Good afternoon, and welcome to SmartCentres' fourth quarter and full year 2025 results call. I'm Peter Slan, Chief Financial Officer, and I'm joined on today's call by Mitchell Goldhar, 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 Mitchell. 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 Mitchell, 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. Mitchell, over to you.

Thank you, Peter. Good afternoon, and welcome, everyone.

Comments this afternoon will be succinct to allow more time for your questions. SmartCentres continued its strong performance in Q4, closing out 2025 with 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. 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. 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, 90% 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. Before that, let me turn it over to Rudy for some more operational highlights.

Rudy?

Thanks, Mitchell, 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 remains 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 centres have allowed us to expand into complementary uses with medical, daycare, entertainment, racquet and sports facilities. Our premium outlets continue to excel in driving traffic with improving tenant sales and the resulting percentage rents, which we convert to base rents 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 after the year-end, Toys filed for credit protection. Prior to that, the REIT had already terminated its six leases and taken control of the space based on the advanced lease negotiations to backfill with grocers and TJX banners.

We expect to re-lease 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 multi-year plan, including materiality assessments, decarbonization planning, physical preparedness in response to climate change, cybersecurity 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 remains 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 one 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 adjustment on our total return swap.

During Q4, we also closed on seven 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 improvement at 89.2% for the full year ended December 31, 2025.

Adjusted debt to adjusted EBITDA was 9.7 times 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 eight projects under construction at the end of Q4, unchanged from the prior quarter.

With that, we would be pleased to take your questions. Operator, can we have the first question on the line, please?

Sorry, our operator was Carl. He was trying to get the first question on the line for us.

Hi, good afternoon. Thanks for taking the questions.

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

Hey, Mario. We have something going on one of the, I think, I don't remember exactly how it was framed last time, but there were a couple sales that were still not done that we were anticipating.

One of them seems very much alive. The other one, I think, is actually a vacancy that we thought we had sold, but it fell through, that we're now negotiating a lease on.

That's in terms of sort of the two that were outstanding from last call. Then in general, the market conditions seem to be a little improving for capital recycling, for dispositions.

We are hoping to see some dispositions of first and foremostly potentially some non-IPP, some land which we're currently starting to focus on.

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

Probably I think it's partly to do with, not that the world is so great, but it does feel like there's a little more visibility or a sense of visibility whereas, let's say a year ago, there was a lot more uncertainty. People were actually sort of nervous a year ago.

I think that there's a little bit more confidence. I think it's a big one.

I guess construction prices are softening. A little bit more motivation in the subtrade marketplace, for certain types of construction.

I think that's helping. I'm not saying it's red-hot or anything, but I think in terms of people making some moves and opening their wallets a bit, it does feel like it's better than it was.

Got it. Speaking of construction costs, I may have missed it, but in terms of the expected expansion at 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?

Rudy can jump in there too, but returns are quite solid. We anticipate in excess of 8% and we're still negotiating on the construction, I'd rather not speak to the cost.

The contractors could be listening in. We are in negotiations right now, but it looks like a pretty healthy 8%-plus 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 the very least maintaining existing occupancy? We've seen a couple of tenants face a bit of pressure.

A colleague of yours highlighted a couple Beer Stores, for example, that were given back, I'm not quite sure what your exposure there would be. How do you see the occupancy both kind of in place and committed evolving as '26...

Of course you have to say couldn't get any higher, and then of course we have Toys "R" Us. We were not surprised by the Toys "R" Us situation.

As we already dealt with a couple of them before they declared. If you X them out, I think you're looking at very, very, very strong occupancy levels.

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, et cetera. I'll let Rudy further illuminate on that.

Mitchell said it well. The only thing I'd add is, we terminated those leases before the filing, 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, and for the likes of TJX banners. We have control of all the spaces, and we are exchanging paper on four of the six of them already, which is fantastic.

Excluding that, we are expecting another strong occupancy year.

Okay. That's it for me.

Thank you.

Hey, guys. Just kind of one question on deleveraging.

I missed the tail end of the question, actually, that was asked earlier. Just with the kind of payout ratio at the mid-90s, net debt at the high 9s, has the REIT given thought to more aggressively selling some of the non-core IPP and if not, why?

I don't think we really have any non-core IPP. It takes enormous effort to create the shopping centers, mostly shopping centers or some of the other forms to create in the first place, and we put a lot of upfront thought into developing them.

Most of them, as you probably know, we developed. Probably 85% to 90% of the portfolio, we developed it.

In the end of the day, we do all the upfront strategic thinking, and so We didn't buy varieties of forms of retail and or whatever we could get our hands on to arbitrage IPP for debt and so on and so forth. We don't have sort of fringe assets that are undesirable.

It's tough to move the needle even if we did want to part with IPP, in terms of cap rates and giving up that income. It's very, very good income.

We collect 99 or over 99% of our IPP. We forge on with our IPP.

We do have a lot of potential PUD for disposition, we can afford, quote-unquote, to sell PUD, and that's our overwhelming preference in terms of capital raising, 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.

I guess kind of my follow-up is more so where are you kind of starting to see the land values bottom or possibly increase at all in your portfolio?

Wherever we have retail land, if we haven't developed it, we could sell that, but we're obviously not going to sell that. The mid-rise, the lower-rise, mid-rise residential, there's a feeling that there's some potential.

Seniors housing seems to have life in terms of potential dispositions. We're getting approached.

We have excellent sites for both mid-rise, high-rise for that matter, and seniors homes. There is a market for storage, but we're in the storage business, we're not really sort of inclined to dispose of that.

Those are the main categories that we think there's a little bit of life.

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

Oh, I'm not sure if you meant what percentage or what we have. No, we have somewhere in the 60 plus or minus 60, 70 million square feet of permitted density across the portfolio on our owned properties.

What I was referring to was selling some of that, some of that density, carving those out,

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

In the next couple years, and that's a lot easier than saying the next year, but the next couple years, we'd like to sell $200 to $300 million worth of that over the next couple years. More if there's a market for it.

Okay. Thank you for your time.

Thanks. Good afternoon.

Just two quick ones from 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?

Hi, Lorne. Rudy.

As we had 3.7%, 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, we might be a little bit lighter than we were last year because of that.

We're expecting something in that range, ex the Toys. 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 Q2.

You won't see it until you get closer to the end of the year where it catches up.

That's very helpful. Then I was just wondering, any updates in relation to building out new stores for Walmart?

I know you guys just opened the one in I think it was Oakville or just west of the GTA here. Was just wondering if there are any updates on that front.

I guess the new retail program here is really picking up in general. I would say that is something worth noting.

We are anticipating quite a bit of growth over the next let's just say 5 years in the areas of grocery, Loblaw, Sobeys, potentially Metro, Costco, TJX, those are large space users. Of course, we do have a longstanding relationship with Walmart, and so we anticipate that we will be also seeing some growth in the new Walmart category as well.

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

I think at this moment, we'll 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. We will start to shed more light on the details of that, but I guess in the meantime, I would think of it as quite quite robust.

You just maybe going back, you mentioned the new sites for growth. Obviously do the premium outlets, any other retail developments in the immediate future for you?

Yes. Quite a few.

That's sort of what I'm saying is we're anticipating quite a few new acquisitions of new sites across the country.

That's very helpful. Thank you.

Thanks. Afternoon, everybody.

Mitchell, you get a lot of questions about what you're going to sell. I'd like to talk a little 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? Secondarily to that, do you think any one of those verticals could hit a size where they're potentially able to just stand on their own?

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?

It's being

It's not being driven per se by us. It's actually being driven by, the consumer.

The ones who have the closest, relationship with the consumer are the retailers, like I was naming, like Loblaw and, the like, Costco, Walmart, et cetera. They're saying through, their interest in in new in new locations is that, there's going to be there's a huge investment, a huge commitment, a huge belief in, in in physical retail shopping.

You put a lot of those different retailers and ones that I haven't named that aren't maybe as large space users together, and you've got a 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. In the eyes of these retailers, there's a lot of catch-up.

We're one of the go-tos. I, we're one of the go-tos for that.

We're super busy, buying new sites and, processing approvals for the development of new shopping centers, across the country. That's going to kick in, really kick in like, start to kick in next year 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, It'd take a year basically to go from commencement of construction to lease commence- to rent commencement. Those are really going to affect things over the next 5 years plus plus and drive growth here.

As far as storage, yeah, it seems like storage is, I think the the honeymoon's over, but I think everyone's sober about it, which is good. I don't think anybody is doing anything irrational.

I I I see that continuing, and holding its value. We we were doing very well with with 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.

The res, the res is is still very desirable as a use, but very skinny in terms of returns. Multi-res and condos basically don't exist.

We'll be standing by and waiting for the planets to line up again to start recommence that program.

We 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 in a sense, 5 to 10 years from now it'll start to become more and more core.

Yes, correct. Our next 5 years, as it looks now, is going to be retail.

It'll be a nice little augmentation with a storage, and some opportunistics, to use your word. I think it's the right word, for some mid-rise, low-rise residential, where we can knock it out at surface parking, wood construction, and no off-sites, very little on-sites, accretive.

We will do some of that, but it won't be core for a while.

Yep, that's what you do

best.

That's it. I appreciate it.

Thanks.

Thank you.

Thank you, and good afternoon, everyone. Just one quick question on the renewal statistics.

When you're looking at the renewal summary, we're noticing a few metrics moving down a bit year on year, when you're looking at renewal rate or both including the anchors or excluding the anchors, as well as the tenant renewal rate. Could you provide some color on why that's happening, just given the underlying strength in the retail strip center sector?

Gaurav, it's Peter. I wouldn't read too much into that.

The biggest single driver is just the timing of lease expirations during any given quarter. That can move around a little bit, but as Mitchell and Rudy both noted earlier, we continue to see very robust demand for space in our centers, but it does ebb and flow from quarter to quarter depending on the term of each lease.

If you look at the And if you look at the over

If you look at the near 90% extensions, that is consistent with the last few years as well.

Perfect. Thank you so much.

I'll turn it back to the operator.

Thank you. Good afternoon, and thank you for taking the question.

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

Hey, Sam, it's Rudy. I don't have that in front of me, but some of them are co-managed with partners, we had some of them paying rent and some of them weren't paying rent in that quarter or part rent in that quarter.

I think we disclosed a higher provision in the quarter to reflect that non-payment of rent, so that's what that was. 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 Toys did, to minimize the impacts on the REIT.

Okay. With the six sites now vacant, all that alone and nothing else happening, what would that do to your occupancy rate in Q1 versus Q4?

Again... [In

square footage?] .

Again, there's the in-place occupancy, and there's the occupancy including executed deals. Half of those, like I mentioned, is going to be expected to be released before the end of the quarter, it leaves another .3.

The 98.6% may be 98.3% on an apples-to-apples basis.

That's helpful. Thank you.

Just I noticed there was an acquisition of some land in Bolton. Is that for retail?

Is that adjacent to the existing SmartCentres shopping center there?

Yes. It is for retail.

As 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. We do have interest from strong retailers.

We anticipate starting construction there sometime, hopefully this year.

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

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

In terms of like technically in this calendar year, yeah, maybe 200,000 to 300,000.

That's helpful. I did miss a part of the call at the start regarding TPO.

I think I heard an 8%-plus guestimate on the yield. That's looking at the cost, including the parkade?

Yes, yes, the whole expansion, including the additional parking. The eight 8%-plus, yeah.

Rents would commence, I didn't hear that if it was said, 2028 is a reasonable timeline or?

We're hoping we can maybe pull it off in late 2027, but yes, by 2028.

Awesome. Thank you, and I'll turn it back.

Thanks.

Hi. Thanks, everyone.

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?

Everything's a priority, it's a question of balancing. The market likes growth, too.

Market likes long average lease terms. Market likes strong covenants.

Market likes refreshing of existing shopping centers. We, of course, balance that because we also very much value our credit rating.

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 at-grade parking, which means that within a year or so of commencement of construction, we're usually collecting rent. To the extent, like always, that everybody's debt to EBITDAs rise and fall with various activities, we're in an enviable position to be able to basically balance both.

This is not a one-trick pony. We are minded to grow and strengthen our network and strengthen our portfolio and our earnings.

Of course, we're not going to commit any follies as relates to sort of important metrics.

Okay. Maybe one follow-up, and I don't know if you can answer this one, but in terms of the agreements with Penguin, the the release indicated that the voting top-up right has expired.

I'm just wanted to clarify, is that part of the discussions in the new 5-year agreements? Then the second part of that is do you expect to have the the new agreements in place or at least announced by the end of the month?

Actually, everything expired at the end of last year. We extended the parts of it that we were able to extend, and one of them that we are not able to extend is voting top-up.

That needs unitholder approval, so that has expired and can't have been extended. The negotiations for a new contract are going on.

They're going very well, and in terms of what form and what not that takes, that will be released, I guess, when it's absolutely finalized. We're getting near the end, and it's looking positive.

Okay. I'll turn it back.

Thanks, Mitchell.

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.