FREDERICTON, NB, May 5, 2022
/CNW/ - Plaza Retail REIT (TSX: PLZ.UN) ("Plaza" or the "REIT")
today announced its financial results for the three months ended
March 31, 2022.
"Our strong results for the quarter demonstrate the strength of
our portfolio of open-air centres, dominated by national tenants in
the essential needs, value and convenience categories", said
Michael Zakuta, President and
CEO. "Our pipeline of developments and redevelopments is
robust, and we are very excited about our future
prospects."
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Summary of Selected
IFRS Financial Results
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(CAD$000s, except
percentages)
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|
|
|
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Three Months
Ended
March 31,
2022
|
Three Months
Ended
March 31,
2021
|
$
Change
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%
Change
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
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$27,904
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$26,708
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$1,196
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4.5%
|
|
|
|
|
|
|
|
|
|
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Net operating income
(NOI)(1)
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|
|
|
|
$17,130
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$16,308
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$822
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5.0%
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|
|
|
|
|
|
|
|
|
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Net change in fair
value of investment properties
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|
|
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$12,434
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$3,098
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$9,336
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--
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|
|
|
|
|
|
|
|
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Profit and total
comprehensive income
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|
|
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$25,832
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$12,224
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$13,608
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--
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|
|
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|
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(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 March 31, 2022 for more
information on each non-GAAP financial measure.
|
Quarterly Highlights
- NOI was $17.1 million, up
$822 thousand (5.0%) from the same
period in 2021, primarily as a result of lease-up and rent
escalations, as well as lower bad debt in the current year.
- Profit and total comprehensive income for the current
quarter was $25.8 million compared to
$12.2 million in the prior year. The
increase was mainly due to an increase in the fair value of
investment properties recorded in Q1 2022 as a result of a decrease
in capitalization rates and appraisals obtained.
|
Summary of Selected
Non-IFRS Financial Results(1)
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|
(CAD$000s, except
percentages, units repurchased and per unit amounts)
|
|
|
|
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Three
Months
Ended
March 31,
2022
|
Three
Months
Ended
March 31,
2021
|
$
Change
|
%
Change
|
|
|
|
|
|
|
|
|
|
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FFO(1)
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|
|
|
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$10,156
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$9,554
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$602
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6.3%
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FFO per
unit(1)
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|
|
|
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$0.099
|
$0.093
|
$0.006
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6.5%
|
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FFO payout
ratio(1)
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|
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71.0%
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75.4%
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n/a
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(5.8%)
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|
|
|
|
|
|
|
|
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AFFO(1)
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|
|
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$9,080
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$8,676
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$404
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4.7%
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AFFO per
unit(1)
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|
|
|
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$0.088
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$0.084
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$0.004
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4.8%
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AFFO payout
ratio(1)
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79.4%
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83.1%
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n/a
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(4.5%)
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|
|
|
|
|
|
|
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Same-asset
NOI(1)
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|
|
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$17,054
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$16,606
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$448
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2.7%
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|
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Normal course issuer
bid – units repurchased
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2,200
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7,850
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n/a
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n/a
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|
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Committed occupancy –
including non-consolidated investments(2)
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96.3%
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95.8%
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n/a
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0.5%
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Same-asset committed
occupancy(3)
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96.3%
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95.4%
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n/a
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0.9%
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(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
March 31, 2022 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.
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Quarterly Highlights
- FFO & AFFO: For the three months ended March 31, 2022, FFO per unit increased by
$0.006 (6.5%) compared to the prior
year. FFO was impacted by an increase in NOI, and lower finance
costs mainly due to lower mortgage interest. AFFO per unit
increased by $0.004 (4.8%) compared
to the prior year due to the changes in FFO noted above somewhat
offset by higher leasing costs in the current year due to increased
leasing activity, which will result in increased revenue in future
years.
- Same-asset NOI increased by $448
thousand (2.7%) mainly due to lease-up and rent escalations,
as well as lower bad debt expense and write offs in the current
year. Excluding the impact of COVID-related bad debt expense,
write-offs and lease buyouts, same-asset NOI for the quarter would
have been 1% higher than 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 is effectively
at pre-pandemic levels, including rent collections. During Q1
2022, Plaza collected 99.4% of rent to date. In addition, for
previous rent deferrals that were scheduled to be repaid in Q1
2022, Plaza collected 100% 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 March 31, 2022, 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, 2022, compared to the three
months ended March 31, 2021 is
presented below:
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3
Months
Ended
March
31,
2022
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3 Months
Ended
March 31,
2021
|
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(000s – except per
unit amounts and percentage data)
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|
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(unaudited)
|
(unaudited)
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Profit and total
comprehensive income for the period attributable to
unitholders
|
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$
25,562
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$
12,145
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Add
(deduct):
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|
|
|
|
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Incremental leasing
costs included in administrative expenses(7)
|
|
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339
|
316
|
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Amortization of
debenture issuance costs(8)
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(120)
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(103)
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Distributions on Class
B exchangeable LP units included in finance costs
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83
|
83
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Deferred income
taxes
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966
|
37
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Land lease principal
repayments
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(194)
|
(187)
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Fair value adjustment
to restricted and deferred units
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111
|
82
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Fair value adjustment
to investment properties
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(12,434)
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(3,098)
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Fair value adjustment
to investments(9)
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(2,390)
|
110
|
|
Fair value adjustment
to Class B exchangeable LP units
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441
|
429
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Fair value adjustment
to convertible debentures
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|
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160
|
2,295
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Fair value adjustment
to interest rate swaps
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(2,547)
|
(2,561)
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Fair value adjustment
to right-of-use land lease assets
|
|
|
194
|
187
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|
Equity accounting
adjustment(10)
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|
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(186)
|
(169)
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|
Non-controlling
interest adjustment(6)
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|
|
171
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(12)
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Basic
FFO(1)
|
|
|
$ 10,156
|
$
9,554
|
|
Add
(deduct):
|
|
|
|
|
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Non-cash revenue –
straight-line rent(5)
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115
|
146
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Leasing costs –
existing properties(2) (5)(11)
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(1,091)
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(818)
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Maintenance capital
expenditures – existing properties(2) (5)(12)
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(126)
|
(225)
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Non-controlling
interest adjustment(6)
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|
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26
|
19
|
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Basic
AFFO(1)
|
|
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$
9,080
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$
8,676
|
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Basic weighted average
units outstanding(3)
|
|
|
103,004
|
102,994
|
|
Basic FFO per
unit(1)
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|
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$
0.099
|
$
0.093
|
|
Basic AFFO per
unit(1)
|
|
|
$
0.088
|
$
0.084
|
|
Gross distributions to
unitholders(4)
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$
7,209
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$
7,208
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Distributions as a
percentage of basic FFO(1)
|
|
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71.0%
|
75.4%
|
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Distributions as a
percentage of basic AFFO(1)
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|
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79.4%
|
83.1%
|
|
|
|
|
|
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Basic
FFO(1)
|
|
|
$
10,156
|
$
9,554
|
|
Interest on dilutive
convertible debentures
|
|
|
770
|
669
|
|
Diluted
FFO(1)
|
|
|
$
10,926
|
$
10,223
|
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Diluted weighted
average units outstanding(3)
|
|
|
113,897
|
112,267
|
|
Basic
AFFO(1)
|
|
|
$
9,080
|
$
8,676
|
|
Interest on dilutive
convertible debentures
|
|
|
770
|
669
|
|
Diluted
AFFO(1)
|
|
|
$
9,850
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$
9,345
|
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Diluted weighted
average units outstanding(3)
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|
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113,897
|
112,267
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Diluted FFO per
unit(1)
|
|
|
$
0.096
|
$
0.091
|
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Diluted AFFO per
unit(1)
|
|
|
$
0.086
|
$
0.083
|
|
|
|
|
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(1)
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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
March 31, 2022 for more information on each non-GAAP financial
measure.
|
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(2)
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Based on
actuals.
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(3)
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Includes Class B
exchangeable LP units.
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(4)
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Includes distributions
on Class B exchangeable LP units.
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(5)
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Includes proportionate
share of expenditures at equity-accounted investments.
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(6)
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The non-controlling
interest ("NCI") adjustment, includes adjustments required to
translate the profit (loss) and total comprehensive income
attributable to NCI of $270 thousand for the three months ending
March 31, 2022 (March 31, 2021 - $79 thousand) to FFO and AFFO for
the NCI.
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(7)
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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.
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(8)
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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.
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(9)
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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.
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|
(10)
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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.
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(11)
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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
25 of the MD&A.
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(12)
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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 25 of the MD&A.
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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 the three months ended March 31, 2022 and the entire year-ending
December 31, 2021, 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
March 31,
2022
(unaudited)
|
3 Months
Ended
March 31, 2021
(unaudited)
|
|
Same-asset
NOI(1)
|
|
|
$
17,054
|
$
16,606
|
|
Developments and
redevelopments transferred to income producing in 2021 & 2022
($590 thousand annualized NOI)
|
|
|
57
|
4
|
|
NOI from acquisitions,
properties currently under development and redevelopment ($6.3
million annualized NOI)
|
|
|
757
|
381
|
|
Straight-line
rent
|
|
|
(115)
|
(146)
|
|
Administrative expenses
charged to NOI
|
|
|
(730)
|
(694)
|
|
Lease buyout
revenue
|
|
|
105
|
75
|
|
Properties
disposed
|
|
|
2
|
82
|
|
Total
NOI(1)
|
|
|
$
17,130
|
$
16,308
|
|
|
|
|
|
|
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(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, prospects, 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, 2021 and Management's Discussion and Analysis for the
three months ended March 31, 2022
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, May 6, 2022 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 May 13, 2022.
To access the replay, dial 1-416-764-8677 (local Toronto) or 1-888-390-0541 (Passcode: 052726).
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, 2022 includes interests in
255 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