Post by
incomedreamer11 on Aug 12, 2021 11:27am
Scotia comments on results
SRU collected 95% of Q2 rent matching the ~95% average for FCR/REI (Q1 = 94.1% vs. 94.5% for FCR/REI). July is 94.4%; see. SRU recorded $2.3M bad debt expense, flat q/q and = 1.1% of revenue (Q1 = 1.1%) vs. 1.8% for FCR/ REI. SRU saw a modest $23M asset FV gain ($0.13/un) vs. $5M loss q/q; cap rates and discount rates were intact q/q. That said, the CEO letter to unitholders noted expected further IPP FV gains in the coming quarters.
SRU noted maintenance of the $1.85 annualized distribution, supported by the improving results.
Transit City 3 closed 439 units in Q2, with the remaining 192 (30%) closed in Q3, implying another ~$0.04 of FFOPU in Q3/21 (vs. our in-place ~$0.04).
In the coming months, SRU expects to launch ArtWalk (600 condo units; southeast portion of former Wal-Mart store at VMC) along with 175 townhome units at Vaughan Northwest. As a reminder, Transit City 4 & 5 (1,026 units) is set for closure in 2023. Development magnitude is consistent q/q following a big uptick in Q4 (+28) potential projects to 284 projects for a total of 32.5Msf (-0.1Msf) and $7.9B cost (-$0.1B) at SRUshare.
There were no notable development completions during Q2, although SRU started two apartment rentals in Quebec (with Cogir) and a new retirement residence in Ottawa with Selection Group. Preparation continues for the first phase of a long-term 12Msf development in Cambridge.
Operational highlights.
Q2 SPNOI was +9.6% y/y (Q1 = -4.8%; 2020A = -6.9%). Ex. the credit losses, SPNOI fell 2.0% y/y (Q1 = -3.7%). Committed Occupancy of 97.3% was flat q/q while in-place occupancy was +10bp to 97.1%.
Net retail occupied rent/sf was +0.2% q/q to $15.43 or $22.04 ex. anchors (Q1 = +0.5% to $22.00). The 1H/21 renewal spread was 0.6% on 2.8Msf of leasing (Q1 = +0.2%, 2020A = +2.6%), but the 1H/21 spread ex. anchors fell 2.4% (-0.7%, 3.3%). 1H/21 tenant retention rate = 72.6% vs. 67.5% y/y (2020A = 75%). We were pleased to see Apparel weighting decline 50bp q/q to 15% of revenue.
Fairly quiet on the capital allocation front. That said, the Total Return Swap carrying value doubled from Q1/21 to $12.6M with total notional units of 467,800 (recall, it is a 4- year swap with a notional $156M value for up to 6.5M units) Liquidity and balance sheet update. Q2 available liquidity of $0.8B (incl. $250M accordion and $0.06M of cash on hand) fell $0.3B q/q but = 9.4x 2021E maturitie