The distribution is an interesting question. The annual increase in distribution per unit in the past were as follows: 2016 $0.03 (4.1% growth), 2017 $0.03 (3.3%), 2018 $0.02 (3.2%), 2019 $0.02 (1.8%) and nothing since 2019, with distribution remaining at US$0.86.  From 2019 to the present, gross leasable area has increased by 30% to 13 million square feet, with almost all of that due to the most recent deal.  

On an absolute basis, the distributions paid over the past six quarters have increased by 24.1%, but that is simply due to a simiilar increase in units issued, with distribution per unit unchanged (and payout ratio coming down a bit).  The big question mark is what a full quarter with the latest acquisition all in, looks like.   The landmark deal closed on September 22, 2021, so only a few days of contribution to the third quarter.   On the going forward impact,  management provided some hints on latest call, including, 

"So it was originally accretive to AFFO to about $0.04, and over the hold period, we were going to add approximately $1.50 to NAV. We expect to outpace those numbers as we take hold of ownership and drive this forward."

Management also alluded to pushing rent to the existing base, the 20% spread on new leases in the third quarter and the accretion coming from redevelopment projects across their asset base.   There are contractual step ups in lease rates, which helps to mitigate current inflation and likelihood of higher interest rates (although 97% of debt is now fixed).  

But it won't be lost on management that there needs to be step ups in the distribution per unit at some point, given all the bluster about deal accretion and buying low/selling high.  So if they have already stated that $0.04/unit in annualized AFFO accretion is too low, perhaps a distribtuion bump of US$0.005 per month in 1H/22 is in the cards, which would be $0.06 annualized and a 6.9% increase in the distribution.  That would take the distribution to US$0.924 per annum, and back to an 8% distribution yield at current CDN$14.74 unit price.   Optimistic?  perhaps, but the timing, size and economics of this latest acquisition is material to SLATE GROCERY, and it would be a good message to unit holders if a bump took place, especially since there has been no distribution/unit growth since 2019.

One always worries about external management structures, and the ability for management to stay disciplined.  Why?   

In Slate Grocery's case, they are paid a management fee equal to 0.35% (reduced from 0.4% at close of latest transaction) of the total assets of the REIT, plus an "acquisition" fee equal to 0.75% of the gross purchase price of each acquisition, and an annual incentive fee equal to 15% of the REITs FFO in excess of $1.35 per unit.   

This is why some externally managed REITs go pear-shaped, because the external managers lose discipline and become deal junkies (financial incentive to get bigger), and the market starts to penalize them for the worsening economics of deals and accretion may turn to dilution on new deals. 

The track record of SLATE GROCERY on new acquisitions (and divestments), especially over the past two years, has been GOOD and they have taken an opportunistic approach to getting bigger.   The fee structure is not egregious.   And deal makers who can generate growing value for shareholders should be paid properly.  Management said this about future acquisition budget:

"We are going into some strategy planning with the board and in the coming quarter, so I think we will have our plan set on a target, probably in the range of $200 million, but we will be finalizing that in the coming weeks."

As long as discipline around new acquisitions is maintained, unit price will continue to hold up, distributions will get the occasional bump and, importantly, management will periodically be able to issue new units in the public markets at nice premium to book.  Everybody gets paid.  Keep the merry go round spinning...

Good luck to all.