SmartCentres Real Estate Investment Trust : First Quarter Results for 2021

SMARTCENTRES REAL ESTATE INVESTMENT TRUST RELEASES FIRST QUARTER RESULTS FOR 2021

• $1.85 per unit annualized distribution maintained;
• Open shopping centre portfolio continues to provide recurring income with a committed occupancy rate of 97.3%;
• Average collection levels across portfolio exceed 94% for the quarter;
• 631 presold condominium units at Transit City 3 commence closings today; and
• Health authorities using approximately 150,000 square feet of SmartCentres' donated space in Cambridge, Rimouski, Chilliwack, and Maple Ridge as vaccination centres; discussions continue on additional locations to assist to fast-track the vaccination process for all Canadians.

TORONTO, ONTARIO - (May 12, 2021) SmartCentres Real Estate Investment Trust ("SmartCentres" or the "Trust") (TSX: SRU.UN) is pleased to report its financial and operating results for the quarter ended March 31, 2021.

"We continue the rapid repositioning of our portfolio," said Mitchell Goldhar, Executive Chairman of SmartCentres." Transit City Condominium Tower 3 at SmartVMC in Vaughan will start to contribute to FFO in the second quarter, while the large wave of earnings and FFO growth from our $13.5b development program is even closer to shore. This is the backdrop to our existing unique national retail portfolio tenanted mostly by essential services, with its stable source of recurring income including quality companies such as Wal-Mart. We will continue to protect our solid balance sheet with its debt to total assets of 44.7% and an interest coverage multiple of 3.2X and ended the quarter with a rolling 12 month payout ratio of 89%. With respect to the pandemic, helping all Canadians will continue to be a priority, and in this regard we are in direct dialogue with federal and provincial authorities offering to donate to them the use of space in our properties to assist with the acceleration of the vaccination process", added Mr. Goldhar.

"SmartVMC in Vaughan, like many of our properties in Canada, is a good example of our 'shopping centres to city centres' transformation and our Team continues to work on our growing mixed-use development platform and now has some 284 projects identified for our pipeline, the majority of which will provide recurring income. We understand how to build entire city centres and have more in the planning stages at major centres across Canada. Additionally, our retail portfolio continues to demonstrate its stability, evidenced by our 97.3% occupancy level when factoring in committed leases" said Peter Forde, President and CEO.

Our experience with the collection of tenant billings has continued to improve. The following table presents the monthly collection experience since the pandemic began:

	% of Gross Monthly Billings	% of Gross Monthly Billings
Month(1)	Collected Before Application of	Collected After Application of
CECRA Related Arrangements(2)	CECRA Related Arrangements(2)
April 2020	78.8	85.3
May 2020	79.5	85.9
June 2020	82.6	89.1
July 2020	88.1	94.5
August 2020	89.6	96.1
September 2020(2)	89.6	96.2
October 2020	95.9	95.9
November 2020	95.8	95.8
December 2020	95.3	95.3
January 2021	93.8	93.8
February 2021	93.9	93.9
March 2021	94.5	94.5

1. Represents the Trust's collection experience up to May 5, 2021.
2. The CECRA program ended on September 30, 2020.

As of May 5, 2021, the Trust has collected 93.0% of gross monthly billings for the month of April 2021.

The following table provides some additional details on the Trust's tenant billings, amounts received, abatements and deferral arrangements up to April 23, 2021, and the remaining balance outstanding subject to deferral arrangements under negotiation and before expected credit loss ("ECL") provision:

(in thousands of dollars)	Three Months Ended	As a %	Nine Months Ended	As a %
March 31, 2021	December 31, 2020(1)
Total recurring tenant billings	200,061	100.0	601,251	100.0
Less: Amounts received directly from tenants to date	187,677	93.8	530,530	88.2
Balance outstanding	12,384	6.2	70,721	11.8
Less:
Recovery from governments for CECRA	-	-	15,412	2.6
Amounts forgiven by the Trust for CECRA	-	-	7,706	1.3
Sales tax on CECRA	-	-	2,976	0.5
Rent abatements provided to tenants	19	-	5,184	0.9
Balance outstanding	12,365	6.2	39,443	6.6
Less: Deferral arrangements negotiated	446	0.2	7,213	1.2
Rents to be collected subject to rent deferral arrangements under	11,919	6.0	32,230	5.4
negotiation and before ECL provision

1. The Trust identifies the nine months ended December 31, 2020 as the beginning of the COVID-19 pandemic period.

The table below represents a summary of total tenant receivables and ECL balances as at March 31, 2021 and December 31, 2020:

(in thousands of dollars)	March 31, 2021	December 31, 2020
Tenant receivables	53,466	57,563
Unbilled other tenant receivables	13,186	8,287
Total tenant receivables	66,652	65,850
Less: Allowance for ECL	20,758	19,742
Balance outstanding subject to deferral arrangements	45,894	46,108

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Highlights

Mixed-Use Development and Intensification at SmartVMC

• Construction of the 55-storey Transit City 3 condo tower representing 631 residential units continues to be ahead of schedule and ahead of budget. The tower is topped-off, cranes have been dismantled, and closings are expected to commence in May 2021.
• Construction continues on Transit City 4 (45 storeys) and 5 (50 storeys) condo towers, representing 1,026 sold residential units. Construction is complete on the multi-level underground parking garage. Above grade, concrete and formwork is well underway.
• Construction is well underway on the 36-storey,362-unitpurpose-built residential rental building at SmartVMC, with concrete and formwork for the multi-level underground parking garage complete. There are also an additional 92 purpose-built rental units located within a portion of the Transit City 4 and Transit City 5 podiums.
• As part of the Transit City 1 and 2 projects, construction is well underway and delivery is expected in late 2021 of the 22 townhomes, which are 100% pre-sold.
• Preparing for the launch of the next phase of high-rise condominium development in 2021 expected to include 620 units.

Other Business Development

The completed first phase of the two-phase,purpose-built residential rental project in Laval, Quebec, which had initial occupancy by tenants commencing in March 2020 and, to date, approximately 90% of the 171-unit building has been leased. Construction of the next phase is expected to commence in Q3 2021.

• The Trust completed construction of its first three self-storage facilities in Toronto (Leaside), Brampton, and Vaughan NW, each of which has been very well received by the local communities, with current occupancy levels ahead of expectations.
• Planning approvals are now in place to permit the Trust to commence construction of a new retirement home in Q2 2021 with its joint venture partner Selection Group in Ottawa.
• Two additional self-storage facilities in Oshawa and Scarborough are currently under construction and are expected to be completed in 2021. Additional self-storage facilities have been approved by the Board and the Trust is in the process of obtaining municipal approvals in Aurora, Whitby, Markham and an additional location in Brampton.
• With the Minister's Zoning Order issued in Q4 2020, the Trust has commenced the redevelopment of its 73-acre Cambridge retail property with various forms of residential, retail, office, institutional, and commercial uses to create a complete vibrant urban community with the potential for over 12.0 million square feet of development. The initial phase of the redevelopment will include various forms of residential development including townhouses as well as mid-rise and high-rise residential buildings.
• During the COVID-19 pandemic, the Trust has been aggressively pursuing final municipal approvals for mixed-use density on many of its shopping centres.

Financial

• Net income and comprehensive income(1) was $60.6 million as compared to $64.2 million in the same period in 2020, representing a decrease of $3.6 million. This decrease was primarily attributed to: i) $49.1 million increase in unfavourable fair value adjustments on financial instruments principally due to the increase in the Trust's Unit Price, ii) $7.4 million decrease in net operating income principally due to lower rent and higher bad debt expense, iii) $3.0 million higher interest expense, and iv) $1.9 million higher G&A expense (net), and partially offset by i) $55.6 million decrease in unfavourable fair value adjustments on revaluation of investment properties and ii) $2.2 million lower acquisition- related costs.
• The Trust further improved its unsecured/secured debt ratio(2) to 69%/31% (December 31, 2020 - 68%/32%).
• The Trust continues to add to its unencumbered pool of high-quality assets. As at March 31, 2021, this unencumbered portfolio consisted of income properties valued at $5.9 billion (March 31, 2020 - $5.7 billion).

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• In January 2021, the Trust completed the redemption of its 3.730% Series M senior unsecured debentures and 2.876% Series Q senior unsecured debentures, in aggregate principal amounts of $150.0 million and $150.0 million, respectively.
• In February 2021, the Trust repaid an aggregate of $57.8 million in respect of secured mortgage debt upon their maturities.
• Debt metrics continue to demonstrate the Trust's commitment to its balance sheet, including Debt to Total Assets(2)(3) of 44.7%, Interest Coverage Ratio multiple(2) of 3.2X, Interest Coverage net of capitalized interest multiple(2) of 3.6X, and Adjusted Debt to Adjusted EBITDA multiple(2)(3) of 8.6X.
• FFO(2) decreased by $11.7 million or 12.2% to $84.3 million as compared to the same period in 2020, primarily due to a $7.4 million decrease in net operating income, principally resulting from the impact of the COVID-19 pandemic and related ECL provisions of $2.3 million (2020 - $0.2 million).
• ACFO(2) decreased by $7.6 million or 8.2% to $85.2 million as compared to the same period in 2020 primarily due to the impact of the COVID-19 pandemic.
• ACFO(2) exceeded distributions declared by $5.5 million (2020 - $12.9 million).
• The Payout Ratio relating to ACFO with one-time adjustment(2) for the rolling 12 months ended March 31, 2021 increased by 3.8% to 89.0%, as compared to the same period in 2020.

Operational

• Rentals from investment properties and other(1) was $198.8 million, as compared to $206.7 million in the same period in 2020, representing a decrease of $7.9 million or 3.8%. This decrease was primarily due to lower: i) rent and percentage rent, ii) short-term rental revenue, iii) parking and other miscellaneous revenues, and iv) recoverable costs, principally resulting from the COVID-19 pandemic.
• Committed and in-place occupancy rates were 97.3% and 97.0%, respectively, as at March 31, 2021 which were unchanged from December 31, 2020.
• Same Properties NOI(2) decreased by $6.0 million or 4.8% as compared to the same period in 2020. This decrease was primarily due to: i) an increase in ECL, ii) decreases in net rental income, and iii) increases in CAM and realty tax recovery shortfalls, all resulting from the COVID-19 pandemic. Excluding the ECL of $2.3 million recorded in the three months ended March 31, 2021, Same Properties NOI(2) would have been $123.1 million representing a decrease of $4.7 million or 3.7% as compared to the same period in 2020.

Subsequent Events

1. • The Trust, through its joint venture with SmartStop, acquired a property on Jane Street in Toronto, Ontario in April 2021 which it intends to develop a self-storage facility.
   • The Trust, through PCVP, has entered into a $340.0 million construction credit facility agreement in May 2021 with a syndicate of four highly rated Canadian financial institutions. This facility replaces the $48.5 million development credit facility maturing in June 2021 and the $270.0 million construction credit facility maturing in August 2022, both related to PCVP development.
2. Represents a GAAP measure.
3. Represents a non-GAAP measure. The Trust's method of calculating non-GAAP measures may differ from other reporting issuers' methods and, accordingly, may not be comparable. For definitions and basis of presentation of the Trust's non-GAAP measures, refer to "Presentation of Certain Terms Including Non-GAAP Measures" in the Trust's MD&A.
4. Net of cash-on-hand of $397.7 million as at March 31, 2021 for the purposes of calculating the ratio.

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Selected Consolidated Operational, Development and Financial Information

Key consolidated operational, mixed-use development and financial information shown in the table below includes the Trust's proportionate share of equity accounted investments:

(in thousands of dollars, except per Unit and other non-financial data)	March 31, 2021 December 31, 2020	March 31, 2020
Portfolio Information
Number of retail and other properties	146	148	150
Number of properties under development	11	10	9
Number of office properties	1	1	1
Number of mixed-use properties	10	8	6
Total number of properties with an ownership interest	168	167	166
Leasing & Operational Information
Gross leasable area including retail and office space (in thousands of sq. ft.)	34,037	34,056	34,174
Occupied area including retail and office space (in thousands of sq. ft.)	32,999	33,039	33,404
Vacant area including retail and office space (in thousands of sq. ft.)	1,038	1,017	770
Committed occupancy rate (%)	97.3	97.3	98.0
In-place occupancy rate (%)	97.0	97.0	97.8
Average lease term to maturity (in years)	4.6	4.6	5.0
Net retail rental rate (per occupied sq. ft.) ($)	15.40	15.37	15.53
Net retail rental rate excluding Anchors (per occupied sq. ft.) ($)	22.00	21.89	22.26
Mixed-use Development Information
Future development area (in thousands of sq. ft.)	32,500	32,500	27,900
Total number of residential rental projects	96	96	88
Total number of seniors' housing projects	40	40	45
Total number of self-storage projects	50	50	48
Total number of office building projects	7	7	10
Total number of hotel projects	4	4	5
Total number of condominium developments	72	72	46
Total number of townhome developments	15	15	14
Total number of future projects currently in development planning stage	284	284	256
Trust's share of estimated costs of future projects currently under
construction, or for which construction is expected to commence within the	7,900,000	7,900,000	5,500,000
next 5 years

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