SmartCentres at a Crossroads as Founder's Voting Power Expires

TORONTO, ON – January 02, 2026 – SmartCentres Real Estate Investment Trust (TSX: SRU.UN) has temporarily extended its foundational agreements with founder and CEO Mitchell Goldhar, ensuring operational stability as it navigates complex negotiations for new five-year contracts. While the two-month extension provides continuity, a far more significant development is unfolding behind the scenes: the expiration of Mr. Goldhar's powerful "Voting Top-Up Right." This quiet but momentous shift in corporate governance marks a new era for one of Canada's largest REITs, recalibrating the balance of power and placing its future strategic direction under intense scrutiny.

The REIT announced that discussions between its Independent Committee and Mr. Goldhar regarding his employment and various service agreements with his privately-owned Penguin Group of Companies will continue until a new deadline of February 28, 2026. However, the special voting right, which bolstered Mr. Goldhar's influence, expired as scheduled on December 31, 2025, after the board did not seek the required unitholder approval for its extension.

A Governance Reset for Unitholders

The expiration of the Voting Top-Up Right is a pivotal event for SmartCentres' governance structure. First implemented following unitholder approval in December 2020, this right allowed for the issuance of additional special voting units to Mr. Goldhar, effectively ensuring he maintained a minimum voting entitlement under specific circumstances. It was a tool that cemented the founder's influence beyond his substantial, but not majority, equity stake.

Its expiry signals a deliberate move toward a more conventional governance model, where voting power is directly proportional to economic ownership. This change automatically cancels any outstanding special voting units and empowers the REIT's broader unitholder base, potentially paving the way for increased activism and a more assertive role in shaping company strategy. The decision not to seek an extension underscores a commitment to evolving governance standards, a process now being steered by an Independent Committee of the Board composed entirely of independent trustees. This committee is tasked with representing the interests of all unitholders in the critical negotiations that will define the REIT's leadership and operational framework for the next five years.

The Indispensable Founder's Legacy and Future

To understand the gravity of the ongoing negotiations, one must understand the role of Mitchell Goldhar. A central figure in Canadian retail real estate for over three decades, Goldhar is widely credited with bringing Walmart to Canada and subsequently developing hundreds of shopping centers anchored by the retail giant. He has been the visionary behind SmartCentres' evolution, most recently championing "Project 512," a multi-billion dollar program to intensify the REIT's vast land holdings by transforming its portfolio "from Shopping Centres to City Centres" through ambitious mixed-use developments.

As of last year, Mr. Goldhar held an 11% ownership stake in the REIT, valued at over half a billion dollars, and his total annual compensation as CEO was reported at CA$1.54 million. His leadership is deeply intertwined with the company's identity and its strategic relationships, particularly with key tenants like Walmart. The current discussions are not merely about a CEO's contract; they are about securing the architect of the REIT's past success and its future vision. The extension of his employment agreement, along with others, ensures his expertise remains in place for now, but the final terms will reveal much about the board's long-term view of his role in this new governance landscape.

Securing a Multi-Billion Dollar Development Pipeline

The temporary extension also covers a suite of critical agreements with Mr. Goldhar's Penguin Group, including development services, property services, and a non-competition clause. These arrangements are the operational engine behind SmartCentres' growth, providing the essential development and management expertise needed to execute its complex, large-scale projects. The extension ensures that the REIT's nearly 200 properties and its active development pipeline continue to function without disruption.

The deep operational entanglement between SmartCentres and Penguin, while a source of synergistic strength, also highlights the stakes of the negotiation. The terms of these service agreements, which involve related-party transactions, will be a key focus for the Independent Committee. Crafting new agreements that are financially sound, transparent, and aligned with unitholder interests is paramount. The outcome will directly impact the cost structure and execution efficiency of the REIT's transformation strategy, which aims to unlock significant value from its 3,500 acres of land across Canada.

A Balancing Act for Investors

For investors, the situation presents a classic balance of long-term opportunity against short-term uncertainty. SmartCentres' stock has remained relatively stable following the announcement, buoyed by its high occupancy rate of 98.6% and an attractive 7.2% monthly dividend yield. The REIT's strategic pivot to include residential and self-storage assets in its mixed-use communities is seen as a forward-thinking move to diversify and grow.

However, there are underlying financial pressures. The REIT's payout ratio has been hovering near 100% of its Funds From Operations (FFO), a key metric of cash flow, leaving little margin for error. A recent drop in FFO, linked to a credit provision, led some analysts to express caution, with Zacks Research reportedly downgrading the stock to "strong sell" in late 2025. This tight financial picture makes the stability provided by proven leadership and seamless operations more critical than ever. The market is watching closely, as the final terms of the new agreements will be a deciding factor in the REIT's ability to reduce leverage, fund its development projects, and maintain its generous distribution, all while navigating a new chapter of corporate governance.