income rising from 2023 to 2025. Gross profit has been relatively stable as a share of revenue in 2023–2024, suggesting consistent property-level economics. The main weakness is earnings volatility: net income swung materially across the period (very strong in 2021–2022, then much lower in 2023), which reduces confidence in the durability of reported profits.78
Positive
Balance Sheet
The balance sheet is asset-backed and equity remains substantial, but leverage is high for a retail REIT. Debt-to-equity ran around ~1.5–1.7 in 2020–2024, and total debt increased notably in 2025 while equity declined versus 2024, implying a more levered capital structure. Returns on equity were modest in 2023–2024, improving from 2023 to 2024 but still not strong, leaving less cushion if financing costs rise or asset values soften.62
Positive
Cash Flow
Cash generation is solid: operating cash flow and free cash flow are consistently positive across the period, and free cash flow has generally tracked reported earnings closely (near one-to-one in 2021–2024), indicating decent earnings quality. However, free cash flow growth turned negative in 2024 and again in 2025, and the cash flow-to-earnings support weakened in 2024 versus prior years, pointing to some recent pressure on cash conversion.71
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 213.37M | 209.13M | 203.28M | 177.49M | 138.28M |
| Gross Profit | 138.34M | 135.40M | 130.47M | 127.41M | 100.86M |
| EBITDA | 129.86M | 128.47M | 86.77M | 140.66M | 104.87M |
| Net Income | 43.39M | 39.67M | 13.60M | 128.80M | 90.87M |
Balance Sheet | |||||
| Total Assets | 2.36B | 2.23B | 2.24B | 2.27B | 1.74B |
| Cash, Cash Equivalents and Short-Term Investments | 21.82M | 22.67M | 23.59M | 20.39M | 14.04M |
| Total Debt | 1.30B | 1.17B | 1.16B | 1.13B | 937.74M |
| Total Liabilities | 1.52B | 1.38B | 1.37B | 1.34B | 1.11B |
| Stockholders Equity | 659.12M | 673.47M | 687.44M | 740.51M | 619.02M |
Cash Flow | |||||
| Free Cash Flow | 60.71M | 67.04M | 71.78M | 51.95M | 46.12M |
| Operating Cash Flow | 66.96M | 70.97M | 76.30M | 58.99M | 50.80M |
| Investing Cash Flow | -51.94M | -10.43M | -20.55M | -381.74M | -190.85M |
| Financing Cash Flow | -15.87M | -61.46M | -52.55M | 329.11M | 151.72M |
Slate Grocery REIT Technical Analysis
Negative
14.98
Price Trends
15.61
Negative
15.16
Negative
14.48
Positive
Market Momentum
-0.12
Positive
36.10
Neutral
15.19
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:SGR.UN, the sentiment is Negative. The current price of 14.98 is below the 20-day moving average (MA) of 15.60, below the 50-day MA of 15.61, and above the 200-day MA of 14.48, indicating a neutral trend. The MACD of -0.12 indicates Positive momentum. The RSI at 36.10 is Neutral, neither overbought nor oversold. The STOCH value of 15.19 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:SGR.UN.
Slate Grocery REIT Peers Comparison
UnderperformOutperform
Sector (65)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | C$471.56M | 8.66 | 10.04% | 6.56% | 4.53% | 197.86% | |
73 Outperform | C$3.89B | 5.06 | 18.40% | 5.74% | 4.11% | 35.99% | |
73 Outperform | C$4.34B | 3.77 | 25.30% | 4.71% | -0.83% | -28.93% | |
71 Outperform | C$901.35M | 14.29 | 6.49% | 7.95% | 1.80% | 46.83% | |
71 Outperform | C$4.52B | 10.88 | 4.85% | 7.22% | 0.48% | 96.32% | |
69 Neutral | C$3.47B | 21.64 | 5.27% | 5.56% | 7.31% | 74.70% | |
65 Neutral | $2.17B | 12.19 | 3.79% | 4.94% | 3.15% | 1.96% |
* Real Estate Sector Average
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Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.