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SmartCentres Real Estate Investment Trust
Company typePublic
TSX: SRU.UN
S&P/TSX Composite Component
IndustryReal estate
Founded1994
FounderMitchell Goldhar
Headquarters
Vaughan, Ontario
,
Canada
Key people
Mitchell Goldhar (Chair of the Board)
Peter Forde (President & Chief Executive Officer)
Revenue$728 million CAD (2016)
Total equity$4.74 billion CAD (2019)
Number of employees
300 (2016)
Websitehttp://www.smartcentres.com
A SmartCentre in Montreal
SmartCentre in Richmond Hill, Ontario
SmartCentre in Markham

SmartCentres Real Estate Investment Trust is a Canadian real estate investment trust, based in Vaughan, Ontario. It specializes in retail real estate, especially power centres. Almost all of its malls have Walmart as a tenant;[1] SmartCentre's logo features a family of penguins with shopping bags.

The fundamental success principle of SmartCentres is to lead retail trends by truly understanding how consumers behave. Through creating cobranded Penguin Pickup with Walmart at a lot of the SmartCentres locations, it has become the leader of merging Bricks & Mortar and e-commerce. The success of this business model is fuelling future growth for the corporation.

It is listed on the Toronto Stock Exchange (symbol SRU.UN), with a market capitalization of about $4.74 billion as of February 2019.

History

SmartCentres was founded in 1994 by Mitchell Goldar, as FirstPro Shopping Centres.[2] It was renamed SmartCentres Inc. in 2006. In 2015, it was taken over by Calloway REIT, which then renamed itself SmartREIT. It changed its name to SmartCentres REIT in 2017.

As of 2011, SmartCentres had opened a new mall once every 3 weeks for its history.[1] As of 2015, it had developed 50 million square feet of space.[3]

Relationship with Calloway REIT

In 2003, SmartCentres (then FirstPro) began to sell some of its malls to Calloway REIT, then a small REIT based in Calgary, to raise additional funds for construction.[1] Its first transaction was the sale of nine malls for $100 million in November 2003.[4] In 2004, 12 malls were sold for $300 million.[5] In 2005, it sold 35 malls for $1.1 billion.[6] This transaction doubled the size of Calloway, and led to Goldar greatly increasing his control and equity stake in Calloway.[7] In 2006, SmartCentres sold 16 properties, worth $1 billion, to Calloway.[8] In 2008, it sold 6 malls for $375 million.[6]

In 2015, SmartCentres was formally taken over by Calloway REIT for $1.1 billion.[3] As a result of the deal, Calloway acquired 24 properties.

Controversies

SmartCentres has been involved in a number of controversial developments, often because of its close association with Walmart. In the late 2000s, there was considerable opposition to a SmartCentres plan to build a power centre in eastern Toronto.[9] The plan was eventually turned down by the Ontario Municipal Board. In 2009, its shopping mall in Salmon Arm, British Columbia was delayed because of environmental concerns.[10] The mall was eventually built in 2013.

Properties

SmartCentres properties are generally suburban power centres, with Walmart as a lead tenant. As of 2016, 72% of SmartCentres properties were anchored by Walmart, with Walmart responsible for 26% of rent and 42% of area.[11] However, in recent years, SmartCentres has been diversifying into more urban and mixed-use properties.[9] For instance, SmartCentres is one of the main developers of the Vaughan Metropolitan Centre, a planned central business district for Vaughan, Ontario, a Toronto suburb, where a bus terminal serving a subway station is named after the company, who contributed funding to its construction. SmartCentres is also the main developer of StudioCentre, a mixed-use development in the Leslieville neighbourhood of Toronto. SmartCentres has also considered converting some of its properties into warehouse space.[12]

As of 2017, SmartCentres had 154 shopping centres and $9.4 billion worth in assets. 60% of its revenue was from Ontario, 15% was from Quebec, 9% was from British Columbia, and the other 16% was from the rest of Canada.[13]

Penguin Pick-Up

A number of online delivery pick-up locations, called Penguin Pick-Ups, are located in SmartCentres properties (the locations are owned by Mitchell Goldhar[14], the SmartCentres chairman, and use the SmartCentres penguin motif).[15] As of January 2018, there are 76 such locations.[16] The original locations were primarily suburban, but some newer locations have been located in urban areas, including some co-branded with Walmart.[17] The locations principally exist to lower Walmart's delivery costs; Walmart charges for home delivery, but only charges a reduced fee for delivery to a Penguin Pick-Up.[17]

References

  1. ^ a b c "Mr. SmartCentres, Mitch Goldhar, gives Canadians what they want". The Globe and Mail. 2011-10-27. Retrieved 2018-01-12.
  2. ^ "SmartCentres Inc.: Private Company Information - Bloomberg". www.bloomberg.com. Retrieved 2018-01-12.
  3. ^ a b "The man who brought Wal-Mart Inc to Canada sells property for $1.16 billion". Financial Post. 2015-04-17. Retrieved 2018-01-12.
  4. ^ "Once ignored, REIT now a major player". The Globe and Mail. 2004-12-07. Retrieved 2018-01-18.
  5. ^ "Calloway to buy malls from First Pro". The Globe and Mail. 2004-03-11. Retrieved 2018-01-12.
  6. ^ a b "Calloway REIT downsizes deal with Wal-Mart and ..." Welland Tribune. 2008-04-11. Retrieved 2018-01-12.
  7. ^ Decloet, Derek (2005-04-27). "Investors could sour on Goldhar's sweet deal with Calloway". The Globe and Mail.
  8. ^ "Calloway buys Wal-Mart malls for $1-billion". The National Post. 2006-10-27.
  9. ^ a b Hume, Christopher (2013-05-16). "SmartCentres hopes there is life after Walmart — Hume". The Toronto Star. ISSN 0319-0781. Retrieved 2018-01-12.
  10. ^ "Opponents to new mall cheer Salmon Arm environmental review". The Globe and Mail. 2009-12-14. Retrieved 2018-01-12.
  11. ^ "SmartREIT Annual Report 2016" (PDF).
  12. ^ "'Jury is still out' on how malls will adapt to ecommerce: SmartCentres REIT CEO - Article - BNN". BNN. 2017-11-09. Retrieved 2018-01-12.
  13. ^ "SmartCentres 2017 Annual Report" (PDF).
  14. ^ "Walmart and Penguin Pick-Up launch co-branded locations to make urban grocery shopping easier". www.newswire.ca. Retrieved 2018-09-19.
  15. ^ "Review: SmartCentres' Penguin Pick-Up". RETAIL INSIDER. Retrieved 2018-01-18.
  16. ^ "Penguin Pick-Up - A SmartCentres Company | Penguin Pick-Up". www.penguinpickup.com. Retrieved 2018-01-18.
  17. ^ a b "Wal-Mart opens new front in growing battle over e-commerce". The Globe and Mail. 2018-01-13. Retrieved 2018-01-18.
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