FREDERICTON, NB, Feb. 24, 2022 /CNW/ - Plaza Retail REIT
(TSX: PLZ.UN) ("Plaza" or the "REIT") today announced its financial
results for the three months and year ended December 31, 2021.
"We are pleased with our strong performance for the year," said
Michael Zakuta, President and
CEO. "Our portfolio of open-air centres dominated by national
tenants in the essential needs, value and convenience categories
continues to perform well. Leasing activity is robust, and
2021 results exceeded pre-pandemic levels. Our high quality and
hard to replace assets leased to strong covenant retailers in a
combination of primary, strong secondary and tertiary markets have
long been under appreciated. It has taken an unprecedented pandemic
to start to highlight their value."
Summary of
Selected IFRS Financial Results
|
(CAD$000s, except
percentages)
|
Three
Months
Ended
Dec 31,
2021
|
Three
Months
Ended
Dec 31,
2020
|
$
Change
|
%
Change
|
Twelve Months
Ended
Dec 31,
2021
|
Twelve Months
Ended
Dec 31,
2020
|
$
Change
|
%
Change
|
|
|
|
|
|
|
|
|
|
Property rental
revenue
|
$27,383
|
$26,835
|
$548
|
2.0%
|
$110,632
|
$106,898
|
$3,734
|
3.5%
|
|
|
|
|
|
|
|
|
|
Net operating income
(NOI)(1)
|
$17,188
|
$18,137
|
($949)
|
(5.2%)
|
$71,779
|
$68,750
|
$3,029
|
4.4%
|
|
|
|
|
|
|
|
|
|
Net change in fair
value of investment properties
|
$29,985
|
$2,169
|
$27,816
|
--
|
$58,376
|
($46,891)
|
$105,267
|
--
|
|
|
|
|
|
|
|
|
|
Profit (loss) and
total comprehensive income (loss)
|
$40,735
|
$9,275
|
$31,460
|
--
|
$100,489
|
($14,937)
|
$115,426
|
--
|
|
|
|
|
|
|
|
|
|
(1)
|
This is a non-GAAP
financial measure. Refer to the Non-GAAP Financial Measures
defined here and in Part I and VIII of the Management's Discussion
and Analysis ("MD&A") ending December 31, 2021 for more
information on each non-GAAP financial measure.
|
Quarterly Highlights
- NOI was $17.2 million,
down $949 thousand (5.2%) from the
same period in 2020, primarily as a result of lower operating
expenses in the prior year due to the Canada Emergency Wage Subsidy ("CEWS")
received and bad debt recovery in the prior year. These were
partially offset by growth in NOI from acquisitions and
developments.
- Profit and total comprehensive income for the current
quarter was $40.7 million compared to
$9.3 million in the prior year. A
significant portion of the increase was due to an increase in the
fair value of investment properties recorded in Q4 2021 as a result
of a decrease in capitalization rates and appraisals obtained.
Annual Highlights
- NOI was $71.8 million, up
$3.0 million (4.4%) from the same
period in 2020, primarily as a result of growth in NOI from
acquisitions and developments, and lease buyout revenues.
- Profit and total comprehensive income for the current
year was $100.5 million compared to a
loss of $14.9 million in the prior
year. A significant portion of the increase was due to an increase
in the fair value of investment properties recorded in the current
year as a result of a decrease in capitalization rates and
appraisals obtained, compared to a decrease in fair value of
investment properties recorded in the prior year.
Summary of
Selected Non-IFRS Financial Results(1)
|
(CAD$000s, except
percentages, units repurchased and per unit amounts)
|
Three Months
Ended
Dec 31,
2021
|
Three Months
Ended
Dec 31,
2020
|
$
Change
|
%
Change
|
Twelve
Months
Ended
Dec
31,
2021
|
Twelve
Months
Ended
Dec
31,
2020
|
$
Change
|
%
Change
|
|
|
|
|
|
|
|
|
|
FFO(1)
|
$10,771
|
$10,554
|
$217
|
2.1%
|
$44,703
|
$36,995
|
$7,708
|
20.8%
|
FFO per
unit(1)
|
$0.105
|
$0.102
|
$0.003
|
2.9%
|
$0.434
|
$0.359
|
$0.075
|
20.9%
|
FFO payout
ratio(1)
|
66.9%
|
68.3%
|
n/a
|
(2.0%)
|
64.5%
|
78.0%
|
n/a
|
(17.3%)
|
|
|
|
|
|
|
|
|
|
AFFO(1)
|
$8,198
|
$9,437
|
($1,239)
|
(13.1%)
|
$37,478
|
$32,604
|
$4,874
|
14.9%
|
AFFO per
unit(1)
|
$0.080
|
$0.092
|
($0.012)
|
(13.0%)
|
$0.364
|
$0.316
|
$0.048
|
15.2%
|
AFFO payout
ratio(1)
|
87.9%
|
76.4%
|
n/a
|
15.1%
|
76.9%
|
88.5%
|
n/a
|
(13.1%)
|
|
|
|
|
|
|
|
|
|
Same-asset
NOI(1)
|
$16,908
|
$17,185
|
($277)
|
(1.6%)
|
$67,750
|
$66,960
|
$790
|
1.2%
|
|
|
|
|
|
|
|
|
|
Normal course issuer
bid – units repurchased
|
5,775
|
7,700
|
n/a
|
n/a
|
27,925
|
395,797
|
n/a
|
n/a
|
|
|
|
|
|
|
|
|
|
Committed occupancy –
including non-consolidated investments(2)
|
|
|
|
|
96.5%
|
95.7%
|
n/a
|
0.8%
|
Same-asset committed
occupancy(3)
|
|
|
|
|
96.0%
|
95.3%
|
n/a
|
0.7%
|
|
(1) This is a non-GAAP financial
measure. Refer to the Non-GAAP Financial Measures defined
here and in Part I and VIII of the MD&A ending December 31,
2021 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 December 31, 2021, FFO per unit increased by
$0.003 (2.9%) compared to the prior
year. FFO was impacted by an increase in NOI from
acquisitions/developments, a decrease in administrative costs due
to lower salary expenses and lower travel costs, a decrease in
finance costs mainly due to lower mortgage interest, partially
offset by a decrease in NOI from same-assets and property
disposals. AFFO per unit was $0.012
(13.0%) lower than the prior year due to the changes in FFO noted
above along with higher leasing costs in 2021 due to increased
leasing activity, which will result in increased revenue in future
years, and higher maintenance capital expenditures in the current
year as certain elective expenditures were deferred from 2020 to
2021.
- Same-asset NOI decreased by $277
thousand (1.6%) mainly due to the CEWS received in the prior
year and bad debt recovery in the prior year.
Excluding the impact of COVID-related bad debt expense and
write-offs, lease buyouts and insurance proceeds:
- FFO and AFFO per unit for the quarter would have been 18% and
2% higher than the prior year, respectively.
- Same-asset NOI for the quarter would have been 4% higher than
the prior year.
Annual Highlights
- FFO & AFFO: For the twelve months ended December 31, 2021, FFO per unit increased by
$0.075 (20.9%) compared to the prior
year. FFO was impacted by an increase in NOI from same assets and
acquisitions/developments, a decrease in administrative costs due
to lower salary expenses and lower travel costs, a decrease in
finance costs mainly due to lower mortgage interest, and lease
buyout revenue in the current year, partially offset by a decrease
in NOI from property disposals. AFFO per unit was $0.048 (15.2%) higher than the prior year due to
the changes in FFO noted above, along with higher leasing costs in
2021 due to increased leasing activity, which will result in
increased revenue in future years, and higher maintenance capital
expenditures in 2021 as certain elective expenditures were deferred
from 2020 to 2021.
- Same-asset NOI increased by $790
thousand (1.2%) mainly due to higher same-asset revenue,
lower realty tax expense, somewhat offset by lower operating
expenses in the prior year from the CEWS received.
Excluding the impact of COVID-related bad debt expense and
write-offs, lease buyouts and insurance proceeds:
- FFO per unit for the year would have been 10% higher than the
prior year, while AFFO per unit for the year would have been 1%
higher than the prior year.
- Same-asset NOI for the year would have been consistent with the
prior year. This measure still includes certain other impacts of
the COVID-19 pandemic on NOI, such as its impact on occupancy and
the timing of re-leasing space in the current year.
COVID-19 Update
Plaza's focus on essential needs, value and convenience retail,
as well as our presence in primary and strong secondary markets
across a wide geography, has served us well. Despite some
uncertainty relating to the future state of COVID-19 whether
pandemic or endemic, Plaza's operating environment has improved
significantly, and is effectively at pre-pandemic levels, including
rent collections.
|
Q4
2021
|
|
Q3
2021
|
|
Q2
2021
|
|
Q1
2021
|
|
Q4
2020
|
|
Q3
2020
|
|
Q2
2020
|
Gross rent collected
from tenants
|
99.5%
|
|
99.6%
|
|
99.2%
|
|
99.1%
|
|
99.5%
|
|
95.4%
|
|
90.9%
|
CECRA – Federal and
Quebec Government contribution
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
2.9%
|
|
4.0%
|
Total collections
including government contributions under CECRA
|
99.5%
|
|
99.6%
|
|
99.2%
|
|
99.1%
|
|
99.5%
|
|
98.3%
|
|
94.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CECRA – 25% Landlord
write-off
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
1.0%
|
|
1.5%
|
Rent
abated
|
-
|
|
-
|
|
0.4%
|
|
0.2%
|
|
0.2%
|
|
0.4%
|
|
2.6%
|
Rent deferred with a
definitive repayment schedule
|
-
|
|
0.1%
|
|
0.3%
|
|
0.3%
|
|
-
|
|
-
|
|
0.3%
|
Remaining tenant
accounts receivable(1)
|
0.5%
|
|
0.3%
|
|
0.1%
|
|
0.4%
|
|
0.3%
|
|
0.3%
|
|
0.7%
|
Totals
|
100.0%
|
|
100.0%
|
|
100.0%
|
|
100.0%
|
|
100.0%
|
|
100.0%
|
|
100.0%
|
(1)
Remaining tenant accounts receivable excludes allowance for
doubtful accounts.
|
For deferred rent that was to be repaid during 2021, Plaza
collected 98.9% of same.
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 VIII of the REIT's
Management's Discussion and Analysis as at December 31, 2021, 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 twelve months
ended December 31, 2021, compared to
the three and twelve months ended December
31, 2020 is presented below:
|
3
Months
Ended
December
31,
2021
|
3 Months
Ended
December 31,
2020
|
12
Months
Ended
December
31,
2021
|
12 Months
Ended
December
31,
2020
|
(000s – except per
unit amounts and percentage data)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
Profit (loss) and
total comprehensive income (loss) for the period attributable to
unitholders
|
$
|
40,735
|
$
|
9,306
|
$
|
99,615
|
$
|
(14,908)
|
Add
(deduct):
|
|
|
|
|
Incremental leasing
costs included in administrative expenses(7)
|
312
|
244
|
1,384
|
1,465
|
Debenture issuance
costs
|
-
|
-
|
370
|
-
|
Amortization of
debenture issuance costs(8)
|
(125)
|
(102)
|
(464)
|
(410)
|
Distributions on
Class B exchangeable LP units included in finance costs
|
84
|
84
|
334
|
334
|
Deferred income
taxes
|
728
|
1,181
|
699
|
898
|
Land lease principal
repayments
|
(193)
|
(199)
|
(760)
|
(693)
|
Fair value adjustment
to restricted and deferred units
|
66
|
26
|
280
|
(156)
|
Fair value adjustment
to investment properties
|
(29,985)
|
(2,169)
|
(58,376)
|
46,891
|
Fair value adjustment
to investments(9)
|
(65)
|
3,124
|
(9)
|
4,214
|
Fair value adjustment
to Class B exchangeable LP units
|
262
|
131
|
1,322
|
(1,144)
|
Fair value adjustment
to convertible debentures
|
(930)
|
(712)
|
1,903
|
(3,429)
|
Fair value adjustment
to interest rate swaps
|
(168)
|
(539)
|
(2,604)
|
3,386
|
Fair value adjustment
to right-of-use land lease assets
|
193
|
199
|
760
|
693
|
Equity accounting
adjustment(9)
|
(46)
|
112
|
(229)
|
291
|
Non-controlling
interest adjustment(6)
|
(97)
|
(132)
|
478
|
(437)
|
Basic
FFO(1)
|
$
|
10,771
|
$
|
10,554
|
$
|
44,703
|
$
|
36,995
|
Add
(deduct):
|
|
|
|
|
Non-cash revenue –
straight-line rent(5)
|
71
|
15
|
277
|
(402)
|
Leasing costs –
existing properties(2) (5)(10)
|
(1,955)
|
(622)
|
(5,554)
|
(2,508)
|
Maintenance capital
expenditures – existing properties(2) (5)(11)
|
(711)
|
(515)
|
(2,030)
|
(1,509)
|
Non-controlling
interest adjustment(6)
|
22
|
5
|
82
|
28
|
Basic
AFFO(1)
|
$
|
8,198
|
$
|
9,437
|
$
|
37,478
|
$
|
32,604
|
Basic weighted
average units outstanding(3)
|
102,982
|
102,968
|
102,986
|
103,048
|
Basic FFO per
unit(1)
|
$
|
0.105
|
$
|
0.102
|
$
|
0.434
|
$
|
0.359
|
Basic AFFO per
unit(1)
|
$
|
0.080
|
$
|
0.092
|
$
|
0.364
|
$
|
0.316
|
Gross distributions
to unitholders(4)
|
$
|
7,208
|
$
|
7,208
|
$
|
28,832
|
$
|
28,846
|
Distributions as a
percentage of basic FFO(1)
|
66.9%
|
68.3%
|
64.5%
|
78.0%
|
Distributions as a
percentage of basic AFFO(1)
|
87.9%
|
76.4%
|
76.9%
|
88.5%
|
|
|
|
|
|
Basic
FFO(1)
|
$
|
10,771
|
$
|
10,554
|
$
|
44,703
|
$
|
36,995
|
Interest on dilutive
convertible debentures
|
788
|
684
|
3,125
|
2,720
|
Diluted
FFO(1)
|
$
|
11,559
|
$
|
11,238
|
$
|
47,828
|
$
|
39,715
|
Diluted weighted
average units outstanding(3)
|
113,875
|
112,241
|
113,879
|
112,321
|
Basic
AFFO(1)
|
$
|
8,198
|
$
|
9,437
|
$
|
37,478
|
$
|
32,604
|
Interest on dilutive
convertible debentures
|
788
|
684
|
3,125
|
2,416
|
Diluted
AFFO(1)
|
$
|
8,986
|
$
|
10,121
|
$
|
40,603
|
$
|
35,020
|
Diluted weighted
average units outstanding(3)
|
113,875
|
112,241
|
113,879
|
111,410
|
Diluted FFO per
unit(1)
|
$
|
0.102
|
$
|
0.100
|
$
|
0.420
|
$
|
0.354
|
Diluted AFFO per
unit(1)
|
$
|
0.079
|
$
|
0.090
|
$
|
0.357
|
$
|
0.314
|
|
|
(1)
|
This is a non-GAAP
financial measure. Refer to the Non-GAAP Financial Measures
defined here and in Part I and VIII of the REIT's MD&A ending
December 31, 2021 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 expenditures at equity-accounted
investments.
|
(6)
|
The non-controlling
interest ("NCI") adjustment, includes adjustments required to
translate the profit (loss) and total comprehensive income
attributable to NCI of $874 thousand for the year ending December
31, 2021 (December 31, 2020 - $29 thousand loss) 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 and
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)
|
Relates to the
unrealized change in fair value adjustments which are excluded from
FFO in accordance with RealPAC's definition of FFO.
|
(10)
|
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.
|
(11)
|
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)
Same-asset categorization refers to those properties which were
owned and operated by Plaza for both the entire years ended
December 31, 2021 and December 31, 2020 and excludes non-consolidated
investments and partial year results from certain assets due to
timing of acquisition, development, redevelopment or
disposition.
(000s)
|
3
Months
Ended
December
31,
2021
(unaudited)
|
3 Months
Ended
December
31,
2020
(unaudited)
|
12
Months
Ended
December
31,
2021
(unaudited)
|
12 Months
Ended
December
31,
2020
(unaudited)
|
Same-asset
NOI(1)
|
$
|
16,908
|
$
|
17,185
|
$
|
67,750
|
$
|
66,960
|
Developments and
redevelopments transferred to income producing in 2020 & 2021
($2.2 million annualized NOI)
|
445
|
316
|
1,761
|
1,015
|
NOI from
acquisitions, properties currently under development and
redevelopment ($6.6 million annualized NOI)
|
535
|
444
|
2,146
|
1,178
|
Straight-line
rent
|
(70)
|
(14)
|
(277)
|
402
|
Administrative
expenses charged to NOI
|
(755)
|
(309)
|
(3,054)
|
(2,613)
|
Lease buyout
revenue
|
120
|
534
|
3,217
|
722
|
Properties
disposed
|
5
|
(19)
|
236
|
1,086
|
Total
NOI(1)
|
$
|
17,188
|
$
|
18,137
|
$
|
71,779
|
$
|
68,750
|
|
|
|
|
|
|
(1) This
is a non-GAAP financial measure. Refer to the Non-GAAP
Financial Measures defined here and in Part I and VIII 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, strategy, condition and the environment in
which it operates. 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 or implied by forward-looking statements contained in
this press release, including but not limited to general economic
and market factors, the duration and full impacts of COVID-19, and
those described in Plaza's Annual Information Form for the year
ended December 31, 2020 and
Management's Discussion and Analysis for the year ended
December 31, 2021 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 that development and redevelopment
opportunities continue to be available and can be completed within
reasonable timeframes and at reasonable costs, and that tenant
demand for space in such projects continues. 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 Friday, February 25,
2022 at 2:00 p.m. EST. 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 March 4, 2022.
To access the replay, dial 1-416-764-8677 (local Toronto) or 1-888-390-0541 (Passcode: 035111).
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 December
31, 2021 includes interests in 257 properties totaling
approximately 8.7 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