Smartcentres Real Estate Investment Trust Stock

Good day, ladies and gentlemen. Welcome to the SmartCentres REIT Q2 2026 Conference Call. I would like to introduce Mr. Peter Slan. Please go ahead.

Thank you, operator, and good morning, everyone. Welcome to SmartCentres' Second Quarter 2026 Results Call. I'm Peter Slan, Chief Financial Officer. And as in prior quarters, I'm joined on today's call by Mitch Goldhar, Executive Chair and CEO; and by Rudy Gobin, our Chief Portfolio and Asset Management Officer. We'll begin today's call with some comments from Mitch. Rudy will then provide some operational highlights, and I will review our financial results. We will then be pleased to take your questions.

Just before I turn the call over to Mitch, I would like to refer you specifically to the cautionary language about forward-looking information, which can be found at the front of our MD&A. This also applies to comments that any of the speakers make today. Mitch, over to you.

Thank you, Peter. Good morning, and welcome, everyone. I will be brief so we can get to your questions. Q2 was very solid in all categories. Here are a few examples. The SmartCentres portfolio delivered on same property NOI growth at 2.6% for the quarter or 4.4% ex-anchors. Occupancy grew to 98.1% for in-place and committed deals. Rental lifts were up 12%, excluding anchors on lease extensions. Leases have been executed at higher rents in 4 of the 6 ex-Toys locations, 3 of which we completed by the quarter end and 1 shortly thereafter. And 86% of 2026 maturing leases were executed by the end of Q2.

Our 200,000 square foot flagship Canadian Tire store in Leaside/Rosedale is on track and near completion with turnover expected in the next few months. All in all, the portfolio continues to show its strength. This includes commitments by many of our major retailers to expand their store count in our existing portfolio as well as in our retail expansion program. In that regard, we will continue to stay on strategy expanding our retail portfolio around our major retailers' growth needs, like Walmart, Loblaws and Costco. This expansion program continues to move forward step by step with specific projects and details to be made available in the months ahead. Stay tuned.

At the corporate level, we continue to carefully manage our balance sheet, debt and related metrics. We've also taken steps to insulate ourselves from potential interest rate increases, with 88% of our debt being at fixed rates.

And with that, I will pass the call over to Rudy for some more operational highlights. Rudy?

Thanks, Mitch, and good morning, everyone. Q2 gained further ground from the likes of grocers, TJX banners, pharmacy, dollar stores, banks and more, leading to the signing of nearly 0.25 million square feet of leases in the quarter. Occupancy returned to above the 98% with 4 of the 6 ex-Toys boxes locations being leased. And as Mitch mentioned, operationally, the portfolio is strong, absorbing some of the best retailers in the country, replacing low rent-paying Toys locations. And if you recall, typically visited 2 to 3 times a year by customers compared with weekly visits for food and pharmacy and dollar stores, which will not only provide a much stronger covenant, but will also drive higher rents for the vacated units.

The higher customer traffic will also drive higher sales for all other tenants within the centers, which then drives higher future rents on renewals and further same properties NOI growth. The ripple effect is immediate and impacts the entire property for years to come. This resiliency is also reflected in the 86% of the 2026 lease maturities already completed by Q2, with a rental lift of 6.6% all in or 12% ex anchors.

Turning to cash flow. Cash collection remained strong at 99% in the quarter. And lastly, our Toronto and Montreal Premium Outlets remain at 99% -- actually closer to 100% leased and continue to excel in driving traffic, with improving tenant sales and percentage rent. Toronto Premium Outlets remains ranked in the top 3 in sales in this country, and the planned expansion for near 100,000 square feet is now scheduled to start construction in Q4, with average rents in the triple digits. Overall, we see continuation of all of this momentum into the second half of the year.

Thank you, and I'll now turn it over to Peter. Peter?

Thanks, Rudy. As you've seen in our release, the FFO this quarter was unchanged from the comparable period last year at $0.58 per unit. FFO with adjustments, which excludes the townhome profits, transactional gains and losses and the total return swap, was $0.54 per unit compared to $0.55 for the same period in 2025. The modest year-over-year decrease was primarily driven by higher interest expense and general and administrative expenses related to the new long-term incentive plan, partially offset by growth in net rental income.

We again maintained our distributions during the quarter at an annualized rate of $1.85 per unit. The payout ratio to AFFO remained stable at 90.5% for the rolling 12 months ended June 30, 2026. Adjusted debt to adjusted EBITDA was 9.8x, unchanged from the previous quarter. The weighted average term to maturity of our debt, including debt on equity accounted investments, was 2.9 years. From a liquidity perspective, we remain very comfortable with our current liquidity position. We recently extended our corporate revolver for an additional 2 years to 2031. As of June 30, 2026, we have approximately $715 million of liquidity, which includes both cash on hand and undrawn credit facilities but excludes any accordion features. Including the accordion, we have $965 million.

During the quarter, we also recorded a fair value loss on our investment properties portfolio of $196.2 million. This adjustment was mainly attributable to the deferral of development activities for certain properties under development, offset by some modest discount rate changes in our income-producing portfolio. With the recent strength in our unit price, we unwound the remaining total return swap during the quarter and repaid the associated TRS debt. As a result, Q2 will be the last quarter that we report a TRS adjustment to our FFO other than for comparable periods. We realized a modest gain on the unwind transaction. And looking back over the 4 years since we initiated the swap, it generated a meaningful positive return for the REIT.

As in previous quarters, we have updated our MD&A disclosure, focusing on those development projects that are currently under construction. As you will see on Page 17, there were 9 projects under construction at the end of Q2, an increase of 1 from last quarter. The Vaughan Northwest townhomes were completed and removed from the list, and 2 additional projects were added. One is a self-storage project in Edmonton, and the other is a 65-unit rental apartment project in the ArtWalk block in the Vaughan Metropolitan Centre.

And with that, we would be pleased to take your questions. Operator?

[Operator Instructions] The first question is from Lorne Kalmar from Desjardins Capital Markets.

Just wondering, you mentioned starting some new developments. Obviously, it looks like there's going to be a kickoff here on the retail side in a more meaningful way. How high are you comfortable taking developments as a percentage of asset value?

Hello?

Yes, sorry. You stumped us with that question. No, we're at 12%. And the development that we're referring to is low-rise, like single story with that great parking for the most part. So it's not difficult to manage because the rents commence on these developments within -- like under a year from commencement of construction. So we're comfortable with where things are. It might fluctuate up and down just because some quarters and some years, we might be developing a little bit more. But as I said, within a year, the rents kick in. So it's not like density where we'll be in debt for years and years before we see any income.

Fair enough. Just confirming, you said you guys are at 12% of -- development is at 12% of asset value right now?

Yes, that's right. 12.5% or so.

Okay. Perfect. And then this one is a little bit ticky tacky, but just noticed tenant receivables have climbed up quite sort of modestly quarter-over-quarter, but now you're kind of at levels you were at in December of 2020. ECL provision is still below. But just wondering if you could give us an idea of what's behind that, if there's anything really to read into there.

It's Rudy. No, that's just seasonal with taxes, normal expenses we are incurring on the property. ECL was not -- as you mentioned, was not unusual for the quarter. So nothing unusual in that category. And the extent that the ECL that we booked in the first quarter have not been -- sorry, not the ECL, the receivables in the first quarter offset by the ECL, we have not adjusted that yet. So you're seeing both grow. At some point, when we remove it, the receivables will disappear and the ECL will disappear.

And Lorne, I would just add -- it's Peter. I would just add that collections remain very, very high. And so there's nothing from an aging perspective on those receivables to be worried about.

And in fact, we were -- in the last, I don't know, 3, 4, 5 quarters, we were at 99%. We were over 99% in Q2 from a collections, from our tenants' perspective.

Yes. Okay. So it should slowly start to trend down then?

Yes.

Yes.

The next question is from Mario Saric from Scotia Capital.

Just on the capital allocation side with the wind up of the TRS swap, does that change how you think about allocating capital? Units are still trading at about a 20% discount, give or take, to your IFRS fair value. Yes. Just curious in terms of how it changes anything, if at all.

From the point of view of buying back, we don't have [indiscernible]. I buy units fairly often. We're not suggesting it's not a good price. But at the moment, the REIT does not have any plans to buy back stock units.

Okay. And then just conversely, with respect to the balance sheet and asset sales, can you give us an update in terms of your conviction level in getting something done on the disposition side in '26 and whether kind of that $200 million to $300 million disposition pipeline over the next 2 to 3 years is still intact?

Very much so. I mean, things, I'd say they move all over the place from one week to the next, but more -- and things are slowly moving on that front. I mean not so much that the economy is pumping or anything. It's just that I think people are just feeling a little bit more -- they have more visibility on the next period for good [indiscernible ]. And that some people are back in the market, some sectors are starting to get in the mood. So we are talking to various but nothing at the moment worthy of announcing, but we are very much committed to that level of acquisitions.

Okay. And then just switching over to operations. You've done a really good job of re-tenanting or re-leasing 4 of the 6 Toys"R"Us. I think it was an expected 25% higher net rent as well. Can you just maybe give us a sense of the cadence of getting the other -- the remaining 2 leased up?

We have interest in both, very interesting. Strong interest in one of them, a real upgrade and improved rents. And the other one, good interest. So we're pretty optimistic about that in the other.

Yes. No, I would just say the uses that we're looking at will be, again, as I mentioned, for the first 4, better covenants, higher traffic generation, higher traffic for all the other tenants in the shopping center as well. So I think it will be very much a big step-up from the traffic that the Toys has generated on site.

Got it. And is the expected rent commencement on the 4 that have been leased, is it still potentially in Q4 '26? Or is that more of a '27 event? And do you think that the other 2 could be rent-producing in 2027 as well?

The 2 that are under negotiation will probably be -- very likely be '27 commencements.

Some enter in Q4 and maybe 1 [indiscernible] that may push into the early year depending on renovation to the space, but that's -- it's soon.

The next question is from Sam Damiani from TD Securities.

Just on the fair value loss taken on the land, was that a reflection of any ongoing discussions on dispositions of any parcels? Or is that just a choice you guys made independent of any...

No, no, it wasn't based on a negotiation. It was just based on appropriate -- our feeling at this point that for a variety of reasons that those were not reflecting accurately the value at this time. So no, it's not -- those were not based on a negotiation.

Okay. And the fair value loss was -- I'm sure it was reflective of a number of parcels, but was the bulk of it concentrated in just maybe 2 parcels? Or really how concentrated was that total provision in Q2?

Yes. I mean it's -- no, it's -- you know from probably in the past where we had focused our attention for potential high-rise. And so it's sort of across half a dozen properties or more, whereby we are imminently going to do the high-rise development there. And we think it's not -- yes, we just don't think it's imminent. So I thought it was prudent to make the adjustment, but it's not 1 or 2 properties.

Okay. And is there -- are you seeing any green shoots in the market -- the transaction market for residential density land in Toronto?

Can you say that one more time? Sorry.

Yes. Sorry, I was just asking, the market for -- the transaction market for residential land, is it -- are you seeing any signs of it potentially improving in the near term?

It's really -- at the moment, I'd say we're at the sort of moment of truth. Sometimes it will be clearer in the next little bit like -- but there have been transactions. And -- so whereas a year ago, there were no transactions. So there are transactions. And the question is, I guess, does it gain momentum? And that's sort of, I guess, depends on some of the macroeconomic issues and how people feel.

But there's still a lot of people out there in the business, both privately and institutionally, that have the capacity to buy and to think long term -- medium, long term. So some of them are buying, not many, but at least there's some, and we're sort of waiting and watching to see if it picks up. So it will be interesting. The next 6 months will probably tell the tale or certainly clarify. But it feels like there'll be some transactions. If you ask me intuitively, I think there's going to be -- start to see some transactions in the next year.

Okay. Great. And last one for me is just, Mitch, your comments at the annual meeting about getting up to a sort of a cadence of 3 shopping center deliveries or being under construction annually. How would you see the buildup to that pace by 2027?

Yes. I mean I think that's still the case. I mean things are moving along with respect to the new retail sites and developments around various anchors in new markets across the country. And I think that, that would be a fair number to use as a placeholder for now, maybe arguably on the conservative side. But getting started is -- there's always lots of obstacles to getting started. So -- but I think in terms of what we're planning, if things go smoothly, I think that's fairly safe, if not conservative.

The next question is from Pammi Bir from RBC Capital Markets.

I just want to come back to the TPO expansion. What can you maybe share in terms of where leasing is at this stage? And I'm just curious, are you seeing any demand from tenants that are not necessarily outlet type tenants, just given that there has really not been much new supply out there?

Well, first of all, Simon does our leasing. And by the way, they are really good at outlet centers. So they really make us look good. And this is obviously a bit of a wonder child outlet center. So the leasing is going very well, but it's a different type of leasing program than normal.

Rudy, do you want to give some more additional color?

Sure. As I mentioned just a few minutes ago, the rents are in the triple digits. And you know the tenants that are in the center and sort of the value of the center. What we found was some tenants that are -- in the center, the very strong tenants are asking to get bigger and move into the expansion area, and some other tenants are also looking to fill other spaces. So net-net, we're about 50% leased and plan to be over that by the time we hit construction commencement in Q4 of this year. So things are going well. And you remember, there's a parking deck that we're building with over 1,200 spots in that parking deck. It will displace some of the surface parking. But net-net, it's going to be, I think, 600 or 700 new parking spots with the new GLA that's coming on stream.

I wanted to add, though, that they don't try to pre-lease at all. That's what I mean by it differently. They do want to stage the leasing. The interest is very strong. So hence, why we're expanding. And the big rents there, I mean, the tenants do huge volumes, and they are doing -- are very successful there. The rents are pretty high relative to the rents in retail. But it's just -- its own thing. So everyone is pretty happy with TPO.

Any change to that? I think you previously cited a target yield of north of 8%. Any upside to that based on what you've done to date or what they've done to date?

Yes, we're above 8%, but we always try and be conservative with our -- such things. So yes, we're pretty comfortable with above 8% for now.

Okay. Just last one for me. Coming back to the development write-downs. I think we've seen these charges now for a couple of years in a row. So what maybe just gives you the comfort that the valuations that you're using now are more reasonable or that they bottomed out?

That's a good question. First of all, I guess part of the write-down goes towards the value, but some of it may be partly attributable to what we think we might be able to develop in terms of the amount of density. But in terms of value for density, I'd say, again, I don't want to jinx the market, but I would say that it does feel like it's bottomed out. I'd say it's a little bit better than it was a year ago. So I guess, by definition, it's bottomed out, and it's starting to improve. So yes, in terms of what one might pay for density, I'd say, it's definitely bottomed out at this point.

[Operator Instructions] The next question is from Dean Wilkinson from CIBC World Markets.

Mitch, just going back to the TRS and your comments around that. And first, I think, we all thank you for unwinding that. Should we read into that, that your preference for, say, the next dollar or dollars spent would be advancing the current development pipeline, then debt, then buying back units? And if, in fact, that is the correct order, what would cause you to maybe change your view on sort of where you're going to put the next incremental dollars?

I mean that's more of a discussion, I think, a longer discussion, but we see the development as being accretive. I mean we're not -- this is not like speculative development. We're going into each one of the new developments with an anchor tenant. So with a lease -- pre-leased substantial portion of the square footage. So there's a year of construction for this type of thing, and we're in debt for that year, but then we're collecting rent for the next 20, 30 years.

So -- and it's accretive. So we see that as being a very good use of our balance sheet. Having said that, of course, simultaneously, we keep an eye on our debt levels. And if we were to make any major transactions of a disposition variety or whatever, that would go towards lowering debt. But in a de facto, it would go -- some of that might go back into the development program, all the while keeping an eye on our various metrics. So we lower debt, just gives us room to do whatever that we think is in the best interest of the unitholders, always subject to debt metrics.

So kind of they're intricately weave together, those things. But development is a great opportunity for us because that is something within our expertise and relationships and intel. So it's accretive. We want to make the most of that, that's really the ultimate driver of significant material growth. It's not raising rents and paying for lower interest rates and whatever else we can do on the margins, like this is a robust kind of growth that we're talking about. So that is, of course, a priority, yes.

Yes. You've been consistent on that for decades. So I didn't expect that to change.

Thank you. There are no further questions in the queue.

Okay. Well, thank you for participating in our Q2 call. Please feel free to reach out to any of us if you have any further questions. Have a great rest of your day and weekend. Thanks.

Ladies and gentlemen, this concludes the SmartCentres REIT Q2 2026 Conference Call. Thank you for your participation, and have a nice day.

Good afternoon. I think it's good morning.

Morning.

I want to thank you all for joining us today. This is the Annual General Meeting of the holders of units and special voting units of SmartCentres Real Estate Investment Trust. The meeting will now come to order. Before we begin, kindly turn off your mobile devices. My name is Mitchell Goldhar, and I am the Executive Chairman and Chief Executive Officer of SmartCentres and a trustee. Before we start the formal portion of the meeting, I would like to introduce other trustees and officers of SmartCentres. In addition to myself, our current trustees are Janet Bannister, Neil Cunningham, Garry Foster, Greg Howard, Sylvie Lachance, Sharm Powell and Michael Young to my left.

In addition to myself, our officers are Peter Slan, Chief Financial Officer; Rudy Gobin, Chief Portfolio and Asset Management Officer; Allan Scully, Executive Vice President, Development; Paula Bustard, Executive Vice President, Development; Dan Markou, Executive Vice President and Chief People and Culture Officer.

After the formal meeting, there will be a brief management presentation and an opportunity to ask questions about SmartCentres. Michael Young is the Lead Independent Trustee of SmartCentres, and will be the Chairman for this meeting. Michael?

Thanks, Mitch. As this meeting is being held in person and online via live webcast, I will first set out a few matters to facilitate the orderly conduct of the meeting. Registered unitholders and policyholders who wish to vote at the meeting and cast a vote in person may do so. Ballots were provided when you signed in at the registration outside this room. Those registered unitholders and proxy holders who wish to vote at the meeting and cast a ballot online should have logged into the webcast by entering the control number listed on their policy form -- on their proxy form.

Proxy holders, including beneficial owners who appointed themselves as proxy holders should have logged into the webcast by entering the control number they received after they appointed themselves as proxy holder and registered with Computershare. If you have logged in properly, the electronic ballot will be displayed. You are encouraged to complete your voting as soon as practical since voting will be -- will close promptly after the conclusion of the formal business of the meeting. Be sure to stay connected to the Internet at all times in order to vote when the balloting begins. If you have voted your units prior to the start of the meeting, your vote has been received and the scrutineer -- by the scrutineers, and there is no need to vote during the meeting unless you wish to revoke or change once the formal items of business are moved.

We will take questions received from the floor through the online messaging platform. The legal name of the submitting unitholder or proxy holder will be read aloud before the question is addressed. Questions that are redundant or that have inappropriate language or are otherwise unduly disruptive to the orderly conduct of the meeting will not be addressed. General unitholder questions that do not directly relate to the meeting's items of business will not be addressed during the meeting but will be addressed after the meeting.

Given timing delays for our online participants, unitholders who are participating online are encouraged to submit their questions at the beginning of the meeting through the online messaging platform. These questions will be addressed during the meeting as -- if they relate to a particular matter or will be addressed during the Q&A session immediately following the management presentation. If during the meeting, we encounter any technical difficulties with the webcast, please remain logged on, and we will resume as soon as possible.

Forward-looking statements may be made during the formal presentation of the meeting and during the management presentation and Q&A session afterwards. Certain material factors and assumptions were applied in providing these statements, many of which are beyond our control. These statements are subject to a number of risks and uncertainties that would cause actual results to differ materially from those expressed or implied in the forward-looking statements. A summary of these underlying assumptions, risks and uncertainties is contained in our various securities filings, including our most recent AIF and MD&A, all of which are available on SEDAR and on the SmartCentres' website. Forward-looking statements are made as of today's date, and except required by applicable securities law, we undertake no obligation to publicly update or revise any such statements.

We will now proceed with the formal portion of today's meeting. I will call this meeting to order. With the consent of the meeting, I appoint James Brown, to my left, Legal Counsel for SmartCentres as Secretary of this meeting, and Computershare Trust Company of Canada represented today by Melissa Phillips and Kate Stevens as scrutineers for the meeting.

A notice informing unitholders of the meeting, along with the management information circular and a form of proxy, where requested, were mailed to unitholders of record of units and special voting units as of March 31, 2026. I will use the term unitholders to refer to both holders of units and holders of special voting units. The audited financial statements and related management discussion and analysis of SmartCentres for the year ended December 31, 2025, have also been mailed to anyone who requested to receive those documents. Computershare has provided an affidavit of mailing of the notice calling this meeting the management information circular and the form of proxy for the meeting.

I request that copies of the notice of the meeting, the affidavit of the mailing, and the mailing -- and the meeting materials be kept by the secretary with the records for this meeting. Unless someone objects, I propose to dispense with the reading of the notice calling this meeting. The declaration of Trust of SmartCentres provide that the quorum for this meeting is at least 2 persons present and holding or representing by proxy not less than 25% of the units and special voting units. The scrutineers' report shows that there are 69 holders of units present at the meeting holding or representing by proxy 43.78% of the issued units of SmartCentres.

There are also 23 holders of special voting units representing at the meeting -- represent present at the meeting holding or representing by proxy 99.87% of the issued special voting units of SmartCentres. The total representation at this meeting present in person or represented by proxy is 63,351,263 units and 33,565,081 special voting units being 54.35% of the units and special voting units of SmartCentres in aggregate. I declare that this meeting has been regularly called and is properly constituted for the transaction of business. The scrutineers' report will be provided to the Secretary of the meeting and will be incorporated into the meeting's minutes.

In order to expedite the formal part of the meeting, certain unitholders have been asked to propose and second various motions. While this procedure will assist in the handling of formal matters, it should not discourage any registered unitholder or proxy holder from speaking or submitting questions or remarks through the instant messaging service of the virtual interface in reference to any motion after it has been proposed and seconded. If you wish to speak or when submitting a question or remark online, please indicate your name, which entity you represent, if any, and indicate whether you are a unitholder or proxy holder.

In the interest of fairness to all unitholders, I would ask that you be brief with your questions or remarks, limiting them to matters directly related to the meeting. Unitholders are asked to complete their ballots, whether in person or online and return them. Once the online poll is closed after all items of business have been considered, the scrutineers will tabulate the votes cast and will report on the results towards the end of the meeting.

The first item of business is the presentation of the audited financial statements of SmartCentres Real Estate Investment Trust for the year ended December 31, 2025, and the auditor's report therein. The financial statements will be taken as presented to the meeting. The next item of business is to fix the aggregate number of trustees to be elected or appointed at this meeting. May I please have a motion?

I move to fix the aggregate number of trustees to be elected or appointed at the meeting at no more than 8.

I second the motion.

Thank you. You have heard the motion. Are there any questions on this matter?

Mr. Chairman, we have not received any online questions or comments related to this item.

Thank you. The next item of business is the election of trustees. As stated in the management information circular, the trustees of SmartCentres have adopted a policy that entitles unitholders to vote for each nominee on an individual basis. In addition, the trustees have adopted a policy stipulating that if the votes in favor of a nominee for the election of a trustee of SmartCentres represent less than a majority of the units voted and withheld, the nominee will submit his or her resignation after the meeting for the consideration of the Corporate Governance and Compensation Committee.

It is proposed that the 6 nominees set out in the management information circular be elected as trustees to hold office until the next annual meeting or until their successors are elected or appointed. The Penguin Group has confirmed that Greg Howard and Mitch Goldhar will be the Penguin Group appointees for the remaining 2 trustee positions of the Board. I'll entertain motions for the nominations of persons to be elected to the 6 trustee positions to be determined by the unitholders of SmartCentres. The nominees for election to the 6 trustee positions to be determined by the unitholders of SmartCentres to hold office until the next annual meeting of unitholders or until their successors are elected or appointed are Janet Bannister, Neil Cunningham, Garry Foster, Sylvie Lachance, Sharm Powell and myself, Michael Young.

I nominate the trustee -- the nominees for trustees named in the management information circular prepared for this meeting for election as trustees of the trust to hold office until the next Annual Meeting of Unitholders or until their successors are elected or appointed.

Thank you. As no notice of additional trustee nominations was received in accordance with the SmartCentres advanced notice policy, I declare nominations closed. Are there any questions or comments submitted in connection with the election of trustees?

Mr. Chairman, we have not received any questions or comments related to this item.

Okay. Thank you. The next item of business is the appointment of the auditor of SmartCentres for the next year.

I move that PricewaterhouseCoopers LLP chartered professional accountants be appointed auditor of SmartCentres the ensuing year, and that trustees of SmartCentres be authorized to fix the remuneration of such auditor.

I second the motion.

Thank you. You have heard the motion. Are there any questions or comments submitted in connection with the appointment of the auditor?

Mr. Chairman, we have not received any questions or comments related to this item.

Okay. Thank you. As stated in the management information circular prepared for this meeting, unitholders are asked to consider an annual nonbinding advisory resolution respecting our approach to executive compensation. As this is an advisory vote, the results will not be binding upon the Board of Trustees of SmartCentres. However, the Board of Trustees will take the results of the vote into account as appropriate when considering future compensation, policies, programs and decisions. May I please have a motion?

I move that on an advisory basis, not to diminish the role and responsibilities of the Board of Trustees of SmartCentres, the approach to executive compensation as disclosed in the management information circular of SmartCentres dated April 1, 2026, be accepted.

I second the motion.

Thank you. Were there any questions or comments submitted in connection with this matter?

Mr. Chairman, we have not received any questions or comments related to this item.

Great. Thank you. As stated in the management information circular prepared for this meeting, unitholders are asked to consider and if thought advisable, to pass a resolution approving the adoption of a new long-term incentive plan that provides for a maximum of 1,200,000 units reserved for issuance thereunder, as more particularly set out in the management information circular. May I please have a motion?

I move that the resolution approving new long-term incentive plan as set out in the management information circular of SmartCentres, be approved.

I second the motion.

Thank you. Were there any questions or comments submitted in connection with this matter?

Mr. Chairman, we have not received any questions or comments related to this item.

Thank you. As this is the last item of business, we will provide registered unitholders and duly appointed proxy holders a few more moments to complete ballots in person or to complete electronic ballots online before closing the polls. A few moments.

[Voting]

Been advised, we're okay. I declare the polls closed on each of the items of business. Thank you. The scrutineers will now tabulate the results and will disclose the official voting results shortly after this meeting. However, we have been advised that based on proxies received prior to the meeting, the preliminary results are as follows. With respect to the motion to fix the aggregate number of trustees to be elected or appointed at the meeting at no more than 8, a majority of the votes cast by proxy were in favor of the motion. Therefore, the motion has been carried.

With respect to the motion to elect the trustees, each of the 6 nominees listed in the management information circular have received a majority of votes cast by proxy in favor of his or her election. Therefore, I confirm they are elected as trustees. With respect to the motion to appoint PricewaterhouseCoopers LLP as the auditor of SmartCentres for the ensuing year, a majority of the votes cast by proxy were in favor of the motion. Therefore, the motion has been carried.

With respect to the motion that on an advisory basis, the approach to executive compensation as disclosed in the management information circular be accepted, a majority of the votes cast by proxy were in favor of the motion. Therefore, the motion has been carried.

With respect to the motion to approve and adopt the new long-term incentive plan as further described in the management information circular, a majority of the votes cast by the proxy were in favor of the motion. Therefore, the motion has been carried.

I direct that the results of the poll be included in the minutes of this meeting. The results of this meeting will be announced in a press release in accordance with the policies of the TSX and filed on SEDAR. Now that we have completed the formal items of the business -- of business for this meeting, I propose that we terminate the meeting.

I move.

Thank you. As there is no further business for the meeting, I declare that the meeting is terminated. Thanks, everybody, for attending today's meeting. I would like to take this opportunity to thank all the SmartCentres unitholders for their support.

And Mitch Goldhar will now walk us through a short management presentation followed by Q&A. Mitch?

You can stand, Mitch.

Thank you, Michael.

It's live.

Great.

Almost...

You got binding to...

Yes, all right. Thanks again, Michael. That's a lot of reading. Yes. So welcome once again to our after party, after, après AGM presentation. I hope that when -- by the time you leave, you'll have a very clear sense of the company and what we are and where we're going. And of course, it's a casual format. So if you have any questions, just go ahead and ask them at any time. And of course, at the end, we'll leave time to do that as well.

So SmartCentres, generally speaking, has a very simple approach, radically simple approach, and that is just to make decisions based on the long term. And I sort of think that's a good philosophy for any business. It doesn't need to be over -- things don't need to be overly more complicated than that. And that has resulted in a lot of the statistics that you see on the screen here now. And then there's other statistics on the screen that are unexplainable, given the long-term approach that's resulted in some of these numbers.

We have 200, basically, shop because we really do have 200. We did not round that up or down. We will be rounding a few things up and down. I'll try and tell you when we do. But we actually have 200. They're in thoughtful locations. The vast majority of these properties, we develop them either in an earlier iteration or in the current public company. And that's significant because we didn't build this company running around, buying anything that we could that would be accretive, because there was a huge period of time where money was cheap and public companies like Canadian REITs could raise money cheaper than the acquisition price based on a yield basis. That's not the case here.

Every one of these locations was sweated just as if you were doing one property development and you thought of everything that could go wrong. It is an accumulation of 200 strategically located properties that has turned into, at the moment, 36 million square feet of income-producing properties. And just you keep in mind that 25% of that plus or minus income is Walmart income. And vast majority of -- the rest of it is Canadian Tire, Loblaws, TJX, et cetera, et cetera.

And further emphasizing the strength of that income is the fact that 88% of it is in [ Vetcom ] markets. This is 2025. So a 98.6% committed occupancy is an industry high. And we actually have an approval pipeline, a pipeline of mixed-use development that's in a range, it's almost a concept. I mean it's almost impossible to comprehend 88 million square feet and what that represents and what that would involve developing, but we do. And of that $88 million, $60 million of it is zoned permissions. So -- and the permissions vary. Of course, a lot of it is residential to get to that number. And the -- this is on sites that the company already owns. So if you're a shareholder, you own your share of this.

It's a staggering amount, which I'll talk about in a bit. And then the assets are $12.3 billion. So with that in mind, the unit price at printing of this was $28.41. The net asset value of everything aforementioned is -- would be the equivalent of $36.19 a share, representing a 21.5% discount. But in the meantime, not only do we offer or does the market offer a 21% discount on real estate that generates income and has lots of density, we will actually pay you 6.5%, 1/12 every month in the meantime, until we see some closing of the gap there. Yes, that's a high-level summary of the financial situation overview of the company.

In saying that we think about the long term, the long-term guides our decision-making. It's not just words. This is the result of long-term thinking because, of course, this means which tenants we choose, how long their leases are. We give up rent to have more reliability in our income and occupancy. But I would take occupancy over spikes in rent any day. And part of that works for SmartCentres more so than other companies because we are also developers. So we don't need -- our growth doesn't rely entirely on internal bumps, and that's not our main story.

We can produce income. We can create profit out of, let's say, nothing or the potential of opportunities out there as developers. So we're better off having a very solid long-term reliable income-producing properties and then tap our development acumen to grow the company, and we'll get to that in a second.

Next. This is just to remind everybody that we've never cut distributions. This shows the numbers. I'm not going to say that it emphasizes the cutters because we can't show that we've never cut distributions really without showing those who have cut distributions. So just happens to make its way on to the slide. And by the way, this choice, I don't remember. I'm sure somebody in the room would remember whether REIT ever cut distributions. I don't know if they did prior to the Choice deal because this is post Choice deal. So if not, I'm getting the signal they did not. They would be the other REIT that didn't cut distributions.

Next slide. So had you bought SmartCentres for all intents and purposes at IPO, if you had bought $100 worth, you'd have $1,572 and that would be otherwise a 12.4% compounded return, including the distributions, which have never been cut. And then you can see that against the REIT index and the market. Yes. So let's go to -- let's get to the growth of the company, the theme of the company going forward about what we are, where we were, what we are.

Since we developed -- for all intents and purposes, since we developed a SmartCentre last from scratch, this is an important stat along with some other stats behind this. The country has grown by about 6.3 million people since we last built a SmartCentre. If we were to use sort of a rule of thumb of one SmartCentre per 100,000 people, as a catch basin, that would represent the opportunity of another 63 SmartCentres and they average probably around 225,000 square feet, let's say, with all the anchors. So it's just a simple stat to illustrate what the potential may be for us.

Why did we not build a SmartCentre since 2014? By the way, I think we only built one in 2014. I think the one before that might have even been 2011 or '12. So it's more than 12 years. It's more like 13, 14 years since we've had a very concerted program. The reason is that in 2010, '11, '12, the retailers that make up the majority of SmartCentres were quite preoccupied with e-commerce. And at that time, if we were sitting here in 2000, say, '10 or '11, everybody would be questioning the future of retail. And everyone would believe that there could be a world without physical retail.

And of course, industrial just took off and there was a flight of capital to industrial and a lot of other things. And retail became, slowly but surely, went into the dog house. But that's sort of a bit of an aside.

The point being, though, that the Canadian immigration policy changed around that time. And we were growing by twice the rate immigration-wise, population-wise in the United States. But nobody, the Walmarts, the Loblaws, the Home Depots, Canadian Tires of the world were very much inward looking at their e-commerce platforms. I mean I can say that in the case of Walmart, they were absolutely determined to catch up because they really were flat-footed in the 2002, '03, '04, '05 when Amazon were all in, whether they were really all in or they were just -- found themselves riding a wave and did an amazing job riding that wave.

Walmart did not go like lockstep. Neither did Target. Neither did Costco. And they were all way behind. They really, at the time, I don't think really believed e-commerce would take the kind of percentage share of retail that it ended up taking. But by 2010, I mean, between 1997 and 2011, SmartCentres, in its then form, opened a Walmart store somewhere in Canada every 3 weeks for 14 years in a row. So if you want to think about the company's capacity to develop, that's an example of us for 14 years, developing out the appetite of the likes of Walmart.

Then it stopped. It became e-commerce. And that went for -- that went until COVID. And then COVID hit, and of course, nobody wanted any physical retail. Population kept growing. And during that time, we see 6.3 million more people in the country, no -- for all intents purposes, no new retail. If anything, a lot of retail was redeveloped into residential and set the stage for where we are now.

Next slide, I think. So what you have now is the companies that are intricately weaved with everything. Food, general merchandise, apparel of the general public. That is physical retail, e-commerce, pick and pack, pick and collect, click and collect. And every other form, among others, these are the retailers that determine how you get your stuff and at what price, whether you think so or not. And Amazon is not on there, but they're part of it, obviously. But they played their catch-up. They've hugely invested in e-commerce. They're major players in e-commerce, but they also can control how much you order online and how much you come in store for, and they can do that by pricing.

It's a cat and mouse game, but the end of the day, everybody loses money on home delivery. So everybody's watching everybody and all want to lose less money on home delivery. So it's -- there's been a movement for quite some time to lose less money on home delivery.

So everybody has bet that it's going to be the split between e-commerce and home delivery is pretty visible now. It's not like it was 12 years ago. People weren't sure. And so that has translated into the Loblaws, for example, wanting 70 new stores in 2026. 70 new stores, I mean that's a company. If you're a real estate company, and they do it. I mean they've done it. We are doing a lot of [ brooding ], a lot for us for that. And same with Sobeys, and they're doing a fantastic job. They are absolutely not rolling over. Loblaws was the first ones -- first movers in this physical retail renaissance or whatever you want to call it.

But Sobeys was right behind. And they're doing as much with them as we are with Loblaws, and we're doing a lot with both. Dollarama, I think everybody knows about. They pretty much own Dollar Store. And Walmart has announced a $6.5 billion investment in things new, mostly stores and distribution and other things. And I would say stay tuned on that front. And then even, let's say, more conservative Metro Inc. have reacted and they're doing quite a few new stores for them.

And then there's all the complementary stuff that goes along with it. This is very dynamic. If you're Loblaws, you know Walmart's doing something. If you're Walmart and you know Loblaw's doing something, you can't lose market share and they really are all pretty much aligned that physical retail is -- because physical retail is not exactly physical retail because in the case of Walmart, for sure, they are using their stores. In the U.S., they finally have reconciled that they're going to use their stores as distribution centers. So a store is not just a physical store anymore. It's where they're going to fulfill home delivery after all. So it's a really big boost to the security, if you will, of physical retail because physical retail is not just physical retail anymore.

Next slide. Yes. So if we took these numbers and we played with them, just had some fun with numbers, we are this, basically right now, we are 36 million square feet. We collect $914 million a year. And you add the permissions and density, we have 88 million square feet, 60 million is zoned. And then we say 62 shopping centers at 225,000 square feet each starting with at least one anchor. And you were to total all that and we were to build it out, it would be built out, it would be 138 million square feet.

Now we can go to the next slide. If we assume we're not going to do that, at least not in the time frame that relevant to most of us in the room. And we just said we were going to build like 0.5% of our density a year. And we are going to say that only 2 million of it is IPP. And I'm talking about average over the next 10 years. I'm just painting a picture of what this company could look like and hopefully will look like at least.

You would have 500,000 square feet a year, 5 million over 10 years. Let's say we divide it this way. This would be, say, condos. And this would be multi-res and other forms of non-retail. And then you were to take the 62 shopping centers at 225,000 square feet and say, let's say we only do half of that in the next 10 years, so 31. The company would grow. I mean, if you take the 5 million and you take the 7 million, you'd be -- we will have developed over, I guess, 12 million square feet. We will have added 2 million of IPP, and we'd be a company that would be 9 million square feet larger with IPP and hopefully, some profits from the 3 million.

We thumbnail that one of those example, we call the many towns, shopping centers would be about $0.01 accretive -- sorry, it would contribute $0.01 to FFO for every one of those centers conservatively, pretty much day 1 on stabilization without bumps. So that's a look. If we're a company right now of 36 million square feet, you can sort of think about the company being somewhere between, I'd like to think between 45 million and 50 million square feet if we're able to accomplish this conservative road map here. I do fully anticipate we will build 30 new shopping centers for the next 10 years.

Next slide. To highlight that, to put some specifics behind this, we'll show you a couple of these centers that we're referring to. These are the retailers driving what I'm describing. Here are 3 markets that it's manifested in. 3 markets that we're willing to share with you and that we announced on our analyst call. So Kingston, Ontario. When I show the names of retailers here, I'm just illustrating what's there now and understand that there's been a lot of population growth and how we could look at this market. I'm not announcing anything. I'm just saying that this is an example of a population of almost 200,000 people with one, for example, one Walmart store.

Somebody might think, didn't you say one SmartCentre per 100,000 people? And a SmartCentres has often had a Walmart store in it. If it was to theoretically happen in that sort of math, you would say that there's room for another SmartCentres. And it would likely be here because we just bought the land and it's zoned. So.

And the site plan, I think we can show you. So we've not really shown this to anybody. This is -- this hasn't even been shown to the retail community yet, but this is what we anticipate will happen here. This is what we hope will happen here. And we don't have, per se, any contracts with anybody. But this is what we're sort of doing. This is what we do. This is our thing.

Next slide. Lindsay. I went to Lindsay when I was, I guess, 30 years -- 25, 30 years younger with Walmart, and we loved it. It's really a Walmart prototype market. And so I tried to buy land there. And just to give you an idea of how slowly land development can be. I literally tried to buy a property here. And the owner would not sell to me, and he was determined to do his own thing, and he never got around to doing it. And because we bumped into the 2011 sort of moratorium, if you will, on new stores, this market just continued to grow.

And when the GTA became too expensive and all the real estate developers of Toronto homebuilders decided to go to bedroom communities, Lindsay was one of them. And so all this land here is owned, 1,200 acres is owned by Tribute, Toronto developer. And they're building homes there. They're not the only ones. Anyway, it's a prototype town.

Next slide. So we've made a deal there. It's been recently approved. We're hoping -- we have no contracts, but we're hoping to develop something that looks like this, which looks very much like a SmartCentre. And this would be an anchor. This lease would have 20 years plus options. This would have bumps every 5 years, and this would be the complementary retail. That pad in the corner, these things are all negotiated. We wanted to build one there. And there, this retailer didn't want one in each corner. So there's -- they didn't want either one actually. So we split the difference, and we ended up with one pad there. That will be a very desirable unit for somebody. And this will just be a very -- if this happens, this will be just a blue chip for the next many, many decades.

That's Highway 35, goes up to the Kawarthas. The town is 27,000. It is the regional seat, has a hospital and very solid employment. But it trades for 25, 30 kilometers around it. Perfect size, just a killer efficient 16 acres with an acre. Great access, signalized access here, signalized access here, and that's all new homes. This is a prototype for the retailer that we're hoping to have there.

Next. Yes. So Winnipeg is 1 million people basically. And see, by a rule of thumb that we would use, let's say, there would be room for more than one Walmart store. Again, we have no commitments, but we're anticipating this as a possibility. Winnipeg is a great market for Walmart. When Walmart came to Canada, they entered buying Woolco. Some of you would remember Woolco. Woolco had great coverage in all the least, sort of sexy, if you will, markets. They were very dominant in -- and so they were very dominant in Winnipeg. So Walmart bought Woolco. They had instant dominant market share and have always had a great relationship with the customer in Winnipeg.

The other market they dominated was Newfoundland. So when I was working with Walmart in the early days, they didn't really know Canada that well. It was like, hey, what do you know about Winnipeg? What do you know about Newfoundland? Because we're buying Woolco and they really own those markets. I said, okay, well, we have a lot of work to do in Ontario.

One of the things that we ended up with at Winnipeg was what's called Unicity Mall. And it was known for being a terrible mall. And it had -- I think it had a bay in it or something. But anyway, I remember, it was a mall, it was enclosed. It was a mini mall. It was just too -- it wasn't large enough to be a draw for fashion. And it was not small enough to just be de-malled. It was just right in the middle. I can't remember who we made the deal with. Marlborough, I think. I can't remember, I think it was Marlborough.

Anyway, so I made a deal with Walmart to come to Unicity. We used to -- eventually we used to call it Unabomber because it was so bad. And that's basically -- we wanted to just blow it up. So just imagine, it had a bay on one end that they so badly wanted to get out of, but they had an old operating clause obligation to operate, but their rent was like $2. So of course, we wanted to get rid of them. But on the other hand, they wanted to get out. But then when we bought it, they figured like we want them to get out. So they don't want to get out. Now they want to stay. And so they would try and get us to pay them to leave. So it was a bit of a cat and mouse. And so I'm so focused on getting them out and make a deal, okay, fine.

So we vacate the bay and most of the other leases in the mall were short-term leases, except for one. So we got -- first, we went to council. And we asked for an approval to de-mall and build the Walmart store and demall the Unicity. Well, all the seniors from the area loved going there and walking around. So they came out to council to try and convince council not to approve the de-malling. But we really thought we had the votes. I mean they all wanted Winnipeg. They were looking for this reinvigoration of retail.

So they vote in favor and sentimentally, they acknowledge that there's history with Unicity, but they approved it. So we all are happy. We get the news. I wasn't at the council meeting to get the news. The council approved the Unicity conversion to an enclosed mall. And then the next day, we hear that somebody appealed the approval on the grounds, that one of the council members got up during the meeting, during the presentation, to go take a pee. Okay. So just keep in mind, like being a Walmart developer all those years, so you've heard it all and everybody was trying to stop Walmart everywhere.

Nobody put the red carpet out back then. And so this was back then. So somebody says that one of the councilors during the presentation went and took a pee. So technically, legally, the councilor did not hear the entire argument against the Walmart approval and the redevelopment of the mall.

And it went to court, and we lost, and we had to apply all over again. And we won. And we de-malled it -- sorry, and we vacated it. Except there was one tenant who was 1,200 square feet, who had term, was a hair salon. So we had a, I think, 550,000 square foot enclosed mall, completely vacated, that we legally had to open every day, the mall. The hair salon was in the middle of the mall. Opened the mall every day and closed the mall every day for this hair salon who was trying to, basically we offered everything to try and get them to leave for a long time. And then eventually, they -- we made a deal with them. It took a long time.

I tell you this story because I was signing some things here, and I was -- Michael was reading all those things, and I was actually thinking I was going to go to the bathroom. And I knew I was going to be telling you about Winnipeg and I was thinking to myself, am I allowed to leave to go to the bathroom while these things are being read? Will they not actually be technically passed if there's not whatever quorum and whatnot? So that made me think of it. And so we're back. I mean we're back in Winnipeg. This one's pretty much greenfields, straightforward. It's a wonderful, wonderful property zoned, if you can go to the next one.

It's a pretty simple one, be a large tenant there and not a lot of retail, but just a beautiful bread and butter, flat as a pancake, Winnipeg, flat as a pancake. And the Costco, there's a Costco going next door over here. I mean it's just going to completely change this area. So it just gives you an example of 3 of -- like you can see there's just 3 of potential blank number of new SmartCentres potential across a country that grew 6 million -- by 6 million people over the last dozen years with retailers who are very dominant in this country and didn't grow. And they come to us because we're -- this is our natural habitat. This is our bread and butter. And so we're busy.

Next slide. This one is just an update. We have an Outlet Center. If you haven't been there, you really got to go there. It's probably our most valuable asset, single asset in the company. 401 in Trafalgar, in Halton Hills. This is just to tell everybody that in addition to everything we just talked about, there's lots of other things happening. And we're just highlighting a few of them. These are all going on at the same time at this company that trades at a 21% discount to its NAV, okay?

So Simon, who are our partners here, who are expert. They are exceptional at what they do, have been doing the leasing and we've got 50% of the expansion leased. It's a bit of a piece of surgery. We've got to add a parking deck before we add on the retail. So we've got to do some -- it's a real wire act. But we will be adding 80,000 is it? What is it, 80,000 square feet?

85,000.

85,000 square feet. So bought considering the average tenant size there is probably 4,000 or 5,000 feet. And the retailers that we're going to be adding, I mean, I'm not I'm not a huge shopper actually. But if you are an Outlet Center shopper, you will be excited by some of the names that will be coming here. This thing is one of the top Outlet Centers in the world. Premium Outlets is the #1 Outlet Center chain in the world. And this is in their top 3, and they're all across the world.

It's 110 million square foot expansion. We're about -- we've got approvals. We've got the working drawings done. We've gone to tender, and we will commence construction here soon. It's all right there. You can see the expansion. We wish we had more land there, but making the most of what we've got.

Next. Most people don't get as excited as us about a picture of a parking deck, but that does excite us at SmartCentres. Okay. Next, that's the oxygen. This is an update on a 200,000 square foot Canadian Tire, which will be a flagship because it's right around the corner from their office. It's a multilevel Canadian Tire. It's a relocation from Eglinton and Laird. This is a SmartCentre right here in Leaside in Toronto. And that Canadian Tire is a 20-year lease. It's not a sale. This is our neighbor who is loving us right now.

Yes. So this is meant to be turned over this summer. We will be turning this over to Canadian Tire and their rent will commence sometime in the fall, I believe, or maybe just in the new year. Hard to read this plan, but it's a lot of parking under the building. You'll go here and you'll park underground, there's underground and surface parking under the building.

Yes. Next slide. And the other sort of steady blue chip growth lever is our self-storage program with SmartStop. And I'll remind you that SmartStop is why we chose them. We don't base who we partner with based on their skills or expertise. We go based on their name. And so obviously, we chose SmartStop. They don't know what the hell they're doing, but it just fits so well with us. So we just keep going with it and it's working out so far.

No, actually, they are amazing. I love the fact that they were small in the U.S. They didn't think they could compete with the giants and storage was really raging in the U.S, so they looked at Canada. And Michael Schwartz turned out to be, along with this company, they've gone public. It's turned out to be a great partner. And they're great operators. They make us look good, kind of like Simon, they make us look good. Kind of like all our retailers, they make us look good. They make us look good. They operate these. And I think they actually look good too.

And we're not afraid or ashamed to put these on our shopping centers, wherever we've got a little nook or cranny. They don't need a lot of parking. A lot of the density is in the air. They're not offensive. We don't have trouble getting them approved, and we work very well together in finding new locations. So we've surpassed, I think, 1 million square feet our share of storage in this program, and it will just continue to chug along, kind of along the lines and paces of what we've been doing.

Next. So these are under construction. And each one of these is, I think, about 120,000, 130,000, 140,000 square feet. And then we're anticipating to start in New West, yes, you can read it. And next year, there'll be another 3 or 4 or 5. We'll do 3 or 4 or 5 of these a year for the next number of years. So, foreseeable future. And we keep an eye on the storage industry. I mean, we're not oblivious to the fact that there's other people building them.

Next. And just a quick update. We do have a condo under construction. So this really enables me to show you and remind you that SmartCentres owns like approximately 100 acres of land on the subway line in Vaughan. Now this is not the north anymore. I mean the city has grown so astronomically. And it is strategically located because, of course, you've got a subway, which is right in the middle, a bus terminal that takes everybody from York region to the subway right here, coming both of those things coming right to the property.

But not just that, we've got Viva crossing all the York region municipalities and over to Brampton, bringing everybody to the subway. And that thing there gets you down under the street. You don't have to cross that grade into the subway. That really is the supercharge, the fertilizer of this development, not just ours, but others around us. We're zoned for 20 million square feet. We've only built 3.4 million square feet of it. It's starting to shape, look like and feel like a city center that it's planned to be and zoned to be.

The one building we do -- we've built, what you see here, this is not built. This is -- well, this is under construction right now. Sorry, just, yes. This, we're probably going to start building next year. This little 5-story rental. And we have something cooking for an office building here, a new office building, which will be -- to be announced later date.

And this -- I think next slide shows you the condo that is under construction. So we built in anticipation of future density, we built 3 levels of underground garage here. So it's a pay-forward situation, long-term approach, long-term minded approach. This will be a combination of commuter parking and parking for the first tower, the future tower, the rental building that I just mentioned, a little jewel box building there, which is very, very small and not parking intensive. And if we build an office tower, it's going to be here, and we're going to utilize this parking and not build parking underneath that.

So yes, we're developers. This is the old Walmart store that we relocated. And for now, we'll leave it there until -- well, actually, we're looking to demolish that, actually, at this moment. And so this tower is -- used to be bigger. But when the music stopped on condos, we had sold, I'd say we had sold 3/4 of the building. And we didn't like the idea of having 25% yet to sell. And that was because we held it back. We didn't want to sell certain floors. We hadn't decided what we were going to do on the lower floors or the top floors from a mechanical, electrical and other point of view. Plus we thought maybe there'll be a little bit more sort of juice in the lemon.

Eventually, we reconciled on our mechanicals, electricals and so on, and the market was gone. So basically, we just shrunk the building. So the building is for all intents and purposes, sold out with a few units available. And we've got significant deposits on a significant price. So it will be interesting to see what happens when closing time comes.

I think if it was today, we'd have some defaults, even though they've got 20% of an average of $1,150 or $75 a square foot. It's hard to say what people would do. But we don't have to worry about it today. It's a year or so away or more. Next, I think that's it. Sure you guys all want to get out here? Any questions, comments, complaints, queries?

One question online. It's around why is SmartCentres trade at such a high distribution, or put another way, at a high discount relative to its peers?

We're not 100% sure. I mean, that's just the fact. We'll do everything we can to give all the information that we think would result in the units going up higher. I mean they've gone up a bit in the last 6 months, but it's a long way from now. We're not 100% sure. We're not sure whether people don't feel they have to buy it now because a lot of the, I guess, the growth is development. So it takes a bit. Mind you, this kind of development doesn't take that long anymore. The high-rise did.

But that's no longer an explanation. Because the fact is that you can, I mean, if you bought this stock and you got Walmart rents and you got a 5.5% return, you'd be doing well. You can buy this stock and get 6% up and it's a very secure income. It's really hard to explain. I don't want to get into some of the other fringe theories. Retail was in the dog house at some point for a while. It's never really fully come out of the dog house. There's no good explanation, just buy it.

Yes. It's true, though, it's funny. It seems funny, but the fact is that sometimes things are just too easy. Just go to money managers and you'll listen to all their theories about how you should invest and what you should do. And then you'll just keep an eye on it, you'll see in 2, 3 years from now, you'll find out you got 5%, 6% -- you'll end up at between 5% and 7%, okay? I'll buy you a coffee if you do better. From all your, all your gesticulating, all your, no offense, all the big brains, will invest your money for you. They'll take fees. You'll spend a lot of time. And you'll end up somewhere in between. You will talk about the home runs, but you won't tell everybody about what you're averaging. And it will be between 5% and 7%, or you just buy this and go spare yourself, tinker and go play pickleball.

Any other questions, comments? We really always appreciate because, of course, everybody here, family and/or very friendly faces and people we've worked with for so long. And everybody is busy, very, very busy. Everybody in this room has more to do than they have time to do it. And we know what it takes to be here. And once you're here, it's nice, but I know what it's like. And seeing you all here is very, very much appreciated. If you wonder or you don't wonder, you know that when you come and just show your face that it's very, very much appreciated. It's great to see everybody in person. And most everybody here supports us. And so we thank you very, very much for that and for coming. So have a good day.

Good day, ladies and gentlemen. Welcome to the SmartCentres REIT Q1 2026 Conference Call. I would like to introduce Mr. Peter Slan. Please go ahead.

Thank you. Good afternoon, and welcome to SmartCentres' First Quarter 2026 Results Call. I'm Peter Slan, Chief Financial Officer and I'm joined on today's call by Mitch Goldhar, Executive Chair and CEO; and by Rudy Gobin, our Chief Portfolio and Asset Management Officer.

We will begin today's call with some comments from Mitch. Rudy will then provide some operational highlights, and I will review our financial results. We will then be pleased to take your questions. Just before I turn the call over to Mitch, I would like to refer you specifically to the cautionary language about forward-looking information, which can be found at the front of our MD&A. This also applies to comments that any of the speakers make on today's call. Mitch, over to you.

Thank you, Peter. Good afternoon, and welcome, everyone. As in prior quarters, we will keep our comments brief to allow more time for your questions. Strong retail fundamentals highlighted in 2025 have continued into early 2026, with 80% of our 2026 lease maturities extending by the quarter-end at retail lifts of 11.5% ex-anchors. This strong retention rate and rental lift is further supported by a 3.4% same-property NOI increase ex-anchors. Demand for space, including new-build built space remains strong as we continue to improve our tenant mix and covenants. As we mentioned in February, we terminated 6 Toys"R"Us locations in early July before their CCAA filing. This gave us the flexibility and control we needed to manage the re-leasing of these locations.

Shortly after the quarter end, we reached commitments with various grocers for 3 of the ex-Toys locations for which we are currently finalizing the documentation. We have also reached a firm commitment with TJX for Winners in a fourth location. With these deals, if measured today, our occupancy would be 98%. Further, these deals offer higher quality, stronger covenant and new 15-year terms and 10-year term, respectively, replacing the 3-year term we had. And all that with higher traffic all year long and not just in the fourth quarter. Most importantly, the new Net Rents are 20% to 25% higher than the previous Toys"R"Us, adding NOI, stability and valuation to our portfolio.

As I have said previously, we will stay on strategy, taking the appropriate time in building a strong, stable portfolio for the long term. As we noted in our Q1 press release, we are embarking on a retail expansion program. The 3 projects announced are Board-approved and just the beginning, 2 of which will start construction later this year. We expect these new-build developments to deliver accretive FFO growth. With the program, which has been going on for a while now, will continue for many years.

Stay tuned for further announcements in the coming months. At the corporate level, which Peter will speak to in a few minutes, you will see that we have continued to carefully manage our balance sheet, debt and related metrics. Our financial flexibility remains strong with over $1 billion of liquidity and an Unencumbered Asset Pool of $10.2 billion. We have also taken steps to insulate ourselves from potential interest rate shocks with 88% of our debt being at fixed rates.

With that, let me turn it over to Rudy for some more operational highlights. Rudy?

Thanks, Mitch, and good afternoon, everyone. The resiliency of the SmartCentres Walmart portfolio was once again a standout for Q1. Same-Property NOI continued its strong momentum with 3.4% growth ex-anchors in the quarter. And if we look at the longer term of the trailing 12 months, we are at 4.8% ex-anchors with 3.0% all-in. Occupancy in the quarter experienced a temporary drop at 97.6%, largely because of one tenant, Toys"R"Us, which Mitch mentioned earlier, with an early January, that was termination that we did deliberately to get control of the space. Now with the committed deals from grocers and TJX we have in hand since the quarter-end, if measured today, we would be back at 98%.

And with 4 of the 6 Toys units attracting rental increases of 25% above what Toys was paying as Mitch mentioned. And so the longer-term NOI and FFO looks even better on a go-forward perspective, all combined with a stronger covenant portfolio. This resiliency is also reflected in the 80% of the 2026 lease maturities already completed and with a rental lift of 11.5% ex-anchors or 5.8% all-in. Cash collections continue to remain strong at near 99% in the quarter and demand continues from our core tenants, grocers, TJX banners, Canadian Tire brands, Dollarama, Pharmacy, banks, pet stores, and fitness.

Along with these also integrating a bit of entertainment, bracket and sports, rounding out a more fulsome retail offering where our minor vacancy exists. Our Premium Outlets continue to excel in driving traffic, with improving tenant sales and the resulting percentage rents. Toronto Premium Outlets is doing very well and is ranked in the top 3 in sales in this country and providing an expansion opportunity of near 100,000 square feet.

With 50% of the leasing completed, this expansion will be accompanied by a new parking deck and construction is scheduled to commence later this year for a grand opening in late fall next year. Overall, the business remains strong, rents are growing and the covenant quality of the portfolio is improving. We expect this momentum of rental growth and occupancy to continue throughout 2026. Thank you, and I'll now turn it over to Peter. Peter?

Thanks, Rudy. As you have seen in our release, the change in FFO this quarter was primarily due to higher interest and G&A expenses, partially offset by the higher Net Operating Income. Our G&A expense this quarter included approximately $2.7 million of non-recurring costs associated with the renegotiation of the various agreements with Penguin. Excluding some non-recurring costs from the comparable period in the prior year, the net G&A run-rate increased by about $1 million. This is an improvement over our estimate when we announced the renewed agreements with Penguin, although we continue to believe that an incremental $1.5 million is appropriate for subsequent quarters.

As we noted at the time, these new arrangements have resulted in a meaningful simplification of our arrangements with Penguin. The earnouts are settled with the related development lands now being solely for the benefit of the REIT. The mezzanine loans, where the total committed amount was as high as $330 million, half of which was drawn at various times, have all been eliminated. The voting top-up right has expired and was not renewed. The variable portion of the Penguin services agreement has been eliminated in exchange for a single fixed fee, and the non-competition agreement was renewed. We again maintained our distributions during the quarter at an annualized rate of $1.85 per unit. The payout ratio to AFFO remained stable at 89.9% for the rolling 12 months ended March 31, 2026.

The Adjusted Debt to Adjusted EBITDA increased modestly to 9.8x. However, the proceeds from the partial settlement of the Total Return Swap just after the quarter-end were used to retire debt, resulting in a pro forma ratio of 9.7x, unchanged from the previous quarter. The weighted average term to maturity of our debt, including debt on equity-accounted investments, is 3.1 years. As in previous quarters, we've updated our MD&A disclosure, focusing on those development projects that are currently under construction. As you can see on Page 17, there were 8 projects under construction at the end of Q1, unchanged from last quarter. And with that, we would be pleased to take your questions. So operator, can we have the first question on the line, please?

[Operator Instructions] The first question is from Sam Damiani from TD Securities.

First question, I guess, just on the Toronto Premium Outlets expansion that was alluded to. Could you provide a little more detail, I guess, on the cost and the return on that?

At the moment, the expansion, 100% numbers is about $110 million. And the projected return on that is in excess of 8%...

Sorry, did you say day 1?

Yes. Like the initial Day 1 rent projection as a return of that $110 million is -- I think it's something like 8.35% or 8.4%. Yes, it's already 50% leased and that's partly self -- it's partly delivered.

And you're confident that it will be substantially, if not 100% leased on opening.

Yes. Yes. It's very much the case. It's really very in demand.

That's great. Congrats on getting that going. And these 3 new greenfield projects, I guess, 2 of which are starting later this year, is there other size and scope metrics that you're disclosing publicly, including the locations specifically?

Yes. I mean, like the rest of the portfolio, I mean, it's going to vary the size, but it's pretty typical smart centers type stuff in terms of size. They'll be anchored, all of them. And yes, I mean, probably -- I don't know whether we announced the sizes in there, but very much typical. Some of them will be 2 anchors. So they're not small.

So these would be somewhat meaningful supply additions to the -- I assume the trade areas of these locations. What gives you the, I guess, the confidence and the conviction to move ahead in these 2 or 3 locations?

Well, I mean, first of all, the retailers, I mean, these are properties we're buying because we have pre-leased to anchor tenants. So you could say they're being driven by consumer demand. Keep in mind that many, many retailers, major national retailers have not expanded in sync with the population growth. Things really stopped growing in sync with population probably 15 years ago. So in addition to the pause of physical retail growth around e-commerce 15 years ago, you also had a lot of inflation on the value of residential land. So you didn't see -- you saw a lot of retail being converted to residential density all over.

And you had -- we've had some very healthy annual population growth in this country for the last 15 years. So when you put it all together, there are -- there's quite a few large national retailers who are playing catch-up. I should have mentioned COVID, which then came along. So then we come to now. And so there's a lot of national retailers who have -- who are interested in catching a lot of residential growth across the country in small, medium and large-sized markets. So yes, I mean, these are some of the factors, some of the variables behind the reasons and the confidence for what we're doing.

And I don't mean to hog the puck here, but obviously, you're going to be building it out in phases the existing SmartCentres portfolio as the buildings are leased, building them out in phases that they're all -- if the center is going to be 350,000 square feet, that could be all built in 12 months.

I'd love to just say I'd love to stare you and tell you that we're going to go and build the 350,000 all at once. But actually, I can't do that to you, Sam. We are -- we've never built -- I mean, for all intents and purposes over the last, whatever it is, 35 years, we've never really built from scratch a space that isn't leased. That's why we've always -- that's where we've had the earn-outs. That's why we've got vacant parcels here and there because we never built spec. Now there are times where we're on a CRU building, we might add 2,000, or 3,000, or 4,000 square feet because it makes sense. But other than that, it's -- we build as we lease.

The next question is from Lorne Kalmar from Desjardins.

Maybe just switching gears a little bit. I mean, you're talking about turning on the development path here on the retail-side. I just wanted to see if there -- if that influences in any way the outlook for dispositions. Are you perhaps a little bit more motivated now that you're going to have to fund some of these developments? And what are you seeing out there in the Market? What do you think is achievable in 2026?

Yes. I mean we've always been motivated to dispose of certain assets, ideally some land. And to the extent that -- we can't do that because the market, which I'll comment on in a second. We'll just gauge the rate of our development around our various metrics. But we are confident that we will be able to achieve some dispositions finally. The market is a little better slowly, but surely. And ideally, it will be some of our PUD. But yes, if the market doesn't cooperate, we'll act accordingly in terms of the rate of development.

Keeping in mind, this development is not high-rise. This is like we build a Walmart store, we started it today, we would be paying rent in a year from now or less. So we're not really carrying the debt for very long. So the path to EBITDA is really very short and straightforward. But nevertheless, we will be managing -- that's how we'll be managed. It would be great if we could achieve some dispositions in the next 12 months.

Okay. And I guess maybe in the event that you can't -- because obviously, there's a lot of stuff beyond your control, unfortunately. Is there like a top end you'd be willing to let leverage go to?

We like our -- we'd like to maintain our current debt rating. I think just in some big-ish kind of way, that would probably be one of the guiding metrics that would determine whether we go or don't go on something. But generally speaking, the land that we're buying is not -- most of it's not really needle-moving stuff. It's more of the development itself. So we're certainly pretty confident that we'll be able to continue to move the Development Program along.

As I said, we -- the only sites we're buying is when we have pre-leased acres. And so we'll -- even if we have to, we would -- I can't imagine it would ever be the case, but we can always slow down acquisitions. But it's the commencement that will watching around our Debt Metrics. So it's not very difficult to do.

Lorne, it's Peter. I was just going to add. We do have some levers to pull. As you saw this quarter, we unwound a portion of the TRS use those proceeds to de-lever a little bit. So -- and there's still another $50 million or $55 million to go there. So there are some tools in the toolkit that we have to manage the debt levels.

And then maybe while I have you, Peter, just one kind of ticky-tacky one on the G&A, and I might have missed it, I think you talked a little bit about it. With the $1.5 million incremental expected, was there -- did you say there was $1 million of that picked up in Q1, i.e., we shouldn't expect a double counting in Q2 of the $1.5 million once the resolution is approved?

That's right. That's exactly right.

The next question is from Mario Saric from Scotiabank.

Maybe just sticking with Peter on the Penguin agreements, just very high level, can you just go through the numbers again in terms of the total potential impact on FFO from the rearrangements.

Well, Mario, there's really not a huge impact on FFO. The biggest impact is on the balance sheet. The largest portion of the Penguin arrangements that we settled was the earn-outs, which is not only with Penguin, but with some third-party partners as well. And that was about $47 million on the balance sheet. And so we now control all of those lands ourselves, and there'll be a future FFO impact as those lands get developed at some point in the future. But the current impact is mostly the G&A that we discussed in the press release about $1.5 million a quarter.

Okay. I just wanted to be clear on that. And then just coming back to the Toys"R"Us discussion, what spend expected on the 4 signed leases that you're getting a 25% rental uplift on...

Can you say that again?

On the 4 signed Toys"R"Us replacement leases, the 3 with the grocers and Winners, what's the estimated kind of CapEx spend required to get to the 25% uplift in net rents?

Yes. I mean minimal, ultimately minimal. I don't know if we have that number at our fingertips, but yes, there's not a huge -- it's not -- they're not bought rental increases.

Yes. And for the most part, Mario, the grocers and the Winners are taking the boxes, and we're not spending money on subdividing boxes into smaller boxes or changing anything. So it's literally a handover, maybe changing some HVAC systems and so on. But like we said, it's going to be minimal on the capital side.

Okay. And then maybe for Peter, during the quarter, was the interest expense associated with those vacated toys boxes was capitalized during Q1? I'm just trying to get a sense of the FFO impact from the vacancy in Q1.

No, it was expensed, Mario.

Okay. And then my last question, just coming back to the asset sales. Mitch, last quarter, said you could see your SmartCentres is selling $20 million to $30 million over the next 2 to 3 years, the timing of which is obviously very unpredictable. Is that still the range that you're thinking about over the next 2, 3 years in terms of what you would like to do?

Which -- what number did you use?

$200 million to $300 million over the next 2 years.

Yes, over the next 2, 3 years. Yes. I mean, if the Market cooperates, I mean, with [indiscernible], I mean, we have in excess of $1.5 billion, maybe $1.7 billion worth of land. So if the Market comes back even comes back a bit, we certainly think that we could achieve that and potentially more. But that would be -- that's being our target number still.

[Operator Instructions] The next question is from Giuliano Thornhill from National Bank.

Just wanted to stick with that line of questioning. And does that imply your goal is mostly to dispose of the more Residential land and just because the Retail market obviously is doing quite well. So I'm just wondering if that's the main opportunity set that you think is available versus some of the Retail land that you have.

Yes. It's not so much like disposing of the Resident that we have. We have 50 million square feet for all purpose approved square feet of residential across the portfolio. So it's -- obviously, we could sell -- be ideal to sell some of that debt since it's going to take a long time for us to build out 50 million, 60 million square feet. I mean I'll still be here, but I don't know about Rudy and Peter. And we don't want to sacrifice any of the Retail because it's just so straightforward, low-capital very quick path to profit accretive, you build and open in the same market, all those reasons. So yes, we don't want to sell off the retail. We think the residential, which we have an abundance of would be ideal.

And so the earnouts that were settled this quarter, can you give us like some more sense of what that related to in terms of asset wise?

Yes, Giuliano, the lands that this related to were lands within properties that were mostly developed already. So this would be the remaining lands in those properties that were subject to final earnouts. So we've just picked the rest of the land so that the REIT can control and lease-up that space itself in conjunction with the rest of the property. None of it was stand-alone land; it's all integrated within the Shopping Center.

And just one other question on the Penguin agreement. Can you help us understand how shifting to more of a fixed-fee structure may change your approach to capital allocation or even just alignment with unitholders?

Well, I think what we said was that it gives us a little bit more predictability and visibility into cash flow going forward. These are fees for development services, and so they get capitalized to our development projects. And of course, the Beneficial Owner is also the largest shareholder of the REIT. So there's very strong alignment -- and as you know, the whole approach was reviewed and negotiated by an Independent Committee of the Board.

We have a follow-up question from Sam Damiani from TD Securities.

Just wondering, as you look out for the balance of the year, are there any other tenants on the Watch-list that might give rise to some hiccups in Occupancy as small as it might be or Bad Debt Expense?

No, maybe some smaller, but no, nothing like the Toys"R"Us situation. That was a big one. That hasn't happened for a while, though, frankly, I mean, I wish I could do the math right now in my head, but we collected -- that's probably close to 250,000 square feet, maybe 220,000 square feet of space, probably averaging, I don't know, $15 a foot, let's say, you can probably do that in your head faster than me. But I think it's probably close to $6 million gross that we collected for many years that, frankly, was longer than I think a lot of people would have predicted for Toys"R"Us. We probably got 2 or 3 years more out of Toys"R"Us rents.

Now, of course, it happened all at once and it affected our quarter really, but we're coming out of this. I mean it's a setback, but it's turned and it is already turned into an advance. I mean there's just no I mean we've traded toys for food. And we've traded weak covenant for the strongest and we've traded 3-year term for 15-year term in the case of the food service to say nothing of just quality that it brings and traffic, quality of traffic it brings to the center.

So yes, okay, fine, it cost us a quarter, but it's a blip. And when you combine it with the growth program that's going on and has been going on for a long time, it's really a blip. I mean we're talking about today 3 new centers, but there are many more than 3 going on. So it really is a blip. We're really excited about the future in terms of our growth and our earnings, and our FFO.

And just on those developments, just to clarify, was 100% owned by the REIT, or does the REIT have partners in these?

No. These are 100% owned by the REIT at the moment. Of course, I have a non-compete. So that's -- in the past, of course, developed -- did end up being partnership with the REIT going back. But no, these are 100% REIT.

The next question is from Pammi Bir from RBC Capital Markets.

Just want to clarify, would -- is it fair to say then that Q1 likely marked the low point for occupancy? And should we expect to see perhaps the same-property NOI ramp up in the back half of the year? Or are we not quite there yet?

No, it's a low point for this year the way we see it. In terms of rent ramp-up NOI, yes, the back-half of the year should get back to what we -- what you've been seeing for the last little while.

Okay. And then just maybe on the toy space, I may have missed it, but when do these tenancies start to -- like when do they -- these grocers and the Winner space, when will they take possession?

Probably near the -- I mean, maybe the earliest Q3, Q4, it depends on which one we're talking about. So, latter half to the end of the year.

Okay. And then -- but the economic rent, like the Economic Occupancy would commence late this year or into 2027?

We're hoping -- we're hopeful that it will actually -- Economic Rent will commence this year.

And then maybe just on ArtWalk. I can't recall if we've spoken about this one for a while, but can you remind us the total cost of that project and the timing of completion?

Let's go in reverse order. I think we're looking at -- we are -- I think we're expecting to top off in November of this year and just stand by in terms of when we anticipate completion and closings, probably a year from now-ish, I would say, starting. We're out of the ground. We're -- the garage, which is 3 levels is done. We're -- I think in the next couple of weeks, we're going to typical floors, where we will start finishing a floor like a week. So all the arduous work is pretty much done and now it's going to be kind of full steam. I think we'll be doing windows sometime in July, late June, July. Windows will start -- I think I'm stalling here for somebody just me, but I think it's...

Q4 '27 is the first deliveries.

Q4 delivery start closings in 2027.

Okay. So that's good. It's still some time away. I guess really where I was going with this is, have you changed -- first off, have you taken any write-downs at all on that project? Any changes in the assumptions on costs or the assumed default rates on the units that have been pre-sold?

I mean, the costs probably overall are the same as we originally anticipated. We've done better on some trades. certainly, the ones that we thankfully did not let in anticipation of some better prices. So we're happy we did on that. I think we could have done a little better on a couple of trades that we let -- we had to let them like in the last 12 months. So I think we're pretty much on budget there. And then we have 20% deposits from the purchasers. And so it's hard to say what's going to happen. I think if we were closing today, just by prediction, I mean, there'll be some defaults just because I think.

But I think for the most part, they were sold at an average of -- let me just check and see whether we disclosed. Yes. I mean we sold between $11 and $11.75 a foot there. We've got 20% deposits. We've done all the slicing and dicing of analyzing what-if scenarios where if we get units back, I mean, we'd rather not happen. But if it does, I think we'll be in pretty good shape to either resell them at current market price or then market price or rent them out and we should do -- we'll be fine with that, just FYI in terms of those analysis. We're well within the market if we were to get those back or any of those back.

Okay. All right. And maybe just moving on last one, just on the new developments that you announced, the new greenfield sites. Are these Walmart-anchored or not other anchors, whether it's other grocers or any of your large tenant?

I think it's taken 38 minutes for somebody to ask that. Well, we are not announcing the actual tenants at the moment, but they very much reflect the overall profile of our current portfolio. So there'll be lots of familiar names in terms of the Anchors that we'll be building on these properties. And as I say, the 3 that we're mentioning right now are just represents a larger program, a larger, accretive program. And I might add that for all intents and purposes, all the anchor tenants in this program have bumps and are, for the most part, between 15 and 20 years. And there'll be the odd sub-anchor at maybe 10 years.

Okay. That answers that last question, I guess. None of the Anchors will have flat rents forever.

No, they will not have flat rents forever.

There are no further questions in the queue.

Okay. Thank you for participating in our Q1 call. Please feel free to reach out to any of us if you have any further questions. Have a great day. We'll speak to you soon. Bye-bye.

Ladies and gentlemen, this concludes the SmartCentres REIT Q1 2026 Conference Call. Thank you for your participation, and have a nice day.

Good day, ladies and gentlemen. Welcome to the SmartCentres REIT Q4 2025 Conference Call. I would like to introduce Mr. Peter Slan. Please go ahead.

Good afternoon, and welcome to SmartCentres' Fourth Quarter and Full Year 2025 Results Call. I'm Peter Slam, Chief Financial Officer, and I'm joined on today's call by Mitch Goldhar, Executive Chair and CEO, and and by Rudy Gobin, our Executive Vice President, Portfolio Management and Investments. We will begin today's call with comments from Mitch. Rudy will then provide some operational highlights, and I will review our financial results. We will then be pleased to take your questions. Just before I turn the call over to Mitch, I want -- I would also like to refer you specifically to the cautionary language about forward-looking information, which can be found at the front of our MD&A. This also applies to comments that any of the speakers make today. Mitch, over to you.

Thank you, Peter. Good afternoon, and welcome, everyone. Our comments this afternoon will be succinct to allow more time for your questions. SmartCentres continued its strong performance in Q4, closing out 2025 strong, same property NOI growth, high occupancy levels, competitive rental lifts, higher FFO developments on schedule while maintaining a conservative balance sheet. At the property level, performance across all sectors throughout the country, retail, industrial, residential, storage and office are all experiencing healthy short- and long-term growth with high tenant retention. And in the area of retail specifically, very healthy growth.

Among other things, this is translating into upgrading and expansion of our existing retail sites with stronger covenants as well as the development and build-out of newly acquired retail sites across the country. And while the business continues to grow organically and through new income-producing developments, we will continue to carefully manage our debt and debt related metrics. In that regard, we have improved our financial flexibility with over $1 billion in liquidity, 9% of debt being fixed rate and for the first time, attaining an unencumbered asset pool of $10 billion, which Peter will speak to in a moment. But before that, let me turn it over to Rudy for some more operational highlights. Rudy?

Thanks, Mitch, and good afternoon, everyone. The fourth quarter was once again a standout and delivered on the momentum of the prior quarters. Tenant demand for space remained strong, delivering high-quality income across the portfolio maintaining a leading 98.6% occupancy at year-end, unchanged from the prior quarter. Same-property NOI continued its strong momentum with 3.7% growth for the year and 5.6%, excluding anchors, and well within the range we outlined at the beginning of the year.

We extended 88% of the 5.3 million square feet of space maturing during the year with rental spreads of 8.4% excluding anchors and 6.3% all-in. Cash collections remained strong at near 99% in the quarter. Strong retail demand for our high-traffic centers have allowed us to expand into complementary uses with medical, daycare, entertainment, bracket and sports facilities. Our premium outlets continue to excel in driving traffic with improving tenant sales and a resulting percentage rents, which we convert to base rent at maturities.

At Toronto Premium Outlets, the increasing demand for space has developed into an expansion opportunity of 85,000 to 90,000 square feet, with top end tenants already signing leases. This expansion will be accompanied by a new parking deck, and all of this is already underway with a construction start expected this summer. As you know, after the year-end, file for credit protection -- but prior to that, the REIT had already terminated its 6 leases and taking control of the space based on the advanced lease negotiations to backfill with and TJX banners. We expect to release at least half of these locations very soon and at higher rents.

On ESG, we continue advancing several initiatives across the organization as part of our multiyear plan. including materiality assessments, decarbonization planning, physical preparedness and response to the climate change, cyber security improvements and enhancing our disclosures. Overall, the business remains strong. Rents continue to grow on the foundation of an improving retail environment, greater cash flow stability, improving covenants and an expanding footprint. We expect the portfolio to continue this momentum throughout 2026.

Thank you, and I will now turn it over to Peter.

Thank you, Rudy. As you have seen in our release, same property NOI growth remained solid, increasing 2.9% for the quarter or 5.1% excluding anchor tenants, mainly due to lease up and renewal activities partially offset by the impact of an expected credit loss provision primarily associated with 1 retail tenant. Excluding the credit provision, same-property NOI grew at 4.5% in the fourth quarter. The change in FFO this quarter was primarily due to NOI growth and the fair value adjustments on our total return swap.

During Q4, we also closed on 7 townhomes in our Vaughan Northwest project. This has resulted in a cumulative margin of approximately 23% for the project to date, bringing Phase 1 of the project to virtual completion with 118 of the 120 homes now closed. We again maintained our distributions during the quarter at an annualized rate of $1.85 per unit. The payout ratio to AFFO continues to show improvements at 89.2% for the full year ended December 31, 2025. Adjusted debt to adjusted EBITDA was 9.7x in Q4, up slightly from last quarter. The weighted average term to maturity of our debt, including debt on equity accounted investments, is 3.4 years, a significant improvement from 2.9 years at Q3, largely as a result of debentures we issued during the quarter and the maturities that were refinanced.

As in previous quarters, we have updated our MD&A disclosure, focusing on those development projects that are currently under construction. As you can see on Page 18, there were 8 projects under construction at the end of Q4 unchanged from the prior quarter.

And with that, we would be pleased to take your questions. So operator, can we have the first question on the line, please? .

Mario Saric from Scotiabank.

Just maybe to start on the capital recycling/allocation side. which last quarter you talked about some potential dispositions of some vacant buildings. Could you just give us an update in terms of what your targets are like in 2026 and the timing thereof?

Mario, we have something going on 1 of the -- I think maybe exactly how teams framed last time, but there were a couple of sales that were still not done that we were anticipating. One of them is seems very much alive. The other one, I think the other 1 it's actually a vacancy that we thought we had sold, but it fell through that we're now negotiating a lease on. So that's in terms of sort of the 2 that were outstanding from last call. And then in general, the market conditions seem to be a little improving for capital recycling for dispositions. So we are hoping to see some dispositions of, first and foremost, lead potentially some non-IPP some land which we are currently starting to focus on.

And what would you attribute the improved kind of sentiment in terms of the buyer pool?

Probably, I think it's partly to do with there's -- I mean not that the world is so great, but it does feel like there's a little more visibility or a sense of visibility whereas a year ago, there was a lot more uncertainty. People were actually sort of nervous a year ago. I don't -- I think that there's a little bit more confidence -- so I think it's a big one. I guess, construction prices are softening little bit more motivation in the sub-trade marketplace so for certain types of construction. I think that's helping. And I'm not saying it's red hot or anything. But I think in terms of people making moves and opening their wallets of it, it does feel like they're -- it's better than it was.

Got it. Okay. And speaking of construction costs, I may have missed it, but in terms of the expected expansion the Toronto premium outlets. Can you share with us any kind of range in terms of the cost and types of returns that you think you can achieve?

We don't really jump in there, too, but the returns are quite solid in excess of we anticipate in excess of 8%. And probably we're still -- you know what, we're still negotiating on the construction. So I'd rather not speak to the cost -- our contractors could be listening in. We are in negotiations right now. But it looks like a pretty healthy 8-plus percent return.

Got it. Okay. My last question on the operational side. You have industry-leading occupancy every time we think it can't go up any higher, it does. When you look at '26, what is your projection in terms of at least maintaining the occupancy like we've seen a couple of tenants face a bit of pressure, you highlighted a couple of beer stores, for example, that were given back. So I'm not sure what your exposure there would be, but how do you see the occupancy both kind of in place and committed evolving '26.

Well, of course, you had to say couldn't get any higher. And then, of course, we have a play the rest. So -- but this is something that's actually frankly, the least what's the right way to say it. We were not surprised by the Toys"R"Us situation. As you know, we already dealt with a couple of them before they declared. So if you x them out, I think you're looking at very, very very strong occupancy levels. And we have a lot of interest in the Toys spaces at better rents and better covenants and better draw and long-term leases et cetera, expense. But I'll let Rudy further illuminate on that.

Mitch said it well. The only thing I'd add is we terminated those leases before the filing, so we have control of the space because we had parties we were talking to grocers, TJX banners requesting those spaces, they're perfect sizes for food for the likes of TJX banner. So we have control of all the spaces, and we are exchanging paper on 4 of the 6 of them already, which is fantastic. So we -- excluding that, we are expecting another strong occupancy year.

The next question is from Giuliano Thornhill from National Bank Financial.

Just kind of 1 question on deleveraging. I missed the tail end of the question actually that was asked earlier. Just with your kind of payout ratio at the mid-90s, like net debt at the high 9%. Has there given thought to more aggressively selling some of the noncore IPP and if not, why?

Well, first of all, I don't think we really have any noncore IPP. So, and it takes an enormous effort to create the shopping centers, most of these shopping centers or some of the other forms to create in the first place. And we put a lot of thought upfront thought into developing them. Most of them, as you probably know, we developed probably 85% to 90% of the portfolio. We developed it. So at the end of the day, we do all the upfront strategic thinking. And so we don't really have -- we didn't buy varieties of forms of retail and or whatever we can get our hands on to arbitrage IPP for debt and so on and so forth.

So we don't have sort of fringe assets that are undesirable. So we don't -- and it's tough to move the needle life even if we did want to part with IPP. I mean, would be tough to move the needle in terms of cap rates and giving up that income. It's very, very good income and we collect 99% or over 99% of our IPP. So we forge on, with our IPP. We do have a lot of potential PUD for disposition. So we can afford to "sell PUD" and that would be our first -- that's our overwhelming preference in terms of capital raise and capital recycling it really does move the needle. The market just hasn't been there. It seems like there is a bit of a market there now. I don't want to overstate it. We're going to test it, but that's where we're going to focus on. .

Yes. And I guess I was going to my follow-up is Where are you kind of starting to see the land values bottom or possibly increase at all in your portfolio?

Yes. I mean, wherever we have retail land, if we haven't developed it, we can sell that. But we're is not going to sell that. But the mid-rise, the lower rise, midrise residential there's a feeling that there's some potential. There are seniors housing seems to have life in terms of potential potential dispositions were getting approached. We have excellent sites for both midrise, high rise for that matter, and seniors homes. So yes, there is a market for storage, but we're in the storage business. So we're not really sort of inclined to dispose of that. So those are the main categories that we think there's a little bit of life.

And so how large is that opportunity the seniors in kind of low to mid-rise within your portfolio? Is it 20%, 30% or less than that?

I mean I'll come back to the -- I'm not sure if you meant what percentage or what we have, I mean -- but no, we're I'm talking about we could sell -- I mean we have somewhere in the 60 plus or minus 60 million, 70 million square feet permitted density across the portfolio on our owned properties. So what I was referring to was selling some of that some of that density carving those out.

I'm just trying to get to like a number that is reasonably realizable in the next couple of years for those 2 uses is kind of where I was going with the question.

Yes, in the next couple of years, and lot easier than saying the next year, but the next couple of years, I mean, we could see -- I mean, we'd like to sell $200 million to $300 million worth of that over the next couple of years. And Morris a market for it. .

The next question is from Lorne Kalmar from Desjardins.

Just 2 quick ones for me, and I'm really sorry if I missed it. I was just wondering, did you guys mention a same property NOI outlook for 2026?

As you know, we had a 7%. And if you excluded toys from this mess we would be in a similar range for 2026. Toys is going to put a little damper on things at the beginning of the year. So we might be a little bit lighter than we were last year because of that. but we're expecting something in that range ex the toys. So -- and we -- and because we have good backfill for the toys, which won't take occupancy right away because we'll execute some of these leases very soon. But by the time they take possession, it's probably into -- so you won't see it until you get closer to the end of the year where it catches up.

Okay. That's very helpful. And then I was just wondering, any updates in relation to building out new stores for Walmart. I know you guys just opened the 1 in or just west of the GTA here. I was just wondering if there are any updates on that front.

First of all, I guess, the new retail program here is really picking up in general. So I would say that is something worth noting. We are we are anticipating quite a bit of growth over the next, let's just say, 5 years in the areas of -- I mean, grocery, Loblaws, Sobeys, potentially metro, Costco, TJX those are large space users. And of course, we do have a long -- a long-standing relationship with Walmart. And so we anticipate that we will be -- we will be also seeing some growth in the new Walmart category as well.

As of now, I guess, though nothing really to report on as it relates to Walmart.

Well, I think at this moment, we will leave it at that. We hope we'll be able to expound on that. But I guess, there's a lot going on in general across the board. -- in all of the areas that I just mentioned, not just garden variety kind of growth in the new retail new sites category of growth. So we will start to shed more light on the details of that. But I guess, in the meantime, I would think of it as it's quite robust.

Okay. Just maybe going back to you mentioned the new sites for growth. Obviously, your premium any other retail developments in the immediate future for you?

Yes. Yes, quite a few. I would sort of what I mean what I'm saying is we're anticipating quite a few new acquisitions of new sites across the country. .

The next question is from Dean Wilkinson from CIBC World Markets.

Mitch, you get a lot of questions about what you're going to sell. I'd like to talk a little bit about more what you're going to keep. When you look out, call it, 5-plus years -- do you think that there is going to be a shift in the mix between retail, self-storage and multifamily and some of the other verticals? And secondarily to that, do you think any 1 of those verticals could hit a size where they're potentially able to just stand on their own.

Well, listen, based just on the retail and what's going on because what we're doing now is going to come out of the ground in the next 2, 3, 4, 5, 6, 7, 8, 9, 10 years, okay? And it's been -- it's nothing driven per se by us. It's actually being driven by the consumer -- and the ones who have the closest relationship with the consumer are the retailers like I was naming like Loblaws and like Costco, Walmart, et cetera. And they're saying through their interest in new in new locations is that there's going to be -- there's a huge investment, a huge commitment, a huge belief in physical retail shopping. And you put a lot of those different retailers and ones that I haven't named that aren't as large space users together and you've got a shopping center in a country that's seen very little physical retail construction in the last 12, 13 years, but a lot of population growth. So I mean, in the eyes of these retailers, there's a lot of catch-up.

So we're 1 of the go-to. We're 1 of the go-tos for that. So we're super busy buying new sites and processing approvals for the development of new shopping centers across the country. And that's going to kick in really kick in like start to kick in action and really kick in the year after and the year after and the year after really kick in. those are quick. Those take us anywhere from -- take a year basically to go from commencement of construction to lease to rent commencement. So those are really going to affect things over the next 5 years plus plus and drive growth here.

As far as storage seems like storage I think the honeymoon is over, but I think everyone's over about it, which is good. I don't think anybody is doing anything irrational. So I see that continuing and holding value. We were doing very well with storage. They do go on their own. We don't always put them in shopping centers, but we do stick them into our shopping centers where it makes sense. And the red is still very desirable as a use, but very skinny in terms of returns. I mean multi-res and condos basically don't exist. So we'll be standing by and waiting for the planners to line up again to start to recommence that program.

Just think of that as ancillary and opportunistic, but it wouldn't be something that becomes a little more core.

Yes, I would say we wanted it to become more core. It will be more core ultimately because we do have a lot of permissions, but that's in a sense 5 to 10 years from now, it will start to become more and more core. But yes, correct. Our next 5 years, as it looks now, is going to be retail be a nice little augmentation with the storage and some some opportunistic to use your word. I think it's right word for some mid-rise, low-rise residential where we can we can knock it out at surface parking, wood construction and very low no offsites, very little on sites accretive. We will do some of that, but it won't be core. .

The next question is from Gaurav Mathur from Green Street.

Just 1 quick question on the renewal statistics -- when you're looking at the renewal summary, we are noticing a few metrics moving down a bit year-on-year when you look at renewal rate or both including the anchors or excluding the anchors as well as tie renewal rate. Could you provide some color on why that's happening, just given the underlying strength in the retail strips and sector.

Gaurav, it's Peter. I wouldn't read too much into that. But I think a single driver is just the timing of when we have lease expirations during any given quarter. so that can move around a little bit. But as Mitch and really both noted earlier, we continue to see very robust demand for space in our centers and -- but it does ebb and flow from quarter-to-quarter depending on the term of each lease. If you look at the near 90% extension, that is consistent with the last few years as well.

The next question is from Sam Damiani from TD Securities.

Thank you. Just on the Toys "R" Us, how much of the 6 sites were paying rent for the full quarter in Q4? And how much rent do you expect to receive in Q1.

Sam, it's Rudy. I don't have that in front of me, but some of them are co-management partners. So we have some of them paying rent and some of them weren't paying rent in that quarter or part rent in nature. So I think we disclosed a higher provision in the quarter to reflect that nonpayment of rent. So that's what that was. And then early in the year, we had so much good interest from these other retailers I mentioned that we took advantage of terminating those leases in advance of the filing that's toys did. So it's to minimize the impact on the REIT.

Okay. And then just on the fix sites now vacant, like that alone and nothing else happening, what would that do to your occupancy rate in Q1 versus Q4?

Yes. Well, again, there's the in-place occupancy and there's the occupancy, including executed deals. So half of those, like I mentioned, is going to be expected to be released before the end of the quarter. So it leaves another $0.3 billion. So the $98.6 million may be 98.3% on an apples-to-apples basis.

That's helpful. And just -- I noticed there was an acquisition of some land in Bolton. Is that for retail? Is that adjacent to the existing Smartcenter there?

Yes. It is for retail. We'll announce the details of that at some point soon. But it is, I would say, part of everything that I was describing earlier about the retail growth program. So we do have interest from strong retailers. And we anticipate starting construction there sometime, hopefully, this year.

And then in total, with all the push on retail development, you've obviously leased a lot of space last year for new build retail. Like how much -- I guess, you got TPO, potentially the site in Bolton, how much square footage do you think commences construction in 2026 on the retail site .

Maybe this year starting $200,000 to $300,000 but it's going to climb a lot after that. That just takes a little bit of time to get all the permits and whatnot to go. But in terms of technically in this calendar year, yes, maybe $200,000 to $300,000.

That's helpful. And I did miss the part of the call at the start regarding TPO, I think I heard an 8-plus percent guesstimate on the yield that's looking at the cost, including the Park aid.

Yes. Yes. The whole expansion, including the additional parking. Yes. 8-plus percent, And rents would commence -- I didn't hear that if it was a 2028 visible time line or yes. We're hoping we can maybe pull it off in late '27. But yes, by 2028.

Thank you. We have 1 more question, Pammi Bir from RBC Capital Markets. .

Just coming back to leverage. Most of your peers have really worked to drive debt-to-EBITDA levels down lower. And investors certainly seem supportive of that. I'm just curious, what do you see as the right level for the business? And where does reducing leverage fit in terms of the priorities?

Yes, everything is a priority. So it's a question of balancing. I mean, the market likes growth to market like long average lease comps market like strong covenants -- so market likes refreshing of existing shopping centers. So we, of course, balance that because we also very much value our credit rating.

So -- we look at all of these things. We have a lot of demand for new space. The good news is that the demand for new space is mostly single-story retail with that great parking. -- which means that within a year or so of commencement of construction, we're usually collecting rent. So to the extent, like always, that we everybody's debt-to-EBITDA rise and fall with various activities we're in an enviable position to be able to basically balance both -- but this is not a one-trick pony. We are minded to grow and strengthen our network and strengthen our portfolio and our earnings. And of course, we're not going to commit any falls as it relates to important important metrics.

Okay. Maybe 1 follow-up, and I don't know if you can answer this one, but in terms of the agreements with Penguin, the release indicated that the voting top right has expired. But I just wanted to clarify, is that part of the discussions in the new 5-year agreements -- and then the second part of that is, do you expect to have the new agreements in place or at least announced by the end of the month?

Well, actually, everything expired at the end of last year. And we extended the parts of it that we were able to extend and 1 of them that we are not able to extend is the voting top-up that needs unitholder approval. So that has expired and has not -- can't have been extended. So -- but the negotiations for a new contract or going on there going very well. And in terms of what form and whatnot that takes, that will be released, I guess, when it's absolutely finalized. But we're getting near the end and looking positive.

Thank you. There are no further questions in the queue.

Thank you. Thank you for participating in our Q4 call. Of course, as always, please feel free to reach out to any of us if you have any further questions. Have a great rest of your day.

Thanks.

Ladies and gentlemen, this concludes the SmartCentres REIT Q4 2025 Conference Call. Thank you for your participation, and have a nice day.

Good day, ladies and gentlemen. Welcome to the SmartCentres REIT Q3 2025 Conference Call.

I would like to introduce Mr. Peter Slan. Please go ahead.

Thank you, operator, and good afternoon, everyone. Welcome to our third quarter 2025 results call.

I'm Peter Slan, Chief Financial Officer; and I'm joined on today's call by Mitch Goldhar, SmartCentres Executive Chair and CEO; and by Rudy Gobin, our Executive Vice President, Portfolio Management and Investments.

We will begin today's call with comments from Mitch. Rudy will then provide some operational highlights, and I will review our financial results. We will then be pleased to take your questions.

Just before I turn the call over to Mitch, I would like to refer you specifically to the cautionary language about forward-looking information, which can be found at the front of our MD&A. This also applies to any comments by any of the speakers made today.

Mitch, over to you.

Thank you, Peter, and good afternoon, and welcome, everyone. Our comments on this Q3 call will be abbreviated so as to leave more time for your questions.

For the third quarter, SmartCentres once again delivered across the board in rental lifts, NOI growth, FFO and a strengthening balance sheet. On the property level, we are driving performance across all sectors, retail, industrial, residential, storage and office, translating into higher occupancy, healthy same-property NOI increases, attractive lease expansion rates and continued tenant demand for new build locations.

With this demand, we are able to focus on high-quality covenants from national retailers who focus on value for all Canadians in our preferred categories of general merchandise, grocery, pharmacy, apparel, home improvement, sports and rec, financial services and more, deepening our role as Canada's shopping center.

As we have said previously, the foundations of this positioning were laid many years ago, that is to provide value and convenience to all Canadians. The third quarter performance reflects that belief that providing value and convenience is good business.

While the business continues to grow organically and through new income-producing developments, we carefully manage our debt and debt-related metrics. In that regard, we have improved our financial flexibility with approximately $1.1 billion in liquidity, 88% of debt being at fixed rate and an unencumbered asset pool at $9.8 billion, which Peter will speak to in a moment.

But before that, let me turn it over to Rudy for some more operational highlights. Rudy?

Thanks, Mitch, and good afternoon, everyone. The third quarter was once again a standout in many areas and related operating metrics. Tenant demand for space remained strong, delivering high-quality income across all provinces maintaining a leading 98.6% occupancy at the quarter end.

In addition, this added demand allows us to make some upgrades to both retailer quality and covenant strength. Same-property NOI continued its strong momentum with 4.6% growth in the quarter ex anchors and 5.9% year-to-date, equating to an overall all-in 3.7% for the year thus far.

With 5.3 million square feet of space maturing in 2025, by quarter end, the REIT had already extended nearly 85% with rental spreads of 8.4% excluding anchors and 6.2% all in. Rent collections remained stable at 99% in the quarter.

Costco at Winston Churchill and 401, as we mentioned before, along with Walmart in Oakville Center, both opened strong shortly after the quarter end. While overall retail and demand for space remains robust, we did, however, book a provision in the quarter for one tenant. Overall, the REIT continues to grow, strengthening its cash flow and stability while reducing risk. We expect this momentum to continue through to year-end.

Thank you, and I will now turn it over to Peter.

Thanks, Rudy. As you've seen in our press release, same-property NOI growth remains solid increasing 2.9 -- 2.6% for the quarter or 4.6% excluding anchor tenants, as Rudy mentioned, mainly due to lease-up and lease extension activities, partially offset by the impact of a credit provision primarily associated with one retail tenant.

Excluding the credit provision, same-property NOI growth would have been about 50 basis points higher or 3.1%. The change in FFO this quarter was primarily due to NOI growth, town home closings and the fair value adjustment on our total return swap. FFO with adjustments increased 5.6% in the quarter compared to the prior year.

During Q3, we closed on 13 townhomes in our Vaughan Northwest project. This has resulted in a cumulative margin of about 22% for the project to date. Subsequent to the quarter, we have also sold an additional 8 town homes, which are expected to close in Q4, bringing Phase 1 of the project to virtual completion with 119 of the 120 homes sold.

We again maintained our distributions during the quarter at an annualized rate of $1.85 per unit. The payout ratio to AFFO continues to show improvement at 89.6% for the rolling 12-month period ending September 30, 2025. Adjusted debt to adjusted EBITDA was 9.6x in Q3, unchanged from last quarter, but an improvement from 9.8x for the same period last year, primarily due to continued growth in EBITDA.

Subsequent to the quarter, we increased our liquidity through the issuance of $500 million of unsecured debentures in 2 tranches. The blended interest rate of the 2 tranches was 3.96%. The proceeds from this offering will be used to repay our Series X debenture upon its maturity in December 2025 as well as floating rate debt on our operating lines.

We also closed on a CMHC financing for our Millway purpose-built rental project and a portfolio financing on 10 self-storage properties subsequent to the quarter end.

The weighted average term to maturity of our debt, including debt on equity accounted investments is 2.9 years, or 3.4 years on a pro forma basis, accounting for those subsequent events that I just mentioned. As in previous quarters, we've updated our MD&A disclosure, focusing on those development projects that are currently under construction. As you can see on Page 18, there were 8 projects under construction at the end of Q3, up 1 from last quarter as a new self-storage facility is under construction in Victoria, British Columbia.

And with that, we would be pleased to take your questions. So operator, can we have the first question on the line, please?

[Operator Instructions] The first question is from Sam Damiani from TD Securities.

Thank you. Good afternoon. Maybe just to start off, maybe perhaps Rudy for you is just the exposure to Toys"R"Us, I'm just wondering if you could comment on the remaining stores within the portfolio and how you view potentially having to backfill those locations and at different rents?

Yes. I mean, Toys"R"Us, yes, we're all over it. Actually, it's turned into actually more of an opportunity, frankly. We have a lot of interest in the toys that we're getting back, stronger companies, more compatible actual users, bigger draws and higher rents. So it's actually turning into a, quite frankly, like that, that setback is turning into an advance. We're well along. So 2 are leased, and there's interest in the majority of the balance.

So then, Rudy, do you want to add anything?

Yes. The only thing I would add is when we replaced 2 of our locations, we mentioned, Sam, a couple of quarters ago, we were doing that. We started getting calls. And we have a really good interest from, as Mitch mentioned, stronger retailers, stronger covenants, the grocers, the TJXs the like. So we're not expecting that there would be any issues if and when we would have to execute on any of these. But it is looking better on an overall rental basis as well.

Okay. Great. And maybe, Mitch, for you, just in the MD&A, the retail development pipeline for the next 5 years, really, I guess, it did increase quite materially to 3 million square feet. And I know it's just kind of a plan. It's nothing that's kind of concrete and pre-leased and all that. But like what is the visibility, I guess, on the REIT constructing 3 million square feet over the next 5 years of purely retail space?

Well, I guess, I think we've alluded to it in previous calls that we're sort of witnessing some increase in interest in our portfolio from the retail side of things. So it's starting to move further along and materialize. That's the reason for the increase there.

You also put that -- combine that with the fact that the residential side of things has slowed down. So in some of the cases, the residential program was on what was going to be retail. And when the residential was more attractive than the retail, we were inclined to -- we are open to doing residential.

But many of those properties are actually shopping centers and permit retail. And so some of it is plans that we had considered for residential. Now we have interest from retailers. So that's also part of the increase that you're seeing there.

And does the increase include one or more greenfield new shopping centers?

That number does not actually -- so I'll say that we are anticipating some growth in our retail -- core retail business. That number is really on existing properties. But I'll say it now, and it's just, I guess, a little bit of guidance or whatever you want to call it that, that could go up and the greenfields development potential, I would say, it's something to look out for. We'll see still sort of earlier stages. But in terms of just indications, there might be -- yes, there might be something up the road that we'll be focusing -- we'll be announcing or putting -- shedding more light on in the coming quarters.

Interesting. And last one for me. Just the Costco and Walmart that just opened, did they contribute any FFO or cash rent in the third quarter?

Yes, yes. And I'll also point out, I don't know if anyone out there lives near the Winston Churchill 401, you should go check it out. And that's an example of what we're talking about earlier about the toys being replaced by certain other retailers. I mean, that was an old Rona and it was a fantastic tenant. But Costco, of course, is bigger traffic generator.

And if you go to the Winston Churchill 401 project and just imagine what that Costco is doing for that shopping center, you'd also be able to extend the trajectory of that on some of the other comments we were making about filling the toys and certain other things that are going on that we're alluding to. But yes, not quite in a position or ready to announce.

[Operator Instructions] This question is from Dean Wilkinson from CIBC World Markets.

Mitch, thank you for the truncated open comments. I think I can say for everybody. We appreciate that. Just following along Sam's question on the development and the development pipeline. I mean, you've got $2 billion of PUD, maybe another $0.5 billion of identified capital that you've got to put in there. How comfortable are you taking -- like how high are you comfortable taking that number up over 20% of the balance sheet? Or are you looking at some of those 3- to 5-year time horizons to have some developments burn off? Just trying to get a sense of how much you want to push the balance sheet on the development side of things given you've got more properties under development than some REITs have entire assets?

Yes. I mean, obviously, Dean, we're just monitoring all of that. We're never going to jeopardize anything. There's great opportunities. It's big difference between residential and retail, especially high density. So with the retail, single-story stuff, mostly at-grade parking and the income kicks in usually between 9 and 12 months. So -- and there's some pretty good accretion there.

So we just watch it and manage it in terms of timing and so on and so forth because the EBITDA kicks in pretty quick. And a lot of it, as we were saying, is on site. So there's no land costs, et cetera, et cetera. So it's quite sensitive to we can do that. It's quite sensitive in terms of the metrics that you're referring to. So we're just going to find a way to do it. within all the metrics and being conservative with inside those metrics, we just find a way to do it.

But the guiding principle, the guiding -- yes, first principle is to stay well within all the important metrics. But not to give up the business. This is just a question of how we're going to get there properly. But we're pretty confident we can find a way to get there.

Shorter development cycle over a longer one sounds like it would be more preferential.

Yes. Yes, exactly.

Right. There are no further questions in the queue.

I guess we are all picking up on the theme. So thank you all for participating in our Q3 call. Please feel free to reach out to us at any time for any further questions. And until then, have a great day.

Ladies and gentlemen, this concludes the SmartCentres Retail Q3 2025 Conference Call. Thank you for your participation, and have a nice day.