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Slate Retail REIT Reports First Quarter 2019 Results


Slate Retail REIT (TSX: SRT.U) (TSX: SRT.UN) (the “REIT”), an owner of U.S. grocery-anchored real estate, today announced its financial results for the three months ended March 31, 2019.

Progress was made on all aspects of the REITs 2019 business plan in the first quarter. Leasing continues to be strong highlighted by the same-property occupancy rate of 94.8%, said Greg Stevenson, Chief Executive Officer. “In addition, we continued to make progress on our redevelopment initiatives. The Hocking Valley redevelopment project was completed this quarter and is anchored by a 105,000 square foot, newly constructed Kroger, on a 25-year lease. This marks the third redevelopment project completed since December 2018. Contribution to net operating income (“NOI”) in the first quarter from the three recently completed redevelopment projects was $0.6 million compared to $0.2 million in the same period last year, a three-fold increase. These completed redevelopment projects, as well as expected contribution from projects in progress, will continue to be a consistent driver of NOI growth in 2019 and into 2020.”

Mr. Stevenson continued, We are pleased to report that we are also making solid progress on our capital recycling program. Two properties were sold during the quarter totaling $24.9 million in gross proceeds at a 7.0% cap rate as well as two outparcels totaling $3.3 million in gross proceeds at a 5.4% cap rate. The majority of these proceeds were used to reduce debt. We will continue to dispose of mature assets to reduce leverage and improve the REITs liquidity position as we head into the second quarter and remain excited to report on continued progress on our initiatives that will serve to further improve and strengthen the REITs portfolio and financial position.

For the CEO’s letter to unitholders for the quarter, please follow the link here.


  • Completed 375,558 square feet of leasing in the quarter, comprised of 341,781 square feet of lease renewals at a 4.9% weighted average spread above expiring rent and 33,777 square feet of new leasing at a 27.2% premium to the weighted average in-place rent of comparable space.
  • The weighted average tenant retention rate for the first quarter is 94.8%. Since the beginning of 2016, the weighted average retention rate has been 91.1%.
  • On January 16, 2019, the REIT commenced a substantial issuer bid (the “offer”), pursuant to which the REIT offered to purchase up to 4.2 million class U units at a purchase price of $9.51 (C$12.54). On February 20, 2019, the offer expired and the REIT took up and paid for 0.3 million class U units for an aggregate cost of $3.2 million or C$4.2 million, excluding fees and expenses related to the offer. The class U units purchased for cancellation under the offer approximate 0.8% of diluted class U units outstanding, immediately prior to the expiry of the offer. Since the beginning of 2018, 2.6 million class U units have been purchased and subsequently canceled under the offer and the REIT’s normal course issuer bid for a total cost, including transaction costs, of $24.4 million at an average price of $9.56.
  • Rental revenue was $36.4 million, a decrease of $0.1 million over the same period in the prior year due to the disposition of four properties and 12 outparcels, partially offset by rental rate growth from re-leasing at rates above in-place rents and new leasing.
  • NOI was $24.6 million for the three month period ended March 31, 2019, compared to $24.7 million in the same period in the prior year. The decrease of $0.2 million is primarily due to the loss in contribution from the disposition of four properties and 12 outparcels since March 31, 2018, offset by the aforementioned positive leasing activity.
  • Same-property NOI increased by 0.4% (comprised of 76 properties) and 2.6% (comprised of 59 properties) for the three and trailing twelve month periods ended March 31, 2019, respectively. Including the impact of the REITs redevelopment projects completed over the period, same-property NOI increased by 2.0% and 3.6% for the three and trailing twelve month periods ended March 31, 2019, respectively. Of the last 11 quarters, the REIT has now had nine quarters of positive same-property NOI growth.
  • Funds from operations (“FFO”) was $13.4 million or $0.30 per unit, a decrease of $0.03 per unit from the same period in the prior year, primarily due to the $1.0 million increase in cash interest paid as a result of increases in one-month U.S. LIBOR rates and fixing the REITs debt through interest rate swaps from 58.4% to 100.3% and reduced rental revenue from property and outparcel sales.
  • Adjusted funds from operations (“AFFO”) was $9.1 million or $0.21 per unit, representing a $0.03 per unit decrease compared to the same quarter in 2018, mainly due to a $0.7 million increase in capital and tenant improvement spend to support new leasing over the prior quarter.
  • Net income for the quarter was $1.6 million, a decrease of $25.1 million from the same quarter in the prior year. This is primarily due to the decrease in unit income and increase in deferred tax expense from the prior quarter, partially offset by an increase in the change in fair value of properties.
Three months ended March 31,
(in thousands of U.S. dollars, except per unit amounts)     2019     2018     Change %
Rental revenue       $ 36,416       $ 36,544       (0.4 )%
NOI $ 24,569 $ 24,724 (0.6 )%
Net income $ 1,601 $ 26,703 (94.0 )%
Leasing “ shop space 145,484 184,509 (21.2 )%
Leasing “ anchor / junior anchor 230,074 109,899 109.4 %
Total leasing activity (square feet) (1) 375,558 294,408 27.6 %
Weighted average number of units outstanding (“WA units”) 44,208 46,479 (4.9 )%
FFO (2) $ 13,387 $ 15,227 (12.1 )%
FFO per WA units (2) $ 0.30 $ 0.33 (9.1 )%
FFO payout ratio (2) 70.4 % 64.0 % 6.4 %
AFFO (2) $ 9,137 $ 10,987 (16.8 )%
AFFO per WA units (2) $ 0.21 $ 0.24 (12.5 )%
AFFO payout ratio (2)       103.1 %       88.7 %       14.4 %
(in thousands of U.S. dollars)     2019     2018     Change %
Same-property NOI (3 month period, 76 properties) $ 22,908 $ 22,827 0.4 %
Same-property NOI (12 month period, 59 properties)       $ 66,181         $ 64,530         2.6 %
As at March 31,
(in thousands of U.S. dollars, except per unit amounts)     2019     2018     Change %
Total assets $ 1,388,403 $ 1,478,396 (6.1 )%
Total debt $ 849,498 $ 872,263 (2.6 )%
Net asset value per unit $ 11.35 $ 12.55 (9.6 )%
Number of properties (1) 84 86 (2.3 )%
Portfolio occupancy (1) 93.3 % 93.7 % (0.4 )%
Debt / GBV ratio 61.2 % 59.0 % 2.2 %
Interest coverage ratio (2)       2.45x       2.67x       (8.2 )%

(1) Includes the REIT’s share of its equity accounted property investment.

(2) Refer to Non-IFRS Measures section below.


Conference Call and Webcast

Senior management will host a live conference call at 9:00 a.m. ET on Wednesday, May 1, 2019 to discuss the results and ongoing business initiatives.

The conference call can be accessed by dialing (647) 427-2311 or 1 (866) 521-4909. Additionally, the conference call will be available via simultaneous audio found at A replay will be accessible until May 15, 2019 via the REITs website or by dialing (416) 621-4642 or 1 (800) 585-8367 (access code 4842728) approximately two hours after the live event.

About Slate Retail REIT (TSX: SRT.U / SRT.UN)

Slate Retail REIT is a real estate investment trust focused on U.S. grocery-anchored real estate. The REIT owns and operates approximately U.S. $1.4 billion of assets located across the top 50 U.S. metro markets that are visited regularly by consumers for their everyday needs. The REITs diversified portfolio and quality tenant covenants, provides a strong basis to continue to grow unitholder distributions and the flexibility to capitalize on opportunities that drive value appreciation. Visit to learn more about the REIT.

About Slate Asset Management L.P.

Slate Asset Management L.P. is a leading real estate investment platform with over $6 billion in assets under management. Slate is a value-oriented manager and a significant sponsor of all of its private and publicly-traded investment vehicles, which are tailored to the unique goals and objectives of its investors. The firm’s careful and selective investment approach creates long-term value with an emphasis on capital preservation and outsized returns. Slate is supported by exceptional people, flexible capital and a proven ability to originate and execute on a wide range of compelling investment opportunities. Visit to learn more.

Supplemental Information

All interested parties can access Slate Retails Supplemental Information online at in the Investors section. These materials are also available on SEDAR or upon request to the REIT at or (416) 644-4264.

Forward Looking Statements

Certain statements herein may be forward-looking statements within the meaning of applicable securities laws. These statements reflect managements expectations regarding objectives, plans, goals, strategies, future growth, results of operations, performance and business prospects and opportunities of the REIT including expectations for the current financial year, and include, but are not limited to, statements with respect to managements beliefs, plans, estimates and intentions, and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Statements that contain words such as could, should, would, anticipate, expect, believe, plan, intend, will, may, might and similar expressions or statements relating to matters that are not historical facts constitute forward-looking statements.

These forward-looking statements are not guarantees of future events or performance and, by their nature, are based on the REITs current estimates and assumptions, which are subject to significant risks and uncertainties. Forward-looking statements contained herein are made as the date hereof and accordingly are subject to change after such date. The REIT does not undertake to update any forward-looking statements that are contained herein except as expressly required by applicable securities laws.

Non-IFRS Measures

This news release and accompanying financial statements are based on International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB).

We disclose a number of financial measures in this news release that are not measures used under IFRS, including NOI, same-property NOI, FFO, FFO payout ratio, AFFO, AFFO payout ratio, adjusted EBITDA and the interest coverage ratio, in addition to certain measures on a per unit basis.

  • NOI is defined as rental revenue less operating expenses, prior to straight-line rent, IFRIC 21, Levies (“IFRIC 21”) property tax adjustments and adjustments for equity investment. Same-property NOI includes those properties owned by the REIT for each of the current period and the relevant comparative period excluding those properties under development.
  • FFO is defined as net income (loss) adjusted for certain items including transaction costs, change in fair value of properties, deferred income taxes, unit expense (income), adjustments for equity investment and IFRIC 21 property tax adjustments.
  • AFFO is defined as FFO adjusted for straight-line rental revenue and sustaining capital, leasing costs and tenant improvements.
  • FFO payout ratio and AFFO payout ratio are defined as distributions declared divided by FFO and AFFO, respectively.
  • FFO per WA unit and AFFO per WA unit are defined as FFO and AFFO divided by the weighted average class U equivalent units outstanding, respectively.
  • Adjusted EBITDA is defined as NOI less other expenses.
  • Interest coverage ratio is defined as adjusted EBITDA divided by cash interest paid.

We utilize these measures for a variety of reasons, including measuring performance, managing the business, capital allocation and the assessment of risk. Descriptions of why these non-IFRS measures are useful to investors and how management uses each measure are included in Managements Discussion and Analysis. We believe that providing these performance measures on a supplemental basis to our IFRS results is helpful to investors in assessing the overall performance of our businesses in a manner similar to management. These financial measures should not be considered as a substitute for similar financial measures calculated in accordance with IFRS. We caution readers that these non-IFRS financial measures may differ from the calculations disclosed by other businesses, and as a result, may not be comparable to similar measures presented by others.

Calculation and Reconciliation of Non-IFRS Measures

The table below summarizes a calculation of non-IFRS measures based on IFRS financial information.

Three months ended March 31,
(in thousands of U.S. dollars, except per unit amounts)       2019       2018
Rental revenue       $ 36,416       $ 36,544
Straight-line rent revenue (784 ) (1,135 )
Property operating expenses (25,392 ) (24,519 )
IFRIC 21 property tax adjustment 14,372 13,834
Adjustments for equity investment       (43 )        
NOI (1)       $ 24,569         $ 24,724  
Cash flow from operations $ 7,795 $ 15,792
Changes in non-cash working capital items 3,176 (2,266 )
Disposition costs 2,092 722
Finance charge and mark-to-market adjustments (482 ) (371 )
Interest, net and TIF note adjustments 97 215
Adjustments for equity investment (75 )
Capital (1,184 ) (734 )
Leasing costs (279 ) (618 )
Tenant improvements       (2,003 )       (1,753 )
AFFO (1)       $ 9,137         $ 10,987  
Net income $ 1,601 $ 26,703
Disposition costs 2,092 722
Change in fair value of properties (8,501 ) 6,557
Deferred income tax expense (recovery) 847 (1,879 )
Adjustments for equity investment (110 )
Unit expense (income) 3,086 (30,710 )
IFRIC 21 property tax adjustment       14,372         13,834  
FFO (1) $ 13,387 $ 15,227
Straight-line rental revenue (784 ) (1,135 )
Capital (1,184 ) (734 )
Leasing costs (279 ) (618 )
Tenant improvements       (2,003 )       (1,753 )
AFFO (1)       $ 9,137         $ 10,987  
NOI (1) $ 24,569 $ 24,724
Other expenses (2,632 ) (2,476 )
Cash interest, net (8,820 ) (7,785 )
Finance charge and mark-to-market adjustments (482 ) (371 )
Adjustments for equity investment (32 )
Capital (1,184 ) (734 )
Leasing costs (279 ) (618 )
Tenant improvements       (2,003 )       (1,753 )
AFFO (1)       $ 9,137         $ 10,987  
(1) Refer to Non-IFRS Measures section above.
Three months ended March 31,
(in thousands of U.S. dollars, except per unit amounts)       2019       2018
NOI (1) $ 24,569 $ 24,724
Other expenses       (2,632 )       (2,476 )
Adjusted EBITDA (1) $ 21,937 $ 22,248
Cash interest paid       (8,941 )       (8,342 )
Interest coverage ratio (1)       2.45x       2.67x
WA units 44,208 46,479
FFO per WA unit (1) $ 0.30 $ 0.33
FFO payout ratio (1) 70.4 % 64.0 %
AFFO per WA unit (1) $ 0.21 $ 0.24
AFFO payout ratio (1)       103.1 %       88.7 %

(1) Refer to Non-IFRS Measures section above.


Investor Relations
Slate Retail REIT
Tel: +1 416 644 4264

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