Mr. Blair Welch reports

SLATE GROCERY REIT REPORTS THIRD QUARTER 2023 RESULTS

Slate Grocery REIT has released its financial results and highlights for the three and nine months ended Sept. 30, 2023. Dollar amounts are in U.S. dollars unless otherwise stated.

"Our team's strong leasing performance at attractive rental spreads continues to drive gains in occupancy and net operating income, keeping the [real estate investment trust] well positioned to provide unitholders with durable cash flow," said Blair Welch, chief executive officer of Slate Grocery. "We believe we have significant growth still embedded in our portfolio, with in-place rents that are well below market. Strong fundamentals in the grocery-anchored sector will provide further tailwinds as we seek to realize this growth and increase the overall value of our business."

Highlights:

• Strong leasing fundamentals and rental spreads drive occupancy and net operating income growth:
  • The REIT completed 691,421 square feet of total leasing in the quarter. New deals were completed at 18.4 per cent above comparable average in-place rent and non-option renewals at 14.8 per cent above expiring rents.
  • New leasing drove a 20-basis-point occupancy gain from the prior quarter, bringing occupancy to 94.1 per cent.
  • Adjusting for completed redevelopments, same-property NOI continues to trend positively, increasing by 2.0 per cent on a trailing 12-month basis.
• The REIT remains well positioned in today's elevated interest rate environment:
  • Most of the REIT's total debt is fixed with a weighted-average interest rate of 4.2 per cent, and there remains positive leverage between the current cost of financing and the REIT's third quarter 2023 international financial reporting standard value at a 7.0-per-cent capitalization rate.
  • At $12.37 per square foot, average rent in the REIT's portfolio remains well below the $22.521 PSF market average, providing significant runway for continued NOI growth.
• The REIT's units are trading at a discount to net asset value, presenting a compelling investment opportunity for unitholders looking for an attractive total return:
  • As at Sept. 30, 2023, the REIT's unit price indicates an implied cap rate of 8.5 per cent based on trailing 12-month NOI, which represents a 41.1-per-cent discount to NAV and a disconnect in valuation based on the REIT's strong fundamentals and operational performance.
  • The REIT believes a private fund's $180-million investment into the REIT's assets at NAV in July, 2022, further validates the REIT's NAV and underscores the strength, quality and stability of the REIT's platform.
  • The REIT's discounted unit price provides an attractive entry point for investors, with below market in-place rents driving attractive renewal spreads and new leasing supporting strong NOI growth.
  • Year to date, the REIT has repurchased 1.2 million Class U units at a weighted-average price of $9.61 ($13 (Canadian)) per unit.

Conference call and webcast

Senior management will host a live conference call at 9 a.m. ET on Nov. 7, 2023, to discuss the results and continuing business initiatives of the REIT.

The conference call will be available by dialling 416-764-8658 or 1-888-886-7786. Additionally, the conference call will be available by simultaneous audio. A replay will be available until Nov. 21, 2023, through the REIT's website or by dialling 416-764-8692 or 877-674-7070 (access code 790435 followed by the number sign) approximately two hours after the live event.

About Slate Grocery REIT

Slate Grocery is an owner and operator of U.S. grocery-anchored real estate. The REIT owns and operates approximately $2.4-billion of critical real estate infrastructure across major U.S. metro markets that communities rely upon for their everyday needs. The REIT's resilient grocery-anchored portfolio and strong credit tenants provide unitholders with durable cash flows and the potential for capital appreciation over the longer term.

We seek Safe Harbor.