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

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TSE:SRU.UN

SmartCentres Real Estate Investment Trust

(TSX:SRU.UN)

Rating:72Outperform
Price Target:
C$30.00
▲(12.02% Upside)
SmartCentres REIT demonstrates strong operational performance and strategic growth initiatives, as highlighted in the earnings call. Despite facing revenue decline and liquidity concerns, the company maintains strong profitability and an attractive dividend yield. Technical indicators suggest bullish momentum, although caution is warranted due to potential overbought conditions.
Positive Factors
Occupancy Rates
Occupancy gains are boosting NOI growth in the near term.
Retail Portfolio
The value-oriented retail portfolio continues to perform well, with SP-NOI growth tracking well against the >3% target.
Tenant Demand
Minimal impact from HBC/Toys 'R' Us store closures, with strong interest from multiple prospective tenants and replacement rent 3-4 times higher than the prior rent.
Negative Factors
Debt Levels
Debt is elevated compared to certain peers, and interest rate headwinds are expected to temper earnings growth.
Debt Maturities
A significant amount of below-rate debt maturities through 2026 is a potential earnings growth headwind.

SmartCentres Real Estate Investment Trust (SRU.UN) vs. iShares MSCI Canada ETF (EWC)

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 Real Estate Investment Trust generates revenue primarily through leasing its extensive portfolio of retail properties to a diverse range of tenants, including major retailers such as Walmart, which serves as a key anchor tenant in many of its locations. Rental income is the predominant revenue stream, complemented by the development and sale of residential and mixed-use properties. The trust also benefits from strategic partnerships with real estate developers and retail giants, enhancing its ability to expand and optimize its property portfolio. Additionally, SmartCentres' focus on developing mixed-use spaces contributes to its revenue through sales of residential units and rental income from office and self-storage facilities.

SmartCentres Real Estate Investment Trust Earnings Call Summary

Earnings Call Date:Aug 07, 2025
(Q2-2025)
|
% Change Since: |
Next Earnings Date:Nov 07, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong operational performance with high occupancy rates, growth in same-property NOI, and robust financial metrics. However, there were challenges in the disposition market, and an increase in the debt to aggregate assets ratio. Overall, the company showed strong resilience and strategic growth initiatives.
Q2-2025 Updates
Positive Updates
Strong Occupancy and Leasing Activity
Occupancy reached 98.6% with 148,000 square feet of lease-up completed in the quarter. Positive leasing spreads of 6.1% all in, or 8.5% excluding anchors, were reported.
Growth in Same-Property NOI
Same-property NOI grew by 4.8% overall and 7.7% excluding anchors, indicating strong performance of core properties.
Financial Performance Metrics
Net operating income increased by $10.2 million or 7.3% compared to the same quarter last year. FFO per fully diluted unit was $0.58, up from $0.50, showing robust financial health.
Successful Tenant and Development Initiatives
Costco took possession of a major premises at Winston Churchill and 401 Centre. Walmart's fixturing is underway at South Oakville Centre. New developments and expansions, like the ArtWalk condo project and Millway apartment, show promising progress.
Positive Capital Management
Debt management has improved with 89% of debt being fixed rate and liquidity at approximately $1.2 billion.
Negative Updates
Challenges in Disposition Market
Some planned dispositions are facing delays with varying probabilities of closure, indicating potential hurdles in capital recycling efforts.
Debt to Aggregate Assets Ratio Increase
The debt to aggregate assets ratio increased by 50 basis points compared to the same period last year, reaching 44.2%.
Company Guidance
During the SmartCentres REIT Q2 2025 conference call, the company highlighted several key performance metrics, reflecting a solid quarter across various sectors, including retail, industrial, residential, storage, and office. The REIT achieved a same-property NOI growth of 4.8% overall, or 7.7% excluding anchors, with positive leasing spreads of 6.1% all in, or 8.5% excluding anchors. Occupancy reached 98.6% for in-place and executed deals, and the payout ratio was reduced to 89.4%. Rent collections exceeded 99%, and 82% of 2025 lease maturities have already been extended. The call also noted the strategic positioning for growth, with ongoing developments like the 340-unit ArtWalk condo project and a new 224,000 square-foot Canadian Tire flagship store in Leaside, slated for completion in Q2 2026. Additionally, SmartCentres' liquidity was emphasized, with approximately $1.2 billion available, 89% of debt being fixed-rate, and an unencumbered asset growth of $9.6 billion. The company remains focused on capital recycling, targeting $100 million in dispositions, and continues to prioritize debt management, maintaining a debt-to-aggregate-assets ratio of 44.2%.

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
65
Positive
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
70
Positive
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
60
Neutral
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.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue932.59M918.36M929.40M804.60M780.76M781.25M
Gross Profit568.15M547.51M608.38M521.16M501.24M474.66M
EBITDA472.76M478.63M681.02M498.73M686.84M520.44M
Net Income230.13M236.75M413.70M811.11M475.28M-143.46M
Balance Sheet
Total Assets12.02B11.94B11.91B11.70B11.29B10.72B
Cash, Cash Equivalents and Short-Term Investments33.81M37.69M34.74M35.26M62.23M794.59M
Total Debt5.14B5.05B5.00B4.98B4.85B5.21B
Total Liabilities5.73B5.60B5.55B5.54B5.45B5.56B
Stockholders Equity5.19B5.24B5.27B5.13B4.88B4.32B
Cash Flow
Free Cash Flow386.09M373.66M328.95M369.17M371.27M428.94M
Operating Cash Flow386.69M374.21M330.85M370.76M371.62M295.98M
Investing Cash Flow-158.70M-155.53M1.52M-121.39M-413.17M-157.38M
Financing Cash Flow-243.49M-215.73M-332.89M-276.35M-690.81M600.62M

SmartCentres Real Estate Investment Trust Technical Analysis

Technical Analysis Sentiment
Positive
Last Price26.78
Price Trends
50DMA
25.79
Positive
100DMA
25.34
Positive
200DMA
24.64
Positive
Market Momentum
MACD
0.30
Positive
RSI
60.93
Neutral
STOCH
25.46
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 26.78 is above the 20-day moving average (MA) of 26.46, above the 50-day MA of 25.79, and above the 200-day MA of 24.64, indicating a bullish trend. The MACD of 0.30 indicates Positive momentum. The RSI at 60.93 is Neutral, neither overbought nor oversold. The STOCH value of 25.46 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 (53)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
72
Outperform
C$4.53B20.584.42%6.91%7.01%-15.80%
53
Neutral
$1.21B3.09-6.08%5.85%-7.32%-78.37%
$3.94B19.143.81%6.10%
81
Outperform
C$3.83B8.6311.08%5.86%4.26%72.02%
77
Outperform
C$458.29M13.176.45%6.71%5.14%209.83%
75
Outperform
C$1.60B25.573.26%5.72%23.01%-50.29%
73
Outperform
C$4.04B15.476.58%4.71%2.53%
* Real Estate Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
TSE:SRU.UN
SmartCentres Real Estate Investment Trust
26.78
2.82
11.77%
RIOCF
RioCan Real Estate Investment
13.35
0.05
0.38%
TSE:CRT.UN
CT Real Estate Investment
16.37
1.84
12.66%
TSE:FCR.UN
First Capital Realty
19.27
2.32
13.69%
TSE:PLZ.UN
Plaza Retail REIT
4.17
0.67
19.14%
TSE:PMZ.UN
Primaris Real Estate Investment Trust
14.95
0.69
4.84%
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.Date of analysis: Aug 20, 2025