FREDERICTON, NB, Nov. 7, 2024
/CNW/ - Plaza Retail REIT (TSX: PLZ.UN) ("Plaza" or the "REIT")
today announced its financial results for the three and nine months
ended September 30, 2024.
"We are pleased with our Q3 results as we continue to achieve
strong 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. As interest rates decline, we also
benefit from lower borrowing costs, which we anticipate will
positively contribute to our results through the remainder of the
year and into 2025."
|
Summary of Selected
IFRS Financial Results
|
|
(CAD$000s, except
percentages)
|
Three
Months
Ended
September 30,
2024
|
Three
Months
Ended
September 30,
2023
|
$
Change
|
%
Change
|
Nine
Months
Ended
September 30,
2024
|
Nine Months
Ended
September 30,
2023
|
$
Change
|
%
Change
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$30,414
|
$28,294
|
$2,120
|
7.5 %
|
$90,657
|
$85,102
|
$5,555
|
6.5 %
|
|
|
|
|
|
|
|
|
|
|
Net operating income
(NOI)(1)
|
$19,651
|
$18,460
|
$1,191
|
6.5 %
|
$56,093
|
$52,918
|
$3,175
|
6.0 %
|
|
|
|
|
|
|
|
|
|
|
Net change in fair
value of investment properties
|
($3,596)
|
($10,919)
|
$7,323
|
-
|
($12,224)
|
($10,472)
|
($1,752)
|
-
|
|
|
|
|
|
|
|
|
|
|
Profit and total
comprehensive income
|
$5,119
|
$3,355
|
$1,764
|
-
|
$17,012
|
$24,091
|
($7,079)
|
-
|
|
|
|
|
|
|
|
|
|
|
(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 September 30, 2024 for more
information on each non-GAAP financial measure.
|
Quarterly Highlights
- NOI was $19.7 million, up
$1.2 million or 6.5% from the same
period in 2023. The increase in NOI is from rent escalations and
lease-up in same-asset properties, 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 $5.1 million compared to
$3.4 million in the same period in
the prior year. The increase was mainly due to the change in fair
value of investment properties, with a $3.6
million decrease in the current quarter compared to a
$10.9 million decrease recorded in
the same quarter in the prior year. Profit and total comprehensive
income was also impacted by an increase in finance costs and
administrative expenses, offset by the NOI increase noted above.
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 $56.1 million, up
$3.2 million or 6.0% from the same
period in 2023. NOI was impacted by rent escalations and lease-up
in same-asset properties, 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 $17.0 million
compared to $24.1 million in the same
period in the prior year. The decrease was mainly due to the change
in fair value of investment properties, with a $12.2 million decrease recorded in the current
year compared to a $10.5 million
decrease recorded in the same period in the prior year. Profit and
total comprehensive income was also impacted by an increase in
finance costs and administrative expenses, offset by the NOI
increase noted above 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, 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
September 30,
2024
|
Three
Months
Ended
September 30,
2023
|
$
Change
|
%
Change
|
Nine
Months
Ended
September 30,
2024
|
Nine Months
Ended
September 30,
2023
|
$
Change
|
%
Change
|
|
|
|
|
|
|
|
|
|
|
FFO(1)
|
$11,405
|
$11,392
|
$13
|
0.1 %
|
$31,948
|
$31,458
|
$490
|
1.6 %
|
|
FFO per
unit(1)
|
$0.102
|
$0.102
|
-
|
-
|
$0.286
|
$0.289
|
($0.003)
|
(1.0 %)
|
|
FFO payout
ratio(1)
|
68.4 %
|
68.5 %
|
n/a
|
(0.1 %)
|
73.3 %
|
73.2 %
|
n/a
|
0.1 %
|
|
|
|
|
|
|
|
|
|
|
AFFO(1)
|
$9,640
|
$9,424
|
$216
|
2.3 %
|
$25,873
|
$25,360
|
$513
|
2.0 %
|
|
AFFO per
unit(1)
|
$0.086
|
$0.085
|
$0.001
|
1.2 %
|
$0.232
|
$0.233
|
($0.001)
|
(0.4 %)
|
|
AFFO payout
ratio(1)
|
81.0 %
|
82.8 %
|
n/a
|
(2.2 %)
|
90.5 %
|
90.8 %
|
n/a
|
(0.3 %)
|
|
|
|
|
|
|
|
|
|
|
Same-asset
NOI(1)
|
$18,618
|
$18,266
|
$352
|
1.9 %
|
$53,984
|
$52,491
|
$1,493
|
2.8 %
|
|
|
|
|
|
|
|
|
|
|
Normal course issuer
bid – units repurchased
|
-
|
8,054
|
n/a
|
n/a
|
4,920
|
19,627
|
n/a
|
n/a
|
|
|
|
|
|
|
|
|
|
|
Committed occupancy –
including non-consolidated investments(2)
|
|
|
|
|
97.5 %
|
97.2 %
|
n/a
|
0.3 %
|
|
Same-asset committed
occupancy(3)
|
|
|
|
|
96.9 %
|
96.9 %
|
n/a
|
-
|
|
|
|
|
|
|
|
|
|
|
(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
September 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 September 30, 2024, FFO on a dollar basis
increased $13 thousand or 0.1%. FFO
per unit was consistent with 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 $216 thousand or 2.3%, and AFFO per unit
increased by $0.001 or 1.2% compared
to the same period in the prior year. AFFO was impacted mainly due
to the changes in FFO noted above, as well as increased maintenance
capital expenditures and lower leasing costs.
- Same-asset NOI increased by $352
thousand or 1.9% due to lease-up and rent escalations, along
with the completion of the repositioning of certain properties,
offset by higher operating expenses.
Year-To-Date Highlights
- FFO & AFFO: For the nine months ended September 30, 2024, FFO on a dollar basis
increased $490 thousand or 1.6%. FFO
per unit decreased by $0.003 or
(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 on a dollar basis increased $513 thousand or 2.0%. AFFO per unit decreased by
$0.001 or (0.4%) compared to the same
period in the prior year mainly due to the changes in FFO noted
above, as well as increased maintenance capital expenditures from
extraordinary expenditures, and lower 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 $1.5
million or 2.8% 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 September 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 nine months
ended September 30, 2024, compared to
the three and nine months ended September
30, 2023, is presented below:
|
(000s – except per
unit amounts and percentage data, unaudited)
|
3 Months
Ended
September
30, 2024
|
3 Months
Ended
September
30, 2023
|
Change
over
Prior
Period
|
9 Months
Ended
September
30, 2024
|
9 Months
Ended
September
30, 2023
|
Change
over
Prior
Period
|
|
Profit and total
comprehensive income for the period attributable to
unitholders
|
$
5,073
|
$
3,375
|
|
$
16,862
|
$
24,009
|
|
|
Incremental leasing
costs included in administrative expenses(7)
|
383
|
319
|
|
1,248
|
1,056
|
|
|
Amortization of
debenture issuance costs(8)
|
(18)
|
(18)
|
|
(54)
|
(123)
|
|
|
Distributions on Class
B exchangeable LP units included in finance costs –
operations
|
81
|
81
|
|
243
|
245
|
|
|
Deferred income
taxes
|
(99)
|
(143)
|
|
97
|
(119)
|
|
|
Right-of-use land lease
principal repayments
|
(205)
|
(202)
|
|
(611)
|
(601)
|
|
|
Fair value adjustment
to restricted and deferred units
|
280
|
(227)
|
|
134
|
(383)
|
|
|
Fair value adjustment
to investment properties
|
3,596
|
10,919
|
|
12,224
|
10,472
|
|
|
Fair value adjustment
to investments(9)
|
(1,460)
|
(451)
|
|
(1,400)
|
121
|
|
|
Fair value adjustment
to Class B exchangeable LP units
|
544
|
(416)
|
|
243
|
(1,017)
|
|
|
Fair value adjustment
to convertible debentures
|
426
|
(450)
|
|
279
|
(658)
|
|
|
Fair value adjustment
to interest rate swaps
|
2,366
|
(1,486)
|
|
1,737
|
(2,014)
|
|
|
Fair value adjustment
to right-of-use land lease assets
|
205
|
202
|
|
611
|
601
|
|
|
Equity accounting
adjustment(10)
|
264
|
(33)
|
|
370
|
(58)
|
|
|
Non-controlling
interest adjustment(6)
|
(31)
|
(78)
|
|
(35)
|
(73)
|
|
|
FFO(1)
|
$
11,405
|
$
11,392
|
$
13
|
$
31,948
|
$
31,458
|
$
490
|
|
FFO change over
prior period - %
|
|
|
0.1 %
|
|
|
1.6 %
|
|
|
|
|
|
|
|
|
FFO(1)
|
$
11,405
|
$
11,392
|
|
$
31,948
|
$
31,458
|
|
|
Non-cash revenue –
straight-line rent(5)
|
(169)
|
(16)
|
|
(387)
|
(27)
|
|
|
Leasing costs –
existing properties(2) (5) (11)
|
(1,022)
|
(1,732)
|
|
(3,952)
|
(5,173)
|
|
|
Maintenance capital
expenditures – existing properties(12)
|
(603)
|
(223)
|
|
(1,778)
|
(901)
|
|
|
Non-controlling
interest adjustment(6)
|
29
|
3
|
|
42
|
3
|
|
|
AFFO(1)
|
$
9,640
|
$
9,424
|
$ 216
|
$
25,873
|
$
25,360
|
$
513
|
|
AFFO change over
prior period - %
|
|
|
2.3 %
|
|
|
2.0 %
|
|
|
|
|
|
|
|
|
Weighted average units
outstanding – basic(1)(3)
|
111,537
|
111,530
|
|
111,528
|
108,797
|
|
|
FFO per unit –
basic(1)
|
$
0.102
|
$
0.102
|
-
|
$
0.286
|
$
0.289
|
(1.0 %)
|
|
AFFO per unit –
basic(1)
|
$
0.086
|
$
0.085
|
1.2 %
|
$
0.232
|
$
0.233
|
(0.4 %)
|
|
|
|
|
|
|
|
|
Gross distribution to
unitholders(1)(4)
|
$
7,806
|
$
7,806
|
|
$
23,417
|
$
23,020
|
|
|
FFO payout ratio –
basic(1)
|
68.4 %
|
68.5 %
|
|
73.3 %
|
73.2 %
|
|
|
AFFO payout ratio –
basic(1)
|
81.0 %
|
82.8 %
|
|
90.5 %
|
90.8 %
|
|
|
|
|
|
|
|
|
|
FFO(1)
|
$
11,405
|
$
11,392
|
|
$
31,948
|
$
31,458
|
|
|
Interest on dilutive
convertible debentures
|
180
|
179
|
|
537
|
533
|
|
|
FFO –
diluted(1)
|
$
11,585
|
$
11,571
|
$
14
|
$
32,485
|
$
31,991
|
$
494
|
|
Diluted weighted
average units outstanding(1)(3)
|
114,067
|
114,060
|
|
114,058
|
111,327
|
|
|
|
|
|
|
|
|
|
AFFO(1)
|
$
9,640
|
$
9,424
|
|
$
25,873
|
$
25,360
|
|
|
Interest on dilutive
convertible debentures
|
180
|
179
|
|
537
|
533
|
|
|
AFFO –
diluted(1)
|
$
9,820
|
$
9,603
|
$ 217
|
$
26,410
|
$
25,893
|
$ 517
|
|
Diluted weighted
average units outstanding(1)(3)
|
114,067
|
114,060
|
|
114,058
|
111,327
|
|
|
|
|
|
|
|
|
|
FFO per unit –
diluted(1)
|
$
0.102
|
$
0.101
|
1.0 %
|
$
0.285
|
$
0.287
|
(0.7 %)
|
|
AFFO per unit –
diluted(1)
|
$
0.086
|
$
0.084
|
2.4 %
|
$
0.231
|
$
0.233
|
(0.9 %)
|
|
(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
September 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 $46 thousand and $150 thousand for the three and nine months
ending September 30, 2024, respectively (September 30, 2023 – loss
of $20 thousand and profit of $82 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
27 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 27 of the MD&A.
|
Net Property Operating Income (NOI) and Same-Asset Net
Property Operating Income (Same-Asset NOI)
|
(000s)
|
3
Months
Ended
September
30,
2024
(unaudited)
|
3 Months
Ended
September
30,
2023
(unaudited)
|
9
Months
Ended
September
30,
2024
(unaudited)
|
9 Months
Ended
September
30,
2023
(unaudited)
|
|
Same-asset
NOI(1)
|
$
18,618
|
$
18,266
|
$
53,984
|
$
52,491
|
|
Developments and
redevelopments transferred to income producing in 2023 & 2024
($7.5 million annual stabilized NOI)
|
1,490
|
906
|
3,767
|
1,684
|
|
NOI from properties
currently under development and redevelopment ($650 thousand
annual stabilized NOI)
|
-
|
(179)
|
-
|
(51)
|
|
Straight-line
rent
|
169
|
22
|
387
|
42
|
|
Administrative expenses
charged to NOI
|
(887)
|
(898)
|
(2,963)
|
(2,829)
|
|
Lease termination
revenue
|
168
|
-
|
201
|
-
|
|
Properties
disposed
|
80
|
324
|
697
|
1,500
|
|
Other
|
13
|
19
|
20
|
81
|
|
Total
NOI(1)
|
$
19,651
|
$
18,460
|
$
56,093
|
$
52,918
|
|
Percentage increase
over prior period
|
6.5 %
|
|
6.0 %
|
|
|
|
|
|
|
|
|
(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 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,
continuation of strong retailer demand and the impact of lower
interest rates on Plaza's overall success through the remainder of
the year and into 2025. 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 nine months
ended September 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 and redevelopment program, the strength of Plaza's
tenant base, that tenant demand for space continues, that Plaza is
able to lease or re-lease space at anticipated rents and that
interest rates continue to decline. 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, November 8,
2024 at 10:00 a.m. EST. The call-in numbers for
participants are 1-437-900-0527 (local Toronto) or 1-888-510-2154 (toll free, within
North America).
A replay of the call will be available until November 15,
2024. To access the replay, dial 1-289-819-1450 (local Toronto) or 1-888-660-6345 (Passcode: 52498#).
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
September 30, 2024 includes interests
in 218 properties totaling approximately 8.8 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