Retirees, if you’re looking for a steady stream of passive income to keep your golden years comfortable, Slate Grocery REIT (TSX:SGR.UN) might be worth your attention. This Canadian real estate investment trust (REIT) focuses on U.S. grocery-anchored properties — a sector known for its stability and resilience in various economic conditions. Unlike some retail spaces that struggle during downturns, grocery stores remain essential, keeping Slate Grocery REIT’s properties in high demand. This makes it a solid option for retirees seeking consistent, long-term income.
The numbers
Slate Grocery REIT released its fourth-quarter and year-end 2024 results, and the numbers show promising growth. Rental revenue saw a 3.0% increase, reaching $53.1 million, while net income rose significantly to $15.7 million, compared to $5.2 million in the previous year. This uptick reflects strong leasing activity and the REIT’s ability to capitalize on higher rental rates. Despite market fluctuations, Slate Grocery REIT continues to expand its portfolio while maintaining a solid financial position.
Over the past year, the REIT completed over 2.7 million square feet of leasing at double-digit rental spreads. New deals were signed at rates 28.0% higher than the average in-place rent, while non-option renewals were completed at 14.3% above expiring rents. These numbers suggest that the REIT is not only retaining tenants. It’s also successfully negotiating higher lease rates. Occupancy remains strong at 94.8%, and given the essential nature of grocery stores, the REIT is expected to sustain this level in the coming quarters.
Looking ahead, Slate Grocery REIT’s future appears bright. Its focus on grocery-anchored retail properties provides a defensive position against economic downturns. While other commercial real estate segments may struggle in uncertain economic conditions, grocery store foot traffic remains steady. This defensive nature makes the REIT particularly appealing to retirees who want their investments to be as worry-free as possible. Moreover, with inflationary pressures affecting retail pricing, grocery tenants have shown a willingness to accept rent increases, further strengthening the REIT’s revenue outlook.
Dive into dividends
Dividends are where Slate Grocery REIT truly shines for retirees. The REIT currently offers an attractive dividend yield of approximately 8.45%. Thus making it a compelling choice for income-focused investors. The combination of reliable rental income and a generous yield allows retirees to generate passive income without taking on excessive risk. Furthermore, the REIT demonstrated a commitment to shareholder value through its recent share buyback program. This further enhances the appeal of its high dividend yield.
One of the key concerns retirees often have is the sustainability of dividend payments. In the case of Slate Grocery REIT, its focus on necessity-based retail, combined with stable tenant demand, provides confidence in its ability to maintain distributions. The REIT’s properties are anchored by leading grocery store chains, ensuring a steady flow of rental income that supports its high payout.
Bottom line
For retirees seeking passive income, choosing investments that balance yield and long-term stability is crucial. Slate Grocery REIT checks both boxes by offering an essential service through its tenants while maintaining strong financial performance. The REIT’s management has demonstrated its ability to grow revenues and enhance shareholder value through strategic leasing and acquisitions. With a solid occupancy rate, stable rent growth, and a defensive market position, Slate Grocery REIT stands out as a REIT that retirees can confidently hold for income generation.
