SmartCentres Real Estate Investment Trust (SRU.UN) AI Stock Analysis

• Market Cap: C$4.46B
• Dividend Yield: 7.05%
• Average Volume (3M): 328.77K
• Price to Earnings (P/E): 20.3
• Beta (1Y): 0.84
• Revenue Growth: 0.48%
• EPS Growth: 96.32%
• Country: CA
• Employees: 342
• Sector: Real Estate
• Sector Strength: 53
• Industry: REIT - Retail
• EPS (TTM): 0.45
• Shares Outstanding: 144,687,640
• 10 Day Avg. Volume: 359,972
• 30 Day Avg. Volume: 328,771
• PEG Ratio: -0.43
• Price to Book (P/B): 0.83
• Price to Sales (P/S): 4.75
• P/FCF Ratio: 11.66
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: C$28.67
• Price Target Upside: 9.30% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 3
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 73 Outperform
• Price Target: C$30.00 ▲(14.37% Upside)

SmartCentres REIT's strong earnings call performance and attractive dividend yield are significant strengths, contributing positively to the overall score. While financial performance shows profitability, revenue growth challenges and declining free cash flow growth are concerns. Technical indicators suggest stable momentum, supporting a positive outlook.

Positive Factors

High Occupancy Rates

High occupancy rates indicate strong tenant demand and effective property management, ensuring stable rental income and financial resilience.

Debt Management and Liquidity

Effective debt management and strong liquidity position enhance financial flexibility, allowing the company to pursue growth opportunities and manage risks.

Same-Property NOI Growth

Consistent NOI growth reflects operational efficiency and the ability to increase rental income, contributing to long-term profitability and shareholder value.

Negative Factors

Revenue Growth Challenges

Significant revenue decline suggests challenges in maintaining sales momentum, which could impact future profitability and market competitiveness.

Declining Free Cash Flow Growth

Declining free cash flow growth may limit investment in new projects and reduce financial flexibility, affecting long-term strategic initiatives.

Exposure to Toys'R'Us

Exposure to vacated locations poses a risk to occupancy rates and rental income, potentially affecting the company's revenue stability and growth.

SmartCentres Real Estate Investment Trust Business Overview & Revenue Model

Company Description

SmartCentres 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 Money

SmartCentres generates revenue primarily through leasing its retail and mixed-use properties to a variety of tenants, including national brands and local businesses. The company's revenue model is anchored in long-term leases, which provide stable and predictable income streams. Key revenue streams include base rental income from tenants, percentage rent from sales-based leases, and other ancillary income from services such as property management and parking. Additionally, SmartCentres has formed strategic partnerships with major retailers and developers, enabling it to expand its portfolio and enhance its earning potential through joint ventures and development projects. The demand for retail space, particularly in well-located shopping centres, contributes significantly to the trust's financial performance.

SmartCentres Real Estate Investment Trust Financial Statement Overview

Summary

SmartCentres REIT shows strong profitability with high margins, but faces challenges with a significant revenue decline and a decrease in free cash flow growth. The balance sheet is stable with balanced leverage, though returns on equity are modest.

Income Statement

The income statement shows a mixed performance. The TTM data reveals a decline in revenue growth, with a negative growth rate of -46.3%, indicating potential challenges in revenue generation. However, the company maintains strong profitability with a gross profit margin of 60.9% and a net profit margin of 24.7%. The EBIT and EBITDA margins are also robust at 49.9% and 50.7%, respectively, suggesting efficient operational management. Despite the revenue decline, the company remains profitable, which is a positive indicator.

Balance Sheet

The balance sheet reflects a stable financial position with a debt-to-equity ratio of 0.99, indicating balanced leverage. The return on equity (ROE) is modest at 4.4%, showing limited returns on shareholders' equity. The equity ratio stands at 43.2%, suggesting a solid equity base relative to total assets. Overall, the balance sheet demonstrates financial stability, though the low ROE may indicate room for improvement in generating returns.

Cash Flow

Cash flow analysis indicates a decrease in free cash flow growth by -3.4% in the TTM period, which could be a concern for future liquidity. The operating cash flow to net income ratio is 0.25, and the free cash flow to net income ratio is nearly 1, reflecting efficient cash conversion from earnings. While cash flow generation is stable, the negative growth in free cash flow warrants attention.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	932.59M	918.36M	929.40M	804.60M	780.76M	781.25M
Gross Profit	568.15M	547.51M	608.38M	521.16M	501.24M	474.66M
EBITDA	472.76M	478.63M	681.02M	498.73M	686.84M	520.44M
Net Income	230.13M	236.75M	413.70M	811.11M	475.28M	-143.46M
Balance Sheet
Total Assets	12.02B	11.94B	11.91B	11.70B	11.29B	10.72B
Cash, Cash Equivalents and Short-Term Investments	33.81M	37.69M	34.74M	35.26M	62.23M	794.59M
Total Debt	5.14B	5.05B	5.00B	4.98B	4.85B	5.21B
Total Liabilities	5.73B	5.60B	5.55B	5.54B	5.45B	5.56B
Stockholders Equity	5.19B	5.24B	5.27B	5.13B	4.88B	4.32B
Cash Flow
Free Cash Flow	386.09M	373.66M	328.95M	369.17M	371.27M	428.94M
Operating Cash Flow	386.69M	374.21M	330.85M	370.76M	371.62M	295.98M
Investing Cash Flow	-158.70M	-155.53M	1.52M	-121.39M	-413.17M	-157.38M
Financing Cash Flow	-243.49M	-215.73M	-332.89M	-276.35M	-690.81M	600.62M

SmartCentres Real Estate Investment Trust Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 26.23
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: 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 26.23 is above the 20-day moving average (MA) of 26.19, below the 50-day MA of 26.24, and above the 200-day MA of 25.12, indicating a neutral trend. The MACD of -0.05 indicates Negative momentum. The RSI at 51.07 is Neutral, neither overbought nor oversold. The STOCH value of 38.30 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

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CRT.UN	75 Outperform	C$3.78B	8.12	11.49%	5.93%	4.11%	35.99%
SRU.UN	73 Outperform	C$4.46B	20.28	5.03%	7.05%	0.48%	96.32%
REI.UN	71 Outperform	$5.58B	86.41	0.92%	6.07%	22.22%	-71.38%
PLZ.UN	71 Outperform	C$447.26M	12.85	7.14%	6.73%	4.53%	197.86%
PMZ.UN	69 Neutral	C$1.78B	12.56	6.52%	5.65%	26.88%	77.26%
Sector *	65 Neutral	$2.17B	12.19	3.79%	4.94%	3.15%	1.96%
FCR.UN	65 Neutral	C$3.93B	15.07	6.18%	4.66%	-0.83%	-28.93%