Thank you. Good afternoon and welcome to SmartCentres' first quarter 2026 results call.

I'm Peter Slan, Chief Financial Officer, and I am 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. The 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 built space, remains strong as we continue to improve our tenant mix and covenants.

As we mentioned in February, we terminated six 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 three of the ex-Toys locations, for which we are currently finalizing the documentation. We have also reached a firm commitment with TJX for a 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.

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 rents, 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 three projects announced are board approved and just the beginning, two 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 looked 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 to 97.6%, largely because of one tenant, Toys "R" Us, which Mitch mentioned earlier with an early January 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%. With four of the six Toys units attracting rental increases of 25% above what Toys was paying, as Mitch mentioned.

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, we are also integrating a bit of entertainment, racket, and sports, rounding out a more wholesome 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 three 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 9.8 times. 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 9.7 times, 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 have updated our MD&A disclosure, focusing on those development projects that are currently under construction.

As you can see on page 17, there were eight projects under construction at the end of Q1, unchanged from last quarter. With that, we would be pleased to take your questions.

Operator, can we have the first question on the line, please?

Thanks and good afternoon, everyone. First question I guess just on the Toronto Premium Outlet expansion that was alluded to.

Could you provide a little more detail I guess on the cost and the return on that?

Returns over 8%, right? Hey, Sam.

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

Did you say day one?

The initial day one rent projection as return of that $110 million is I think it's something like 8.35% or 8.4%.

All right, great.

I assume you're It's already 50% leased and that's partly deliberate.

But Understood, and you're confident, I'm sure, that it'll be substantially, if not 100% leased, on opening.

Yeah. It's very much the case.

It's really very in demand.

That's great. Congrats on getting that going.

Then these three new greenfield projects, I guess two of which are starting later this year, are there sort of size and scope metrics that you're disclosing publicly including the locations specifically?

Like the rest of the portfolio, it's going to vary the size, but it's pretty typical SmartCentres type stuff in terms of size. They'll be anchored.

All of them. I don't know whether we announced the sizes in there, but very much typical.

Some of them will be two anchors. They're not small.

These would be somewhat meaningful supply additions to I assume the trade areas of these locations. What gives you the I guess the confidence and the conviction to move ahead in these two or three locations?

These are properties we're buying because we have pre-leased two anchor tenants. You could say they're being driven by consumer demand.

Keeping in mind that major national retailers have not expanded in sync with the population growth. Things really stopped growing in sync with population probably 15 years ago.

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, you saw a lot of retail being converted to residential density all over. Then you had some very healthy annual population growth in this country for the last 15 years.

When you put it all together, there's quite a few large national retailers who are playing catch-up. I should have mentioned COVID, which then came along.

Then we come to now, and so there's a lot of national retailers who are interested in catch-up. A lot of residential growth across the country in small, medium, and large-size markets.

These are some of the factors, some of the variables behind the reasons and the confidence for what we're doing.

I don't mean to hog the puck here, but, Mitch, obviously you're going to be building these out in phases, much like the existing SmartCentres portfolio. If a center is going to be 350,000 square feet, it's not going to be all built in 12 months.

I'd love to scare you and tell you that we're going to go build the 350 all at once, but actually I can't do that to you, Sam. 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 had the earnouts. That's why we've got vacant parcels here and there, because we've never built spec.

Now, there are times where 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, we build as we lease.

Great. Thank you.

I'll turn it back. Thank you.

Thanks very much. Good afternoon, everybody.

Maybe just switching gears a little bit. You're talking about turning on the development taps here on the retail side.

Just wanted to see 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?

We've always been motivated to dispose of of certain assets. Ideally, some land.

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. We are confident that we will be able to achieve some dispositions finally.

The market's a little better, slowly but surely. Ideally it'll be some of our PUD.

If the market doesn't cooperate, we'll act accordingly in terms of the rate of development. Keeping in mind this development's not high-rise.

This is, if we build a Loblaw store, we started it today, we would be paying rent in a year from now or less. We're not really carrying the debt for very long.

The path to EBITDA is really very short and straight forward. Nevertheless, that's how we'll be managing.

It'd be great if we could achieve some dispositions the next 6 to 12 months.

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

We'd like to maintain our current debt rating. I think, just in some vague-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.

Generally speaking, the land that we're buying, most of it's not really needle-moving stuff, it's more the development itself. We're certainly pretty confident that we'll be able to move the development program along.

As I said, the only sites we're buying is when we have pre-leased to anchors. Even if we have to—I can't imagine it would ever be the case, but we can always slow down acquisitions, but it's the commencement that we'll be watching closely around our debt metrics.

It's not very difficult to do.

Okay. Then maybe just one

kind of ticky-tack one.

Yep, sorry. Go ahead, Peter.

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, used those proceeds to delever a little bit, and there's still another $50 million or $55 million to go there. There are some tools in the toolkit that we have to manage the debt levels.

Okay. Then maybe while I have you, Peter, just one kind of ticky-tack 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, did you say there was a 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's approved?

That's right. That's exactly right.

Yeah.

Perfect. Thanks so much.

That's all for me.

Hi. Thank you.

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?

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 earnouts, which is not only with Penguin, but with some third-party partners as well. 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.

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.

Thanks for that. Then just coming back to the Toys "R" Us discussion, what will total capital spend expected on the four signed leases that you're getting a 25% rental uplift on be?

Can you say that again?

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

Minimal. Ultimately minimal.

Don't know if we have that number on our at our fingertips, but yeah, there's there's not a huge It's not a It's not what they're not bought, sort of rental increases.

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. It's literally a handover, maybe changing some HVAC systems and so on, but like Mitch said, it's going to be minimal on the capital side.

Okay. Then maybe for Peter, during the quarter was the interest expense associated with those vacated Toys boxes, was it capitalized during Q1?

I'm just trying to get a sense of the FFO impact from the vacancy in Q1.

No, it's expensed, Mario.

Okay. Then maybe my my last question, just coming back to the asset sales, I think Mitch last quarter kind of said you could see us see SmartCentres selling $200 million to $300 million over the next 2 to 3 years.

The timing of which is is obviously very unpredictable. Is that still kind of the range that you're thinking about over the next 2, 3 years in terms of what you would like to do?

What number did you use?

$200 to $300 million over the next 2 to 3 years.

Over the next 2, 3 years. If the market cooperates with PUD alone, we have sort of in excess of $1.5 billion, maybe $1.7 billion worth of land.

If the market comes back a bit, we certainly think that we could achieve that and potentially more, but that's sort of been our target number and still is.

Okay. Thank you.

Hey, guys. Good afternoon, everyone.

Just wanted to stick with that line of questioning. Does that kind of imply your goal is mostly to dispose of the kind of more residential exposed lands and just because the retail market obviously is doing quite well, I'm just wondering if that's the main opportunity set that you think is available versus some of the retail lands that you have?

It's not so much disposing of the residential, just that we have 50 60 million square feet for all intents and purposes approved square feet of residential across the portfolio. It'd be ideal to sell some of that density since it's going to take a long time for us to build out 50, 60 million square feet.

I'll still be here, but I don't know about Rudy and Peter. 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 good reasons. We don't want to sell off the retail.

We think the residential, which we have an abundance of, would be ideal.

The earnouts that were settled this quarter, can you give us some more sense of what that related to in terms of asset-wise?

Giuliano, the lands that this related to were lands within properties that were mostly developed already. This would be the remaining lands in those properties that were subject to final earnouts.

We've just picked up 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 land integrated within a shopping center.

Right. Okay.

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

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.

Of course, the beneficial owner is also the largest shareholder of the REIT, there's very strong alignment. Right.

Okay. Thanks, guys.

As the whole approach was reviewed and negotiated by an independent committee of the board.

Yep.

Yes, thank you. 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?

Thank you.

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, jeez, I wish I could do the math right now in my head, but we collected, that's probably 200 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 could probably do that in your head faster than me, but I think it's probably close to $6 million gross dollars 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. It's a setback, but it is already turned into an advance.

There's just no comparison. We've traded toys for food.

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 stores, to say nothing of just the quality of traffic it brings to the center. Fine, it cost us a quarter, but it's a blip.

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. We are talking about today three new centers, but there are many more than three going on.

It really is a blip. We're really sort of excited about the future in terms of our growth and our earnings in FFO.

Thank you. Just on those developments, just to clarify, those are 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. In the past, of course, when I developed I did end up being partners with the REIT going back, but nope, these are 100% REIT.

Thank you, and I'll turn it back.

Thanks. Hi, everyone.

Just wanted to clarify. 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 for this year the way we see it, and in terms of, in terms of rent ramp ramp-up, NOI, yeah, the back half the back half of the year should get back to, back to what we what we've what you've been seeing for the last last little while.

Okay. Then just maybe on the Toys space, I may have missed it, but these grocers and the Winners space, when will they take possession?

Maybe the earliest Q3, Q4. It depends on which one we're talking about.

Latter half to the end of the year.

Then but the economic occupancy would commence late this year or into 2027?

We're sort of hopeful that economic rent will commence this year.

Great. Okay.

Then maybe just on Artwalk, 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 there. I think we're expecting to top off in November this year.

Just standby 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.

The garage, which is three levels, is done. I think in the next couple weeks we're going to typical floors where we will start finishing a floor one a week.

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 late June, July.

Windows will start [unclear]. Ground floor.

I think I'm stalling here for somebody to just find it, but I think it's

Q4 '27 is the first deliveries.

Okay.

Q4

Q4 delivery start closings in in 2027.

Still some time away. I guess really where I was going with this is, 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?

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, we're happy we did wait on that. I think we could have done a little better on a couple trades that we let, we had to let them in the last 12 months.

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, it's just my prediction.

There'd 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've disclosed this before I say it. We sold between $1,100 and $1,175 a foot there.

We've got 20% deposits. We've done all the slicing and dicing of analyzing what happens if scenarios where if we get units back, we'd rather that 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.

Okay.

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.

Maybe just moving on, last one just on the new developments that you announced, the new greenfield sites. Are these Walmart-anchored or not?

It's other grocers or any other of your larger tenants?

I think it's taken 38 minutes for somebody to ask that. We are not announcing the actual tenants at the moment.

They very much reflect the overall profile of our current portfolio. There'll be lots of familiar names in terms of the anchors that we'll be building on these properties.

As I say, the three that were mentioned right now are just representative. Just represent a larger accretive program.

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. There'll be the odd sub-anchor at maybe 10 10 years.

Okay. Good to hear.

I guess that answers that last question. I guess none of the anchors will have flat rents forever.

That was a dig there. No, they will not have flat rents forever.

All right. I'll turn it back.

Thank you.

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 and we'll speak to you soon.

Bye-bye.