Smart Real Estate Investment Trust Releases Second Quarter Results for 2016

Marketwired.com
Aug. 4, 2016

Smart Real Estate Investment Trust ("SmartREIT" or "the Trust") (TSX:SRU.UN) is pleased to report positive results for the second quarter ended June 30, 2016.

Highlights for the quarter ended June 30, 2016:

• Funds From Operations (FFO) increased by 26.4% to $93.7 million and 15.4% to $0.60 on a per Unit basis compared to the same quarter in 2015
• Adjusted Funds From Operations (AFFO) increased by 27.4% to $88.9 million and 16.3% to $0.57 on a per Unit basis compared to the same quarter in 2015
• Target net settlement proceeds of $9.7 million were recorded, which had a corresponding impact on both FFO per Unit and AFFO per Unit of $0.06, and also decreased AFFO payout ratio from 80.9% to 72.5%
• AFFO payout ratio decreased by 9.6% to 72.5% compared to the same quarter in 2015
• Same properties' NOI increased by 0.9% or $0.9 million compared to the same quarter in 2015
• High level of occupancy maintained at 98.2% (98.3% with committed leases not yet commenced). The Trust had two Target store locations in its portfolio. As a result of Target's decision to leave these locations, the Trust has identified both locations for redevelopment. Had these two sites not been identified for redevelopment, the occupancy level would have been 97.5%
• Developments and Earnouts of 293,064 square feet of leasable area for $76.2 million were completed, providing an unleveraged yield of 6.0%
• Secured debt of $19.4 million with an interest rate of 4.91% was repaid
• Toronto Premium Outlets' expansion of both the shopping centre and the associated parking facility is actively moving forward

Subsequent to quarter end:

• The Trust announced the commencement of the second phase of office development at VMC. The next phase of development is expected to be completed in 2019 and will feature a new 220,000 square foot Class A facility, which will be home to lead occupants, PwC, YMCA, and a new library and community uses for the City of Vaughan
• The Board of Trustees approved a 3.0% increase in annual distributions to $1.70 per Unit effective October 2016
• The Trust exercised its option to extend a development loan relating to the Montreal Premium Outlets for an additional term of one year expiring September 10, 2017. At June 30, 2016, the balance on this loan was $54.4 million and the credit facility limit is

$55.5 million at the Trust's share.

Huw Thomas, CEO of SmartREIT said, "We are very pleased with the level of final settlement we reached on the two properties formerly leased to Target Canada. The amount received gives us multiple years flexibility in releasing space to new vibrant tenants at both locations and our core shopping centre portfolio continues to perform well despite a very competitive market, providing the Trust with a steady cash flow stream. Looking to the future, the suite of growth initiatives we have created continues to build momentum, including the VMC and the Premium Outlet portfolio as well as our various mixed use and residential opportunities," added Thomas.

Rentals from investment properties for the three months ended June 30, 2016, totalled $187.3 million, a $26.6 million or 16.6% increase over the three months ended June 30, 2015. Net base rent increased by $10.7 million or 10.1%, primarily due to rent increases from new and renewing tenants, acquisitions including the Transaction that closed on May 28, 2015, Earnouts and completed developments that occurred during 2015 and 2016. Property operating costs recovered increased by $4.5 million or 8.7% due to the related increases in recoverable costs with the growth in the portfolio.

The Trust recovered 97.4% of total recoverable expenses during the three months ended June 30, 2016, compared to 98.5% in the same quarter last year. Non-recovery of most of the remaining costs results from fixed recovery rates for some tenants and restrictions contained in certain anchor tenant leases in addition to adjustments made in 2015 for prior years.

In comparison to the same quarter in 2015, NOI increased by $20.9 million or 19.7% in 2016, primarily as a result of: a) the growth of the portfolio mainly due to the Transaction that closed on May 28, 2015, resulting in an increase to NOI of $9.3 million, and b) the increase to miscellaneous revenue, which was primarily due to $9.7 million of net settlement proceeds associated with the Target lease terminations.

For the three months ended June 30, 2016, FFO excluding adjustments increased by $19.5 million or 26.4% to $93.7 million and by 15.4% to $0.60 on a per Unit basis compared to the same quarter of 2015. The increase in FFO was primarily due to a $20.9 million increase in NOI as discussed above.

The non-IFRS measures used in this Press Release, including AFFO, FFO, NOI and payout ratio do not have any standardized meaning prescribed by International Financial Reporting Standards ("IFRS") and are therefore unlikely to be comparable to similar measures presented by other issuers. These non-IFRS measures are more fully defined and discussed in the 'Management Discussion and Analysis' (MD&A) of the Trust for the three and six months ended June 30, 2016, available on SEDAR at www.sedar.com.

Full reports of the financial results of the Trust for the three and six months ended June 30, 2016 are outlined in the unaudited interim condensed consolidated financial statements and the related MD&A of the Trust, which are available on SEDAR at www.sedar.com. In addition, supplemental information is available on the Trust's website at www.smartreit.com.

SmartREIT will hold a conference call on Friday, August 5, 2016 at 9:00 a.m. (ET). Participating on the call will be members of SmartREIT's senior management.

Investors are invited to access the call by dialing 1-866-530-1553. You will be required to identify yourself and the organization on whose behalf you are participating. A recording of this call will be made available Friday, August 5, 2016 beginning at 12:00 p.m. (ET) through to 12:00 p.m. (ET) on Friday, August 12, 2016. To access the recording, please call 1-888-203-1112 and enter the Replay Passcode 9024057#.

About SmartREIT

SmartREIT is one of Canada's largest real estate investment trusts with total assets in excess of $8.6 billion. It owns and manages in excess of 31 million square feet in value-oriented, principally Walmart-anchored retail centres, having the strongest national and regional retailers as well as strong neighbourhood merchants. In addition, SmartREIT is a joint-venture partner in the Toronto and Montreal Premium Outlets with Simon Property Group. SmartREIT's core vision is to provide a value-oriented shopping experience in all forms to Canadian consumers and over time create high quality mixed use developments in urban settings.

With SmartREIT's 2015 acquisition of SmartCentres, SmartREIT has transformed into a fully integrated real estate provider. SmartREIT and SmartCentres have had a long and successful alliance, helping to provide Canadians with value-focused retail shopping centres across the country. Now, our alliance has grown even stronger, the result is a fully integrated real estate provider with expertise in planning, development, leasing, operations, and construction - all under one roof. Our name is a reflection of our combined capabilities: SmartREIT. For more information on SmartREIT, visit www.smartreit.com.