FREDERICTON, NB, May 3, 2023
/CNW/ - Plaza Retail REIT (TSX: PLZ.UN) ("Plaza" or the "REIT")
today announced its financial results for the three months ended
March 31, 2023.
"In March, we issued $40 million
of equity via a bought deal – our first equity issue since 2016 –
with the proceeds, combined with proceeds from non-core asset
sales, utilized to repay our maturing $47.25
million convertible debentures. This has re-set our
balance sheet, reducing our debt to assets ratio from approximately
56% in December 2022 to 52%, and has
provided us with additional flexibility. This quarter is a
building block for future growth – with a record committed
occupancy level, healthy renewal spreads, and a robust development
pipeline which will contribute incremental income and value over
the next two years.", said Michael
Zakuta, President and CEO. "Our business and tenants,
focused on essential-needs, value and convenience offerings, remain
strong and resilient, and will continue to perform well under all
economic conditions."
Summary of Selected
IFRS Financial Results
|
(CAD$000s, except
percentages)
|
|
|
|
|
Three
Months
Ended
March 31,
2023
|
Three Months
Ended
March 31,
2022
|
$
Change
|
%
Change
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
$28,345
|
$27,904
|
$441
|
1.6 %
|
|
|
|
|
|
|
|
|
|
Net operating income
(NOI)(1)
|
|
|
|
|
$16,815
|
$17,130
|
($315)
|
(1.8 %)
|
|
|
|
|
|
|
|
|
|
Net change in fair
value of investment properties
|
|
|
|
|
$1,274
|
$12,434
|
($11,160)
|
--
|
|
|
|
|
|
|
|
|
|
Profit and total
comprehensive income
|
|
|
|
|
$7,751
|
$25,832
|
($18,081)
|
--
|
|
|
|
|
|
|
|
|
|
(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 March 31, 2023 for more
information on each non-GAAP financial measure.
|
|
|
Quarterly Highlights
- NOI was $16.8 million,
down $315 thousand (1.8%) from the
same period in 2022, mainly due to an allowance provided to a
tenant in consideration of delayed delivery of premises at a
development property.
- Profit and total comprehensive income for the current
quarter was $7.8 million compared to
$25.8 million in the same period in
the prior year. The decrease was mainly due to an increase in the
fair value of investment properties of $1.3
million in the current quarter compared to a fair value
increase of $12.4 million in the same
quarter in the prior year. The fair value change year over year was
mainly due to more significant fair value increases recognized in
the prior year, compared to more stabilized values this year.
Summary of Selected
Non-IFRS Financial Results
|
(CAD$000s, except
percentages, units
repurchased and per unit amounts)
|
|
|
|
|
Three
Months
Ended
March 31,
2023
|
Three
Months
Ended
March 31,
2022
|
$
Change
|
%
Change
|
|
|
|
|
|
|
|
|
|
FFO(1)
|
|
|
|
|
$9,377
|
$10,156
|
($779)
|
(7.7 %)
|
FFO per
unit(1)
|
|
|
|
|
$0.091
|
$0.099
|
($0.008)
|
(8.1 %)
|
FFO payout
ratio(1)
|
|
|
|
|
79.0 %
|
71.0 %
|
n/a
|
11.3 %
|
|
|
|
|
|
|
|
|
|
AFFO(1)
|
|
|
|
|
$8,129
|
$9,080
|
($951)
|
(10.5 %)
|
AFFO per
unit(1)
|
|
|
|
|
$0.079
|
$0.088
|
($0.009)
|
(10.2 %)
|
AFFO payout
ratio(1)
|
|
|
|
|
91.1 %
|
79.4 %
|
n/a
|
14.7 %
|
|
|
|
|
|
|
|
|
|
Same-asset
NOI(1)
|
|
|
|
|
$16,784
|
$16,654
|
$130
|
0.8 %
|
|
|
|
|
|
|
|
|
|
Normal course issuer
bid – units repurchased
|
|
|
|
|
3,855
|
2,200
|
n/a
|
n/a
|
|
|
|
|
|
|
|
|
|
Committed occupancy –
including non-consolidated investments(2)
|
|
|
|
|
97.6 %
|
96.3 %
|
n/a
|
1.3 %
|
Same-asset committed
occupancy(3)
|
|
|
|
|
97.5 %
|
96.3 %
|
n/a
|
1.2 %
|
|
|
|
|
|
|
|
|
|
(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
March 31, 2023 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 March 31, 2023, FFO per unit decreased by
$0.008 (8.1%) compared to the same
period in the prior year. FFO was impacted by an allowance provided
to a tenant in consideration of delayed delivery of premises at a
development property, a decrease in NOI from properties disposed,
offset by rent escalations and renewals across the portfolio, an
increase in finance expenses, an increase in administrative
expenses, and an increase in investment and other income. AFFO per
unit decreased by $0.009 (10.2%)
compared to the same period in the prior year mainly due to the
changes in FFO noted above.
- Same-asset NOI increased by $130
thousand (0.8%) due to lease-up and rent escalations in the
current quarter.
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 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. 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 March 31, 2023, 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 months ended
March 31, 2023, compared to the three
months ended March 31, 2022 is
presented below:
(000s – except per
unit amounts and percentage data, unaudited)
|
|
|
|
3 Months
Ended
March 31,
2023
|
3 Months
Ended
March 31,
2022
|
Change
over
Prior
Period
|
Profit and total
comprehensive income for the period attributable to
unitholders
|
|
|
|
$
7,698
|
$
25,562
|
|
Incremental leasing
costs included in administrative expenses(7)
|
|
|
|
284
|
339
|
|
Amortization of
debenture issuance costs(8)
|
|
|
|
(86)
|
(120)
|
|
Distributions on Class
B exchangeable LP units included in finance costs
|
|
|
|
83
|
83
|
|
Deferred income
taxes
|
|
|
|
483
|
966
|
|
Land lease principal
repayments
|
|
|
|
(199)
|
(194)
|
|
Fair value adjustment
to restricted and deferred units
|
|
|
|
(100)
|
111
|
|
Fair value adjustment
to investment properties
|
|
|
|
(1,274)
|
(12,434)
|
|
Fair value adjustment
to investments(9)
|
|
|
|
662
|
(2,390)
|
|
Fair value adjustment
to Class B exchangeable LP units
|
|
|
|
(369)
|
441
|
|
Fair value adjustment
to convertible debentures
|
|
|
|
545
|
160
|
|
Fair value adjustment
to interest rate swaps
|
|
|
|
1,452
|
(2,547)
|
|
Fair value adjustment
to right-of-use land lease assets
|
|
|
|
199
|
194
|
|
Equity accounting
adjustment(10)
|
|
|
|
(6)
|
(186)
|
|
Non-controlling
interest adjustment(6)
|
|
|
|
5
|
171
|
|
FFO(1)
|
|
|
|
$
9,377
|
$
10,156
|
(779)
|
FFO change over
prior period - %
|
|
|
|
|
|
(7.7 %)
|
|
|
|
|
|
|
|
FFO(1)
|
|
|
|
$
9,377
|
$
10,156
|
|
Non-cash revenue –
straight-line rent(5)
|
|
|
|
(55)
|
115
|
|
Leasing costs –
existing properties(2) (5) (11)
|
|
|
|
(1,105)
|
(1,091)
|
|
Maintenance capital
expenditures – existing properties(12)
|
|
|
|
(88)
|
(126)
|
|
Non-controlling
interest adjustment(6)
|
|
|
|
-
|
26
|
|
AFFO(1)
|
|
|
|
$
8,129
|
$
9,080
|
(951)
|
AFFO change over
prior period - %
|
|
|
|
|
|
(10.5 %)
|
|
|
|
|
|
|
|
Weighted average units
outstanding – basic(1)(3)
|
|
|
|
103,274
|
103,004
|
|
FFO per unit –
basic(1)
|
|
|
|
$
0.091
|
$
0.099
|
(8.1 %)
|
AFFO per unit –
basic(1)
|
|
|
|
$
0.079
|
$
0.088
|
(10.2 %)
|
|
|
|
|
|
|
|
Gross distribution to
unitholders(1)(4)
|
|
|
|
$
7,407
|
$
7,209
|
|
FFO payout ratio –
basic(1)
|
|
|
|
79.0 %
|
71.0 %
|
|
AFFO payout ratio –
basic(1)
|
|
|
|
91.1 %
|
79.4 %
|
|
|
|
|
|
|
|
|
FFO(1)
|
|
|
|
$
9,377
|
$ 10,156
|
|
Interest on dilutive
convertible debentures
|
|
|
|
176
|
770
|
|
FFO –
diluted(1)
|
|
|
|
$
9,553
|
$ 10,926
|
(1,373)
|
Diluted weighted
average units outstanding(1)(3)
|
|
|
|
105,805
|
113,897
|
|
|
|
|
|
|
|
|
AFFO(1)
|
|
|
|
$
8,129
|
$
9,080
|
|
Interest on dilutive
convertible debentures
|
|
|
|
176
|
770
|
|
AFFO –
diluted(1)
|
|
|
|
$
8,305
|
$
9,850
|
(1,545)
|
Diluted weighted
average units outstanding(1)(3)
|
|
|
|
105,805
|
113,897
|
|
|
|
|
|
|
|
|
FFO per unit –
diluted(1)
|
|
|
|
$
0.090
|
$
0.096
|
(6.3 %)
|
AFFO per unit –
diluted(1)
|
|
|
|
$
0.078
|
$
0.086
|
(9.3 %)
|
|
|
|
|
|
|
|
|
(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
March 31, 2023 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 (loss)
attributable to NCI of $53 thousand for the three months ending
March 31, 2023 (March 31, 2022 - $270 thousand) 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
March
31,
2023
(unaudited)
|
3 Months
Ended
March 31,
2022
(unaudited)
|
Same-asset
NOI(1)
|
|
|
$
16,784
|
$
16,654
|
Developments and
redevelopments transferred to income producing in 2022 &
2023
($2.6 million stabilized NOI)
|
|
|
625
|
370
|
NOI from acquisitions,
properties currently under development and redevelopment
($7.4 million stabilized NOI)
|
|
|
137
|
394
|
Straight-line
rent
|
|
|
59
|
(116)
|
Administrative expenses
charged to NOI
|
|
|
(824)
|
(729)
|
Lease termination
revenue
|
|
|
-
|
105
|
Properties
disposed
|
|
|
88
|
426
|
Other
|
|
|
(54)
|
26
|
Total
NOI(1)
|
|
|
$
16,815
|
$
17,130
|
|
|
|
|
|
|
(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.
|
|
|
Debt to Gross Assets
Debt to gross
assets(1) (000s)
|
|
March 31,
2023
|
December 31,
2022
|
March 31,
2022
|
Total debt including
land leases(1)(2)
|
|
$
652,741
|
$
708,697
|
$
682,147
|
Less: land
leases
|
|
(65,007)
|
(65,206)
|
(65,792)
|
Total debt excluding
land leases
|
|
$
587,734
|
$
643,491
|
$
616,355
|
|
|
|
|
|
Total gross
assets
|
|
$
1,254,338
|
$
1,269,011
|
$ 1,236,430
|
Less: land
leases
|
|
(65,007)
|
(65,206)
|
(65,792)
|
Total gross assets
excluding land leases
|
|
$
1,189,331
|
$
1,203,805
|
$ 1,170,638
|
Debt to gross assets
including land leases(1)
|
|
52.0 %
|
55.8 %
|
55.2 %
|
Debt to gross assets
excluding land leases(1)
|
|
49.4 %
|
53.5 %
|
52.7 %
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
This is a non-GAAP
financial measure. Refer to the Non-GAAP Financial Measures
in Part I and VII of this document for more information on each
non-GAAP financial measure.
|
(2)
|
Total debt includes
current and long-term debt defined for this purpose as mortgage
bonds, mortgages payable, derivative liabilities, face value of
convertible debentures, non-convertible debentures, notes payable,
land lease liabilities and bank indebtedness.
|
|
|
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 that Plaza's business
and tenants will continue to perform well under all economic
conditions. 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 any
unforeseen impacts from new or renewed pandemic conditions and
impacts on the business, operations and financial condition of the
REIT, its tenants and the economy in general; 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, 2022 and Management's Discussion and
Analysis for the three months ended March
31, 2023 which can be obtained on the REIT's website at
www.plaza.ca or on SEDAR at www.sedar.com. 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 the strength
and resiliency 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, and Jim Drake, CFO, will host a conference call for the
investment community on Thursday, May 4,
2023 at 11:30 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 May 11, 2023.
To access the replay, dial 1-416-764-8677 (local Toronto) or 1-888-390-0541 (Passcode: 286540).
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 March
31, 2023 includes interests in 246 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. For more information, please
visit www.plaza.ca.
SOURCE Plaza Retail REIT