FREDERICTON, NB, Aug. 1, 2024
/CNW/ - Plaza Retail REIT (TSX: PLZ.UN) ("Plaza" or the "REIT")
today announced its financial results for the three and six months
ended June 30, 2024.
"We are pleased with our Q2 results as we continue to achieve
record high lease renewal spreads and same-asset NOI growth.
said Michael Zakuta, President and
CEO. "Our portfolio, dominated by open-air essential needs and
value retail properties, continues to perform, and demand for our
retail space remains strong."
|
Summary of Selected
IFRS Financial Results
|
|
(CAD$000s, except
percentages)
|
Three
Months
Ended
June 30,
2024
|
Three
Months
Ended
June 30,
2023
|
$
Change
|
%
Change
|
Six
Months
Ended
June 30,
2024
|
Six Months
Ended
June 30,
2023
|
$
Change
|
%
Change
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$30,672
|
$28,463
|
$2,209
|
7.8 %
|
$60,243
|
$56,808
|
$3,435
|
6.0 %
|
|
|
|
|
|
|
|
|
|
|
Net operating income
(NOI)(1)
|
$18,390
|
$17,643
|
$747
|
4.2 %
|
$36,442
|
$34,458
|
$1,984
|
5.8 %
|
|
|
|
|
|
|
|
|
|
|
Net change in fair
value of investment properties
|
($7,316)
|
($827)
|
($6,489)
|
-
|
($8,628)
|
$447
|
($9,075)
|
--
|
|
|
|
|
|
|
|
|
|
|
Profit and total
comprehensive income
|
$2,437
|
$12,985
|
($10,548)
|
-
|
$11,893
|
$20,736
|
($8,843)
|
-
|
|
|
|
|
|
|
|
|
|
|
(1)
|
This is a non-GAAP
financial measure. Refer to the Non-GAAP Financial Measures
defined here and in Part I and VII of the Management's Discussion
and Analysis ("MD&A") ending June 30, 2024 for more information
on each non-GAAP financial measure.
|
Quarterly Highlights
- NOI was $18.4 million, up
$747 thousand (4.2%) from the same
period in 2023. The increase in NOI is from rent escalations and
lease-up in same-asset properties, lower operating expenses,
developments, and properties transferred to income-producing in
2023 and 2024, partially offset by a decrease in NOI from
properties sold.
- Profit and total comprehensive income for the current
quarter was $2.4 million compared to
$13.0 million in the same period in
the prior year. The decrease was mainly due to the decrease in the
fair value of investment properties of $7.3
million in the current quarter compared to a fair value
decrease of $827 thousand in the same
quarter in the prior year, an increase in finance costs and an
increase in administrative expenses offset by the NOI increase
noted above and an increase in other income. Profit was also
impacted by changes in non-cash fair value adjustments relating to
share of profit from associates, interest rate swaps, the Class B
exchangeable LP units, and convertible debentures.
Year-To-Date Highlights
- NOI was $36.4 million, up
$2.0 million (5.8%) from the same
period in 2023. NOI was impacted by an increase in NOI from
developments and properties transferred to income producing in 2023
and 2024, offset by a decrease in NOI from properties sold.
- Profit and total comprehensive income for the current
year to date was $11.9 million
compared to $20.7 million in the same
period in the prior year. The decrease was mainly due to a decrease
in the fair value of investment properties of $8.6 million in the current year compared to a
fair value increase of $447 thousand
in the same period in the prior year. The fair value change was
mainly due to reductions to forecasted stabilized NOI at an
enclosed mall, and cost overruns on a development property. Profit
was also impacted by an increase in the share of profit of
associates relating to the non-cash fair value adjustment of the
underlying properties in the current year, an increase in
administrative expenses and finance costs, a decrease in investment
and other income, along with changes in non-cash fair value
adjustments relating to interest rate swaps, the Class B
exchangeable LP units, and convertible debentures.
|
Summary of Selected
Non-IFRS Financial Results
|
|
(CAD$000s, except
percentages, units repurchased and per unit amounts)
|
Three
Months
Ended
June 30,
2024
|
Three
Months
Ended
June 30,
2023
|
$
Change
|
%
Change
|
Six
Months
Ended
June 30,
2024
|
Six Months
Ended
June 30,
2023
|
$
Change
|
%
Change
|
|
|
|
|
|
|
|
|
|
|
FFO(1)
|
$10,627
|
$10,689
|
($62)
|
(0.6 %)
|
$20,543
|
$20,066
|
$477
|
2.4 %
|
|
FFO per
unit(1)
|
$0.095
|
$0.096
|
($0.001)
|
(1.0 %)
|
$0.184
|
$0.187
|
($0.003)
|
(1.6 %)
|
|
FFO payout
ratio(1)
|
73.5 %
|
73.0 %
|
n/a
|
0.7 %
|
76.0 %
|
75.8 %
|
n/a
|
(0.3 %)
|
|
|
|
|
|
|
|
|
|
|
AFFO(1)
|
$8,924
|
$7,807
|
$1,117
|
14.3 %
|
$16,233
|
$15,936
|
$297
|
1.9 %
|
|
AFFO per
unit(1)
|
$0.080
|
$0.070
|
$0.010
|
14.3 %
|
$0.146
|
$0.148
|
($0.002)
|
(1.4 %)
|
|
AFFO payout
ratio(1)
|
87.5 %
|
100.0 %
|
n/a
|
(12.5 %)
|
96.2 %
|
95.5 %
|
n/a
|
0.7 %
|
|
|
|
|
|
|
|
|
|
|
Same-asset
NOI(1)
|
$17,993
|
$17,516
|
$477
|
2.7 %
|
$35,606
|
$34,496
|
$1,110
|
3.2 %
|
|
|
|
|
|
|
|
|
|
|
Normal course issuer
bid – units repurchased
|
-
|
7,718
|
n/a
|
n/a
|
4,920
|
11,573
|
n/a
|
n/a
|
|
|
|
|
|
|
|
|
|
|
Committed occupancy –
including non-consolidated investments(2)
|
|
|
|
|
97.6 %
|
97.6 %
|
n/a
|
-
|
|
Same-asset committed
occupancy(3)
|
|
|
|
|
97.2 %
|
97.4 %
|
n/a
|
(0.2 %)
|
|
|
|
|
|
|
|
|
|
|
(1) This is
a non-GAAP financial measure. Refer to the Non-GAAP Financial
Measures defined here and in Part I and VII of the MD&A ending
June 30, 2024 for more information on each non-GAAP financial
measure.
(2)
Excludes properties under development.
(3)
Same-asset committed occupancy excludes properties under
development and non-consolidated investments.
|
Quarterly Highlights
- FFO & AFFO: For the three months ended June 30, 2024, FFO on a dollar basis decreased
$62 thousand or 0.6%. FFO per unit
decreased by $0.001 (1.0%) compared
to the same period in the prior year. FFO was impacted by higher
NOI from same-asset, developments, and properties transferred to
income producing, offset by a decrease in NOI from property
dispositions and higher administrative and finance costs. AFFO per
unit increased by $0.010 (14.3%)
compared to the same period in the prior year mainly due to the
changes in FFO noted above, as well as decreased maintenance
capital expenditures and decreased leasing costs. FFO and AFFO per
unit were also impacted by the issue of 8.5 million trust units in
March 2023.
- Same-asset NOI increased by $477
thousand (2.7%) due to lease-up and rent escalations, along
with the completion of the repositioning of certain properties, and
lower operating expenses.
Year-To-Date Highlights
- FFO & AFFO: For the six months ended June 30, 2024, FFO on a dollar basis increased
$477 thousand or 2.4%. FFO per unit
decreased by $0.003, 1.6% compared to
the same period in the prior year. FFO was impacted by higher NOI
from same-asset, developments, and properties transferred to income
producing, offset by a decrease in NOI from property dispositions
and higher administrative and finance costs. AFFO on a dollar basis
increased $297 thousand or 1.9%. AFFO
per unit decreased by $0.002 (1.4%)
compared to the same period in the prior year mainly due to the
changes in FFO noted above, as well as decreased leasing costs, and
an increase in maintenance capital expenditures. FFO and AFFO per
unit were also impacted by the issue of 8.5 million trust units in
March 2023.
- Same-asset NOI increased by $1.1
million (3.2%) due to lease-up and rent escalations, along
with the completion of the repositioning of certain properties, and
lower operating expenses.
Non-GAAP Financial Measures
This press release contains certain non-GAAP financial measures
including FFO, AFFO and same-asset NOI. These measures are commonly
used by entities in the real estate industry as useful metrics for
measuring performance. However, they do not have a standardized
meaning prescribed by IFRS Accounting Standards and are not
necessarily comparable to similar measures presented by other
publicly traded entities. These measures should be considered as
supplemental in nature and not as a substitute for related
financial information prepared in accordance with IFRS Accounting
Standards. For further explanation of non-GAAP measures and their
usefulness in assessing Plaza's performance, please refer to the
section "Basis of Presentation" in Part I and the section
"Explanation of Non-GAAP Measures" in Part VII of the REIT's
Management's Discussion and Analysis as at June 30, 2024, which can be found on Plaza's
website at www.plaza.ca and on SEDAR at www.sedar.com.
The following tables reconcile the non-GAAP measures FFO, AFFO,
and NOI to the most comparable IFRS measures.
Funds from Operations (FFO) and Adjusted Funds from
Operations (AFFO)
Plaza's summary of FFO and AFFO for the three and six months
ended June 30, 2024, compared to the
three and six months ended June 30,
2023 is presented below:
|
(000s – except per
unit amounts and percentage data, unaudited)
|
3
Months Ended
June 30, 2024
|
3 Months Ended
June 30, 2023
|
Change over
Prior Period
|
6 Months
Ended
June 30,
2024
|
6 Months
Ended
June 30,
2023
|
Change over
Prior Period
|
|
Profit and total
comprehensive income for the period attributable to
unitholders
|
$
2,385
|
$
12,936
|
|
$
11,789
|
$
20,634
|
|
|
Incremental leasing
costs included in administrative expenses(7)
|
539
|
453
|
|
865
|
737
|
|
|
Amortization of
debenture issuance costs(8)
|
(18)
|
(19)
|
|
(36)
|
(105)
|
|
|
Distributions on Class
B exchangeable LP units included in finance costs –
operations
|
81
|
81
|
|
162
|
164
|
|
|
Deferred income
taxes
|
96
|
(459)
|
|
196
|
24
|
|
|
Right-of-use land lease
principal repayments
|
(203)
|
(200)
|
|
(406)
|
(399)
|
|
|
Fair value adjustment
to restricted and deferred units
|
(116)
|
(56)
|
|
(146)
|
(156)
|
|
|
Fair value adjustment
to investment properties
|
7,316
|
827
|
|
8,628
|
(447)
|
|
|
Fair value adjustment
to investments(9)
|
257
|
(90)
|
|
60
|
572
|
|
|
Fair value adjustment
to Class B exchangeable LP units
|
(232)
|
(232)
|
|
(301)
|
(601)
|
|
|
Fair value adjustment
to convertible debentures
|
(72)
|
(753)
|
|
(147)
|
(208)
|
|
|
Fair value adjustment
to interest rate swaps
|
345
|
(1,980)
|
|
(629)
|
(528)
|
|
|
Fair value adjustment
to right-of-use land lease assets
|
203
|
200
|
|
406
|
399
|
|
|
Equity accounting
adjustment(10)
|
50
|
(19)
|
|
106
|
(25)
|
|
|
Non-controlling
interest adjustment(6)
|
(4)
|
-
|
|
(4)
|
5
|
|
|
FFO(1)
|
$
10,627
|
$
10,689
|
$ (62)
|
$
20,543
|
$
20,066
|
$
477
|
|
FFO change over
prior period - %
|
|
|
(0.6 %)
|
|
|
2.4 %
|
|
|
|
|
|
|
|
|
FFO(1)
|
$
10,627
|
$
10,689
|
|
$
20,543
|
$
20,066
|
|
|
Non-cash revenue –
straight-line rent(5)
|
(174)
|
44
|
|
(217)
|
(11)
|
|
|
Leasing costs –
existing properties(2) (5) (11)
|
(1,308)
|
(2,336)
|
|
(2,931)
|
(3,441)
|
|
|
Maintenance capital
expenditures – existing properties(12)
|
(229)
|
(590)
|
|
(1,175)
|
(678)
|
|
|
Non-controlling
interest adjustment(6)
|
8
|
-
|
|
13
|
-
|
|
|
AFFO(1)
|
$
8,924
|
$
7,807
|
$1,117
|
$
16,233
|
$
15,936
|
$
297
|
|
AFFO change over
prior period - %
|
|
|
14.3 %
|
|
|
1.9 %
|
|
|
|
|
|
|
|
|
Weighted average units
outstanding – basic(1)(3)
|
111,526
|
111,530
|
|
111,523
|
107,407
|
|
|
FFO per unit –
basic(1)
|
$
0.095
|
$
0.096
|
(1.0 %)
|
$
0.184
|
$
0.187
|
(1.6 %)
|
|
AFFO per unit –
basic(1)
|
$
0.080
|
$
0.070
|
14.3 %
|
$
0.146
|
$
0.148
|
(1.4 %)
|
|
|
|
|
|
|
|
|
Gross distribution to
unitholders(1)(4)
|
$
7,806
|
$
7,807
|
|
$
15,611
|
$
15,214
|
|
|
FFO payout ratio –
basic(1)
|
73.5 %
|
73.0 %
|
|
76.0 %
|
75.8 %
|
|
|
AFFO payout ratio –
basic(1)
|
87.5 %
|
100.0 %
|
|
96.2 %
|
95.5 %
|
|
|
|
|
|
|
|
|
|
FFO(1)
|
$
10,627
|
$
10,689
|
|
$
20,543
|
$
20,066
|
|
|
Interest on dilutive
convertible debentures
|
179
|
178
|
|
357
|
354
|
|
|
FFO –
diluted(1)
|
$
10,806
|
$
10,867
|
$ (61)
|
$
20,900
|
$
20,420
|
$
480
|
|
Diluted weighted
average units outstanding(1)(3)
|
114,056
|
114,060
|
|
114,054
|
109,938
|
|
|
|
|
|
|
|
|
|
AFFO(1)
|
$
8,924
|
$
7,807
|
|
$
16,233
|
$
15,936
|
|
|
Interest on dilutive
convertible debentures
|
179
|
178
|
|
357
|
354
|
|
|
AFFO –
diluted(1)
|
$
9,103
|
$
7,985
|
$1,118
|
$
16,590
|
$
16,290
|
$ 300
|
|
Diluted weighted
average units outstanding(1)(3)
|
114,056
|
114,060
|
|
114,054
|
109,938
|
|
|
|
|
|
|
|
|
|
FFO per unit –
diluted(1)
|
$
0.095
|
$
0.095
|
-
|
$
0.183
|
$
0.186
|
(1.6 %)
|
|
AFFO per unit –
diluted(1)
|
$
0.080
|
$
0.070
|
14.3 %
|
$
0.145
|
$
0.148
|
(2.0 %)
|
|
(1)
|
This is a non-GAAP
financial measure. Refer to the Non-GAAP Financial Measures
defined here and in Part I and VII of the REIT's MD&A ending
June 30, 2024 for more information on each non-GAAP financial
measure.
|
|
(2)
|
Based on
actuals.
|
|
(3)
|
Includes Class B
exchangeable LP units.
|
|
(4)
|
Includes distributions
on Class B exchangeable LP units.
|
|
(5)
|
Includes proportionate
share of revenue and expenditures at equity-accounted
investments.
|
|
(6)
|
The non-controlling
interest ("NCI") adjustment, includes adjustments required to
translate the profit and total comprehensive income attributable to
NCI of $52 thousand and $104 thousand for the three and six months
ending June 30, 2024, respectively (June 30, 2023 – $49 thousand
and $102 thousand, respectively) to FFO and AFFO for the
NCI.
|
|
(7)
|
Incremental leasing
costs included in administrative expenses include leasing costs of
salaried leasing staff directly attributed to signed leases that
would otherwise be capitalized if incurred from external
sources. These costs are excluded from FFO in accordance with
RealPAC's definition of FFO.
|
|
(8)
|
Amortization of
debenture issuance costs is deducted on a straight-line basis over
the remaining term of the related convertible debentures, in
accordance with RealPAC.
|
|
(9)
|
Fair value adjustment
to investments relate to the unrealized change in fair value of
equity accounted entities which are excluded from FFO in accordance
with RealPAC's definition of FFO.
|
|
(10)
|
Equity accounting
adjustment for interest rate swaps includes the change in non-cash
fair value adjustments relating to interest rate swaps held by
equity accounted entities, which are excluded from FFO in
accordance with RealPAC's definition of FFO.
|
|
(11)
|
Leasing costs –
existing properties include internal and external leasing costs
except to the extent that leasing costs relate to development
projects, in accordance with RealPAC's definition of AFFO.
See the Gross Capital Additions Including Leasing Fees note on page
26 of the MD&A.
|
|
(12)
|
Maintenance capital
expenditures – existing properties include expenditures related to
sustaining and maintaining existing space, in accordance with
RealPAC's definition of AFFO. See the Gross Capital Additions
Including Leasing Fees note on page 26 of the MD&A.
|
Net Property Operating Income (NOI) and Same-Asset Net
Property Operating Income (Same-Asset NOI)
|
(000s)
|
3
Months
Ended
June
30,
2024
(unaudited)
|
3 Months
Ended
June 30,
2023
(unaudited)
|
6
Months
Ended
June
30,
2024
(unaudited)
|
6 Months
Ended
June 30,
2023
(unaudited)
|
|
Same-asset
NOI(1)
|
$
17,993
|
$
17,516
|
$
35,606
|
$
34,496
|
|
Developments and
redevelopments transferred to income producing in 2023 & 2024
($5.5 million annual stabilized NOI)
|
1,061
|
663
|
1,969
|
771
|
|
NOI from properties
currently under development and redevelopment ($5.6 million annual
stabilized NOI)
|
271
|
47
|
388
|
75
|
|
Straight-line
rent
|
174
|
(39)
|
218
|
20
|
|
Administrative expenses
charged to NOI
|
(1,116)
|
(1,107)
|
(2,076)
|
(1,931)
|
|
Lease termination
revenue
|
-
|
-
|
30
|
-
|
|
Properties
disposed
|
66
|
419
|
278
|
950
|
|
Other
|
(59)
|
144
|
29
|
77
|
|
Total
NOI(1)
|
$
18,390
|
$
17,643
|
$
36,442
|
$
34,458
|
|
|
|
|
|
|
|
(1)
|
This is a non-GAAP
financial measure. Refer to the Non-GAAP Financial Measures
defined here and in Part I and VII of the REIT's MD&A for more
information on each non-GAAP financial measure.
|
Cautionary Statements Regarding Forward-looking
Information
This press release contains forward-looking
statements relating to Plaza's operations, prospects, outlook,
condition and the environment in which it operates, including with
respect to Plaza's outlook or expectations regarding the future of
its business and continuation of strong retailer demand.
Forward-looking statements are not future guarantees of future
performance and involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or
achievements of Plaza to be materially different from any future
results, performance or achievements expressed, implied or
projected by forward-looking statements contained in this press
release, including but not limited to changes in economic, retail,
capital market, or debt market conditions, including recessions and
changes in, or the extent of changes in, interest rates and the
rate of inflation; supply chain constraints; competitive real
estate conditions; and others described in Plaza's Annual
Information Form for the year ended December
31, 2023 and Management's Discussion and Analysis for the
three and six months ended June 30,
2024 which can be obtained on the REIT's website at
www.plaza.ca or on SEDAR+ at www.sedarplus.ca. Forward-looking
statements are based on a number of expectations and assumptions
made in light of management's experience and perceptions of
historical trends and current conditions, including that progress
continues on Plaza's development program, the strength of Plaza's
tenant base, that tenant demand for space continues and that Plaza
is able to lease or re-lease space at anticipated rents.
Although based upon information currently available to management
and what management believes are reasonable expectations and
assumptions, there can be no assurances that forward-looking
statements will prove to be accurate. Readers, therefore, should
not place undue reliance on any forward-looking statements. Plaza
undertakes no obligation to publicly update any such statements,
except as required by law. These cautionary statements qualify all
forward-looking statements contained in this press release.
Further Information
Information appearing in this
press release is a select summary of results. A more detailed
analysis of the REIT's financial and operating results is included
in the REIT's Management's Discussion and Analysis and Consolidated
Financial Statements, which can be found on the REIT's website at
www.plaza.ca or on SEDAR at www.sedar.com.
Conference Call
Michael
Zakuta, President and CEO, Jim
Drake, CFO, and Jason
Parravano, COO, will host a conference call for the
investment community on Friday, August 2,
2024 at 10:00 a.m. EDT. The call-in numbers for
participants are 1-416-764-8659 (local Toronto) or 1-902-704-0254 (local Halifax) or 1-888-664-6392 (toll free, within
North America).
A replay of the call will be available until August 9,
2024. To access the replay, dial 1-416-764-8677 (local Toronto) or 1-888-390-0541 (Passcode: 609167).
The audio replay will also be available for download on the REIT's
website for 90 days following the conference call.
About Plaza
Plaza is an open-ended real estate
investment trust and is a leading retail property owner and
developer, focused on Ontario,
Quebec and Atlantic Canada. Plaza's portfolio at
June 30, 2024 includes interests in
225 properties totaling approximately 8.9 million square feet
across Canada and additional lands
held for development. Plaza's portfolio largely consists of
open-air centres and stand-alone small box retail outlets and is
predominantly occupied by national tenants with a focus on the
essential needs, value and convenience market segments. For more
information, please visit www.plaza.ca.
SOURCE Plaza Retail REIT