Slate Grocery REIT Q1 2025 Results
Slate Grocery REIT., a prominent owner and operator of grocery-anchored real estate across the United States, today announced its financial results and key highlights for the three-month period ending March 31, 2025. The REIT demonstrated resilience and growth within its asset class, capitalizing on robust leasing demand and a favorable supply environment.
Blair Welch, Chief Executive Officer of Slate Grocery REIT, expressed confidence in the REIT’s performance and the underlying strength of the grocery-anchored sector. “Grocery-anchored real estate has consistently proven its ability to withstand various economic shifts, and our conviction in its performance within the current economic landscape remains strong,” stated Welch. He further highlighted the portfolio’s sustained growth in same-property net operating income (NOI), attributing it to consistent and robust leasing activity characterized by double-digit spreads.
The first quarter of 2025 witnessed the REIT’s leasing team achieving record-high renewal spreads, underscoring the embedded growth potential within its portfolio, which benefits from below-market average rents. Welch also pointed to the anticipated limited new supply in the grocery-anchored sector in the near to medium term as a factor positioning the REIT’s portfolio favorably for stable growth and the creation of long-term value for its unitholders.
Key Highlights of the First Quarter 2025:
- Strong Same-Property NOI Growth: On a trailing twelve-month basis, same-property NOI increased by a healthy 4.3%, representing a $6.8 million rise, after adjusting for completed redevelopments. This growth was fueled by several consecutive quarters of strong leasing volumes achieved at attractive rental spreads.
- Record-High Renewal Spreads: The REIT demonstrated significant pricing power during the quarter, completing 222,886 square feet of total leasing. Notably, renewal spreads reached a record high of 17.1% above expiring rents, indicating the REIT’s ability to capture significant rental upside upon lease renewal. New deals were also executed at an impressive 22.2% above the comparable average in-place rent.
- Stable Portfolio Occupancy: The REIT maintained a strong and stable portfolio occupancy rate of 94.4% as of March 31, 2025, reflecting the continued demand for space within its grocery-anchored centers.
- Significant Rental Upside: The REIT’s average in-place rent of $12.72 per square foot remains considerably below the estimated market average of $23.85 per square foot (according to CBRE Econometric Advisors, Q1 2025). This substantial difference provides a significant runway for continued rent increases as leases expire and new leases are executed.
- Manageable Debt Maturities: The REIT faces a manageable debt maturity profile, with only $179.4 million of debt maturing in 2025. This represents 12.9% of the REIT’s total debt (including its share of joint venture investments), providing financial flexibility.
- Proactive Debt Management: Subsequent to the end of the first quarter, the REIT successfully financed $17.4 million of debt. Furthermore, productive discussions are currently underway to refinance additional upcoming debt maturities, demonstrating a proactive approach to managing its capital structure.
- Positive Leverage and Embedded NOI Growth: The REIT’s current portfolio valuation continues to provide significant positive leverage and embedded NOI growth potential, suggesting that the underlying value of its assets supports further income expansion.
- Compelling Investment Opportunity: The REIT’s units continue to trade at a discount to its net asset value (NAV), presenting a compelling investment opportunity for unitholders seeking attractive total returns.
Summary of First Quarter 2025 Financial Results:
| (thousands of U.S. dollars, except per unit amounts) | Three months ended March 31, 2025 | Three months ended March 31, 2024 | Change % |
|---|---|---|---|
| Rental revenue | $53,067 | $51,915 | 2.2% |
| NOI ¹ ² | $41,239 | $40,572 | 1.6% |
| Net income ² | $16,082 | $13,612 | 18.1% |
| Same-property NOI (3 month period, 114 properties) ¹ ² | $40,980 | $39,869 | 2.8% |
| Same-property NOI (12 month period, 111 properties) ¹ ² | $159,391 | $153,794 | 3.6% |
| New leasing (square feet) ² | 43,098 | 98,198 | (56.1)% |
| New leasing spread ² | 22.2% | 30.9% | (28.2)% |
| Total leasing (square feet) ² | 222,886 | 770,784 | (71.1)% |
| Total leasing spread ² | 15.6% | 10.8% | 44.4% |
| New leasing – anchor / junior anchor ² | 11,000 | 10,000 | 10.0% |
| Weighted average number of units outstanding (“WA units”) | 60,385 | 60,307 | 0.1% |
| FFO ¹ ² | $15,757 | $16,198 | (2.7)% |
| FFO per WA units ¹ ² | $0.26 | $0.27 | (3.2)% |
| FFO payout ratio ¹ ² | 82.3% | 80.1% | 2.8% |
| AFFO ¹ ² | $12,388 | $13,045 | (5.0)% |
| AFFO per WA units ¹ ² | $0.21 | $0.22 | (2.9)% |
| AFFO payout ratio ¹ ² | 104.7% | 99.4% | 5.3% |
| Fixed charge coverage ratio ¹ ³ | 1.9x | 2.0x | (3.1)% |
Key Financial Position Metrics:
| (thousands of U.S. dollars, except per unit amounts) | March 31, 2025 | December 31, 2024 | Change % |
|---|---|---|---|
| Total assets | $2,236,028 | $2,233,699 | 0.1% |
| Total assets, proportionate interest ¹ ² | $2,445,443 | $2,444,143 | 0.1% |
| Debt | $1,169,435 | $1,166,655 | 0.2% |
| Debt, proportionate interest ¹ ² | $1,372,447 | $1,370,530 | 0.1% |
| Net asset value per unit | $13.83 | $13.84 | (0.1)% |
| Number of properties ² | 116 | 116 | —% |
| Portfolio occupancy ² | 94.4% | 94.8% | (0.4)% |
| Debt / GBV ratio | 52.3% | 52.2% | 0.2% |
