Slate Grocery REIT (SGR-UN) Q2 2024 earnings summary

Executive summary

• Achieved over 700,000 sq ft of leasing in Q2 2024, with new deals at 28% above prior rents and renewals at 12.8% above expiring rents, driving net operating income growth.

• Same-property NOI increased 3.5% year-over-year, with stable occupancy at 94.2%.

• Portfolio is 95% grocery-anchored, spanning 116 properties across 23 U.S. states, totaling 15.2M sq ft and valued at $2.4B as of June 30, 2024.

• In-place rents are $12.56 per sq ft, significantly below the national average, providing potential for future NOI growth.

• Management is actively addressing near-term debt maturities and expects to finalize terms with lenders ahead of expirations.

Financial highlights

• Rental revenue rose 3.0% year-over-year to $51.8M; NOI up 2.8% to $41.4M.

• Net income declined 26.1% to $14.0M compared to Q2 2023.

• FFO increased 5.8% to $17.5M; FFO per unit up 7.4% to $0.29.

• AFFO grew 3.6% to $14.1M; AFFO per unit up 4.6% to $0.23.

• Asset value stands at $2.4B (proportionate interest, non-IFRS measure) as of June 30, 2024.

Outlook and guidance

• Management expects continued revenue and NOI growth, supported by below-market average rents and strong leasing spreads.

• Ongoing low vacancy and limited new supply provide a favorable environment for further value creation.

• Management remains optimistic about refinancing upcoming debt maturities, citing active lender demand and stable risk spreads for grocery-anchored real estate.

• Models remain conservative, with potential to outperform if base rates decline.

• Online grocery sales are forecasted to grow from 11.2% to 13.6% of total sales by 2027, reinforcing the need for physical stores.