Slate Grocery REIT Reports Second Quarter 2025 Results

National Post

06-08-2025

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TORONTO — Slate Grocery REIT (TSX: SGR.U) (TSX: SGR.UN) (the 'REIT'), an owner and operator of U.S. grocery- anchored real estate, today announced its financial results and highlights for the three and six months ended June 30, 2025.
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'The strength of our portfolio is reflected in another quarter of healthy same-property NOI growth, supported by sustained demand for our high-quality spaces and consistent double-digit renewal spreads,' said Blair Welch, Chief Executive Officer of Slate Grocery REIT. 'At the same time, we remain focused on prudently managing the REIT's balance sheet and upcoming debt maturities. Against a backdrop of favorable fundamentals and attractive supply-demand dynamics in the grocery-anchored sector, we believe our portfolio – anchored by below-market rents – is well positioned to drive stable growth and long-term value.'
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For the CEO's letter to unitholders for the quarter, please follow the link here.
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Highlights
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(1) As of March 31, 2025, the REIT revised its 'Deal Types' methodology. Refer to 'Leasing and Property Portfolio' in Part II of Management's Discussion and Analysis for further details.
(2) CBRE Econometric Advisors, Q2 2025
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Summary of Q2 2025 Results
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Three months ended June 30,
(thousands of U.S. dollars, except per unit amounts)
2025
2024
Change %
Rental revenue
$
52,385
$
51,818
1.1%
NOI 1 2
$
41,660
$
41,442
0.5%
Net income 2
$
13,081
$
14,003
(6.6)%
Same-property NOI (3 month period, 114 properties) 1 2
$
41,390
$
40,930
1.1%
Same-property NOI (12 month period, 111 properties) 1 2
$
159,856
$
154,863
3.2%
New leasing (square feet) 2
33,516
84,679
(60.4)%
New leasing spread 2
28.8%
28.0%
2.9%
Total leasing (square feet) 2
423,894
706,811
(40.0)%
Total leasing spread 2
11.6%
10.0%
16.0%
Weighted average number of units outstanding ('WA units')
60,403
60,327
0.1%
FFO 1 2
$
15,883
$
17,472
(9.1)%
FFO per WA units 1 2
$
0.26
$
0.29
(10.3)%
FFO payout ratio 1 2
81.6%
74.2%
10.0%
AFFO 1 2
$
12,624
$
14,095
(10.4)%
AFFO per WA units 1 2
$
0.21
$
0.23
(8.7)%
AFFO payout ratio 1 2
102.7%
92.0%
11.6%
Fixed charge coverage ratio 1 3
1.9x
2.0x
(5.0)%
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(thousands of U.S. dollars, except per unit amounts)
June 30, 2025
December 31, 2024
Change %
Total assets
$
2,241,469
$
2,233,699
0.3%
Total assets, proportionate interest 1 2
$
2,449,571
$
2,444,143
0.2%
Debt
$
1,177,515
$
1,166,655
0.9%
Debt, proportionate interest 1 2
$
1,379,662
$
1,370,530
0.7%
Net asset value per unit
$
13.78
$
13.84
(0.4)%
Number of properties 2
116
116
—%
Portfolio occupancy 2
94.0%
94.8%
(0.8)%
Debt / GBV ratio
52.5%
52.2%
0.6%
(1) Refer to 'Non-IFRS Measures' section below.
(2) Includes the REIT's share of joint venture investments.
(3) As of March 31, 2025, the REIT transitioned from disclosing interest coverage ratio to fixed charge coverage ratio. Refer to 'Fixed Charge Coverage Ratio' in Part IV of Management's Discussion and Analysis for further details.
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Conference Call and Webcast
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Senior management will host a live conference call at 9:00 am ET on August 7, 2025 to discuss the results and ongoing business initiatives of the REIT.
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The conference call can be accessed by dialing [phone] or 1 [phone]. Additionally, the conference call will be available via simultaneous audio found at https://onlinexperiences.com/scripts/Server.nxp?LASCmd=AI:4;F:QS!10100&ShowUUID=FFF8E68E-BEA4-45E5-BFEE-1A5FCF4310EE&LangLocaleID=1033. A replay will be accessible until August 21, 2025 via the REIT's website or by dialing [phone] or 1 [phone] (access code 47849#) approximately two hours after the live event.
Slate Grocery REIT 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 are expected to provide unitholders with durable cash flows and the potential for capital appreciation over the longer term. Visit slategroceryreit.com to learn more about the REIT.
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About Slate Asset Management
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Slate Asset Management is a global investor and manager focused on essential real estate and infrastructure assets. We focus on fundamentals with the objective of creating long-term value for our investors and partners across the real assets space. We are supported by exceptional people and flexible capital, which enable us to originate and execute on a wide range of compelling investment opportunities. Visit slateam.com to learn more, and follow Slate Asset Management on LinkedIn, X (Twitter), and Instagram.
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Supplemental Information
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All interested parties can access Slate Grocery's Supplemental Information online at slategroceryreit.com in the Investors section. These materials are also available on SEDAR+ or upon request to the REIT at [e-mail] or [phone].
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Forward Looking Statements
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Certain information herein constitutes 'forward-looking information' as defined under Canadian securities laws which reflect management's expectations regarding objectives, plans, goals, strategies, future growth, results of operations, performance, business prospects and opportunities of the REIT. The words 'plans', 'expects', 'does not expect', 'forecasts', 'scheduled', 'estimates', 'intends', 'anticipates', 'does not anticipate', 'projects', 'believes', or variations of such words and phrases or statements to the effect that certain actions, events or results 'may', 'will', 'could', 'would', 'might', 'occur', 'be achieved', or 'continue' and similar expressions identify forward-looking statements. Management believes that the expectations reflected in its forward-looking statements are based upon reasonable assumptions, however, management can give no assurance that actual results, performance or achievements will be consistent with these forward-looking statements. Such forward-looking statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations.
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Forward-looking statements are necessarily based on a number of estimates and assumptions that, while considered reasonable by management as of the date hereof, are inherently subject to significant business, economic and competitive uncertainties and contingencies. When relying on forward-looking statements to make decisions, the REIT cautions readers not to place undue reliance on these statements, as forward-looking statements involve significant risks and uncertainties, and should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not the times at or by which such performance or results will be achieved. A number of factors could cause actual results to differ, possibly materially, from the results discussed in the forward- looking statements. Additional information about risks and uncertainties is contained in the filings of the REIT with securities regulators.
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Non-IFRS Measures
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This news release and accompanying financial statements are based on IFRS® Accounting Standards ('IFRS Accounting Standards'), as issued by the International Accounting Standards Board ('IASB').
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We disclose a number of financial measures in this news release that are not measures used under IFRS Accounting Standards, including NOI, same-property NOI, FFO, FFO payout ratio, AFFO, AFFO payout ratio, adjusted EBITDA, fixed charges and the fixed charge coverage ratio, in addition to certain measures on a per unit basis.
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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 investments. 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 adjusted for certain items including transaction/disposition costs, change in fair value of properties, change in fair value of financial instruments, deferred income taxes, unit income (expense), adjustments for equity investments and IFRIC 21 property tax adjustments.
AFFO is defined as FFO adjusted for straight-line rental revenue and revenue 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 general and administrative expenses at the REIT's proportionate interest.
Fixed charges include principal payments and cash interest paid, net at the REIT's proportionate interest.
Fixed charge coverage ratio is defined as adjusted EBITDA divided by fixed charges at the REIT's proportionate interest.
Net asset value is defined as the aggregate of the carrying value of the REIT's equity, deferred income taxes and exchangeable units of subsidiaries.
Proportionate interest represents financial information adjusted to reflect the REIT's equity accounted joint ventures and financial real estate assets and its share of net income (losses) from equity accounted joint ventures and financial real estate assets on a proportionately consolidated basis at the REIT's ownership percentage of the related investment.
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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 Management's Discussion and Analysis. We believe that providing these performance measures on a supplemental basis to our IFRS Accounting Standards 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 Accounting Standards. 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.
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SGR-FR
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The table below summarizes a calculation of non-IFRS measures based on financial information in accordance with IFRS Accounting Standards.
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Three months ended June 30,
(in thousands of U.S. dollars, except per unit amounts)
2025
2024
Rental revenue
$
52,385
$
51,818
Straight-line rent revenue
(111)
(30)
Property operating expenses
(9,071)
(9,134)
IFRIC 21 property tax adjustment
(6,983)
(6,696)
Contribution from joint venture investments
5,440
5,484
NOI 1 2
$
41,660
$
41,442
Cash flow from operations
$
21,187
$
19,582
Changes in non-cash working capital items
(3,761)
(1,224)
Disposition costs
—
290
Finance charge and mark-to-market adjustments
(1,120)
(436)
Interest, net and TIF note adjustments
141
22
Adjustments for joint venture investments
2,748
2,665
Non-controlling interest
(3,276)
(3,678)
Taxes on dispositions
—
297
Capital expenditures
(1,798)
(1,407)
Leasing costs
(803)
(611)
Tenant improvements
(694)
(1,405)
AFFO 1 2
$
12,624
$
14,095
Net income 2
$
13,081
$
14,003
Change in fair value of financial instruments
608
(272)
Disposition costs
—
290
Change in fair value of properties
8,454
11,706
Deferred income tax expense
2,174
1,570
Unit expense (income)
1,122
(325)
Adjustments for joint venture investments
1,432
1,348
Non-controlling interest
(4,005)
(4,449)
Taxes on dispositions
—
297
IFRIC 21 property tax adjustment
(6,983)
(6,696)
FFO 1 2
$
15,883
$
17,472
Straight-line rental revenue
(111)
(30)
Capital expenditures
(1,798)
(1,407)
Leasing costs
(803)
(611)
Tenant improvements
(694)
(1,405)
Adjustments for joint venture investments
(582)
(695)
Non-controlling interest
729
771
AFFO 1 2
$
12,624
$
14,095
(1) Refer to 'Non-IFRS Measures' section above.
(2) Includes the REIT's share of joint venture investments.
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Three months ended June 30,
(in thousands of U.S. dollars, except per unit amounts)
2025
2024
NOI 1 2
$
41,660
$
41,442
General and administrative expenses
(3,996)
(3,949)
Cash interest, net
(14,419)
(13,560)
Finance charge and mark-to-market adjustments
(1,120)
(436)
Current income tax (expense) recovery
(238)
518
Adjustments for joint venture investments
(2,692)
(2,819)
Non-controlling interest
(3,276)
(3,678)
Capital expenditures
(1,798)
(1,407)
Leasing costs
(803)
(611)
Tenant improvements
(694)
(1,405)
AFFO 1 2
$
12,624
$
14,095
(1) Refer to 'Non-IFRS Measures' section above.
(2) Includes the REIT's share of joint venture investments.
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Three months ended June 30,
(in thousands of U.S. dollars, except per unit amounts)
2025
2024
Net income 1
$
13,081
$
14,003
Interest and finance costs
15,539
13,996
Change in fair value of financial instruments
608
(272)
Disposition costs
—
290
Change in fair value of properties
8,454
11,706
Deferred income tax expense
2,174
1,570
Current income tax expense (recovery)
238
(221)
Unit expense (income)
1,122
(325)
Adjustments for joint venture investments
3,331
3,261
Straight-line rent revenue
(111)
(30)
IFRIC 21 property tax adjustment
(6,983)
(6,696)
Adjusted EBITDA 1 2
$
37,453
$
37,282
Adjusted EBITDA 1 2
$
37,453
$
37,282
Cash interest paid
(16,656)
(15,814)
Principal payments
(2,913)
(2,997)
Total fixed charges 1
$
(19,569)
$
(18,811)
Fixed charge coverage ratio 1 2 3
1.9x
2.0x
(1) Includes the REIT's share of joint venture investments.
(2) Refer to 'Non-IFRS Measures' section above.
(3) As of March 31, 2025, the REIT transitioned from disclosing interest coverage ratio to fixed charge coverage ratio. Refer to 'Fixed Charge Coverage Ratio' in Part IV of Management's Discussion and Analysis for further details.
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June 30, 2025
December 31, 2024
(in thousands of U.S. dollars, except per unit amounts)
Statement of
Financial Position
Joint Venture Investments
Proportionate
Share (Non-IFRS)
Statement of
Financial Position
Joint Venture Investments
Proportionate
Share (Non-IFRS)
ASSETS
Non-current assets
Properties
$
2,065,464
$
312,300
$
2,377,764
$
2,054,511
$
310,400
$
2,364,911
Joint venture investments
118,961
(118,961)
—
112,429
(112,429)
—
Interest rate swaps
—
—
—
4,690
—
4,690
Other assets
3,558
—
3,558
3,624
—
3,624
$
2,187,983
$
193,339
$
2,381,322
$
2,175,254
$
197,971
$
2,373,225
Current assets
Cash
25,603
7,305
32,908
22,668
4,851
27,519
Accounts receivable
20,502
1,014
21,516
23,417
1,723
25,140
Other assets
4,572
5,657
10,229
4,327
4,629
8,956
Prepaids
2,146
701
2,847
5,050
1,025
6,075
Interest rate swaps
663
86
749
2,983
245
3,228
$
53,486
$
14,763
$
68,249
$
58,445
$
12,473
$
70,918
Total assets
$
2,241,469
$
208,102
$
2,449,571
$
2,233,699
$
210,444
$
2,444,143
LIABILITIES
Non-current liabilities
Debt
$
1,162,289
$
59,371
$
1,221,660
$
1,120,616
$
59,914
$
1,180,530
Interest rate swaps
1,545
—
1,545
—
—
—
Deferred income taxes
156,968
—
156,968
153,580
2
153,582
Other liabilities
4,256
876
5,132
4,378
837
5,215
$
1,325,058
$
60,247
$
1,385,305
$
1,278,574
$
60,753
$
1,339,327
Current liabilities
Debt
15,226
142,776
158,002
46,039
143,961
190,000
Accounts payable and accrued liabilities
42,449
5,079
47,528
42,071
5,730
47,801
Exchangeable units of subsidiaries
9,583
—
9,583
8,733
—
8,733
Distributions payable
4,323
—
4,323
4,323
—
4,323
$
71,581
$
147,855
$
219,436
$
101,166
$
149,691
$
250,857
Total liabilities
$
1,396,639
$
208,102
$
1,604,741
$
1,379,740
$
210,444
$
1,590,184
EQUITY
Unitholders' equity
$
666,007
$
—
$
666,007
$
673,474
$
—
$
673,474
Non-controlling interest
178,823
—
178,823
180,485
—
180,485
Total equity
$
844,830
$
—
$
844,830
$
853,959
$
—
$
853,959
Total liabilities and equity
$
2,241,469
$
208,102
$
2,449,571
$
2,233,699
$
210,444
$
2,444,143
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