SmartCentres Real Estate Investment Trust

TSX:SRU.UN

Q2-2025 Earnings Call

[Operator]

Good day, ladies and gentlemen. Welcome to the SmartCentres REIT Q2 2025 Conference Call.

I would like to introduce Mr. Peter Slan. Please go ahead.

[Peter Slan, executive]

Good morning, everyone. Apologies for a slightly delayed start. We had a couple of technical difficulties on our end. But welcome to our second quarter 2025 results call.

I'm Peter Slan, Chief Financial Officer. And I'm joined on today's call by Mitch Goldhar, SmartCentres Executive Chair and CEO; and by Rudy Gobin, our Executive Vice President of Portfolio Management & Investments. We will begin today's call with comments from Mitch, Rudy will then provide some operational highlights and I will review our financial results. We will then be pleased to take your questions.

Just before I turn the call over to Mitch, I would like to refer you specifically to the cautionary language about forward-looking information, which can be found at the front of our MD&A. This also applies to comments that any of the speakers make this morning.

Mitch, over to you.

[Mitchell Goldhar, executive]

Thank you, Peter. Good morning, and welcome, everyone, and so sorry for the delay.

As you have seen from our disclosures, Q2 continues the trend started last year. That is a quarter of solid performance across all sectors of the business. That is retail, industrial, residential, storage and office. Translating into higher occupancies, healthy same-property NOI increase, respectable and sustainable lease extension rates and a reduction in payout ratio. All with a focus on high-quality covenants from national retailers in our preferred categories of general merchandise, grocery, pharma, home improvement, apparel, financial services and quick-service restaurants, extending our lead in the area of value and convenient retail.

As I have said before, the seeds of this positioning and weather-proofing of the business were planted years ago, guided by our belief in first principle that providing value and convenience to all Canadians is good business. The second quarter performance reflects this in many different metrics such as same-property NOI growth of 4.8% all in, or 7.7% excluding anchors; positive leasing spreads of 6.1% all in, or 8.5% excluding anchors. 82% of 2025 lease maturities have already been extended; 98.6% occupancy for in-place and executed deals; a reduced payout ratio of 89.4%; rent collections of over 99%.

And during the quarter, Costco took possession of the premises at our 80-acre Winston Churchill and 401 Centre, formerly occupied by Rona, and have commenced fixturing with a planned opening later this year. This center is now anchored by Loblaws, Walmart, Winners and Costco.

Also worth noting, Walmart's fixturing is well underway on schedule at our South Oakville Centre located at Third Line in Rebecca, with a scheduled grand opening this fall in the old Zellers' Target space. This is the first Walmart opening in quite a few years.

Value-oriented retail, while not always in vogue, is always in demand. In addition to the metrics mentioned, this is further evidenced by our very active new-build program where negotiations for new space in existing SmartCentres is up to expand our 37 million square foot portfolio with the latest in general merchandise, pharma, apparel and other offerings.

Further on the development spectrum, our projects now under construction, which I will describe in a moment, and also contributing to future value is our ongoing land use permissions program across the platform with the 59 million square feet at the REIT share already zoned. We believe SmartCentres could possibly possess the largest pipeline of zoned real estate in the country. When the time comes, the ability to quickly execute on this valuable inventory will prove a competitive advantage.

Active developments include the 340-unit ArtWalk condo project. It's well underway and at grade. As previously reported, 93% of the units are presold with substantial deposits. Our recently completed 458-unit Millway apartment is now 97.8% leased, performing ahead of budget. Construction of our Vaughan Northwest townhomes with our partner is progressing well with 9 more closings taking place in the quarter, bringing the total to 98 units now closed.

Construction continues in our 224,000 square-foot Canadian Tire flagship store in Leaside, which will be completed and fixtured for opening in Q2 2026. And 3 SmartStop self-storage facilities opened in the quarter, 2 in Toronto, Eglinton West and Gilbert and on Jane Street -- on Jane Street, and also 1 in Dorval, Montreal, bringing the total open facilities to 14, with 3 remaining under construction.

Altogether this brings the gross square footage of the 17 projects to 2.3 million square feet at 100%. This portfolio continues to perform well and we intend to continue its expansion.

On the capital recycling side, we have waived deals on 1/3 of the planned $100 million of dispositions under negotiations. Closing for this particular part is scheduled for September.

While the business continues to grow organically and through new income-producing developments, we carefully manage our debt and debt-related metrics. In this regard, we have improved our financial flexibility with approximately $1.2 billion in liquidity, 89% of debt being fixed rate and an unencumbered asset growth of $9.6 billion, which Peter will speak to in a moment.

But before that, let me turn it over to Rudy for some more operational highlights. Rudy?

[Rudy Gobin, executive]

Thanks, Mitch, and good morning, everyone. As Mitch mentioned, the second quarter was once again a standout in many areas and related operating metrics. Tenant demand for space remained strong with 148,000 square feet of lease-up completed in the quarter, delivering high-quality income across all provinces with a leading 98.6% occupancy at the quarter-end.

Same-property NOI continued its strong momentum with 4.8% growth overall and 7.7% excluding anchors, compared to the same period in the prior year. With 5.3 million square feet of space maturing in 2025, by the quarter-end, the REIT had already extended 82%, with rental spreads of 8.5% excluding anchors and 6.1% all in. As also mentioned, cash collections remained strong, exceeding 99% in the quarter.

Costco with a 20-year initial lease term took possession of the ex-Rona space at the 650,000 square-foot shopping center at Winston Churchill and 401, with an opening schedule for the fall. Also during the quarter and also with a 20-year term, a grocer and entertainment user took possession of the ex-Lowe's space in our Vaughan Centre with a planned fall opening.

As we have mentioned recently, the relaxation of grocery restrictions will not only continue to benefit large open format retail, but we believe will also accelerate the pace of tenant demand and customers to our centers, maintaining strong cash flow and high occupancy. Generally, we have also been adding to the portfolio and upgrading uses with medical, daycare, entertainment, health and beauty, fitness, pet stores and more.

Our premium outlets continue to excel in driving traffic with improving tenant sales, leading to strong growth in EBITDA and valuation to the REIT. Tenant sales continue to improve with the Toronto Premium Outlets in the top 3 highest sales performers of all shopping centers in Canada. The Saks space only just disclaimed after the quarter-end will be outfitted with a temporary user for up to a year while we lock in and expand some luxury names into the space at significantly higher rent.

On ESG, we are advancing several initiatives across the organization as part of our 3-year plan, including training for all staff, completing materiality assessments, further defining the net-zero framework established last year, implementing utility tracking software, advancing a number of IT initiatives to enhance our governance, improving climate change awareness and implementing related policies and procedures to address our assessments.

During the quarter, we submitted our GRESB Report. And shortly after the quarter-end, we published our annual ESG Report, which you can find on our website. Through ESG-specific targets being tied to compensation for all associates, we ensure ESG issues are integrated across the organization and retail platform.

Overall, the REIT continues to grow, strengthening its cash flow and stability while reducing risks. Our strong and expanding relationships with dominant retailers also paves the way for the introduction of new brands in our existing platform, enhancing the customer experience. We expect this momentum to continue throughout the year.

Thank you. And I'll now turn it over to Peter.

[Peter Slan, executive]

Thanks, Rudy. The financial results for the second quarter once again reflect the strong performance in our core retail business. For the 3 months ended June 30, 2025, net operating income increased by $10.2 million or 7.3% from the same quarter last year, primarily due to lease up and renewal activities.

FFO per fully diluted unit was $0.58 in the quarter, compared to $0.50 in the comparable quarter last year. The increase was primarily due to higher NOI and changes in the fair value adjustment on our total return swap, partially offset by a decrease in interest income as a result of the repayments of mortgages receivable and lower interest rates.

During Q2, we also delivered and closed on 9 additional townhomes in our Vaughan Northwest project. This has resulted in a cumulative margin of approximately 23% for the project to date.

For the 3 months ended June 30, 2025, FFO with adjustments, which excludes the townhome profits, transactional gains and losses and the total return swap, was $0.55 per unit, compared to $0.51 in for the same period in 2024, an increase of 7.8%.

We again maintained our distributions during the quarter at an annualized rate of $1.85 per unit. The payout ratio to AFFO with adjustments continues to show improvement at 89.4% for the quarter or 93.3% for the rolling 12 months ended June 30.

Adjusted debt to adjusted EBITDA was 9.6x for the 12-month period ending in Q2, which is unchanged from last quarter and an improvement of 30 basis points compared to the same period last year, primarily due to continued growth in EBITDA.

Our debt to aggregate assets ratio was 44.2% at the end of the quarter, a 50 basis-point increase compared to the same period last year. Compared to Q1, our unencumbered asset pool increased by approximately $50 million to $9.6 billion in Q2, mainly due to fair value increases on existing unencumbered assets.

Unsecured debt, including our share of equity accounted investments, was $4.7 billion at Q2, slightly higher than the prior quarter and represents approximately 84% of our total debt of $5.5 billion. Subsequent to the quarter-end, DBRS reconfirmed our BBB Mid rating with a Stable outlook.

From a liquidity perspective, we remain comfortable with our current liquidity position. As of June 30, 2025, we have approximately $907 million of liquidity, which includes both cash on hand and undrawn credit facilities, but excludes any accordion features. This was boosted due to the closing of a new $100 million revolving bilateral credit facility during the quarter at an attractive cost of capital compared to our syndicated operating facility.

The weighted average term to maturity of our debt, including debt on equity accounts and investments, is 3.1 years. Our weighted average interest rate is 3.94%, virtually unchanged from the prior quarter. Our debt ladder remains conservatively structured and we have ample liquidity to refinance the maturities for the remainder of the year. Approximately 90% of our debt is at fixed interest rates.

Just before we open up the call to questions, I want to touch briefly on our development projects that are underway. As in previous quarters, we have updated our MD&A disclosure focusing on those development projects that are currently under construction.

As you will see on Page 17, there were 7 projects under construction at the end of Q2, down 3 from last quarter, as Mitch described the 3 self-storage facilities that opened during the quarter, 2 of them in Toronto and 1 in Dorval, Quebec. The REIT share of total capital costs of these development projects is approximately $456 million, with our share of the estimated cost to complete standing at $255 million.

And with that, we would be pleased to take your questions. So operator, can we have the first question on the line, please?

[Operator]

[Operator Instructions] The first question is from Mario Saric from Scotia Capital.

[Mario Saric, analyst]

I just have a couple of them. First one, Mitch, I think on the last call, you noted kind of a 50% chance of closing up to $100 million of non-IPP sales this year. Can you maybe give us an update on those figures? Any kind of incremental broader market changes in terms of appetite since then?

[Mitchell Goldhar, executive]

Yes. I mean I would say it's above 50% for one of the deals, one of the transactions. I would say it's maybe below 50% for one of the transactions, at the moment. But I don't think it's actually a reflection of the market. I think there is a market improvement since we last spoke about this, notwithstanding the one that would be, I think, a little bit less likely. And that's just due to the particular purchaser that we contracted with.

That particular asset, while maybe not sold to -- maybe lower than 50% for this particular buyer, I think, is well above 50% to a buyer as a project. So giving you the specifics that the reported activity last quarter is -- we had more visibility on it. So I think one will be probably a little bit delayed and the other is imminent.

But the general capital recycling program, I think, has improved. The prospect of capital recycling, the climate has improved slightly since we've last spoken quite a bit from 12 months ago.

[Mario Saric, analyst]

Got it. Okay. And then when you think about recycling opportunities on the one that may be imminent, how would you prioritize your capital allocation priority? What looks most attractive in terms of you deploying proceeds today?

[Mitchell Goldhar, executive]

We'll just repay debt. Yes.

[Mario Saric, analyst]

Yes. Okay. My second question is more on the operational side. There was a mixed employment report in Canada today. I appreciate SmartCentres is probably the last to see any weakness in its portfolio given the consumer staple nature of your tenant base. With that said, I'm kind of curious about which kind of tenant demand leading indicators you're focused on, and what are those indicators telling you today?

[Mitchell Goldhar, executive]

Yes. I mean we are not directly or proportionately affected by those types of trends or data points. I mean our tenants, the Walmart, the No Frills and Loblaws, Winners, so on I think thrive -- I think they thrive in all markets. I mean there's an underlying, very strong underlying reliance on value and convenience across the country.

But when there's a perceived tightening -- belt tightening going on, then there probably is a little -- even a little bit more rush to value. So we do see an increase in leasing activity for new space from our core retailers going on right now. I think we will report on more specifics about that in the coming quarters. But we're anticipating doing a fair amount, if not quite a bit, of leasing for new spaces as well as occupancy. So I think we're ultimately kind of -- we're sort of in the right place for those trends, the trends that you're referring to.

[Mario Saric, analyst]

Okay. My last question, maybe for Peter. The CAM cost recovery ratio was up 200 basis points to roughly about 94% based on our numbers. Given occupancy is now back north of 98%, are you essentially at a peak cost recovery ratio today, or is there more upside there?

[Peter Slan, executive]

Mario, there is a little bit of seasonality to that, but I think our year-to-date number is a pretty good run rate. Don't just focus on the quarter, but look at the 6 months.

[Operator]

The next question is from Lorne Kalmar from Desjardins Capital Markets.

[Lorne Kalmar, analyst]

Maybe just going back to the discussion around the transaction market, I'm sorry if I missed it when I was queuing in for the questions. But Mitch, what do you attribute the improvement over the last couple of quarters to?

[Mitchell Goldhar, executive]

I would say -- well, it's really -- at the last 12 months, I would say, just there's less uncertainty, even though there's uncertainty. I think the world, and the Canadian market, I think, is less concerned about consequences ultimately, whereas a year ago, I think people were thinking in more dramatic, if not even catastrophic terms, maybe 6 months ago even. That continued on.

In the last 6 months, I think capital is a little bit more comfortable with the next 6 to 12 months. So we're getting inquiries. We feel some convective energy in the area that would result in capital recycling for us.

It's really a question of what we're willing to part with. I think there's a market for our product. Particularly given what's going on, particularly with the results of -- sales results of the food stores and the Walmart, Costco and so on, our assets are particularly attractive I think to capital.

So I think it's a combination of the uncertainty that's not as wobbly as it was before and the strength of value-oriented assets.

[Lorne Kalmar, analyst]

So just to be clear because again I missed it, I'm so sorry if you have to repeat yourself. Are the dispositions you're looking at, they are of income-producing properties?

[Mitchell Goldhar, executive]

Yes. One of them -- yes, you must have missed it. One of them is pretty far along, better than 50-50 it will close. The other one, I'd say, has gone from 50-50 to below 50-50. And that one is an asset that's not complete, but will be an income-producing asset.

But they're not our core assets. It's not a core and Walmart-anchored shopping center. We're not talking about that. These are assets that are noncore, or for other reasons, but that we are looking to sell. But not our core assets.

[Lorne Kalmar, analyst]

Okay. And then I guess maybe following on that, how much value-wise of the portfolio do you believe there is of these noncore disposition targets?

[Mitchell Goldhar, executive]

I mean these assets would probably total, I guess, $150 million to $200 million, if they were all sold, ones that we're actively in negotiations on. We'd like to sell $300 million to $400 million of assets. So we just want to get these done and then we'll go -- we might actually not even wait for these to get done. The market is looking more interesting right now. So we're not going to part with assets that are a little closer to our core without the right cap rates.

So we might start looking at some capital recycling on the next tranche of assets given the improvement in cap rates and the interest out there. But we haven't really -- we're nowhere on that, I mean that's just something that might happen in the next few quarters. So you're looking at, best case scenario, $150 million to $200 million. But short term, very short term, you're looking at under $100 million.

[Operator]

The next question is from Dean Wilkinson from CIBC World Markets.

[Dean Wilkinson, analyst]

Maybe just a question around the balance sheet in general. Mitch, you said things aren't as wobbly now. What would have to happen for you guys to say, look, there's enough opportunities here to maybe gear up a little, move it from this mid-40% range? And just how are you thinking about just sort of the optimal capital structure here, just sort of debt relative to where your units are trading against NAV?

[Mitchell Goldhar, executive]

Yes. I mean I think we're a little more comfortable with lowering the debt. We are feeling pretty stable. I mean you see our occupancy, our rent collections, there is definitely positive trends. But we want to lower debt. So I don't think you're going to see us looking to get -- to leverage up. I don't think that's -- that's certainly not in our plans, and it's not in our DNA. So I think we'll play it a little bit more conservatively as it relates to debt.

[Dean Wilkinson, analyst]

And then would you have a target as to where you want to see that get down to?

[Mitchell Goldhar, executive]

Well, 0. But yes, I mean, we're comfortable with where it is, but under -- at or below 40% is pretty conservative. We've always been sort of in the low -- the last while we've always been in the low 40s, I think. So we'd love to, we'd get pretty excited if we could get down to 40% or a little below 40%.

[Operator]

The next question is from Sam Damiani from TD Securities.

[Sam Damiani, analyst]

Maybe the first question just on the same-property NOI. Really I didn't catch it if you did. But did you guys reiterate your outlook for 3% to 5% for this year on same-property and still looking at the lower end of that range?

[Rudy Gobin, executive]

No, sorry. You did not miss it. But we would reiterate that same outlook and that same range we think we'll probably, as a forecast or as a run rate for the rest -- for the year, be closer to the middle of that range. So we had a great quarter, but on a run rate basis, look to the middle of that range as our guidance.

[Sam Damiani, analyst]

Appreciate that. And switching over to the premium outlets, and maybe specifically Toronto Premium Outlets. The NOI growth there has been very strong in recent years and you've got here an opportunity with the former HBC store, the Saks OFF 5TH store. Like is the NOI growth starting to slow a little bit there? Or do you think the growth that we've seen in recent years is sustainable over the next few years?

[Mitchell Goldhar, executive]

Yes. I mean, I think the most -- the outlet in both Toronto -- the outlets in both Toronto and Montreal continue to amazingly improve. But I think most significantly in Toronto, we are looking at a possible expansion, another expansion there. So we're in the approval process right now. And if we're able to do that, I think you'll see significant increases there. There's a lot of demand; obviously, that's why the expansion.

So I think, Rudy, do you want to make any comments on the organic growth?

[Rudy Gobin, executive]

Yes. As we mentioned in the in the outlet space, the rental bumps and the rental lifts are annual. And as a result of that, you're going to see annual growth in NOI, to the extent that the property is almost fully leased. And then when there's a little bit of churn, like there is for the Saks space, that gives us opportunities, especially that particular space, to do something bigger.

And in addition to what -- so the NOI is just going to continue to grow. The sales, as I mentioned earlier, is in the top 3 in the country and it's one of the highest performers, even in the Simon portfolio, they tell us. So performing really, really well, which is why we're looking at an expansion of that center.

And you can imagine the expansion of that center and what we -- and the current construction costs, what the rents would have to be, and there is a list of parties that are already interested and new names that would come in that would be names that you would see south of the border in the bigger outlets.

So the property continues to do really well. Existing tenants are wanting to expand into larger spaces and pay higher per square foot rent as well. So all of that bodes well for continued growth in TPO.

[Sam Damiani, analyst]

That's helpful. And I guess just on the Saks space. I mean your comment about the rents growing annually, it's kind of geared to sales perhaps more so than a regular shopping center such that, obviously, the Saks space, I think everyone could probably agree, hasn't seen the kind of sales growth that many of the rest of the tenants have enjoyed. So there's a big reset potential there?

[Mitchell Goldhar, executive]

Yes. And the rent was, I would say, substantially below market. I mean they just happen to have a lease that was below the average rent in that place to start with in their sales. But that turned into an opportunity.

I would also add that Montreal is also -- there's things going on in the Montreal outlet center and around our outlet center there that are going to make, I think, move the needle in Montreal as well, the outlet center in Montreal. There just happens to be a lot of growth in the area, in Mirabel, and we've got surplus lands there. So we're anticipating that there'll be things happening, because we're in negotiations, that will add some voltage over there as well. So there's some potential NOI increase over there at the Montreal.

[Sam Damiani, analyst]

Interesting. Yes, there's been a huge population growth up there. Last question for me, just on the distributions. The last bump was right before the pandemic. And Peter, you mentioned the improving payout ratio. How are you guys feeling about reinstating annual distribution increases today perhaps versus 6, 12 months ago? What's needed to sort of make that decision more real for the Board?

[Mitchell Goldhar, executive]

So [ 7 2 ] is not good enough then? We think -- I mean, I'll turn it over to Peter, but yes, I mean, we're very comfortable with the security of our distributable income or recurring income. But that's a decision anyway that's made basically between monthly and quarterly. So we will obviously be considering it each time. But I don't think -- I think -- did we confirm that or did we announce anything yet about -- right, no. Well, anyway, that decision has not been made. But I'll turn it over to Peter to add some...

[Peter Slan, executive]

I don't have much to add, Sam. The payout ratio continues to improve. We're pleased to see that. We certainly, as it improves, grow more confident in the sustainability of the existing distribution, and it leaves us more room. And ultimately, the Board will have to make a decision on what to do with distributions. But no change is currently contemplated.

[Operator]

The next question is from Gaurav Mathur from Green Street.

[Gaurav Mathur, analyst]

Just one question from me on self-storage. Now we're hearing that there are certain operators in the market that the new entrants that have come in that are flashing rents very quickly just so they can shore up occupancy. As you're delivering units -- more storage units to the market, is that somewhat changing how you're thinking about underwriting some of these assets? And is there any change in sort of the pricing strategy at your end?

[Mitchell Goldhar, executive]

Yes, I don't think -- first of all, we are often the ones with the lowest rental rates going into the market. We're very competitive in that regard. I think, in fact, we're a bit of a disruptor when we open around existing storage.

But big picture, Canada is still substantially below the average square footage per capita of storage than the U.S., for example. So yes, everyone is going to respond to market forces, there might be some aggressive competitive, and it's going on in any given market. But overall, I think we are very cognizant and we're watching very closely about overbuilding in storage.

And most of our locations are pretty tough markets to get into, if you look at our Gilbert or Dorval, Dupont, Victoria, Burnaby. I mean there's just -- these are really land plays that we've been able to get approvals for. Nobody is going to be -- I mean, I doubt anyone is going to be building nearby or down the street anytime soon on the majority of our stuff.

A lot of the other stuff -- a lot of the other storage locations are on our shopping centers, on our SmartCentres. And that's just a choice that we've made as we went into the storage business, to give our storage network an advantage. So we're already drawing massive amounts of traffic to our SmartCentres. And then we're putting storage on that site. That is a very strong competitive advantage. So in those cases as well, our competitors aren't opening and are not able to open down the street.

So I think in most all of our cases, we're well positioned. But nevertheless, we're watching closely to make sure that we're not committing a folly in terms of storage and the storage industry here in Canada as it grows.

[Operator]

We have a follow-up question from Mario Saric from Scotia Capital.

[Mario Saric, analyst]

Just really quickly, coming back to the potential dispositions, the $150 million to $200 million, kind of best case, 3, 4 assets, can you comment on kind of the blended cap rate that you're hoping to achieve on that? Presumably it's a mixture of different types of assets.

[Mitchell Goldhar, executive]

Okay. Yes. I mean you don't need to do a calculation of what we're giving up and what we're gaining. These are -- the ones that are happening right now are on lands where there's no actual income at the moment. They're buildings, but there's no income.

So the reason for that is when we started this capital recycling program, there was just a tiny, little, flickering, glimpse of a market and it was just no interest in selling our core assets at then cap rates. So these are the assets that made sense.

Now, and you'll see in the foreseeable future, there seems to be a little bit more energy, cap rate compression, and we might start to entertain the sale of properties where there is actual income. But we're not sellers in enterprise, although we're motivated to recycle capital. We're waiting for the cap rates. Those were the only assets that made sense at the time given market conditions.

And I would not plug in $150 million anytime soon. This is going to be step-by-step process. But when it happens, when the market does come around, we'll be -- we'll have lots of options and the numbers will be significant. But for now, I would plug in, in the short term, well under $100 million. And then hopefully, not-too-distant future, closer to $100 million. And then when we turn the corner in the new year, maybe the balance of the $150 million to $200 million.

[Mario Saric, analyst]

So if I understand you correctly, on the first little bit, essentially a cap rate of 0. And then as we add properties to it down the road over the next year or 2, then the cap rate comes up a little bit. But that's, initially, that's how to think about it?

[Mitchell Goldhar, executive]

I guess. I'm not sure I understood that, but everybody here is nodding. I didn't quite understand it, but I'm going to just go along with that.

[Mario Saric, analyst]

Like in the short term, buildings that are being sold, effectively, there's no income associated with them. But over time, as cap rates for the building that you may look to sell, as they come down and then have income on them, over time, the blended cap rate on those then will inherently go up because there's no income on the [ initial ]?

[Mitchell Goldhar, executive]

Yes, yes. Okay. Yes. But the assets we're selling are, one is a vacant building. It's being bought by somebody who wants to use it. But we have no income on it.

The other one, I don't want to say too much about it, it's kind of -- we don't want to be announcing it. But there's no income on it at the moment. We could keep it and generate income on it. We decided to sell it for reasons earlier stated. If the deal doesn't go through and we think it makes more sense to just complete it and generate the income, then we might do that.

We're really waiting for the market to get a little bit better. It seems be moving in the right direction. And when it does, we will. We'll seize the moment and we'll be looking to do more than what we're kind of just kicking around and playing footsie on right now. It's just the only things we feel make sense to sell at the numbers that we've been able to achieve. But that day will come and we will act on it. And I hope that will be -- if this trend continues, I hope that will start to happen sometime in the next 6 months.

[Operator]

All right. Thank you. There are no further questions in the queue.

[Mitchell Goldhar, executive]

Great. Well, thank you all for participating in our Q2 call. Please feel free to reach out to any of us if you have any further questions. In the meantime, have a great rest of your day and a great weekend. Thank you.

[Operator]

Ladies and gentlemen, this concludes the SmartCentres REIT's Q2 2025 conference call. Thank you for your participation, and have a nice day.