1、SLATE RETAIL REITDecember31,2018 Q4 2018 TSX:SRT.U and SRT.UNRemember that the Green Bay Packers won because they executed the fundamentals better than their competition.Trick playsmake headlines,but winners execute the basics.Alan C Greenberg,Chairman of the Executive Committee of Bear Stearns,1986
2、DEAR FELLOW UNITHOLDERS One can make the argument that the best thing about watching sports is that the outcome is unknown.Researchers believe this is because humansfind it more enjoyable to think about what could happen than what already did.We want to be more instructive than talking about what co
3、uld happenand instead outline what is in fact our plan for the future of Slate Retail REIT(Slate Retail)as we head into a new year.Before we look forward,we want to take a brief look back at 2018.We highlighted several initiatives in our year end 2017 Letter to Unitholders thatcan be distilled very
4、simply;after several years growing the company largely through acquisition,the 2018 plan was to focus on organic growth andde-risk our balance sheet.Below are the key performance indicators we used to measure our goal.1.Total organic portfolio net operating income(NOI)growth achieved of 3.8%driven p
5、urely by leasing and redevelopment activity;2.Increased occupancy to 94.2%from 93.7%year-over-year;3.Achieved a 92.1%tenant retention ratio,up from 88.3%in 2017;4.Reduced debt outstanding by$13.1 million while taking fixed rate debt to 99.2%of total debt,up from 57.7%in 2017;and5.Reduced units outst
6、anding by approximately 2.2 million units.As the third and fourth points highlight,NOI growth was largely financed organically through the significant operating cash flow the portfolio generates.The team did a tremendous job executing on what we set out to do and as importantly,we did what we said w
7、e would.The Plan AheadTotaling the unit repurchases under both the normal course issuer bid and the substantial issuer bid completed earlier this month,we have reducedour total units outstanding by 5.5%from the end of 2017.Existing unitholders that did not sell have been rewarded as they now own 5.8
8、%moreof Slate Retail than prior to the unit repurchases taking place.The stock market continues to be one of the only markets where when things go onsale,everybody runs out of the store.We have an active property disposition pipeline of approximately$100 million and we have identified another$100 mi
9、llion that we willtarget for sale in 2019 as well.This capital recycling program will allow us to accretively fund the completed unit repurchases as well as help takefinancial leverage down to the longer-term targeted level of approximately 50%debt to total assets.Furthermore,what is exciting from a
10、 capital allocation perspective,is that we believe we can sell properties that would rank in the bottom tier of theportfolio from a growth and market quality standpoint to fund the completed unit repurchases.Specifically,we believe we can execute on the$200million pipeline of property sales at 7.5%c
11、ap rate and we have repurchased units at an implied cap rate of 8.1%.Said differently,we can sellproperties at book value, asset value(NAV)and have repurchased units at a substantial discount to their book value.Repurchasing units has other benefits.Slate Retails current annual distribution of$0.855
12、 represents an 8.9%yield on units repurchased or$2.2million of distributions that we can retain to invest in growth opportunities or further reduce leverage as per our plan.As importantly,repurchasingunits at such a high yield will be a contributing factor in bringing down our payout ratio to our 20
13、19 target of 89%of adjusted funds fromoperations or AFFO.We are projecting capital spend to be lower by the second half of 2019 on a year-over-year basis,which will also contributeto a lower payout ratio.Leasing continues to be robust and we expect annual total portfolio NOI growth to be in the 2.5%
14、to 3.0%range driven by redevelopment,leasessigned but not yet paying rent,and rental rate increases upon renewal.We continue to have a multi-year runway to increase in-place market rentsto market rent levels upon renewal.NOI growth and a lower payout ratio translates into the ability to continue to
15、increase distributions and continue to deliver excess yield for our investors.Based on our current growth projections,we believe we can return over$4.45 per unit to investors through distributions over the next 5 years.In addition,we believe we can grow NAV per unit above$13.50.These projections are
16、 useful when thinking about repurchasing units for cancellationbelow$10.00.To summarize,we think the future is bright for Slate Retail and here is what we plan on doing:Organically grow NOI by 2.5%to 3.0%in 2019 and maintain a 90%tenant retention ratio;Recycle proceeds from property sales at or abov
17、e IFRS net asset value to fund already completed unit repurchases that have been canceledat a substantial discount book value;Use the remaining sale proceeds to begin to reduce financial leverage toward the longer-term target level of 50%of debt to total assets;Achieve an AFFO payout ratio of 89%in
18、2019 and increase distributions to unitholders for the sixth consecutive year;Grow net asset value per unit to at least$13.50(CAD$18.00)and distribute$4.45(CAD$5.93)per unit to unitholders over the next 5 years(forour investors who think in Canadian dollar terms,the figures in parenthesis assume an
19、average CAD to USD exchange rate of 0.75);andContinue to monitor Slate Retails unit price relative to underlying property values to take advantage of mispricings should they continue topersist.Below are some of the other exciting things we are thinking about in our future:Slate Retail currently owns
20、 1,351 acres of land located within close proximity to major urban and suburban neighbourhoods across the UnitedStates.18.6%of this land is covered by our real estate properties and 18.2%is required for parking.We believe some of the remaining 853acres of land could prove to be a valuable piece of t
21、he last mile distribution puzzle as retailers look for ways to get closer to their customers.There is virtually no real estate zoned for commercial use closer to residential housing than strip centres;and Given Slate Retail is a publicly listed entity,sentiment can play a big role in our cost of cap
22、ital and ability to accretively grow.While the currentnegative sentiment toward retail may persist for some time it has definitely improved over the past year.Private capital is already beginning toform to invest in retail real estate and we believe it will continue to grow as investors look to take
23、 advantage of the potential for outsized returnsrelative to other real estate asset classes.Its also worth noting that debt financing is still abundant for defensive,grocery-anchored propertieswith service-based tenancies.Our belief is that deals will be more frequent and grow in dollar size over th
24、e next few years which could translateinto more favorable public market valuations for U.S.strip center REITs.Finally,thank you again to the Slate Retail team.Congratulations to Will Miller and David Dunn who are now Officers of the REIT.Will and Davecontinue to be leaders within the asset managemen
25、t group and bring best in-class pedigree to work every day,in everything they do.John Harrickswho joined Slate Retail from the Slate Advisors platform has been a huge boon to the team and signed some of 2018s biggest lease deals for theREIT,including the anchor backfill at North Summit Square.Allen
26、Gordon,who is based in Atlanta,set a record for same-property NOI growth in hisportfolio this year,at over 4.0%.Allen has been in strip retail his entire career and his experience and relationships are invaluable.Brittney Finchcompleted her first full year as an asset manager after supporting the te
27、am for a number of years and stepped up like a veteran,growing her portfolioto 12 properties by year end.This was instrumental in freeing up time for some of our larger redevelopment projects that will drive meaningful growthgoing forward.Brendan Poupore renewed more than 200,000 square feet in 2018
28、 and signed the new anchor lease at Buckeye Plaza which wasarguably the most important lease of the year.Buckeye Plaza is now ready for sale in 2019.Ryan Robert,Stelios Mourtzakis,and Scott Dela Cruzwho comprise our construction team oversaw all of our capital projects(refer to link here for an exam
29、ple of a capital project)which was the largestyear of spend in the REITs history and totaled,at its peak,over 90 separate projects.These projects drive our income growth and value at ourproperties and we have more in the pipeline for 2019.The teams expertise and quick turnaround on all of our projec
30、ts is hugely important and atthe forefront of Slate Retails outstanding reputation with our tenants.Robert Armstrong and Andrew Agatep led the reporting and finance teamanchored by Katelyn Merchand and Kyli Lane.They are the backbone of everything we measure and their role in providing our unitholde
31、rs withaccurate and timely information is critical.Lastly,Darrell Shipp and Tyler Pridham have been instrumental on our disposition program,maximizingproceeds while minimizing transaction timelines due to their deep relationships and first-hand knowledge of our properties from having bought ormanage
32、d many of them.Thank you to our investors for your continued support.We get the unitholders that we deserve and we continue to work diligently to earn your trust.Sincerely,Greg StevensonChief Executive OfficerFebruary26,2019 Managements Discussion and AnalysisSLATE RETAIL REITDecember31,2018 TSX:SRT
33、.U and SRT.UN CONTENTSFINANCIAL AND INFORMATIONAL HIGHLIGHTS.3PART I OVERVIEW.4PART II LEASING AND PROPERTY PORTFOLIO.7PART III RESULTS OF OPERATIONS.21PART IV FINANCIAL CONDITION.35PART V ACCOUNTING AND CONTROL.41PART VI PROPERTY TABLES.45 FORWARD-LOOKING STATEMENTSCertain information in this manag
34、ements discussion and analysis(“MD&A”)constitutes“forward-looking statements”within the meaning ofapplicable securities legislation.These statements reflect managements expectations regarding objectives,plans,goals,strategies,future growth,results of operations,performance and business prospects and
35、 opportunities of Slate Retail REIT(the REIT)including expectations for the currentfinancial year,and include,but are not limited to,statements with respect to managements beliefs,plans,estimates and intentions,and similarstatements concerning anticipated future events,results,circumstances,performa
36、nce or expectations that are not historical facts.Statements thatcontain words such as“could”,“should”,“would”,“can”,“anticipate”,“expect”,“does not expect”,“believe”,“plan”,budget”,“schedule”,“estimate”,“intend”,“project”,“will”,“may”,“might”,“continue”and similar expressions or statements relating
37、 to matters that are not historical facts constituteforward-looking statements.These forward-looking statements are not guarantees of future events or performance and,by their nature,are based on the REITs currentestimates and assumptions,which are subject to significant risks and uncertainties.The
38、REIT believes that these statements are made based onreasonable assumptions;however,there is no assurance that the events or circumstances reflected in these forward-looking statements will occuror be achieved.A number of factors could cause actual results to differ materially from the results discu
39、ssed in the forward-looking statementsincluding,but not limited to the risks that are more fully discussed under the“Risk Factors”section of the annual information form of the REIT forthe year ended December 31,2018(“Annual Information Form”).Factors that could cause actual results to differ materia
40、lly from those contemplatedor implied by forward-looking statements include,but are not limited to:risks incidental to ownership and operation of real estate properties includinglocal real estate conditions;financial risks related to obtaining available equity and debt financing at reasonable costs
41、and interest rate fluctuations;operational risks including timely leasing of vacant space and re-leasing of occupied space on expiration of current leases on terms at current oranticipated rental rates;tenant defaults and bankruptcies;uncertainties of acquisition activities including availability of
42、 suitable property acquisitionsand integration of acquisitions;competition including development of properties in close proximity to the REITs properties;loss of key managementand employees;potential environmental liabilities;catastrophic events,such as earthquakes and hurricanes;governmental,taxati
43、on and otherregulatory risks and litigation risks.Forward-looking statements included in this MD&A are made as of February26,2019,and accordingly are subject to change after such date.TheREIT does not undertake to update any forward-looking statements that are included in this MD&A,whether as a resu
44、lt of new information,futureevents or otherwise,except as expressly required by applicable securities laws.Certain statements included in this MD&A may be considered“financial outlook”for purposes of applicable securities laws,and such financial outlook may not be appropriate for purposes other than
45、 this MD&A.Investors are cautioned against placing undue reliance on forward-looking statements.SLATE RETAIL REIT Q4 2018 MD&A2FINANCIAL AND INFORMATIONAL HIGHLIGHTS(in thousands,except per unit amounts and as otherwise stated)Q4 2018Q3 2018Q2 2018Q1 2018Q4 2017Q3 2017Summary of Portfolio Informatio
46、nNumber of properties858686868684GLA10,768,31910,897,05911,060,14511,067,37211,156,47410,850,708GLA occupied by grocery-anchors5,170,5845,198,0555,159,6935,159,6935,159,6934,887,294Occupancy94.2%94.3%93.9%93.7%93.7%92.6%Grocery-anchor occupancy100.0%100.0%100.0%100.0%100.0%100.0%Non-anchor occupancy
47、88.9%89.1%88.6%88.2%88.3%86.8%Grocery-anchor weighted average lease term(years)5.45.25.35.65.85.5Portfolio weighted average lease term(years)4.84.84.95.05.14.9Square feet(SF)leased642,773258,114242,401294,408402,050490,422Summary of Financial InformationIFRS gross book value(GBV)(1)$1,416,334$1,472,
48、898$1,474,077$1,478,396$1,499,519$1,476,651Total debt871,562875,227864,051872,263883,046846,325Revenue36,30135,69935,66936,54434,85930,030Net(loss)income(9,017)(1,024)(14,201)26,70331,421(8,816)Net operating income(NOI)(2)25,35325,55125,30424,72424,59221,891Funds from operations(FFO)(2)13,53614,4691
49、4,54215,22715,40614,448Adjusted funds from operations(AFFO)(2)9,2018,9989,46510,98711,36011,168Distributions declared$9,438$9,627$9,670$9,742$9,625$9,381Per Unit Financial InformationClass U equivalent units outstanding44,30945,67446,03146,26146,41146,340WA class U equivalent units outstanding(WA un
50、its)44,97145,48946,15346,47946,44346,372FFO per WA units(2)$0.30$0.32$0.32$0.33$0.33$0.31AFFO per WA units(2)0.200.200.210.240.240.24Declared distributions per unit$0.2113$0.2100$0.2100$0.2100$0.2075$0.2025Financial RatiosFFO payout ratio(2)(3)69.7%66.5%66.5%64.0%62.5%64.9%AFFO payout ratio(2)(4)102
51、.6%107.0%102.2%88.7%84.7%84.0%Debt/GBV61.5%59.4%58.6%59.0%58.9%57.3%Weighted average interest rate(5)4.06%4.06%3.70%3.53%3.36%3.15%Interest coverage ratio(6)2.41x2.64x2.63x2.78x3.06x3.41xAll operational amounts are for the three month period ended and all other amounts are as at the end of the perio
52、d.(1)GBV is equal to total assets.(2)Refer to non-IFRS financial measures on page 4.(3)Distributions declared divided by FFO.(4)Distributions declared divided by AFFO.(5)Includes the impact of pay-fixed receive-float swaps.(6)NOI less other expenses,divided by interest on debt.SLATE RETAIL REIT Q4 2
53、018 MD&A3PART I OVERVIEW SLATE RETAIL REIT Q4 2018 MD&A4INTRODUCTIONThis MD&A of the financial position and results of operations of Slate Retail REIT(TSX:SRT.U and SRT.UN)and its subsidiaries(collectively,theREIT)is intended to provide readers with an assessment of performance and summarize the fin
54、ancial position and results of operations of theREIT for the period ended December 31,2018.The presentation of the REITs financial results,including the related comparative information,contained in this MD&A are based on the REITs consolidated financial statements for the year ended December 31,2018
55、(the consolidatedfinancial statements),which have been prepared by management in accordance with International Financial Reporting Standards(IFRS).ThisMD&A should be read in conjunction with those financial statements.All amounts are in thousands of United States dollars,unless otherwise noted,which
56、 is the functional currency of the REIT and all of its subsidiaries.The information contained in this MD&A is based on information available to the REIT and is dated as of February26,2019,which is also the datethe Board of Trustees,upon the recommendation of its Audit Committee,approved the contents
57、 of this MD&A.PROFILEThe REIT is an unincorporated open-ended real estate mutual fund trust constituted in accordance with the laws of the Province of Ontario pursuantto an amended and restated Declaration of Trust dated as of April 15,2014,as amended on May 11,2018.As of December31,2018,the REITown
58、s 85 grocery-anchored retail commercial properties located in the United States of America(the U.S.)comprising 10.8 million square feet ofGLA.The REIT is externally managed and operated by Slate Asset Management L.P.(the Manager”or Slate).The Manager has an experienced anddedicated team of real esta
59、te professionals with a proven track record of success in real estate investment and management.Managementsinterests are aligned with the unitholders of the REIT through its sponsorship and as a significant unitholder of the REIT.Slate is a significantunitholder in the REIT,with an approximate 7.6%i
60、nterest,and accordingly,is highly motivated to increase the value to unitholders and providereliable growing returns to the REITs unitholders.Additional information on the REIT,including its Annual Information Form,is available on SEDAR at and on the REITs websiteat .STRATEGY AND OUTLOOKOur strategy
61、 is to own quality grocery-anchored retail properties located in major markets in the U.S.that are visited regularly by consumers fortheir everyday needs.We believe that our diversified portfolio,quality tenant covenants,coupled with a conservative payout ratio,provides a strongbasis to continue to
62、grow unitholder distributions and flexibility to capitalize on opportunities that provide value appreciation.We are focused on the following areas to achieve the REITs objectives:Be disciplined in our acquisition of well-located properties that provide opportunity for future value creation;Maintain
63、a conservative AFFO payout ratio to continue to provide steady and reliable distributions to unitholders;Proactive property and asset management that results in NOI growth while minimizing property and portfolio vacancy exposure;Prudent and disciplined management of capital outlays that will maintai
64、n and increase the attractiveness of the REITs portfolio and achieveincreased rents;andContinue to increase the REITs financial strength and flexibility through robust balance sheet management.The REITs internal growth strategy includes the following:Maintaining strong tenant relationships and ensur
65、ing tenant retention:Slate expects to continue to nurture its many longstanding relationshipswith existing tenants by anticipating and adapting to their changing needs and being proactive with lease renewals.Slate understands thevalue of maintaining existing tenancies and will engage in ongoing disc
66、ussions with tenants throughout their lease term to be proactive innegotiating early renewals as leases approach their expiries.The growing size of the REITs portfolio will help strengthen its longstandingrelationships with existing tenants and allow Slate to offer leasing opportunities across multi
67、ple properties.This strategy will promote organicgrowth by minimizing marketing,leasing and tenant improvement costs and avoiding interruptions in rental income generation.Maximizing rental income through leasing initiatives:Slate expects to maintain the current high level of occupancy in the REITs
68、propertiesby leveraging Slates established leasing platform.Slate intends to continue to implement active strategies that take into considerationprevailing economic conditions,the nature of the property,its local positioning,as well as existing and prospective tenants.Many of the REITsproperties are
69、 located in areas with low vacancy rates and minimal new competitive supply,which should minimize leasing costs and allowthe REIT to replace in-place rents with increased market rents as leases expire.Slate also seeks to continue to include contractual rentescalators in leases to further facilitate
70、growth in rental income.Repositioning current properties:Slate believes that in a number of situations there exists the opportunity to reposition properties currentlyheld by the REIT through modest and targeted capital projects and/or operational improvements.The REIT will continue to focus on acqui
71、ring diversified revenue producing commercial real estate properties with a focus on grocery-anchoredretail properties.The REITs external growth strategy includes the following:Opportunity to benefit from its relationship with Slate:The REIT anticipates that its continuing relationship with Slate pr
72、ovides opportunitiesto acquire additional properties.Slate has a strong track record of closing acquisitions and believes that it can grow the asset base of theREIT on an accretive basis in the near to medium term.Identify undervalued properties:Slates extensive relationships with a network of U.S.-
73、based commercial real estate brokers allow it to identifyundervalued properties,many of which may be“off-market”or not widely marketed for sale.With over approximately 38,000 grocery storesin the U.S.,there exists significant opportunity for the REIT to continue its strategy of acquiring attractive,
74、revenue-producing commercialreal estate properties anchored by grocery tenants.Slates familiarity with the REITs properties allows it to identify complimentary acquisitionopportunities that are aligned with the REITs investment criteria and accretive to cash flow.The REIT will continue to seek to ac
75、quire properties:(i)located in secondary markets in the U.S.demonstrating sustainable population and employment statistics;(ii)located in well-developedsub-markets with limited risk of new development;and(iii)with anchor tenants,which typically are the dominant retailer within the sub-market,with a
76、proven track record of strong sales and profitability.Slate will continue to target secondary cities in the U.S.,as opposed to primarymarkets where there is typically less competition for quality assets.Apply Slates hands-on asset management philosophy:Even though Slate targets assets that are stabl
77、e,income producing properties,Slatewill continue to assess each property to determine how to optimally refurbish,reposition and re-tenant the property.Slate will continue towork closely with contractors to reduce operating costs and will oversee capital expenditure projects to ensure they are on bud
78、get andcompleted on time.In addition,Slate will continue to:(i)focus on rebuilding and strengthening tenant relationships with a view to gainingincremental business and extending stable tenant leases;and(ii)outsource property management and other real estate property functionsto lower the operating
79、costs borne by the tenants.This cost reduction further improves tenant relationships and will increase the net operatingincome of the REITs properties.Overall,the REIT has established a premier platform of diversified grocery-anchored properties that creates meaningful cash flow for unitholdersand t
80、he continued opportunity for future growth.SLATE RETAIL REIT Q4 2018 MD&A5NON-IFRS FINANCIAL MEASURESWe disclose a number of financial measures in this MD&A that are not measures determined in accordance with IFRS,including NOI,same-property NOI,FFO,FFO payout ratio,AFFO,AFFO payout ratio,adjusted e
81、arnings before interest,tax,depreciation and amortization(AdjustedEBITDA)and the interest coverage ratio,in addition to certain measures on a per unit basis.We utilize these measures for a variety of reasons,including measuring performance,managing the business,capital allocation and the assessment
82、of risk.Descriptions of why these non-IFRSmeasures are useful to investors and how management uses each measure are included in this MD&A.We believe that providing these performancemeasures on a supplemental basis to our IFRS results is helpful to investors in assessing the overall performance of ou
83、r businesses in a mannersimilar to management.These financial measures should not be considered as a substitute for similar financial measures calculated in accordancewith IFRS.We caution readers that these non-IFRS financial measures may differ from the calculations disclosed by other businesses,an
84、d as aresult,may not be comparable to similar measures presented by others.Reconciliations of these non-IFRS measures to the most directly comparablefinancial measures calculated and presented in accordance with IFRS are included within this MD&A.The definition of non-IFRS financial measures are as
85、follows:NOI is defined as rental revenue less operating expenses,prior to straight-line rent and IFRIC 21,Levies(IFRIC 21)property tax adjustments.Same-property NOI includes those properties owned by the REIT for each of the current period and the relevant comparative period excludingthose propertie
86、s under development.NOI margin is defined as NOI divided by revenue,prior to straight-line rent.FFO is defined as net income(loss)adjusted for certain items including transaction costs,change in fair value of properties,deferred incometaxes,unit expense(income)and IFRIC 21 property tax adjustments.A
87、FFO is defined as FFO adjusted for straight-line rental revenue and sustaining capital,leasing costs and tenant improvements.FFO payout ratio and AFFO payout ratio are defined as distributions declared divided by FFO and AFFO,respectively.FFO per WA unit and AFFO per WA unit are defined as FFO and A
88、FFO divided by the weighted average class U equivalent units outstanding,respectively.Adjusted EBITDA is defined as NOI less other expenses.Interest coverage ratio is defined as adjusted EBITDA divided by cash interest paid.RISK AND UNCERTAINTIESThe REITs business is subject to a number of risks and
89、 uncertainties which are described in its most recently filed Annual Information Form forthe year ended December 31,2018,available on SEDAR at .Additional risks and uncertainties not presently known to the REITor that the REIT currently considers immaterial also may impair its business and operation
90、s and cause the price of the REITs units to decline.Ifany of the noted risks actually occur,the REITs business may be harmed and the financial condition and results of operation may suffer significantly.In that event,the trading price of the units could decline,and unitholders may lose all or part o
91、f their investment.RECENT DEVELOPMENTSThe following is a summary of the key financial and operational highlights and recent developments for the REIT for the year ended December 31,2018:Completed 588,211 square feet of lease renewals at a 4.4%weighted average spread above expiring rent and 54,562 sq
92、uare feet of new leasingat a 26.9%premium above the weighted average in-place rent for comparable space.Effective for its December 2018 distributions,the REIT approved the increase of its monthly distribution by 1.8%to U.S.$0.07125 per unit,orU.S.$0.855 annually.This increase is the fifth consecutiv
93、e annual distribution increase since the REIT listed its class U units on the TorontoStock Exchange in 2014.Occupancy increased by 0.5%during the year to 94.2%,with a significant portion of the REITs leasing activity to still impact future periods.The weighted average tenant retention rate for the f
94、ourth quarter is 95.8%compared to 90.4%in the fourth quarter of 2017.Since the beginningof 2016,the weighted average retention rate has been 90.7%.The REIT continued to actively repurchase units,with 1.4 million class U units purchased and subsequently canceled under the REITs normalcourse issuer bi
95、d(NCIB)for a total cost,including transaction costs,of$12.9 million at an average price of$9.47 during the fourth quarter.For the year ended December 31,2018,the REIT repurchased 2.2 million units which will result in approximately$1.9 million less distributionson an annualized basis.On January16,20
96、19,the REIT commenced a substantial issuer bid(the offer),pursuant to which the REIT offered to purchase up to 4.2million class U units at a purchase price of C$12.54(USD$9.51).On February 20,2019,the offer announced on January9,2019 expired andthe REIT has taken up and paid for 0.3 million class U
97、units for an aggregate cost of$3.2 million or C$4.2 million,excluding fees and expensesrelated to the offer.The class U units purchased for cancellation under the offer approximate 0.8%of the REITs class U units outstanding atDecember 31,2018 and 0.8%of class U units outstanding at February 20,2019,
98、immediately prior to the expiry of the offer.Upon completionof the offer,44.1 million class U units remain outstanding.Rental revenue for the three month period ended December 31,2018 and 2017 was$36.3 million and$34.9 million respectively,which representsan increase of$1.4 million.The increase is p
99、rimarily due to rental rate growth from re-leasing at rates above in-place rents and new leasing inaddition to net acquisitions.In the last 12 months,the REIT has acquired one property and disposed of two properties and 13 outparcels atcertain properties.Net loss for the three month period ended Dec
100、ember 31,2018 was$9.0 million,which is a$40.4 million decrease from the same quarter of theprior year.The decrease is attributed to the decrease in deferred income tax recovery of$27.4 million and the decrease in the change in fairvalue of properties of$6.3 million,partially offset by the aforementi
101、oned increases in revenue of$1.4 million.NOI was$25.4 million for the three month period ended December 31,2018,compared to$25.6 million in the third quarter of 2018.The decreaseis due to the lost contribution from the sale of one property and seven outparcels during the period,partially offset by a
102、 full quarter of NOIcontribution from the acquisition of Plymouth Station,located in Plymouth,Minnesota and termination fees related to shop-space tenants andnon-rental income totaling of$0.4 million.Same-property NOI for the three month period ended December 31,2018(comprised of 77 properties)incre
103、ased by 4.2%over the comparativeperiod.Same-property NOI for the trailing twelve month period ended December31,2018(comprised of 62 properties)increased by 1.7%overthe same period in the prior year.Including the impact of the completion of the REITs redevelopment projects completed from the fourth q
104、uarterof 2017,same-property NOI increased by 4.2%and 2.4%for the three and trailing twelve month period ended December31,2018,respectively.Of the last 10 quarters,the REIT has now had eight quarters of positive same-property NOI growth.FFO per unit was$0.30 for the quarter,which represented a$0.03 d
105、ecrease from the same period in the prior year primarily due to the$2.0million increase in cash interest paid as a result of fixing the REITs debt through interest rate swaps that fixed the rate on 99.2%of debt,partiallyoffset by the aforementioned increases in rental revenue over the prior quarter.
106、On a pro forma basis after taking into account the REITsrepurchases of units in the fourth quarter of 2018 and in early 2019,the REITs FFO per unit would have been$0.31 for the quarter,and$1.31for 2018.We expect the full impact of these repurchases to be realized beginning in the second quarter of 2
107、019.AFFO per unit was$0.20 for the quarter,which is a$0.04 per unit decrease compared to the same quarter in 2017,mainly due to a$0.6 millionincrease in leasing and tenant improvement spend to primarily support new leasing over the prior quarter.If the REIT calculated capital,leasingand tenant impro
108、vement spend as 10%of NOI in the current quarter,which is representative of the REITs historical sustaining capital,leasingand tenant improvement costs,the REIT would have a modified AFFO per unit of$0.24.The REITs AFFO payout ratio for the fourth quarter was 102.6%.For the year ended December 31,20
109、18,the AFFO payout ratio was 99.5%.SLATE RETAIL REIT Q4 2018 MD&A6PART II LEASING AND PROPERTY PORTFOLIO SLATE RETAIL REIT Q4 2018 MD&A7LEASINGThe REIT strives to ensure that its properties are well occupied with tenants who have space that allow them to meet their own business objectives.Accordingl
110、y,the REIT proactively monitors its tenant base with the objective to renew in advance of lease maturities,backfill tenant vacancies ininstances where a tenant will not renew,or if there is an opportunity to place a stronger or more suitable tenant in the REITs properties,managementendeavors to find
111、 a suitable solution.The following table summarizes the REITs leasing activity for the four most recent quarters:Square feetDeal typeQ4 2018Q3 2018Q2 2018Q1 2018Less than 10,000RenewalLeases signed46405349Total square feet111,94384,156123,637128,158Average base rent$19.02$18.98$17.31$16.36Rental spr
112、ead5.8%9.0%8.9%7.8%Greater than 10,000RenewalLeases signed7535Total square feet476,26893,29553,80099,469Average base rent$7.42$8.69$7.51$7.29Rental spread3.6%5.0%14.8%(5.0)%Total renewals(square feet)588,211177,451177,437227,627Less than 10,000New leaseLeases signed9201622Total square feet26,56243,8
113、0041,24456,351Average base rent$19.05$19.47$20.91$14.07Rental spread(1)44.4%50.0%67.0%12.7%Greater than 10,000New leaseLeases signed1121Total square feet28,00036,86323,72010,430Average base rent$7.25$8.40$11.92$16.75Rental spread(1)(2.6)%10.1%48.4%99.2%Total new leases(square feet)54,56280,66364,964
114、66,781Total leasing activity(square feet)642,773258,114242,401294,408(1)Calculated based on the average base rent of the new lease term compared to the average in-place rent for comparable space across the portfolio.Rental spreads on new leasesRental spreads on lease renewalsLeasing Spreads70%60%50%
115、40%30%20%10%0%Q4 2016Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018Q2 2018Q3 2018Q4 201845.5%40.3%44.5%36.9%31.7%22.2%62.0%36.8%26.9%9.9%2.7%4.7%5.2%6.0%4.2%9.8%7.6%4.4%During the fourth quarter,management completed 588,211 square feet of lease renewals.The weighted average rental rate increase on renewalscomp
116、leted for leases less than 10,000 square feet was$1.04 per square foot or 5.8%higher than expiring rent.The weighted average rental rateincrease on renewals completed for leases greater than 10,000 square feet was$0.26 per square foot or 3.6%higher than expiring rent.The weighted average base rent o
117、n all new leases completed less than 10,000 square feet was$19.05 per square foot which is$5.86 per squarefoot or 44.4%higher than the weighted average in-place rent for comparable space across the portfolio.The weighted average rental rate on allnew leases greater than 10,000 square feet was$7.25 w
118、hich is$0.19 or 2.6%lower than the weighted average in-place rent for comparable spaceacross the portfolio.These transactions compare favorably to the current weighted average in place rent of$10.79.The single new lease greater than 10,000 squarefoot was completed at a small negative spread relative
119、 to other tenancies in the portfolio,however,represents the leasing of 28,000 square feetof vacancy at Stadium Center,located in Port Huron,Michigan,occurring in July 2018.The new lease was signed with a national retailer andincreases Stadium Center to an occupancy of 96.8%.Management expects that t
120、he new lease will allow the REIT to explore a sale of the property,monetize the income from the new 28,000 square foot lease,and exit the Port Huron,Michigan market in order to deploy the proceeds into highergrowth opportunities.Lease maturitiesThe REIT generally enters into leases with initial term
121、s to maturity between 5 and 10 years with our grocery-anchor tenants.The initial terms tomaturity for non-anchor space tends to be of a shorter duration between 3 and 5 years.The weighted average remaining term to maturity of theREITs grocery-anchor and non-grocery-anchor tenants as at December31,20
122、18 was 5.4 years and 4.2 years respectively,not including tenantson month-to-month leases.On a portfolio basis,the weighted average remaining term to maturity is 4.8 years.The following table summarizes the composition of the remaining term to maturity of the REITs leases at December31,2018:Weighted
123、 averageterm to maturityGLAGLA%Grocery-anchor5.45,170,58448.0%Non-anchor4.24,872,90945.3%Total occupied4.810,043,49393.3%Month-to-month101,6430.9%Vacant623,1835.8%Total GLA10,768,319100.0%The following table shows the change in occupancy during the three month period ended December 31,2018:Total GLA
124、Occupied GLAOccupancySeptember 30,201810,897,05910,273,62094.3%Dispositions(129,272)(118,367)91.6%Leasing changes(1)(785)N/ARe-measurements532(9,332)N/ADecember31,201810,768,31910,145,13694.2%(1)Leasing changes include new leases,lease buyouts,expirations and terminations.Occupancy is determined bas
125、ed on lease commencement.Occupancy has decreased by 0.1%to 94.2%from September 30,2018,primarily dueto 55,347 square feet of shop space tenant vacancies,partially offset by 54,562 square feet of new leasing and the disposal of Cudahy Centerand seven outparcels at various properties at a weighted occ
126、upancy rate of 91.6%.The following table shows the change in occupancy during the year ended December 31,2018:Total GLAOccupied GLAOccupancyDecember 31,201711,156,47410,452,39293.7%Acquisitions114,069111,58497.8%Dispositions(498,827)(470,936)94.4%Leasing changes(1)83,427N/ARe-measurements(3,397)(31,
127、331)N/ADecember31,201810,768,31910,145,13694.2%(1)Leasing changes include new leases,lease buyouts,expirations and terminations.SLATE RETAIL REIT Q4 2018 MD&A8Occupancy increased to 94.2%at December31,2018 from 93.7%at December 31,2017.The increase in occupancy is due to 266,970 squarefeet of new le
128、asing and the acquisition of Plymouth Station with an occupancy rate of 97.8%,partially offset by vacancies totaling 183,543 squarefeet and the disposal of two properties and 13 property outparcels at certain properties at a weighted occupancy rate of 94.4%.The following is a profile of the REITs le
129、ases excluding the impact of tenant extension options:Grocery-anchorNon-anchorTotalGLA expirationGLAPercentageof portfolioAveragein-placerentGLAPercentageof portfolioAveragein-placerentGLAPercentageof portfolioAveragein-placerentMonth-to-month$101,6430.9%$17.73101,6430.9%$17.732019494,7294.6%6.40463
130、,9674.3%16.42958,6968.9%11.252020382,0903.5%6.60748,0006.9%11.411,130,09010.4%9.792021524,6994.9%7.89781,2807.3%13.421,305,97912.2%11.202022699,7856.5%7.70725,9326.7%14.561,425,71713.2%11.192023799,1147.4%7.86766,2147.1%13.581,565,32814.5%10.662024 and later2,270,16721.0%9.201,387,51613.0%12.753,657
131、,68334.0%10.55VacantN/A623,1835.9%N/A623,1835.9%N/ATotal/weighted average5,170,58447.9%$8.205,597,73552.1%$13.4910,768,319100.0%$10.79The REIT endeavors to proactively lease upcoming expiries in advance of maturity to maintain high occupancy levels,ensure a proper mix oftenants at each property and
132、certainty in cash flows.The following is a table of lease expiries at December31,2018 and pre-existing futurematurities that were leased in advance during 2018:The following table summarizes remaining expiries:December31,2018September 30,2018June 30,2018March 31,2018GLA ExpirationNumber oftenantsGLA
133、Number oftenantsGLANumber oftenantsGLANumber oftenantsGLAAnchors7494,729156,127156,127156,127Non-anchors171463,9673483,69773195,840117330,555Remaining expiries178958,69635139,82474251,967118386,682Percentage of occupied portfolio9.4%1.4%2.3%3.5%At December31,2018,remaining 2019 expiries totaled 958,
134、696 square feet with 4.3%or 463,967 square feet of total GLA related to non-anchortenants.Comparatively,at September30,2018,remaining 2018 expiries totaled 139,824 square feet with 0.8%or 83,697 square feet of total GLArelated to non-anchor tenants.At June30,2018,remaining 2018 expiries totaled 251,
135、967 square feet with 1.8%or 195,840 square feet of totalGLA related to non-anchor tenants.At March31,2018,remaining 2018 expiries totaled 386,682 square feet with 3.0%or 330,555 square feet oftotal GLA related to non-anchor tenants.SLATE RETAIL REIT Q4 2018 MD&A9Retention ratesThe asset management t
136、eam strives to maintain strong relationships with all tenants,especially the REITs grocery-anchor tenants.Since inceptionin 2011,where the REIT has sought a renewal with a grocery-anchor,the asset management team has had a 100%success rate in obtaining alease extension.In certain cases,management ha
137、s not sought renewals with larger tenants,including in cases where a better user is available,or a redevelopment opportunity exists.Management believes that this success is as a result of the strong relationships maintained with tenantsand the REITs underwriting which in part considers the relative
138、strength of grocery-anchors in the respective market,recent capital investmentby grocers and,where possible,the profitability of the store.Management expects a lower retention rate for our non-grocery-anchor tenants as aresult of the dynamics and natural turnover of certain businesses over time whic
139、h gives us opportunity to re-lease space,potentially at higherrates,and improve overall credit and tenant mix.The following are the REITs retention rates for the three and twelve month periods ended December 31,2018,and year ended December31,2017 for both grocery-anchor and non-grocery-anchor tenant
140、s:Retention rate(1)Three months endedDecember 31,2018Year endedDecember 31,2018Year endedDecember 31,2017Grocery-anchor100.0%100.0%100.0%Non-grocery-anchor91.4%84.0%76.6%Net total/weighted average95.8%92.1%88.3%(1)Retention rate excludes instances where management has not sought a renewal,which are
141、primarily related to redevelopment or property portfolio management opportunities.On October 15,2018,Sears Holdings Corporation,the parent company of Sears and Kmart,declared Chapter 11 under the Bankruptcy Code inthe U.S.The REIT has one 83,076 square foot Kmart at Eastpointe Shopping Center,locate
142、d in Clarksburg,West Virginia which contributes annualbase rent of$0.1 million and represents 0.1%of portfolio annual base rent.The REIT is in discussions with national retailers to backfill the Kmartbox and potentially redevelop the centre.On acquisition,the REIT underwrote a lease buy-out with Kma
143、rt,an outlay no longer required due toKmarts closure,a favorable outcome for the REIT.Annual base rent is expected to increase meaningfully following the completion of theredevelopment project.The following are the REITs incremental change in base rent for the four most recent quarters:For the three
144、 months ended,December31,2018 September 30,2018June 30,2018March 31,2018RenewalsSquare feet588,211177,451177,437227,627Expiring rent per square foot(1)$9.22$12.64$13.06$11.90Rent spread per square foot(1)0.410.961.280.50VacatedSquare feet(2)55,34736,35119,22072,625Expiring rent per square foot(1)$14
145、.94$10.89$16.26$15.13NewSquare feet54,56280,66364,96466,781New rent per square foot(1)$12.99$14.41$17.63$14.49Total base rent retained$4,596$1,847$2,005$1,610Incremental base rent$950$1,333$1,372$1,081(1)Weighted average.(2)Adjusted for lease buyouts and vacancies due to redevelopment.In-place and m
146、arket rentsThe REITs leasing activity during the three month period ended December 31,2018 is as follows:GLA Number of tenantsWeighted averageexpiring rentWeighted averagenew rentRenewed leases588,21153$9.22$9.63New leases54,56210N/A12.99Total/weighted average642,77363N/A$9.91Less,leases not renewed
147、/vacated during term(1)(55,347)(20)14.94N/ANet total/weighted average587,42643$9.91(1)Adjusted for lease buyouts and vacancies due to redevelopment.SLATE RETAIL REIT Q4 2018 MD&A10The REITs leasing activity during the year ended December 31,2018 is as follows:GLA Number of tenantsWeighted averageexp
148、iring rentWeighted averagenew rentRenewed leases1,170,726208$10.84$11.48New leases266,97072N/A14.92Total/weighted average1,437,696280N/A$12.12Less,leases not renewed/vacated during term(1)(183,543)(65)14.35N/ANet total/weighted average1,254,153215$12.12(1)Adjusted for lease buyouts and vacancies due
149、 to redevelopment.During the fourth quarter of 2018 the REIT completed 642,773 square feet of leasing,which represents 6.0%of the REITs portfolio.For the yearended December 31,2018,1,437,696 square feet of leasing was completed,which represents 13.4%of the REITs portfolio and compares favorablyto th
150、e 5.7%that was contractually expiring as of December 31,2017.This level of leasing is consistent with the REITs strategy of actively managingthe properties to create value through a hands-on approach.Net rental ratesThe following table is a summary of in-place rent for the eight most recent financia
151、l quarters of the REIT:Q4 2018Q3 2018Q2 2018Q1 2018Q4 2017Q3 2017Q2 2017Q1 2017Grocery rent$8.20$8.10$8.08$8.20$8.19$8.29$8.28$8.38Shop space rent13.4913.4413.0013.0313.0812.6812.3212.22Total$10.79$10.79$10.55$10.63$10.67$10.55$10.31$10.30Market rent(1)$11.46$11.45$11.27$11.16$11.27$11.22$10.92$10.8
152、2(1)Market rate represents the REITs estimate of market rents for its properties on a weighted average basis.Market rents are determined based,in part,on broker feedback,markettransactions and completed deals.In-place rentMarket rent per square footIn-place Rent Versus Estimated Market Rent$11.60$11
153、.40$11.20$11.00$10.80$10.60$10.40$10.20Rate per square footQ4 2016Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018Q2 2018Q3 2018Q4 2018$10.32$10.30$10.31$10.55$10.67$10.63$10.55$10.79$10.79$10.67$10.82$10.92$11.22$11.27$11.16$11.27$11.45$11.46The REIT leases to high-quality tenants in well located centres typica
154、lly below the average market rent for U.S.strip centres,allowing for increasedvalue in the portfolio through rental rate growth.SLATE RETAIL REIT Q4 2018 MD&A11ACQUISITIONSSubject to the availability of acquisition opportunities,the REIT intends to grow distributions,in part through the accretive ac
155、quisition of properties.The current environment for acquisitions is very competitive with limited supply of quality properties coming to the market.The REIT exploresacquisition opportunities as they arise but will pursue only acquisitions that management believes are accretive to net asset value per
156、 unit in themedium-term relative to its long-term cost of capital.The REIT acquired one property during the year ended December 31,2018,as summarized below:PropertyPurchase dateMetropolitan statistical area(MSA)PurchasepriceSFPriceper SFAnchor tenantPlymouth StationAugust 31,2018Minneapolis-St Paul$
157、20,465114,069$179Hy-VeeThe aforementioned property was acquired by the REIT for a total of$20.5 million,totaling 0.1 million square feet($179 price per square foot)ata going-in capitalization rate of 7.3%.Consideration for the cost of the acquisition was funded by the REITs revolver and cash on hand
158、.The assetis anchored by a market leading grocer with 15.1 years of lease term.Subsequent to December 31,2018,the REIT acquired a 50%interest in Windmill Plaza,located in Sterling Heights,Michigan,in a joint-venturepartnership with The Kroger Company for$7.3 million,net of settlement of the REITs no
159、te receivable of$9.4 million and an assumed loan andprior to transaction costs.The REIT is planning to invest an additional$5.7 million at our share to redevelop the property and includes a 25 yearground lease with Kroger as the anchor tenant.Construction will commence in the first quarter of 2019 a
160、nd will include a brand new 129,000square foot Kroger Marketplace,an improved inline faade and a completely redesigned parking lot,landscaping and lighting system.In additionto Kroger,new leases have been executed with Edge Fitness for 36,576 square feet and Pet Supplies Plus for 7,780 square feet,s
161、ignificantlyreducing future leasing risk.The REIT expects completion and rent commencement to be February of 2020.This acquisition is summarized below:PropertyPurchase dateMetropolitan statistical area(MSA)PurchasepriceSFPriceper SFAnchor tenantWindmill Plaza(1)January 2019Detroit$7,299159,854$91Kro
162、ger(1)Price per square foot is based on a 100%purchase price of the property at$14.8 million.SLATE RETAIL REIT Q4 2018 MD&A12DISPOSITIONSDispositionsThe REIT disposed of two properties and 13 property outparcels during the year ended December 31,2018 as follows:PropertyTenantNumber ofoutparcelsDispo
163、sition dateLocationSalespriceWesthaven Town Center OutparcelVarious office tenants1January 9,2018Franklin,TN$9,100Mooresville Consumer Square OutparcelPlanet Fitness1February 15,2018Mooresville,NC6,450Norwin Town Square OutparcelPep Boys1March 16,2018North Huntingdon,PA1,360Waterbury Plaza Outparcel
164、Webster Bank1April 17,2018Waterbury,CT3,300Mooresville Consumer Square Outparcels Camping World,Pizza Hut2August 22,2018Mooresville,NC12,730Field Club CommonsPick n SaveN/ASeptember 26,2018 New Castle,PA9,800Roxborough Marketplace OutparcelChase Bank1October 11,2018Littleton,CO1,550Roxborough Market
165、place OutparcelSonic1November 5,2018Littleton,CO710North Branch Marketplace OutparcelHoliday Gas1November 19,2018North Branch,MN1,760North Lake Commons OutparcelOReilly Auto Parts1December 4,2018Lake Zurich,IL1,252Cudahy CenterPick n SaveN/ADecember 4,2018Cudahy,WI2,075Battleground Village Outparcel
166、Starbucks1December 13,2018Greensboro,NC1,818Mooresville Consumer Square OutparcelPopeyes1December 18,2018Mooresville,NC1,491Stonefield Square OutparcelCVS Pharmacy1December 24,2018Louisville,KY1,700Total$55,096The disposition of outparcels is consistent with the REITs strategy to recycle capital tha
167、t can be more opportunistically deployed or reduce risk.Often outparcels are identified for disposition at the underwriting stage in order to reduce the REITs acquisition cost basis,or after a period ofownership,where additional value has been created that can be crystallized.There are no fees incur
168、red by the REIT to the Manager in relation to the disposition of properties or outparcels.PROPERTY PROFILEProfessional managementThrough professional management of the portfolio,the REIT intends to ensure its properties portray an image that will continue to attract consumersas well as provide prefe
169、rred locations for its tenants.Well-managed properties enhance the shopping experience and ensure customers continueto visit the centres.Professional management of the portfolio has enabled the REIT to maintain a high occupancy level,currently 94.2%atDecember31,2018(September,2018 94.3%,June 30,2018
170、 93.9%,March 31,2018 93.7%).Occupancy has decreased by 0.1%to 94.2%from the most recent quarter due to 55,347 square feet of shop space tenant vacancies,partiallyoffset by new leases in the quarter,which included Ollies Bargain Outlet at Stadium Center at 28,000 square feet and the disposal of Cudah
171、yCenter and seven outparcels at various properties at a weighted occupancy rate of 91.6%.The following table shows the occupancy rate of the REITs portfolio since the REIT was listed on the TSX:20142015201620172018Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2 Q3Q4Q1Q2Q3Q4Properties334143596466666864697173848686868685Occ
172、upancy96%96%96%95%95%95%94%95%94%94%93%92%93%94%94%94%94%94%PropertiesOccupancyHistorical Occupancy Rates100%98%96%94%92%90%88%86%84%82%80%Occupancy rate90807060504030Number of propertiesQ3 2014Q4 2014Q1 2015Q2 2015Q3 2015Q4 2015Q1 2016Q2 2016Q3 2016Q4 2016Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018Q2 2018Q
173、3 2018Q4 201896.0%96.0%96.0%95.3%95.1%94.7%94.4%95.0%93.6%93.5%93.2%91.7%92.6%93.7%93.7%93.9%94.3%94.2%SLATE RETAIL REIT Q4 2018 MD&A13Geographic overviewThe REITs portfolio is geographically diversified.As of December31,2018,the REITs 85 properties were located in 21 states with a presencein 22 MSA
174、s.The REIT has 33 properties,or 38.8%of the total portfolio,located in the U.S.sunbelt region.Markets within this region benefit fromstrong underlying demographic trends,above average employment and population growth.This provides the REIT opportunities to progressivelydrive operational efficiencies
175、 and sustainable growth.The following is a summary of the geographic location and relative dispersion of the REITs property portfolio:StateNumber of assetsTotal SFOccupied SFPercentage ofrevenueOccupancyFlorida131,512,4981,439,46315.8%95.2%North Carolina91,209,0131,153,22911.1%95.4%Pennsylvania81,28
176、0,3141,210,39711.0%94.5%Georgia91,030,702962,9989.6%93.4%South Carolina7969,644931,0248.9%96.0%Minnesota5566,782539,0775.8%95.1%Michigan4501,378487,9284.6%97.3%Ohio5688,096546,0384.0%79.4%Tennessee5526,641520,6413.7%98.9%North Dakota2261,578260,2873.5%99.5%Illinois4390,946341,8803.4%87.4%Maryland114
177、7,803136,8303.0%92.6%West Virginia2387,162380,3022.6%98.2%Colorado2198,637188,2842.2%94.8%Wisconsin2190,979188,2792.0%98.6%New Hampshire1187,001181,2422.0%96.9%Virginia2203,434199,2341.9%97.9%Connecticut1139,653139,6531.7%100.0%Texas1167,961142,8921.3%85.1%Utah1127,231123,9701.2%97.4%Kentucky180,866
178、71,4880.9%88.4%Total8510,768,31910,145,136100%94.2%SLATE RETAIL REIT Q4 2018 MD&A14Tenant categoriesAs of December31,2018,the REIT has the following tenant categories within the portfolio,allocated by base rent:Supermarkets and groceryOther service-based tenantsMedical and personal servicesRestauran
179、tsDiscount and off-priceFinancial institutionsFitness facilitiesSporting and footwearDollar storesLiquor storesPharmacies39%15%14%13%7%4%3%2%1%1%1%CategoryNumber of storesPercentage of rentKey brands(1)Supermarkets and grocery10139%Other service-based tenants25815%Medical and personal services39414%
180、Restaurants27713%Discount and off-price527%Financial institutions1014%Fitness facilities373%Sporting and footwear222%Dollar stores161%Liquor stores251%Pharmacies91%Total1,292100%(1)All trademarks are the property of their respective owners.The REITs portfolio of tenants is a diversified mix of leadi
181、ng grocers,national brands and strong regional performers complemented by localoperators providing needed services and goods to their local communities.These retailers provide significant non-discretionary e-commercedefensive goods.The REITs properties,which are located in well-established neighborh
182、oods,allow grocery-anchored property real estate andeconomics of last mile delivery to be viable.SLATE RETAIL REIT Q4 2018 MD&A15Anchor tenantsThe REIT endeavors to own properties with anchors who are dominant in their respective regions in terms of operational scale and sales.Accordingly,the REITs
183、anchor tenants are often either the first or second dominant store in their respective area in terms of market share.The following tableidentifies the REITs largest anchor tenants including their annual minimum rent,the number of stores,GLA as a percentage of the total portfolioand the percentage of
184、 base rent.Walmart Inc.represents the REITs largest tenant by base rent with a total of 8 stores and 7.7%of base rents.The largest 15 tenants account for 47.9%of total GLA and 39.2%of base rent as follows:Parent companyStore brandsGroceryStores%GLABase rent%BaserentWalmart Inc.Wal-Mart,Sams ClubY812
185、.1%$8,5497.7%The Kroger Co.Kroger,Pick n Save,Harris TeeterY1910.3%7,4966.8%Publix SupermarketsPublixY125.1%4,4924.1%Koninklijke Ahold Delhaize N.V.Stop&Shop,GIANT,Food Lion,HannafordY52.8%4,3313.9%Southeastern GrocersWinn Dixie,BI-LOY104.3%3,9123.5%United Natural Foods,Inc.Various(1)Y52.4%2,6252.4%
186、Coborns Inc.CashWiseY21.1%2,0381.9%AlbertsonsJewel-Osco,SafewayY42.3%1,7861.6%Alex Lee Inc.Lowes FoodsY31.3%1,6831.5%Bealls,IncBealls,Burkes OutletN41.3%1,2521.1%Dollar Tree Inc.Dollar Tree,Family DollarN121.1%1,1321.0%Schnuck Markets,Inc.SchnucksY21.1%1,0991.0%TJX CompaniesMarshalls,T.J.MaxxN41.0%1
187、,0500.9%The Fresh Market,Inc.The Fresh MarketY40.8%9540.9%Planet FitnessPlanet FitnessN60.9%9420.9%Total10047.9%$43,34139.2%(1)Store brands include Cub Foods,County Market,Shop n Save and Rainbow Foods.SLATE RETAIL REIT Q4 2018 MD&A16DevelopmentThe REITs redevelopment program is focused on growing i
188、ncome and unlocking value by revitalizing tenant uses and creating a better customerexperience at select properties.Redevelopment is generally considered to begin when activities that change the condition of the property commence.Redevelopment ceases when the asset is in the condition and has the ca
189、pability of operating in the manner intended,which is generally at cessationof construction and tenanting.For purposes of reporting same-property NOI,redevelopment assets are excluded from the same-property portfolioin the period in which they are re-classified as a redevelopment property and are ex
190、cluded until they are operating as intended in all of both thecurrent and comparative periods.The carrying value of redevelopment properties includes the acquisition cost of property and direct redevelopmentcosts attributed to the project.The REIT does not capitalize interest for its projects under
191、development.To date,redevelopment spend has beenfunded by cash from operations.Interest expense is recognized as incurred in income which is not comparable to other REITs or other corporationsthat capitalize interest.The REIT has classified the following properties as redevelopment properties:Estima
192、tedincrementalNOI(1)Nature ofredevelopmentExpectedcompletionYield oncostPre-leasedpercentageEstimated investmentPropertyIncurred RemainingTotalHocking Valley MallAnchor repositioningQ1 20195264.5%93%$11,110$602$11,712North Summit SquareAnchor repositioningQ3 201949120.6%100%$312$2,068$2,380Springbor
193、o PlazaJunior anchorrepositioningQ3 202053117.6%$4$3,005$3,009Total$1,5489.1%$11,426$5,675$17,101Completed redevelopment projectsEstimatedincrementalNOI(1)Nature ofredevelopmentCompletedYield oncostLeasedpercentageTotalinvestedPropertyBuckeye Plaza(2)Anchor repositioningQ4 2018$20972.8%100%$287Count
194、y Line PlazaAnchor repositioningQ4 201853017.5%100%3,02673922.3%$3,313(1)Calculated on a trailing twelve month basis as of December 31,2018.(2)Total invested spend of$287 thousand includes the commitment to deliver a tenant improvement in the amount of$250 thousand following 6 months of tenant opera
195、tions in the leasedspace.This capital spend is expected to be incurred in the third quarter of 2019.Redevelopment capital spent during the three and twelve month periods ended December 31,2018 is as follows:Three months endedDecember 31,2018Year ended December 31,2018County Line Plaza$2$1,619Hocking
196、 Valley Mall1007,595Other redevelopment costs(1)488650Total$590$9,864(1)Other redevelopment costs relate to new outparcel development as well as other planning and work completed in the planning stages for redevelopment projects.North Summit Square is a 224,530 square foot shopping centre anchored b
197、y Sams Club and shadow anchored by Lowess Home Improvement.The centre is located in one of the premier retail nodes in Winston-Salem North Carolina and has close proximity to Wake Forest University.InJune 2017 management strategically terminated the lease of a 36,862 square foot junior anchor tenant
198、 that was paying below market rates.TheREIT has now finalized a 10 year lease with Urban Air Adventure Park to backfill the junior anchor space.The lease will result in a$58 thousandspread annually over base rental rates paid by the previous tenant.Rent commencement is targeted for the second quarte
199、r of 2019.The REITexpects to invest$2.4 million of capital as part of the transaction,with approximately$1.5 million allocated to parking lot repairs and resurfacing,as required by Sams Club waive restrictions on the Urban Air Adventure Park use.As of December 31,2018,$0.3 million has been spent.Hoc
200、king Valley is a 181,727 square foot shopping centre located in the Columbus MSA,anchored by a Kroger grocery store.The REIT hasundertaken a redevelopment of the property in order to grow the existing 55,160 square foot Kroger store into their new format,which is over100,000 square feet.In addition
201、to a full-service grocer,the new format features an array of departments including:pharmacy,health and beautycare,home furnishings,bed and bath,toys and apparel.The initial term of the ground lease with Kroger is for 25 years,ensuring Krogers presenceat the centre well into the future.The REIT has a
202、chieved substantial completion of the project and anticipates the total investment will be approximately$11.7 million.At December31,2018,$11.1 million has been spent with an estimated$0.6 million remaining for the lease-up of the balance of theavailable space.The REIT has leased the majority of the
203、former Kroger box to leading national retailers,HomeGoods and PetSmart.Both tenantshave opened for business to the public in the fourth quarter of 2018 and have commenced paying rent,at significant spreads to Krogers previouscontractual rent.Springboro Plaza is a well-established community shopping
204、center anchored by a 56,634 square foot Kroger.The center features a 91,266 squarefoot former Kmart box available for lease and the REIT is working through several backfill scenarios.Management is exploring the potential ofdemising the box to accommodate multiple junior anchor tenancies,ranging from
205、 value focused soft goods retailers to family entertainment concepts.The REIT anticipates it will realize meaningful progress on the lease-up of the available space by the fourth quarter of 2019.Subsequent to the year end,the REIT acquired Windmill Plaza,a grocery-anchored shopping centre located in
206、 Sterling Heights,Michigan,in ajoint-venture partnership with The Kroger Company.The REIT is planning to invest an additional$5.7 million at our share to redevelop the propertyand includes a 25 year ground lease with Kroger as the anchor tenant.Construction will commence in the first quarter of 2019
207、 and will include abrand new 129,000 square foot Kroger Marketplace,an improved inline faade and a completely redesigned parking lot,landscaping and lightingsystem.In addition to Kroger,new leases have been executed with Edge Fitness for 36,576 square feet and Pet Supplies Plus for 7,780 squarefeet,
208、significantly reducing future leasing risk.The REIT expects completion and rent commencement to be February of 2020.SLATE RETAIL REIT Q4 2018 MD&A17IFRS FAIR VALUEThe REITs property portfolio at December31,2018 had an estimated IFRS fair value of$1.4 billion,with a weighted average capitalization ra
209、teof 7.50%.Overall,the average estimated IFRS value per square foot of the REITs portfolio is$127.The following table presents a summary of the capitalization rates used to estimate the fair value of the REITs properties:Direct capitalization ratesDecember31,2018December31,2017Minimum6.25%6.25%Maxim
210、um11.40%9.50%Weighted average7.50%7.25%The December31,2018 weighted average capitalization rate increased to 7.50%from 7.25%at December31,2017.The increase in the weightedaverage capitalization rate is primarily due to changes in buyer demand in the retail real estate sector for properties similar t
211、o the REITs.This waspartially offset by decreases in capitalization rates driven by value-add asset management activities including anchor tenant renewals,improvedcredit,higher occupancy and capital improvement.The fair value of properties is measured individually without consideration to their aggr
212、egate value on a portfolio basis.No consideration is givento diversification benefits related to single property tenant risk and geography,the value of assembling a portfolio or to the utilization of a commonmanagement platform,amongst other benefits.As a result,the fair value of the REITs propertie
213、s taken in aggregate may differ from the fair valueof properties measured individually in the REITs consolidated statements of financial position.The change in properties is as follows:Three months ended December 31,Year ended December 31,2018201720182017Beginning of the period$1,418,935$1,424,049$1
214、,454,463$1,072,923Acquisitions49,15321,087397,791Capital1,3971,4855,5554,382Leasing costs6213902,8711,307Tenant improvements1,9861,6488,1253,007Development and expansion capital5902,0039,8647,186Straight-line rent3315232,5721,930Dispositions(12,356)(2,025)(55,096)(17,110)IFRIC 21 property tax adjust
215、ment4,8704,3872001,956Change in fair value(1)(33,419)(27,150)(66,686)(18,909)End of the period$1,382,955$1,454,463$1,382,955$1,454,463(1)Change in properties include acquisitions,capital,leasing costs,tenant improvements,redevelopment spend,straight-line rent adjustments,dispositions,IFRIC 21 proper
216、ty taxadjustment,and change in fair value SLATE RETAIL REIT Q4 2018 MD&A18The fair value of the REITs properties and properties under redevelopment for the year ended December 31,2018 is as follows:PropertiesProperties underredevelopmentTotalBalance,December 31,2017$1,387,660$66,803$1,454,463Acquisi
217、tions21,08721,087Capital5,1094465,555Leasing costs2,5972742,871Tenant improvements8,113128,125Development and expansion capital2,2697,5959,864Straight-line rent2,0675052,572Dispositions(55,096)(55,096)IFRIC 21 property tax adjustment200200Transfers to income-producing properties30,864(30,864)Change
218、in properties(1)(89,576)22,890(66,686)Balance,December 31,2018$1,315,294$67,661$1,382,955(1)Change in properties include acquisitions,capital,leasing costs,tenant improvements,redevelopment spend,straight-line rent adjustments,dispositions,IFRIC 21 property taxadjustment,and change in fair value.Cap
219、ital,leasing and tenant improvement costs for the three and twelve month periods ended December 31,2018,was$4.0 million and$16.6million respectively.Such costs are generally expended for purposes of tenanting and renewing existing leases,which maintain and create valueat the REITs properties and the
220、 portfolio as a whole by increasing contractual cash flow through new and extended leases.The REIT will continueto capitalize on opportunities to revitalize,undertake space improvements and generally maintain the high quality of the properties and tenants,such as the programs undertaken at Buckeye P
221、laza,County Line Plaza,both of which completed in the fourth quarter of 2018,and Hocking Valleyand North Summit Square,both of which are expected to be completed in 2019.These expenditures can vary from period to period,at timessignificantly,depending upon the timing of lease expiries,re-leasing and
222、 managements capital plan for the period.Fair value adjustments on propertiesFor the three month period ended December 31,2018,the REIT recorded a fair value loss on properties of$33.4 million,mainly related to valuationparameters and cash flows.The fair value loss on properties of$66.7 million for
223、the year ended December 31,2018 is due to valuation parametersand cash flows and adjustments for straight-line rent.The following table presents the impact of certain accounting adjustments on the fair value loss recorded versus managements estimate of futurecash flows and valuation assumptions:Thre
224、e months ended December 31,Year ended December 31,2018201720182017Valuation parameters and cash flows$(28,218)$(21,537)$(63,292)$(8,342)Transaction costs capitalized(703)(622)(6,681)IFRIC 21 property tax adjustment(4,870)(4,387)(200)(1,956)Adjusted for straight-line rent(331)(523)(2,572)(1,930)Total
225、$(33,419)$(27,150)$(66,686)$(18,909)The fair value change of properties is impacted by IFRIC 21 property tax adjustments recorded on the REITs portfolio.For acquisition purposesthe REIT determines the obligating event for property taxes is ownership of the property on January 1st of the fiscal year.
226、As a result,the annualproperty tax liability and expense has been recognized on the properties owned on January 1st of each year,with a corresponding increase to thefair value of properties that is reversed as the liability is settled through property tax installments.The change in fair value of pro
227、perties recorded in income excludes the impact of tenanting and leasing costs,landlord work,and developmentand expansion capital,not all of which are additive to value but are directly capitalized to the property.SLATE RETAIL REIT Q4 2018 MD&A19STRATEGIC ACQUISITION LOANSManagement has identified,in
228、 consultation with certain of its existing tenants,non-grocery-anchored retail properties that have the potential for aconversion to grocery-anchored retail malls.These acquisition targets are primarily characterized by under-managed properties,often with under-capitalized owners,where the opportuni
229、ty exists to re-imagine and modernize the asset.This conversion opportunity involves bringing a currentgrocery store format and size to the property coupled with improvements and re-tenanting of the shop space.The REIT has undertaken an arrangement to take advantage of these opportunities in conjunc
230、tion with a U.S.based entity in which Slate has asignificant interest.These loans will provide the REIT with the opportunity to earn an 8%return on the capital committed,establish a pipeline ofnew format grocery-anchored retail assets,strengthen its relationships with tenants as a strategic partner,
231、and limits the risk to the REIT of anunsuccessful conversion and development of an asset from its current format to a modern format and size grocery-anchored retail mall.Under this arrangement,the REIT has the option to provide loans,secured by the properties,to an entity in which Slate has a signif
232、icant interest,whereby Slate will undertake the acquisition and conversion of the assets to grocery-anchored retail malls.In cases where the REIT provides aloan in respect of a conversion property it will earn an 8%return on the amount advanced and will,in turn,have the ability,but not the obligatio
233、n,to purchase the property upon conversion of the property to a grocery-anchored retail mall.Additionally,prior to Slate purchasing any property,the REIT has the right of first refusal to purchase the property and undertake the conversion itself.The loan,originally advanced in October 2015 in the am
234、ount of$7.7 million,had a balance of$9.4 million at December 31,2018,bears interestat 8.0%and matures on October 19,2020.On March 6,2017 and August 24,2017,the REIT advanced an additional$1.2 million and$0.5 millionunder the loan arrangement,respectively.This loan is recorded as a note receivable wi
235、thin the other assets account balance on the REITsconsolidated statements of financial position.Subsequent to quarter end,the loan was settled as part of consideration for the acquisition of Windmill Plaza,a grocery-anchored shoppingcentre located in Sterling Heights,Michigan.Windmill Plaza was acqu
236、ired on January25,2019 in a 50%joint-venture partnership with The KrogerCompany for$7.3 million,before transaction costs and an assumed loan.In addition to the settlement of the loan,consideration for the propertyincluded cash consideration and an assumed loan.The REIT is planning to invest an addit
237、ional$5.7 million at our share to redevelop the propertyand includes a 25 year ground lease with Kroger as the anchor tenant.Construction will commence in the first quarter of 2019 and will include abrand new 129,000 square foot Kroger Marketplace,an improved inline faade and a completely redesigned
238、 parking lot,landscaping and lightingsystem.In addition to Kroger,new leases have been executed with Edge Fitness for 36,576 square feet and Pet Supplies Plus for 7,780 squarefeet,significantly reducing future leasing risk.The REIT expects completion and rent commencement to be February of 2020.SLAT
239、E RETAIL REIT Q4 2018 MD&A20PART III RESULTS OF OPERATIONS SLATE RETAIL REIT Q4 2018 MD&A21SUMMARY OF SELECTED QUARTERLY INFORMATIONThe selected quarterly information highlights performance over the most recently completed eight quarters and is reflective of the timing ofacquisitions,leasing and mai
240、ntenance expenditures.Similarly,debt reflects financing activities related to acquisitions which serve to increaseAFFO in the future,as well as ongoing financing activities for the existing portfolio.Accordingly,rental revenue,NOI,NAV,FFO and AFFO arereflective of changes in the underlying income-pr
241、oducing asset base and changing leverage.Quarter endedQ4 2018Q3 2018Q2 2018Q1 2018Q4 2017Q3 2017Q2 2017Q1 2017Rental revenue$36,301$35,699$35,669$36,544$34,859$30,030$26,614$27,233Property operating expenses(1)(5,747)(5,126)(5,117)(24,519)(5,357)(3,988)(3,532)(16,907)Straight-line rentrevenue(331)(4
242、48)(658)(1,135)(523)(367)(639)(401)IFRIC 21 property tax adjustment(1)(4,870)(4,574)(4,590)13,834(4,387)(3,784)(3,271)9,486NOI$25,353$25,551$25,304$24,724$24,592$21,891$19,172$19,411Class U unitsoutstanding44,30945,67446,03146,26146,41046,34046,29141,031WA units44,97145,48946,15346,47946,44346,37242
243、,83239,847Net(loss)income$(9,017)$(1,024)$(14,201)$26,703$31,421$(8,816)$16,049$8,652Net(loss)incomeper WA unit$(0.20)$(0.02)$(0.31)$0.57$0.68$(0.19)$0.37$0.22IFRS NAV$514,329$565,720$580,742$580,345$593,066$606,235$597,403$541,819IFRS NAV per unit$11.61$12.39$12.62$12.55$12.78$13.08$12.91$13.21Dist
244、ributions$9,438$9,627$9,670$9,742$9,625$9,381$9,018$8,308Distributions per unit$0.2113$0.2100$0.2100$0.2100$0.2075$0.2025$0.2025$0.2025FFO$13,536$14,469$14,542$15,227$15,406$14,448$12,741$12,859FFO per WA units$0.30$0.32$0.32$0.33$0.33$0.31$0.30$0.32AFFO$9,201$8,998$9,465$10,987$11,360$11,168$10,713
245、$11,587AFFO per WA units$0.20$0.20$0.21$0.24$0.24$0.24$0.25$0.29Total assets$1,416,334$1,472,898$1,474,077$1,478,396$1,499,519$1,476,651$1,225,065$1,158,102Debt$871,562$875,227$864,051$872,263$883,046$846,325$608,035$597,787Debt/GBV61.5%59.4%58.6%59.0%58.9%57.3%49.6%51.6%Number of properties85868686
246、86847371%leased94.2%94.3%93.9%93.7%93.7%92.6%91.7%93.2%GLA10,768,31910,897,05911,060,14511,067,37211,156,47410,850,7089,141,5388,513,110Grocery-anchored GLA5,170,5845,198,0555,159,6935,159,6935,159,6934,887,2944,162,7563,968,924(1)In accordance with IFRIC 21,the REIT recognizes the annual property t
247、ax liability and expense on its existing properties on January 1st,rather than progressively,i.e.ratably,throughoutthe year.REVENUERevenue from properties includes base rent from tenants,straight-line rental income,property tax and operating cost recoveries and other incidentalincome.Rental revenue
248、for the three and twelve month periods ended December 31,2018 was$36.3 million and$144.2 million respectively,whichrepresents an increase of$1.4 million and$25.5 million from the same periods in the prior year.The increase is primarily due to a full period ofrental revenue contributed from 17 proper
249、ties acquired in the 2017 year,partial revenue contribution from the acquisition of one property duringthe current period,increases in rental rates from re-leasing,and new leasing typically above in-place rent,partially offset by the impact of a lossin revenue contribution from the disposition of tw
250、o properties and 13 outparcels at certain properties since December31,2017.Southeastern Grocers,LLCOn May 31,2018,Southeastern Grocers,LLC(“SEG”),the parent of Winn-Dixie,BI-LO,Fresco y Ms and Harveys Supermarket grocery storessuccessfully emerged from its restructuring previously announced on March
251、 15,2018.As a result of the Restructuring Support Agreement(“RSA”)entered by SEG,the REIT entered into lease amendments with SEG to modify the terms of certain existing leases of the REIT,effective uponSEGs successful emergence from its restructuring.The impact of the lease amendments included minor
252、 rent reductions at 6 of the REITs 10properties,which the REIT expects to be$0.7 million in rental revenue during 2019,in return for lease term modifications and certain minimuminvestments to improve or upgrade the existing format at the REITs properties.For the three and twelve month periods ended
253、December 31,2018,the rent reductions had an impact of$0.2 million and$0.4 million,respectively.On a three month same-property NOI basis year-over-year andtrailing twelve month basis,the rent reductions resulted in a$0.2 million and$0.4 million lower NOI,respectively.SLATE RETAIL REIT Q4 2018 MD&A22P
254、ROPERTY OPERATING EXPENSESProperty operating expenses consist of property taxes,property management fees and other expenses including common area costs,utilities andinsurance.The majority of the REITs operating expenses are recoverable from tenants in accordance with the terms of their respective le
255、aseagreements.Operating expenses fluctuate with changes in occupancy and levels of repairs and maintenance.Property operating expenses increased by$0.9 million and$9.0 million for the three and twelve month periods ended December 31,2018,respectively.The increase is primarily due to a full period of
256、 operating expenses associated with properties acquired from the prior year,theacquisition of one property in the current year and the application of IFRIC 21 property tax adjustments,partially offset by the disposition of twoproperties and 13 outparcels at certain properties from December31,2017.In
257、 accordance with IFRIC 21,the REIT recognizes the annual property tax liability and expense on its existing properties as at January 1st of eachyear,rather than progressively,i.e.ratably,throughout the year.The recognition of property taxes as a result of IFRIC 21 has no impact on NOI,FFO or AFFO.OT
258、HER EXPENSESOther expenses include fees for asset management,legal,trustee services,tax compliance,reporting,marketing,bad debt expenses and franchiseand business taxes.Franchise and business taxes are typically billed in the following calendar year to which they relate.Three months ended December 3
259、1,Year ended December 31,20182017Variance20182017VarianceAsset management fees$1,485$1,489$(4)$5,925$4,978$947Professional fees and other6554861692,7732,290483Bad debt expense3061231831,105459646Franchise and business taxes94(136)230503261242Total$2,540$1,962$578$10,306$7,988$2,318%of total assets0.
260、2%0.1%0.1%0.7%0.5%0.2%of total revenue7.0%5.6%1.4%7.1%6.7%0.4%Other expenses for the three month period ended December 31,2018 increased by$0.6 million from the comparative quarter in 2017.The increaseis mainly due to increases in bad debt expense and increases in franchise and business taxes as a r
261、esult of withholding tax refunds received inthe prior period.Other expenses for the year ended December 31,2018 was$10.3 million,which represents a$2.3 million increase from the same period in theprior year.The increases in asset management fees and professional fees and other are mainly due to the
262、acquisition and operation of 17 propertiesduring the 2017 period and the acquisition of one property in the current year,partially offset by the impact of a loss in contribution from thedisposition of two properties and 13 outparcels at certain properties from December31,2017.The increase in bad deb
263、t expense of$0.6 millionto$1.1 million was driven by an increase in the allowance for doubtful accounts as management anticipates certain amounts from shop spacetenants will be uncollectible.Total bad debt expense for the year ended December 31,2018 was 0.8%of revenue which represents an increaseof
264、0.4%from prior year.INTEREST EXPENSE AND OTHER FINANCING COSTS,NETThree months ended December 31,Year ended December 31,20182017Variance20182017VarianceInterest on debt and finance charges$9,983$7,430$2,553$36,805$22,903$13,902Interest rate swaps,net settlement(518)(32)(486)(2,067)186(2,253)Interest
265、 income(23)(17)(6)(95)(69)(26)Interest income on notes receivable(190)(189)(1)(752)(708)(44)Amortization of finance charges493651(158)1,9501,639311Amortization of mark-to-market premium(92)(87)(5)(353)(347)(6)Interest income on TIF notes receivable(24)(27)3(99)(117)18Interest expense on TIF notes pa
266、yable39(39)122154(32)Amortization of deferred gain on TIF notes(21)(21)(87)(87)Total$9,608$7,747$1,861$35,424$23,554$11,870Interest expense and other finance costs,net consists of interest paid on the revolving credit facility(revolver),term loans,mortgages and interestrate swap contracts,as well as
267、 standby fees paid on the REITs revolver.Interest on debt increased by$2.6 million and$13.9 million for the three and twelve month periods ended December 31,2018,respectively,compared to the same period in 2017.The increases are primarily due to advances on the revolver for the acquisition of certai
268、n properties andincreased costs of the REITs floating rate debt driven by higher one-month U.S.LIBOR rates over the comparative periods.One-month U.S.LIBOR at December31,2017 was 1.57%,increasing to 2.52%at December31,2018.This increase was partially offset by periods of lowerindebtedness from$56.5
269、million in repayments from the disposition of two properties and 13 outparcels at certain properties from the fourth quarterof 2017 and cash on hand.The REITs revolver is redrawn from time-to-time to fund acquisitions.The REITs pay-fixed,receive-float interest rate swaps hedge a portion of the cash
270、flow risk associated with one-month U.S.LIBOR based interestpayments,with 99.2%of the REITs debt subject to fixed rates at December31,2018.The weighted average fixed rate of the REITs interest rateswaps was 2.03%compared to the one-month U.S.LIBOR at 2.52%at December31,2018 with a weighted average t
271、erm to maturity of 3.9 years.Under this arrangement,the REIT has received$0.5 million and$32 thousand of net interest payments in current quarter and comparative period,respectively.Based on current one-month U.S.LIBOR,the REIT expects to receive$3.7 million annually.The REIT does not capitalize int
272、erest for its projects under development.To date,redevelopment spend has been funded by cash from operations.Interest expense is recognized as incurred in income which is not comparable to other REITs or other corporations that capitalize interest.SLATE RETAIL REIT Q4 2018 MD&A23FAIR VALUE ADJUSTMEN
273、TS ON REIT UNITS AND EXCHANGEABLE UNITS OF SUBSIDIARIESExchangeable units of subsidiaries are classified as financial liabilities under IFRS and are measured at fair value with any changes in fair valuerecognized in unit expense in the consolidated statements of income.The fair value is re-measured
274、at the end of each reporting period.An unrealizedgain represents a decrease in the fair value per unit whereas an unrealized loss represents an increase in the fair value per unit.The fair valueper unit on December31,2018 was$8.61(December 31,2017$10.38).Changes in fair value of exchangeable units o
275、f subsidiaries are non-cash in nature and are required to be recorded in income under IFRS.SubdivisionThe REIT completed various steps to have its units presented as equity in its consolidated financial statements.The changes included the approvalof a special resolution of an amendment to and restat
276、ement of the Declaration of Trust of the REIT(the“Third A&R DOT”)making the features ofthe class A units,class I units and class U units identical among all three classes,among other things.Also on May 1,2018,the board of trusteesof the REIT approved the subdivision of each of the:(i)class A units i
277、ssued and outstanding on May 3,2018(the“record date”)on the basis of asubdivision ratio of one pre-subdivision class A unit for 1.0078 post-subdivision class A units;and(ii)class I units issued and outstanding on therecord date on the basis of a subdivision ratio of one pre-subdivision class I unit
278、for 1.0554 class I units(the Subdivision).The Third A&R DOTand the Subdivision were undertaken contemporaneously and the impact of such actions did not change the relative economics of the differentclasses of units of the REIT.The Subdivision was completed on May 11,2018.As a consequence of the Subd
279、ivision,the proportionate entitlement of the class A units andclass I units with respect to distributions from the REIT has been adjusted to 1.0 and all class A units,class I units and class U units have equalrights with respect to distributions from the REIT,redemptions of units and on the terminat
280、ion of the REIT.Each class A unit and each class I unithave remained convertible into a class U unit but the conversation ratio is on a one-for-one-basis.The REIT issued an additional 3 thousand classA units and 15 thousand class I units as a result of the Subdivision.The fair value of the REIT unit
281、s of$435.3 million at May 11,2018 were classifiedas equity.Prior to this date,REIT units were classified as financial liabilities under IFRS with changes in fair value recorded in income in the periodof change.On May 11,2018,the fair value of a REIT unit was$9.93.For the three month period ended Dec
282、ember 31,2018,the REIT recognized an unrealized fair value gain of$2.7 million on the exchangeableunits of subsidiaries.For the year ended December 31,2018,the REIT recognized an unrealized fair value gain of$19.5 million and$4.0 millionon the REIT units and exchangeable units of the subsidiaries re
283、spectively,as a result of a decrease in fair value per unit from$10.38 at the 2017year end.SLATE RETAIL REIT Q4 2018 MD&A24NET(LOSS)INCOMEFor the three month period ended December 31,2018,the REIT incurred a net loss of$9.0 million which represented a$40.4 million decreasefrom the same quarter of th
284、e prior year.The decrease is attributed to a decrease in deferred income tax recovery of$27.4 million and a decreasein the change in fair value of properties of$6.3 million,partially offset by the aforementioned increases in revenue of$1.4 million.Total REITdistributions for the quarter recognized a
285、s a decrease to equity was$9.0 million.Net income for the year ended December 31,2018 was$2.5 million,which was a$44.8 million decrease from the comparative period.The decreaseis mainly due to the change in fair value of properties of$47.8 million and increased interest expense and other financing c
286、osts of$11.9 millionfrom the prior period.NOINOI is a non-IFRS measure and is defined by the REIT as property rental revenue,excluding non-cash straight-line rent,less property operatingexpenses after adjusting for the impact of IFRIC 21 property tax accounting adjustments.Rental revenue excludes re
287、venue recorded as a resultof recording rent on a straight-line basis for IFRS which management believes reflects the cash generation activity of the REITs properties.NOIis an important measure of the income generated from the REITs properties and is used by the REIT in evaluating the performance of
288、its properties.NOI may not be comparable with similar measures presented by other entities and is not to be construed as an alternative to net income or cashflow from operating activities determined in accordance with IFRS.The following is a calculation of NOI for the three and twelve month periods
289、ended December 31,2018 compared to the same period in the prioryear:Three months ended December 31,Year ended December 31,20182017Variance20182017VarianceRental revenue$36,301$34,859$1,442$144,213$118,736$25,477Straight-line rent revenue(331)(523)192(2,572)(1,930)(642)Property operating expenses(5,7
290、47)(5,357)(390)(40,509)(29,784)(10,725)IFRIC 21 property tax adjustment(4,870)(4,387)(483)(200)(1,956)1,756NOI$25,353$24,592$761$100,932$85,066$15,866NOI margin70.5%71.6%(1.1)%71.3%72.8%(1.5)%NOI for the three and twelve month periods ended December 31,2018 was$25.4 million and$100.9 million respect
291、ively,which represents anincrease of$0.8 million and$15.9 million from the same periods in 2017.The increase is primarily due uplifts in rental rates from re-leasing andnew leasing typically above in-place rent.SAME-PROPERTY NOISame-property NOI is a non-IFRS measure and is defined by the REIT as re
292、ntal revenue,excluding non-cash straight-line rent,less propertyoperating cost expenses after adjusting for the impact of IFRIC 21 property tax accounting adjustments for those properties owned by the REITfor the entirety of each of the current period and the relevant comparative period excluding th
293、ose properties under redevelopment.For the threemonth period ended December 31,2018,the same-property portfolio is comprised of a portfolio of 77 properties owned and in operation for eachof the entire three month periods ended December31,2018 and 2017.Same-property NOI is an important measure of th
294、e income generated from the REITs properties period-over-period,but without consideration ofacquisition and disposition activity,and is used by the REIT in evaluating the performance of its properties.The REIT seeks to increase or maintainsame-property NOI through high-occupancy,increasing rents on
295、renewal to market rents and by signing leases with embedded rent increasesthroughout the term of the lease.For the 10 most recently completed quarters,the REIT has achieved eight positive same-property NOI growthquarters therein.The following is a summary of same-property NOI and the related occupan
296、cy rates for the three month period ended December 31,2018 ascompared to the same period in the prior year,reconciled to total NOI:Number ofpropertiesThree months ended December 31,20182017Variance%changeSame-property NOI77$22,691$21,786$9054.2%NOI attributable to redeveloped properties367162843NOI
297、attributable to properties under redevelopment350746146NOI attributable to acquisitions21,312645667NOI attributable to dispositions,including outparcel sales171721,072(900)Total NOI$25,353$24,592$7613.1%Occupancy,same-property7795.2%95.0%0.2%Occupancy,redeveloped properties390.1%90.4%(0.3)%Occupancy
298、,properties under redevelopment379.7%72.5%7.2%Occupancy,acquisitions296.6%95.0%1.6%Occupancy,dispositions,including outparcel sales1794.5%94.5%Occupancy,portfolio94.2%93.7%0.5%Same-property NOI increased by$0.9 million or 4.2%for the three month period ended December 31,2018 over the comparative per
299、iod.Theincrease is primarily attributed to increases in rental rates from re-leasing above average in-place rent of the properties,new leasing abovecomparable market rental rates and 0.2%increase in occupancy over the comparative period.The current quarter impact of the Winn-Dixie andBI-LO rent redu
300、ctions at 6 of the REITs 10 properties,as a result of SEGs successful emergence from restructuring,resulted in a$0.2 milliondecrease to same-property NOI.Including the impact of completion of redevelopment projects,same-property NOI increased by 4.2%over theperiod.Same-property NOI by quarter and pe
301、rcentage change over the relevant comparative period for the respective quarter is as follows:Number ofpropertiesSame-propertyNOISame-property%changeSame-property%change,excludingtermination feesQ1 201640$10,409(1.0)%(3.9)%Q2 20164111,101(1.0)%(1.3)%Q3 20164913,7910.7%0.9%Q4 20164915,2292.5%2.0%Q1 2
302、0175616,1874.5%2.4%Q2 20175615,9801.5%0.9%Q3 20175615,3040.9%0.9%Q4 20175715,477(1.7)%(1.3)%Q1 20186216,555(1.2)%(0.8)%Q2 20186417,4030.6%0.3%Q3 20186518,2262.4%1.4%Q4 20187722,6914.2%3.1%SLATE RETAIL REIT Q4 2018 MD&A25Termination income is included in the REITs definition of same-property NOI,howe
303、ver,can be substantial and does not occur frequently.Thefollowing is a table summarizing same-property NOI growth excluding the impact of terminations fees:The following is a summary of same-property NOI and the related occupancy rates on a trailing twelve month basis as at December31,2018,ascompare
304、d to the same period in the prior year reconciled to total NOI:Number ofpropertiesTrailing twelve months,December 31,20182017Variance%changeSame-property NOI62$66,292$65,213$1,0791.7%NOI attributable to redeveloped properties32,0121,520492NOI attributable to properties under redevelopment31,7042,100
305、(396)NOI attributable to acquisitions1729,48013,16716,313NOI attributable to dispositions,including outparcel sales121,4453,025(1,580)Total NOI$100,933$85,025$15,90818.7%Occupancy,same-property6295.9%95.3%0.6%Occupancy,redeveloped properties390.1%90.4%(0.3)%Occupancy,properties under redevelopment37
306、9.7%72.5%7.2%Occupancy,acquisitions1793.9%94.1%(0.2)%Occupancy,dispositions,including outparcel sales1294.5%94.5%Occupancy,portfolio94.2%93.7%0.5%Same-property NOI increased by$1.1 million or 1.7%for the trailing twelve month period ended December 31,2018 over the same period in theprior year.This i
307、s primarily due to increases in rental rates from re-leasing above average in-place rent and new leasing above comparable marketrental rates,partially offset by the$0.4 million decrease as a result of the Winn-Dixie and BI-LO rent reductions due to SEGs successful emergencefrom restructuring and fre
308、e rent of$0.3 million for Stop&Shop at Waterbury Plaza from January 2018 to March 2018.Including the impact of thecompletion of redevelopment projects during the period,same-property NOI increased by 2.4%over the period.SLATE RETAIL REIT Q4 2018 MD&A26FFOFFO is a non-IFRS measure and real estate ind
309、ustry standard for evaluating operating performance.The REIT calculates FFO in accordance withthe definition provided by the REALPAC in its White Paper on FFO and AFFO for IFRS,as revised in February 2017.FFO is an important measureof the operating performance of REITs and is used by the REIT in eva
310、luating the combined performance of its operations and the impact of itscapital structure.In calculating FFO,the REIT makes adjustments to the change in the fair value of properties,deferred income tax(recovery),unit expense(income)and IFRIC 21 accounting related adjustments.The following is a recon
311、ciliation of net(loss)income to FFO:Three months ended December 31,Year ended December 31,20182017Variance20182017VarianceNet(loss)income$(9,017)$31,421$(40,438)$2,461$47,306$(44,845)Disposition costs5751044712,2017351,466Change in fair value of properties33,41927,1506,26966,68618,90947,777Deferred
312、income tax recovery(4,223)(31,582)27,359(4,021)(15,810)11,789Unit(income)expense(2,348)(7,300)4,952(9,353)6,270(15,623)IFRIC 21 property tax adjustment(4,870)(4,387)(483)(200)(1,956)1,756FFO$13,536$15,406$(1,870)$57,774$55,454$2,320FFO per WA unit$0.30$0.33$(0.03)$1.27$1.26$0.01WA number of units ou
313、tstanding44,97146,443(1,472)45,63943,8991,740The following is a calculation of FFO from NOI:Three months ended December 31,Year ended December 31,20182017Variance20182017VarianceNOI$25,353$24,592$761$100,932$85,066$15,866Straight-line rent revenue331523(192)2,5721,930642Other expenses(2,540)(1,962)(
314、578)(10,306)(7,988)(2,318)Cash interest,net(1)(9,207)(7,183)(2,024)(33,827)(22,262)(11,565)Finance charge and mark-to-market adjustments(401)(564)163(1,597)(1,292)(305)FFO$13,536$15,406$(1,870)$57,774$55,454$2,320(1)Cash interest,net is comprised of total interest expense less amortization of financ
315、e charges and mark-to-market adjustments.FFO for the three month period ended December 31,2018 decreased by$1.9 million compared to the same quarter in the prior year.The decreaseis attributable to increases in interest cash paid,professional fees and bad debt expense,partially offset by the aforeme
316、ntioned increases in NOI.FFO for the year ended December 31,2018 was$57.8 million which represents a$2.3 million increase from the comparative period.The increaseis due to the aforementioned increases in NOI,partially offset by increases in interest cash paid,professional fees and bad debt expense,a
317、nd theloss of NOI contribution from the sale of two properties and 13 property outparcels from December 31,2017.On a pro forma basis after taking into account the REITs repurchases of units in the fourth quarter of 2018 and in early 2019,the REITs FFO perunit would have been$0.31 for the quarter,and
318、$1.31 for 2018.We expect the full impact of these repurchases to be realized beginning in thesecond quarter of 2019.SLATE RETAIL REIT Q4 2018 MD&A27AFFOAFFO is a non-IFRS measure that is used by management of the REIT,certain of the real estate industry and investors to measure recurring cashflows,i
319、ncluding certain capital costs,leasing costs,tenant improvements and the impact of non-cash revenue.As described above,the REITcalculates AFFO as FFO adjusted for capital expenditures,leasing costs,tenant improvements and straight-line rent.The REITs calculation isconsistent with AFFO as calculated
320、by REALPAC in its White Paper on FFO and AFFO for IFRS,as revised in February 2017.However,the REITuses AFFO as a cash flow measure and considers it a meaningful measure used to evaluate the cash available for distribution to unitholders,whileREALPAC considers AFFO as a recurring economic earnings m
321、easure.Accordingly,the REITs use and calculation of AFFO may be different thanthe use or as disclosed by other businesses,and as a result,may not be comparable to similar measures presented by others.The following is a reconciliation of cash flow from operations as included in the REITs consolidated
322、 cash flow statement to AFFO:Three months ended December 31,Year ended December 31,20182017Variance20182017VarianceCash flow from operations$9,065$13,559$(4,494)$57,823$49,518$8,305Changes in non-cash working capital items3,7081,5692,139(4,136)3,736(7,872)Disposition costs5751044712,2017351,466Finan
323、ce charge and mark-to-market adjustments(401)(564)163(1,597)(1,292)(305)Interest,net and TIF note adjustments2582154391182784Capital(1,397)(1,485)88(5,555)(4,382)(1,173)Leasing costs(621)(390)(231)(2,871)(1,307)(1,564)Tenant improvements(1,986)(1,648)(338)(8,125)(3,007)(5,118)AFFO$9,201$11,360$(2,15
324、9)$38,651$44,828$(6,177)In calculating AFFO,the REIT makes adjustments to FFO for certain items including capital,leasing costs,tenant improvements and straight-linerental revenue.The following is a reconciliation of FFO to AFFO:Three months ended December 31,Year ended December 31,20182017Variance2
325、0182017VarianceFFO$13,536$15,406$(1,870)$57,774$55,454$2,320Straight-line rental revenue(331)(523)192(2,572)(1,930)(642)Capital(1,397)(1,485)88(5,555)(4,382)(1,173)Leasing costs(621)(390)(231)(2,871)(1,307)(1,564)Tenant improvements(1,986)(1,648)(338)(8,125)(3,007)(5,118)AFFO$9,201$11,360$(2,159)$38
326、,651$44,828$(6,177)AFFO per WA unit$0.20$0.24$(0.04)$0.85$1.02$(0.17)WA number of units outstanding44,97146,443(1,472)45,63943,8991,740The following is a reconciliation of net(loss)income to AFFO:Three months ended December 31,Year ended December 31,20182017Variance20182017VarianceNet(loss)income$(9
327、,017)$31,421$(40,438)$2,461$47,306$(44,845)Disposition costs5751044712,2017351,466Change in fair value of properties33,41927,1506,26966,68618,90947,777Deferred income tax recovery(4,223)(31,582)27,359(4,021)(15,810)11,789Unit(income)expense(2,348)(7,300)4,952(9,353)6,270(15,623)IFRIC 21 property tax
328、 adjustment(4,870)(4,387)(483)(200)(1,956)1,756FFO$13,536$15,406$(1,870)$57,774$55,454$2,320Straight-line rental revenue(331)(523)192(2,572)(1,930)(642)Capital(1,397)(1,485)88(5,555)(4,382)(1,173)Leasing costs(621)(390)(231)(2,871)(1,307)(1,564)Tenant improvements(1,986)(1,648)(338)(8,125)(3,007)(5,
329、118)AFFO$9,201$11,360$(2,159)$38,651$44,828$(6,177)SLATE RETAIL REIT Q4 2018 MD&A28The following is a calculation of AFFO from NOI:Three months ended December 31,Year ended December 31,20182017Variance20182017VarianceNOI$25,353$24,592$761$100,932$85,066$15,866Other expenses(2,540)(1,962)(578)(10,306
330、)(7,988)(2,318)Cash interest,net(1)(9,207)(7,183)(2,024)(33,827)(22,262)(11,565)Finance charge and mark-to-market adjustments(401)(564)163(1,597)(1,292)(305)Capital(1,397)(1,485)88(5,555)(4,382)(1,173)Leasing costs(621)(390)(231)(2,871)(1,307)(1,564)Tenant improvements(1,986)(1,648)(338)(8,125)(3,00
331、7)(5,118)AFFO$9,201$11,360$(2,159)$38,651$44,828$(6,177)(1)Cash interest,net is comprised of total interest expense less amortization of finance charges and mark-to-market adjustments.AFFO was$9.2 million for the three month period ended December 31,2018,which represents a$2.2 million decrease over
332、the same quarter inthe prior year,driven primarily by increases in cash interest paid of$2.0 million over the prior quarter and a$0.6 million increase in leasing andtenant improvement spend to primarily support new leasing,partially offset by increases in NOI over the comparative period.For the year
333、 endedDecember 31,2018,AFFO decreased by$6.2 million to$38.7 million over the comparative period.This decrease is due to a$11.6 million increasein cash interest paid and a$7.9 million increase in capital,leasing and tenant improvement spend.If the REIT calculated capital,leasing and tenant improvement spend as 10%of NOI in the current quarter,which is representative of the REITshistorical sustaini
0731-84720580
sgpjbg002
工作日 9:30 - 18:00
研報
新質生產力
DeepSeek?
低空經濟
大模型
AI Agent
AI Infra
具身智能
自動駕駛
寵物
銀發經濟
人形機器人
企業出海
算力
微短劇
薪酬
白皮書
創新藥
人工智能
AI產業
信息科技
互聯網
消費經濟
汽車交通
電商零售
傳媒娛樂
醫藥健康
投資金融
能源環境
地產建筑
傳統產業
英文報告
其它
最新報告
中英對照
全文搜索
報告精選
PDF上傳翻譯
多格式文檔互轉
入駐&報告售賣
會員權益
機構報告
券商研報
財報庫
專題合集
英文報告
數據圖表
會議報告
其他資源
行業聚焦
芯片產業
熱點概念
全球咨詢智庫
人工智能
500強
新質生產力
會議峰會
新能源汽車
企業年報
互聯網
公司研究
行業綜觀
消費教育
科技通信
醫藥健康
人力資源
投資金融
汽車產業
物流地產
電子商務
傳統產業
傳媒營銷
其它
2025低空經濟/低空產業報告合集（共49套打包）
2025年智算中心/AIDC/AI數據中心研究報告合集（共37套打包）
AI、科技與通信
廣告、傳媒與營銷
消費、零售與支付
HR、文化與旅游
金融、保險與投資
能源、環境與工業
醫療制藥與大健康
物流、地產與建筑
其他行業
AI ? 科技 ? 通信
數字化
金融財經
智能制造
電商傳媒
地產建筑
醫療醫學
能源化工
其他行業
收藏
下載
2025-05-20
AI查數
行業數據
政策法規
商業模式
產業鏈
競爭格局
市場規模
產業概述
其它
2025年
AI讀財報
年報
一季報
半年報
三季報
IPO招股書
社會責任報告
A股
IPO申報
港股
美股&全球
新三板
掃碼登錄
手機快捷登錄
賬號登錄
