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SmartCentres Real Estate Investment Trust (TSE:SRU.UN)
TSX:SRU.UN
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SmartCentres Real Estate Investment Trust
(TSX:SRU.UN)
76Outperform
SmartCentres Real Estate Investment Trust (SRU.UN) vs. S&P 500 (SPY)
Market Cap
C$4.34B
Dividend Yield7.26%
Average Volume (3M)341.89K
Price to Earnings (P/E)19.2
Beta (1Y)0.94
Revenue Growth9.46%
EPS Growth-42.77%
CountryCA
Employees342
SectorReal Estate
Sector Strength65
IndustryREIT - Retail
Share Statistics
EPS (TTM)1.33
Shares Outstanding144,687,640
10 Day Avg. Volume320,928
30 Day Avg. Volume341,892
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)4.88
Price to Cash Flow (P/CF)4.90
P/FCF Ratio3.80
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$27.50Price Target Upside8.35% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering2
SmartCentres Real Estate Investment Trust Business Overview & Revenue Model
Company DescriptionSmartCentres Real Estate Investment Trust is one of Canada's largest fully integrated REITs, with a best-in-class portfolio featuring 166 strategically located properties in communities across the country. SmartCentres has approximately $10.4 billion in assets and owns 33.8 million square feet of income producing value-oriented retail space with 97.4% 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. A publicly announced $11.9 billion intensification program ($5.4 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 59.3 million square feet (27.9 million square feet at SmartCentres' share) of space, 27.1 million square feet (12.3 million square feet at SmartCentres' share) of which has or will commence construction within 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 11.0 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 two phases of Transit City Condominiums began ahead of budget and ahead of schedule in August 2020 and as at September 30, 2020, 766 units (representing approximately 70% of all 1,110 units in the first and second phases) had closed with the balance of units expected to close before year end. In addition, the presold 631 units in the third phase along with 22 townhomes, all of which are sold out and currently under construction, are expected to close in 2021. The fourth and fifth sold-out phases representing 1,026 units are currently under construction and are expected to close in 2023.
How the Company Makes MoneySmartCentres REIT makes money primarily through leasing space in its retail and mixed-use properties to tenants. Key revenue streams include rental income from long-term leases with major retailers, which provide a stable and predictable cash flow. Additionally, the company generates income from property management fees and development activities, such as constructing new commercial and residential projects. Strategic partnerships with large retail chains and real estate development firms also significantly contribute to its earnings by facilitating the creation of high-demand commercial spaces and residential units.
SmartCentres Real Estate Investment Trust Financial Statement Overview
Summary
SmartCentres REIT shows strong cash flow and a stable financial position, but faces challenges with profitability and revenue growth. The company's manageable leverage and solid cash flow allow it to manage debt and invest in growth, although decreasing ROE impacts overall returns.Income Statement
The company has shown a consistent revenue base with fluctuations in profitability. The gross profit margin improved to 59.6% in 2024, up from 56.1% in 2023. Net profit margins have been volatile, with a decrease to 25.8% in 2024 from 44.5% in 2023. Revenue growth has been negative recently, declining by 1.2% from 2023 to 2024, indicating some challenges in maintaining growth.72
Positive
Balance Sheet
The balance sheet reflects a stable financial structure with a debt-to-equity ratio of 0.96 in 2024, slightly higher than 0.95 in 2023, suggesting a moderate level of leverage. The equity ratio remained stable at around 43.9% in 2024. Return on equity dropped to 4.5% in 2024 from 7.8% in 2023, indicating reduced profitability for shareholders.68
Positive
Cash Flow
Cash flow generation remains strong, with operating cash flow covering net income comfortably, evident from an operating cash flow to net income ratio of 1.58 in 2024. Free cash flow growth rate was 13.6% in 2024, showing robust cash generation capabilities. The free cash flow to net income ratio stands at 1.58, indicating efficient cash utilization.80
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 918.36M | 929.40M | 804.60M | 780.76M | 781.25M | Gross Profit |
| 547.51M | 608.38M | 521.16M | 501.24M | 474.66M | EBIT |
| 0.00 | 577.57M | 488.42M | 674.38M | 505.97M | EBITDA |
| 478.63M | 681.02M | 498.73M | 686.84M | 520.44M | Net Income Common Stockholders |
| 236.75M | 413.70M | 811.11M | 475.28M | -143.46M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 37.69M | 34.74M | 35.26M | 62.23M | 794.59M | Total Assets |
| 11.94B | 11.91B | 11.70B | 11.29B | 10.72B | Total Debt |
| 5.05B | 5.00B | 4.98B | 4.85B | 5.21B | Net Debt |
| 5.01B | 4.96B | 4.95B | 4.79B | 4.42B | Total Liabilities |
| 5.60B | 5.55B | 5.54B | 5.45B | 5.56B | Stockholders Equity |
| 5.24B | 5.27B | 5.13B | 4.88B | 4.32B |
| Cash Flow | Free Cash Flow | |||
| 373.66M | 328.95M | 369.17M | 371.27M | 428.94M | Operating Cash Flow |
| 374.21M | 330.85M | 370.76M | 371.62M | 295.98M | Investing Cash Flow |
| -155.53M | 1.52M | -121.39M | -413.17M | -157.38M | Financing Cash Flow |
| -215.73M | -332.89M | -276.35M | -690.81M | 600.62M |
SmartCentres Real Estate Investment Trust Technical Analysis
Positive
25.38
Price Trends
24.93
Positive
24.67
Positive
24.14
Positive
Market Momentum
0.05
Negative
58.41
Neutral
63.77
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:SRU.UN, the sentiment is Positive. The current price of 25.38 is above the 20-day moving average (MA) of 25.18, above the 50-day MA of 24.93, and above the 200-day MA of 24.14, indicating a bullish trend. The MACD of 0.05 indicates Negative momentum. The RSI at 58.41 is Neutral, neither overbought nor oversold. The STOCH value of 63.77 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:SRU.UN.
SmartCentres Real Estate Investment Trust Peers Comparison
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | C$4.34B | 19.19 | 4.50% | 7.26% | 9.46% | -42.77% | |
73 Outperform | C$3.50B | 17.08 | 5.20% | 5.22% | 6.55% | ― | |
63 Neutral | C$2.64B | ― | -2.29% | 5.92% | -6.92% | -310.05% | |
61 Neutral | $4.72B | 17.64 | -3.07% | 10.89% | 5.99% | -21.86% |
* Real Estate Sector Average
Performance Comparison
TSE:SRU.UN
SmartCentres Real Estate Investment Trust
25.38
4.37
20.80%
RIOCF
RioCan Real Estate Investment
12.05
-0.53
-4.21%
TSE:FCR.UN
First Capital Realty
16.73
1.91
12.89%
TSE:HR.UN
H&R Real Estate ate Staple
10.05
1.57
18.51%
ARESF
Artis Real Estate Investment
5.44
1.13
26.22%
PPRQF
Choice Properties Real Estate Investment
9.81
0.54
5.83%
SmartCentres Real Estate Investment Trust Earnings Call Summary
Earnings Call Date: Feb 12, 2025 | % Change Since: 4.49% | Next Earnings Date: May 7, 2025
Earnings Call Sentiment Positive
The earnings call reflected a robust performance in rental growth, occupancy levels, and strategic leasing deals with major retailers like Walmart and Costco. Mixed-use development projects are progressing well, contributing to long-term growth prospects. However, there are concerns about the decrease in FFO per unit and higher interest expenses. Overall, the positive aspects outweigh the negatives.Highlights
Strong Rental Growth
Rental growth was up 8.8% on lease extensions, excluding anchors, and 6.6% overall, contributing to a five-year high occupancy rate of 98.7%.
High Occupancy and Cash Collections
Occupancy reached a five-year high of 98.7%, with cash collections above 99%.
Successful Leasing and Development Deals
Executed 192,000 square feet of deals for vacant space and 253,000 square feet of deals for new retail construction. New leases with Walmart and Costco at key locations.
Mixed-use Development Progress
Achieved 1.8 million square feet of new permissions in Q4, bringing the year to a total of 9.8 million square feet. Significant ongoing projects like the 36-story ArtWalk project.
Improved Financial Performance
Net operating income increased by $12.3 million or 9% from the same quarter last year. FFO with adjustments was $0.56 per unit, a 9.8% increase from 2023.
Stable Financial Metrics
Adjusted debt to adjusted EBITDA decreased to 9.6 times from 9.8 times last quarter. Debt to aggregate assets ratio was steady at 43.7%.
Lowlights
Decrease in FFO per Unit
FFO per fully diluted unit was $0.53 in the quarter, down from $0.59 in the comparable quarter last year, primarily due to a fair value adjustment on a total return swap.
Higher Interest Expenses
An increase in net interest expense partially offset the increase in NOI and FFO with adjustments.
Company Guidance
In the SmartCentres REIT Q4 2024 conference call, several key metrics were highlighted reflecting the company's strong performance. Rental growth was reported at 8.8% on lease extensions, excluding anchors, and 6.6% overall, with cash collections exceeding 99%. The same property net operating income (NOI) increased by 3.8%, and occupancy reached a five-year high of 98.7%. SmartCentres executed 192,000 square feet of deals for vacant space in the quarter and 253,000 square feet for new retail construction over the year. In terms of financial results, net operating income for the quarter increased by $12.3 million or 9% compared to the same period last year, while funds from operations (FFO) per unit, with adjustments, rose by 9.8% to $0.56. Additionally, the company maintained a strong balance sheet with a debt to aggregate assets ratio of 43.7% and a liquidity position of approximately $833 million. These metrics underscore SmartCentres' robust operational and financial performance during the quarter and the full year.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
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.