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

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

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SmartCentres Real Estate Investment Trust

(TSX:SRU.UN)

78Outperform
SmartCentres REIT exhibits a solid financial and operational position, with strong profitability and cash flow management. Technical indicators suggest a positive market trend, while the earnings call highlights robust operational growth and strategic partnerships. The valuation is attractive due to the moderate P/E ratio and high dividend yield, although careful monitoring of leverage and occupancy rates is advised.
Positive Factors
Leasing and Tenant Interest
Retailers are looking for more space, and SRU executed new leasing on existing vacant built space, indicating demand for their properties.
Mixed-use Development
SRU's retail portfolio is performing well, and the contribution from mixed-use development is becoming more visible.
Retail Portfolio Performance
The value-oriented retail portfolio continues to perform well, with SP-NOI growth tracking well against the >3% target.
Negative Factors
Debt and Interest Rates
Debt is elevated compared to certain peers, and interest rate headwinds are expected to temper earnings growth.
Debt Impact on Future Growth
Debt is elevated compared to certain peers, and interest rate headwinds are expected to temper earnings growth, particularly in 2026.

SmartCentres Real Estate Investment Trust (SRU.UN) vs. S&P 500 (SPY)

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 makes money by leasing retail and commercial spaces to tenants, which include major national retailers and various businesses. The rental income from these leases forms the backbone of its revenue model. Additionally, the company is increasingly involved in mixed-use developments, which can include residential, office, and self-storage components, providing diversified income streams. SmartCentres also engages in property development and management activities, generating revenue through the sale of developed properties and property management fees. Strategic partnerships with other real estate players and retailers can enhance its property portfolio's value, further contributing to its earnings.

SmartCentres Real Estate Investment Trust Financial Statement Overview

Summary
SmartCentres Real Estate Investment Trust demonstrates strong financial performance with high profitability, particularly reflected in its gross profit and net profit margins. The cash flow is robust with effective cash conversion rates. The balance sheet is stable, though leverage should be monitored to maintain financial stability.
Income Statement
75
Positive
The income statement shows a healthy gross profit margin of 59.49% and a net profit margin of 26.46% for the TTM, indicating strong profitability. The revenue growth rate for the TTM is 1.32%, showing modest growth. EBIT and EBITDA margins are strong at 56.46% and 48.86%, respectively, signaling efficient operations. However, the revenue growth has slowed compared to previous years, which could be a concern if the trend continues.
Balance Sheet
70
Positive
The balance sheet reflects a stable financial structure with a debt-to-equity ratio of 0.98, indicating a balanced approach to leveraging. The return on equity (ROE) is 4.76% for the TTM, showing reasonable returns for equity holders. The equity ratio is 43.35%, suggesting a solid equity base compared to total assets. While the overall leverage is manageable, any increase in debt levels could pose a risk to financial stability.
Cash Flow
80
Positive
Cash flow analysis highlights a strong free cash flow growth rate of 6.98% for the TTM, demonstrating effective cash generation. The operating cash flow to net income ratio is 1.63, indicating solid cash flow relative to net earnings. The free cash flow to net income ratio is notable at 1.62, underscoring efficient conversion of profits into cash. Overall, cash flows are robust, supporting operational and financial needs.
Breakdown
TTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
930.46M918.36M929.40M804.60M780.76M781.25M
Gross Profit
553.57M547.51M608.38M521.16M501.24M474.66M
EBIT
525.26M509.84M577.57M488.42M674.38M505.97M
EBITDA
454.63M478.63M681.02M498.73M686.84M520.44M
Net Income Common Stockholders
246.17M236.75M413.70M811.11M475.28M-143.46M
Balance SheetCash, Cash Equivalents and Short-Term Investments
28.63M37.69M34.74M35.26M62.23M794.59M
Total Assets
11.92B11.94B11.91B11.70B11.29B10.72B
Total Debt
5.09B5.05B5.00B4.98B4.85B5.21B
Net Debt
5.06B5.01B4.96B4.95B4.79B4.42B
Total Liabilities
5.67B5.60B5.55B5.54B5.45B5.56B
Stockholders Equity
5.17B5.24B5.27B5.13B4.88B4.32B
Cash FlowFree Cash Flow
399.76M373.66M328.95M369.17M371.27M428.94M
Operating Cash Flow
400.32M374.21M330.85M370.76M371.62M295.98M
Investing Cash Flow
-173.31M-155.53M1.52M-121.39M-413.17M-157.38M
Financing Cash Flow
-245.59M-215.73M-332.89M-276.35M-690.81M600.62M

SmartCentres Real Estate Investment Trust Technical Analysis

Technical Analysis Sentiment
Positive
Last Price25.94
Price Trends
50DMA
25.03
Positive
100DMA
24.68
Positive
200DMA
24.55
Positive
Market Momentum
MACD
0.22
Negative
RSI
62.62
Neutral
STOCH
68.78
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 25.94 is above the 20-day moving average (MA) of 25.38, above the 50-day MA of 25.03, and above the 200-day MA of 24.55, indicating a bullish trend. The MACD of 0.22 indicates Negative momentum. The RSI at 62.62 is Neutral, neither overbought nor oversold. The STOCH value of 68.78 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 (60)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
82
Outperform
C$3.70B8.3411.23%5.94%4.54%68.32%
78
Outperform
C$4.42B18.784.75%7.13%10.06%-19.26%
76
Outperform
C$3.71B17.305.40%4.98%3.11%
75
Outperform
C$424.03M17.174.57%7.29%6.36%13.91%
74
Outperform
C$1.53B26.662.99%5.60%22.60%-48.92%
60
Neutral
$2.82B10.290.39%8508.26%5.90%-17.41%
* Real Estate Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
TSE:SRU.UN
SmartCentres Real Estate Investment Trust
25.94
4.70
22.13%
RIOCF
RioCan Real Estate Investment
12.72
0.40
3.25%
TSE:CRT.UN
CT Real Estate Investment
15.51
2.72
21.27%
TSE:FCR.UN
First Capital Realty
17.48
2.97
20.47%
TSE:PLZ.UN
Plaza Retail REIT
3.84
0.44
12.94%
TSE:PMZ.UN
Primaris Real Estate Investment Trust
15.11
2.26
17.59%

SmartCentres Real Estate Investment Trust Earnings Call Summary

Earnings Call Date:May 07, 2025
(Q1-2025)
|
% Change Since: 1.41%|
Next Earnings Date:Aug 07, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong operational performance with significant growth in Same Property NOI, high occupancy and cash collection rates, and successful leasing activities. Notable partnerships with major retailers like Walmart and Costco were secured, and development projects are progressing well. However, there were concerns about a fair value loss on investment properties and a slight decline in occupancy rates. Overall, the positive highlights significantly outweigh the lowlights.
Q1-2025 Updates
Positive Updates
Strong Same Property NOI Growth
The company reported a Same Property NOI growth of 4.1% overall and 6.7% excluding Anchors, demonstrating strong performance in their core retail business.
High Occupancy and Cash Collections
SmartCentres maintained a high occupancy rate of 98.4% with cash collections exceeding 99% during the quarter.
Successful Leasing and Expansion
The company successfully extended 68.4% of its 2025 lease maturities with positive leasing spreads of 6.3% all-in or 8.4% excluding Anchors.
Major Retailer Partnerships
SmartCentres secured significant partnerships with Walmart and Costco, both taking possession of new locations with 20-year initial lease terms.
FFO Per Unit Increase
FFO per fully diluted unit increased to $0.56 from $0.48 in the same quarter last year, driven by higher NOI and changes in fair value adjustments.
Development Projects Progress
The company is actively moving forward with several development projects, including the 340-unit ArtWalk Condo project and the 458-unit Millway apartments, now 96.5% leased.
Negative Updates
Fair Value Loss on Investment Properties
The company recorded a fair value loss of $80.1 million on its investment properties portfolio, mainly due to delays in development activities for certain properties.
Occupancy Rate Slight Decline
The occupancy rate slightly declined from the previous quarter, attributed to seasonal variations and minor increases in vacancy.
Company Guidance
During the SmartCentres REIT Q1 2025 Conference Call, the company reported a strong performance, with several key metrics highlighted. Same Property Net Operating Income (NOI) grew by 4.1% overall, and 6.7% excluding Anchors. The company achieved positive leasing spreads of 6.3% all-in or 8.4% excluding Anchors, with 98.4% occupancy for in-place and executed deals. Cash collections were above 99%. Approximately 70% of the 2025 lease maturities had already been extended by the end of the quarter. Financial highlights included a 5.5% increase in net operating income, with Funds From Operations (FFO) per fully diluted unit rising to $0.56, compared to $0.48 in the same quarter last year. The company's unencumbered asset pool increased to $9.6 billion. Additionally, major tenant movements included Walmart and Costco taking possession of new spaces with planned openings later in the year, contributing to the continued expansion and dominance of the company's retail offerings.
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.