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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)
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Rating:71Outperform
Price Target:
C$30.00
â–²(13.04% Upside)
Action:UpgradedDate:02/18/26
The score is driven primarily by solid, steady REIT fundamentals and supportive technical trend signals. Guidance and call commentary reinforce strong occupancy/NOI and liquidity, while the main constraints are elevated leverage and a relatively high payout ratio, with some near-term tenant disruption risk.
Positive Factors
High Portfolio Occupancy
Sustained 98.6% occupancy supports durable rental income and low vacancy-driven downtime. High occupancy improves predictability of cash flows, strengthens negotiating leverage on renewals, and reduces short-term capital needs for leasing or tenant improvements across the portfolio.
Strong Lease Renewals & Cash Collection
High renewal rates (88% of 5.3M sq ft) plus ~99% collections indicate resilient tenant demand and excellent cash conversion. This underpins NOI stability, limits working capital volatility, and supports reliable distribution coverage and funding for development over the medium term.
Liquidity, Fixed-Rate Debt & Development Pipeline
Over $1B liquidity, a $10B unencumbered asset pool and 8 active projects provide balance-sheet flexibility to fund high-return developments and absorb near-term shocks. A mostly fixed-rate debt profile reduces interest-rate exposure and supports multi-year execution of value-accretive projects.
Negative Factors
Elevated Leverage
A near-10x adjusted debt/EBITDA ratio materially constrains financial flexibility. High leverage increases refinancing and interest-rate risk, may force asset sales if markets tighten, and limits capacity to fund growth internally, making deleveraging a medium-term priority.
High AFFO Payout Ratio
An AFFO payout near 90% leaves limited retained cash to support capex, development or deleveraging. This elevates reliance on external financing or asset dispositions to fund growth and debt reduction, increasing execution risk if capital markets or disposition conditions worsen.
Tenant Concentration / Bankruptcy Risk
Lease terminations from a single tenant (Toys"R"Us) create vacancy, provisioning and timing risk to NOI. While management expects to re-lease some sites, concentrated tenant disruptions can produce uneven cash flow impacts and require leasing or repositioning costs over the medium term.
SmartCentres Real Estate Investment Trust (SRU.UN) vs. iShares MSCI Canada ETF (EWC)
Market Cap
C$4.55B
Dividend Yield7.22%
Average Volume (3M)328.77K
Price to Earnings (P/E)18.2
Beta (1Y)0.62
Revenue Growth0.48%
EPS Growth96.32%
CountryCA
Employees342
SectorReal Estate
Sector Strength53
IndustryREIT - Retail
Share Statistics
EPS (TTM)0.71
Shares Outstanding144,687,640
10 Day Avg. Volume359,972
30 Day Avg. Volume328,771
Financial Highlights & Ratios
PEG Ratio3.03
Price to Book (P/B)0.88
Price to Sales (P/S)4.95
P/FCF Ratio12.23
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$28.75Price Target Upside8.33% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering3
EPS Forecast (FY)1.98
Revenue Forecast (FY)C$972.10M
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 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 Earnings Call Summary
Earnings Call Date:Feb 11, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 13, 2026
Earnings Call Sentiment Positive
The call conveyed strong operational performance across occupancy, same-property NOI (notably higher when excluding anchors and one credit provision), high cash collections, clear development momentum (including an 8-plus percent expected return on the Toronto Premium Outlets expansion), improved liquidity and balance-sheet flexibility (over $1 billion liquidity, 90% fixed-rate debt, $10 billion unencumbered assets). Key near-term negatives were the Toys"R"Us insolvency impact (six leases terminated, short-term vacancy/provisioning and timing to reletting), and a relatively high adjusted debt/EBITDA (9.7x) and elevated payout ratio (89.2%), which left investors focused on deleveraging and disposition execution. Overall, the positives (operating strength, development pipeline, liquidity and asset quality) materially outweighed the manageable near-term challenges.Q4-2025 Updates
Positive Updates
Very High Portfolio Occupancy
Ending occupancy of 98.6% at year-end, unchanged from prior quarter, supported by strong tenant demand and high tenant retention.
Same-Property NOI Growth
Full-year same-property NOI growth of 3.7% (5.6% excluding anchors). Q4 same-property NOI grew 2.9% (5.1% excluding anchors). Excluding an expected credit loss provision, Q4 same-property NOI grew 4.5%.
Strong Lease Renewal Performance
Extended 88% of 5.3 million sq. ft. of space maturing during the year with rental spreads of 8.4% excluding anchors and 6.3% all-in.
Very Strong Cash Collections
Cash collections remained near 99% in the quarter, demonstrating strong rent collection and cash flow stability.
Liquidity and Balance Sheet Improvements
Over $1.0 billion in liquidity, 90% of debt fixed-rate, and an unencumbered asset pool of $10.0 billion for the first time; weighted average debt term to maturity improved to 3.4 years from 2.9 years in Q3.
Distribution and Payout Discipline
Maintained distributions at an annualized $1.85 per unit; payout ratio to AFFO improved to 89.2% for the full year.
Development & Capital Recycling Momentum
Eight projects under construction at year-end (unchanged from prior quarter). Anticipated retail construction starts of ~200k–300k sq. ft. in 2026, scaling materially higher thereafter; focus on selling PUD/land with a near-term target of ~$200–$300 million of dispositions over the next couple of years.
Notable Development Wins & Margins
Closed 7 townhomes in Vaughan Northwest (118 of 120 homes closed) with a cumulative margin of approximately 23% for the project to date.
Toronto Premium Outlets Expansion
Expansion of ~85k–90k sq. ft. planned at Toronto Premium Outlets with a new parking deck; management anticipates returns in excess of 8% and construction to start in summer (rents commencing ~late 2027–2028).
ESG and Risk Initiatives
Advancing materiality assessments, decarbonization planning, climate preparedness, cybersecurity improvements and enhanced disclosures as part of a multi-year ESG plan.
Negative Updates
Toys"R"Us Bankruptcy Impact
Toys filed for creditor protection after year-end; REIT had already terminated 6 leases and taken control of the space. Short-term impact: modest reduction in occupancy (estimated apples-to-apples drop from 98.6% to ~98.3%) and increased provisioning — management expects to re-lease at least half the locations soon at higher rents, but some vacancy and timing drag (Q1 impact) is expected.
Credit Provision and One Retail Tenant
Q4 same-property NOI was partially offset by an expected credit loss provision primarily associated with one retail tenant; this reduced headline NOI growth (excluding the provision NOI grew 4.5% in Q4).
Relatively High Leverage Metric
Adjusted debt to adjusted EBITDA of 9.7x in Q4 (up slightly from the prior quarter), a level that prompted investor questions around deleveraging and contrasts with some peers who have been reducing leverage more aggressively.
High Payout Ratio
Payout to AFFO remains relatively elevated at 89.2% for the full year, which limits free cash flow flexibility and was referenced in investor questions about priority of deleveraging vs growth.
Sale/Disposition Market Still Selective
Management noted improving disposition sentiment but indicated the market is not uniformly strong — capital recycling will focus on PUD/land sales where the REIT can meaningfully move the needle, and execution/timing remains market-dependent.
Quarterly Variability in Renewal Metrics
Some year-on-year movements down in renewal statistics (renewal rate and tenant renewal rate) driven by timing of expiries; management cautioned not to overread quarter-to-quarter variability.
Company Guidance
SmartCentres guided that same‑property NOI should be roughly in the 7% range for 2026 (similar ex‑Toys), noting Q4/2025 same‑property NOI of +2.9% (+5.1% ex‑anchors; +4.5% excluding a credit provision) and +3.7% for the year (+5.6% ex‑anchors); management expects the portfolio to maintain strong fundamentals with year‑end occupancy at 98.6% (an apples‑to‑apples ToysRUs impact could lower this to ~98.3% before re‑letting at least half of the six vacated sites), 88% of 5.3M sq ft of expiries extended, rental spreads of 8.4% ex‑anchors (6.3% all‑in), and cash collections near 99%. Balance‑sheet guidance emphasized conservative metrics and flexibility: >$1.0B liquidity, 90% fixed‑rate debt, a $10B unencumbered asset pool, adjusted debt/EBITDA of 9.7x, and a weighted average debt term of 3.4 years, while distributions are being maintained at $1.85/unit (FY2025 AFFO payout ~89.2%). Development and disposition priorities include 8 projects under construction, a Toronto Premium Outlets expansion of ~85–90k sq ft (expected >8% yield; construction start this summer; rents late‑2027/2028), ~200–300k sq ft of retail starting in 2026, roughly 60–70M sq ft of permitted density across the portfolio, and a $200–300M PUD disposition target over the next couple of years.SmartCentres Real Estate Investment Trust Financial Statement Overview
Summary
Steady revenue and consistent operating/free cash flow support a solid base, but the balance sheet remains meaningfully leveraged (debt roughly matching equity) and earnings/margins have shown noticeable volatility and normalization from prior highs.Income Statement
Revenue has been steady with modest growth recently (2025 up ~2% after a flat 2024), and profitability is generally strong with solid gross and operating margins in 2024–2025. That said, earnings have been volatile across the period (including a loss in 2020 and unusually high profit levels in 2022), and margins have compressed meaningfully from the 2021–2023 highs to more normalized levels in 2024–2025, which tempers the score.74
Positive
Balance Sheet
Leverage is consistently elevated, with debt roughly matching equity (debt-to-equity near ~0.95–1.00 in 2021–2025, and higher in 2020). Equity has been relatively stable and assets have grown gradually, but the capital structure leaves less flexibility if financing costs rise or property values soften; returns on equity are positive in recent years but not high and have fluctuated.63
Positive
Cash Flow
Cash generation is steady: operating cash flow is consistent year-to-year and free cash flow closely tracks reported earnings in 2021–2025 (free cash flow roughly in line with net income). However, the amount of operating cash flow relative to the earnings base is on the low side in 2024–2025, and free cash flow growth has been uneven over time, indicating some variability in underlying cash conversion and/or timing.70
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 927.28M | 918.36M | 929.40M | 804.60M | 780.76M |
| Gross Profit | 563.04M | 547.51M | 608.38M | 521.16M | 501.24M |
| EBITDA | 486.19M | 478.63M | 681.02M | 498.73M | 686.84M |
| Net Income | 251.81M | 236.75M | 413.70M | 811.11M | 475.28M |
Balance Sheet | |||||
| Total Assets | 12.14B | 11.94B | 11.91B | 11.70B | 11.29B |
| Cash, Cash Equivalents and Short-Term Investments | 51.55M | 37.69M | 34.74M | 35.26M | 62.23M |
| Total Debt | 5.21B | 5.05B | 5.00B | 4.98B | 4.85B |
| Total Liabilities | 5.79B | 5.60B | 5.55B | 5.54B | 5.45B |
| Stockholders Equity | 5.23B | 5.24B | 5.27B | 5.13B | 4.88B |
Cash Flow | |||||
| Free Cash Flow | 375.48M | 373.66M | 328.95M | 369.17M | 371.27M |
| Operating Cash Flow | 377.44M | 374.21M | 330.85M | 370.76M | 371.62M |
| Investing Cash Flow | -186.20M | -155.53M | 1.52M | -121.39M | -413.17M |
| Financing Cash Flow | -177.38M | -215.73M | -332.89M | -276.35M | -690.81M |
SmartCentres Real Estate Investment Trust Technical Analysis
Negative
26.54
Price Trends
27.04
Negative
26.27
Positive
25.72
Positive
Market Momentum
-0.09
Positive
43.72
Neutral
18.21
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:SRU.UN, the sentiment is Negative. The current price of 26.54 is below the 20-day moving average (MA) of 27.18, below the 50-day MA of 27.04, and above the 200-day MA of 25.72, indicating a neutral trend. The MACD of -0.09 indicates Positive momentum. The RSI at 43.72 is Neutral, neither overbought nor oversold. The STOCH value of 18.21 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:SRU.UN.
SmartCentres Real Estate Investment Trust Peers Comparison
UnderperformOutperform
Sector (65)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | C$2.01B | 10.72 | 6.52% | 5.52% | 26.88% | 77.26% | |
74 Outperform | C$472.66M | 8.66 | 10.04% | 6.56% | 4.53% | 197.86% | |
73 Outperform | C$3.92B | 7.47 | 18.40% | 5.74% | 4.11% | 35.99% | |
73 Outperform | C$4.37B | 3.77 | 25.30% | 4.71% | -0.83% | -28.93% | |
71 Outperform | C$4.55B | 18.23 | 4.85% | 7.22% | 0.48% | 96.32% | |
65 Neutral | $2.17B | 12.19 | 3.79% | 4.94% | 3.15% | 1.96% | |
55 Neutral | $5.52B | 79.85 | 0.92% | 6.21% | 22.22% | -71.38% |
* Real Estate Sector Average
TSE:SRU.UN
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TSE:FCR.UN
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TSE:PLZ.UN
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Primaris Real Estate Investment Trust
17.02
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17.79%
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.