Mr. Mitchell Goldhar reports

SMARTCENTRES REAL ESTATE INVESTMENT TRUST RELEASES SECOND QUARTER RESULTS FOR 2023

SmartCentres Real Estate Investment Trust has released its financial and operating results for the quarter ended June 30, 2023.

Operational:

• Shopping centre leasing activity strengthened from Q1 2023, with an industry-leading in-place and committed occupancy rate of 98.2 per cent as at June 30, 2023 (Dec. 31, 2022 -- 98.0 per cent);
• Executed new leases of 273,150 square feet during the quarter;
• Renewed 75.5 per cent of the 5,157,636 square feet of space expiring in 2023.

Mixed-use development:

• Construction activity is currently under way, with respect to high-rise residential on existing shopping centre sites in Vaughan, Laval and Ottawa.
• First occupancy and condo closings for Transit City 4 and Transit City 5 commenced in March and May, 2023, respectively. In Q2 2023, 452 units were closed generating additional FFO (funds from operations) (1) of $10.6-million or six cents per unit. Closing of the balance of Transit City 4 and Transit City 5 will take place over the next two quarters.
• The 458-unit Millway rental apartment project commenced occupancy in the Transit City 4 and Transit City 5 podiums in February, 2023. The remaining 366 units, located in a 36-storey purpose-built tower, are nearing completion and initial occupancy began in July, 2023.
• Construction nears completion on the full 229,000 square feet of industrial space for the 16-acre phase 1 development in Pickering. Over half of the space has been completed, having been preleased to a single tenant that took possession in April, 2023.
• With the recent opening of the Kingspoint self-storage facility, the trust reached a milestone of approximately 1.0 million square feet of gross floor area of self-storage rental facilities (at 100 per cent). Excluding the two facilities that have been open for less than a year, the trust's self-storage portfolio has an average occupancy rate of 93.0 per cent.

Financial:

• Same-property NOI (net operating income) (1) increased by $4.2-million or 3.2 per cent in Q2 2023 as compared with the same period in 2022, which was primarily due to an increase in rental revenue attributable to lease-up activity and step-up rents, and miscellaneous revenue.
• FFO per unit (1) was 55 cents for the three months ended June 30, 2023 (compared with 49 cents for the three months ended June 30, 2022). The increase was mainly attributable to higher profits from condo closings at Transit City 4 and Transit City 5 and higher rental income, partially offset by higher interest costs.
• The payout ratio to AFFO (adjusted funds from operations) (1) for the three months ended June 30, 2023, was 93.8 per cent, as compared with 101.2 per cent for the same period ended June 30, 2022.
• Net rental income for the three months ended June 30, 2023, increased by $4.6-million or 3.7 per cent as compared with the three months ended June 30, 2022, primarily due to lease-up activity, step-up rents and percentage rents.
• Net income and comprehensive income per unit totalled 93 cents (three months ended June 30, 2022 -- 90 cents).
• For the three months ended June 30, 2023, excess distribution over cash flow from operation was improved by $17.3-million to $21.1-million compared with same period 2022, mainly as result of timing differences in property tax and interest payments.

"Building on Q1, we are pleased to report stronger performances in all areas of the business for Q2," said Mitchell Goldhar, chief executive officer of SmartCentres. "Our defensive portfolio has become more offensive, with even stronger numbers in our Walmart-anchored centres, which drove a $7.0-million increase in net rental income (1) compared to the same quarter of last year. In-place and committed occupancy increased 20 basis points to 98.2 per cent in the quarter, demonstrating our industry leadership. We expect to continue delivering strong occupancy levels and solid rental income for the balance of the year.

"In addition to the strength of our core recurring retail income, our mixed-use development business also continues to grow and deliver strong results. We are delighted with the progress we have made on our Transit City 4 and 5 condominium projects at the Vaughan Metropolitan Centre," said Mr. Goldhar. "During the quarter, we closed on an additional 452 units in Transit City 4 and 5, resulting in FFO (1) at the REIT's share of $10.6-million or six cents per unit (1). The remaining 380 units at these two towers are expected to close over the balance of the year.

"With the recent opening of our self-storage rental facilities at our Kingspoint Plaza in Brampton, the trust reached a milestone of 1.0 million square feet of gross floor area of self-storage rental facilities (at 100 per cent) in four short years. Excluding the two facilities that have been open for less than a year, the trust's self-storage portfolio has an average occupancy rate of 93 per cent. We also have a further 1.6 million square feet in the pipeline, mostly on properties we already own, along with numerous other highly accretive initiatives.

"Additionally, we currently have 10 mixed-use development initiatives that are under construction. Collectively, these projects have an estimated total development cost, at the REIT's share, of $547.9-million, of which $202.5-million is required to complete construction. We have ample liquidity available, not only to complete these projects but also to commence several new initiatives where construction is expected to begin later in the year. These new projects include phase I of our sold-out Art Walk condominium tower at the VMC, a townhome community in Vaughan northwest, a large preleased retail project in Leaside and several new self-storage locations.

"In May, 2023, the trust issued $300.0-million of 5.354 per cent Series Z senior unsecured debentures with a maturity date of May 29, 2028. We used the net proceeds from the offering to repay the $200.0-million aggregate principal of Series I senior unsecured debentures in full upon their maturity and other existing indebtedness. The issuance of the debentures has improved the trust's debt maturity profile by extending the term of previous short-term debt and reducing its exposure to floating rate debt.

"Despite a more challenging current economic environment for launching new development initiatives, we remain nimble and we are continuing to move forward with fewer, albeit impactful, projects in the near term," continued Mr. Goldhar. "As always, we are focused on the long term, which includes advancing new entitlements and zoning applications for multiple opportunities within our large network of retail centres. We are confident that the ongoing and future intensification on these strategically located properties will be highly complementary to our existing retail centres and will deliver strong returns to unitholders for decades to come."

(1) Represents a non-GAAP (generally accepted accounting principles) measure. The trust's method of calculating non-GAAP measures may differ from other reporting issuers' methods and, accordingly, may not be comparable.

Selected consolidated operational, mixed-use development and financial information

Key consolidated operational, mixed-use development and financial information shown in the attached tables includes the trust's proportionate share of equity-accounted investments.

Development and intensification summary

The attached tables provide additional details on the trust's 10 development initiatives that are currently under construction (in order of estimated initial occupancy/closing date).

Reconciliations of non-GAAP measures

The attached tables reconcile the non-GAAP measures to the most comparable GAAP measures for the three and six months ended June 30, 2023, and the comparable periods in 2022. Such measures do not have a standardized meaning prescribed by IFRS (international financial reporting standards) and may not be comparable with similar measures disclosed by other issuers.

Non-GAAP measures

The non-GAAP measures used in this news release, including, but not limited to, AFFO, AFFO with adjustments, AFFO per unit, AFFO with adjustments per unit, payout ratio to AFFO, payout ratio to AFFO with adjustments, unencumbered assets, NOI, debt to aggregate assets, interest coverage ratio, adjusted debt to adjusted EBITDA (earnings before interest, taxes, depreciation and amortization), unsecured/secured debt ratio, FFO, FFO with adjustments, FFO per unit, FFO with adjustments per unit, same-property NOI, debt to gross book value, weighted average interest rate, transactional FFO, and total proportionate share, do not have any standardized meaning prescribed by IFRS and are therefore unlikely to be comparable with similar measures presented by other issuers. Additional information regarding these non-GAAP measures is available in the management's discussion and analysis (the MD&A) of the trust for the three and six months ended June 30, 2023, dated Aug. 9, 2023, and is incorporated by reference. The information is found in the presentation of certain terms including non-GAAP measures and non-GAAP measures sections of the MD&A, which is available on SEDAR+. Reconciliations of non-GAAP financial measures to the most directly comparable IFRS measures are found in reconciliations of non-GAAP measures of this news release. Full reports of the financial results of the trust for the three and six months ended June 30, 2023, are outlined in the unaudited interim condensed consolidated financial statements and the related MD&A of the trust for the three and six months ended June 30, 2023, which are available on SEDAR+.

Conference call

SmartCentres will hold a conference call on Thursday, Aug. 10, 2023, at 3 p.m. ET. Participating on the call will be members of SmartCentres' senior management.

Investors are invited to access the call by dialling 1-855-353-9183 and then keying in the participant access code 30006 followed by the pound key. 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 Thursday, Aug. 10, 2023, beginning at 8:30 p.m. ET, through to 8:30 p.m. ET on Thursday, Aug. 17, 2023. To access the recording, please call 1-855-201-2300, enter the conference access code 30006 followed by the pound key and then key in the playback access code 0113627 followed by the pound key.

About SmartCentres Real Estate Investment Trust

SmartCentres is one of Canada's largest fully integrated REITs, with a best-in-class portfolio featuring 189 strategically located properties in communities across the country. SmartCentres has approximately $11.8-billion in assets and owns 34.9 million square feet of income-producing value-oriented retail and first-class office space with 98.2-per-cent in-place and committed 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. The publicly announced $16.0-billion intensification program ($10.9-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 55.5 million square feet (40.4 million square feet at SmartCentres' share) of space, 26.6 million square feet (18.1 million square feet at SmartCentres' share) of which have or will commence construction within the 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 20.0 million square feet of mixed-use space in Vaughan, Ont. Final closings of the first three phases of Transit City condominiums began ahead of budget and ahead of schedule in August, 2020, and all 1,741 units, in addition to the 22 townhomes that complete these phases, have now closed. The fourth and fifth sold-out phases representing 1,026 units commenced closing and occupancy in March, 2023.

We seek Safe Harbor.