FREDERICTON, NB, Feb. 26,
2025 /CNW/ - Plaza Retail REIT (TSX: PLZ.UN)
("Plaza" or the "REIT") today announced its financial results for
the quarter and year ended December 31,
2024.
"Our 2024 results reflect record same-asset NOI growth and lease
renewal spreads, and excellent occupancy rates" said
Jason Parravano, President &
CEO. "In addition, we have improved the quality and resilience of
our portfolio with the completion of development projects and sale
of non-core assets. Our portfolio, dominated by open-air
essential needs and value retail properties, is well-positioned to
withstand heightened macroeconomic uncertainty, and we are excited
about the opportunities for our business."
|
Summary of Selected
IFRS Financial Results
|
|
(CAD$000s, except
percentages)
|
Three
Months
Ended
December
31,
2024
|
Three
Months
Ended
December
31,
2023
|
$
Change
|
%
Change
|
Twelve
Months
Ended
December
31,
2024
|
Twelve
Months
Ended
December
31,
2023
|
$
Change
|
%
Change
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$30,623
|
$28,962
|
$1,661
|
5.7 %
|
$121,280
|
$114,064
|
$7,216
|
6.3 %
|
|
|
|
|
|
|
|
|
|
|
Net operating income
(NOI)(1)
|
$18,926
|
$17,436
|
$1,490
|
8.5 %
|
$75,019
|
$70,354
|
$4,665
|
6.6 %
|
|
|
|
|
|
|
|
|
|
|
Net change in fair
value of investment properties
|
$1,847
|
($9,497)
|
$11,344
|
-
|
($10,377)
|
($19,969)
|
$9,592
|
-
|
|
|
|
|
|
|
|
|
|
|
Profit and total
comprehensive income
|
$8,473
|
($3,779)
|
$12,252
|
-
|
$25,485
|
$20,312
|
$5,173
|
-
|
|
|
|
|
|
|
|
|
|
|
(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 December 31, 2024 for more
information on each non-GAAP financial measure.
|
Quarterly Highlights
- NOI was $18.9 million, up
$1.5 million or 8.5% from the same
period in 2023. The increase in NOI is due to an increase in
revenue from leasing and rent escalations over the same period in
the prior year, and the completion of the repositioning of certain
properties, offset by a decrease in NOI from properties sold.
- Profit and total comprehensive income for the current
quarter was $8.5 million compared to
a $3.8 million loss in the same
period in the prior year. The increase was mainly due to the change
in fair value of investment properties, with a $1.8 million increase in the current quarter
compared to a $9.5 million decrease
recorded in the same quarter in the prior year. Profit and total
comprehensive income was also impacted by an increase in
administrative costs of $2.6 million
from reorganization costs including severance settlements and
vesting of restricted units on severance totaling $2.1 million, and the write-off of greenfield
development projects, in the current and prior year, which will not
be pursued totaling $578 thousand.
Excluding the impact of the settlement costs and greenfield
development deals, administrative expenses would have been
consistent with the same period in the prior year. Profit was also
impacted by the NOI increase noted above, changes in non-cash fair
value adjustments relating to interest rate swaps, the Class B
exchangeable LP units, convertible debentures, and non-consolidated
investments.
Year-To-Date Highlights
- NOI was $75.0 million, up
$4.7 million or 6.6% from the same
period in 2023. The increase in NOI is due to an increase in
revenue from leasing and rent escalations over the same period in
the prior year, and the completion of the repositioning of certain
properties, offset by a decrease in NOI from properties sold.
- Profit and total comprehensive income for the current
year to date was $25.5 million
compared to $20.3 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 $10.4 million decrease recorded in the current
year compared to a $20.0 million
decrease recorded in the same period in the prior year. Profit and
total comprehensive income was also impacted by the NOI increase
offset by the reorganization costs noted above. Profit was also
impacted by changes in non-cash fair value adjustments relating to
interest rate swaps, the Class B exchangeable LP units, convertible
debentures and non-consolidated investments.
|
Summary of Selected
Non-IFRS Financial Results
|
|
(CAD$000s, except
percentages, units repurchased and per unit amounts)
|
Three
Months
Ended
December
31,
2024
|
Three
Months
Ended
December
31,
2023
|
$
Change
|
%
Change
|
Twelve
Months
Ended
December
31,
2024
|
Twelve
Months
Ended
December
31,
2023
|
$
Change
|
%
Change
|
|
|
|
|
|
|
|
|
|
|
FFO(1)
|
$8,514
|
$10,062
|
($1,548)
|
(15.4 %)
|
$40,462
|
$41,520
|
($1,058)
|
(2.5 %)
|
|
FFO per
unit(1)
|
$0.076
|
$0.090
|
($0.014)
|
(15.6 %)
|
$0.363
|
$0.379
|
($0.016)
|
(4.2 %)
|
|
FFO payout
ratio(1)
|
91.7 %
|
77.6 %
|
n/a
|
18.2 %
|
77.2 %
|
74.2 %
|
n/a
|
4.0 %
|
|
|
|
|
|
|
|
|
|
|
AFFO(1)
|
$5,992
|
$6,573
|
($581)
|
(8.8 %)
|
$31,865
|
$31,933
|
($68)
|
(0.2 %)
|
|
AFFO per
unit(1)
|
$0.054
|
$0.059
|
($0.005)
|
(8.5 %)
|
$0.286
|
$0.292
|
($0.006)
|
(2.1 %)
|
|
AFFO payout
ratio(1)
|
130.3 %
|
118.8 %
|
n/a
|
9.7 %
|
98.0 %
|
96.5 %
|
n/a
|
1.6 %
|
|
|
|
|
|
|
|
|
|
|
Same-asset
NOI(1)
|
$17,945
|
$17,127
|
$818
|
4.8 %
|
$71,758
|
$69,420
|
$2,338
|
3.4 %
|
|
|
|
|
|
|
|
|
|
|
Normal course issuer
bid – units repurchased
|
-
|
6,205
|
n/a
|
n/a
|
4,920
|
27,657
|
n/a
|
n/a
|
|
|
|
|
|
|
|
|
|
|
Committed occupancy –
including non-consolidated investments(2)
|
|
|
|
|
97.6 %
|
97.0 %
|
n/a
|
0.6 %
|
|
Same-asset committed
occupancy(3)
|
|
|
|
|
97.0 %
|
96.6 %
|
n/a
|
0.4 %
|
|
|
|
|
-
|
|
|
|
|
|
(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
December 31, 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 December 31, 2024, FFO on a dollar basis
decreased $1.5 million or 15.4% and
15.6% on a per unit basis, compared 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, higher
administrative expenses due to the reorganization costs noted
above, and higher finance costs. AFFO decreased $581 thousand or 8.8%, and 8.5% on a per unit
basis, compared to the same period in the prior year. AFFO was
impacted mainly due to the changes in FFO noted above, as well as a
decrease in leasing costs and maintenance capital expenditures.
Excluding the reorganization costs noted above, FFO for the three
months ending would have been $11,210
or $0.10 per unit, representing an
11% increase in per unit performance over the same period in the
prior year. Excluding the reorganization costs, including the
write-off of greenfield development projects in the current and
prior year, AFFO would have been $8,688 or $0.078
per unit, representing a 31% increase in per unit performance over
the same period in the prior year.
- Same-asset NOI increased by $818
thousand or 4.8% due to revenue from leasing and rent
escalations over the same period in the prior year, along with the
completion of the repositioning of certain properties.
Year-To-Date Highlights
- FFO & AFFO: For the twelve months ended December 31, 2024, FFO on a dollar basis
decreased $1.1 million or 2.5%. and
4.2% on a per unit basis, 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, higher administrative
expenses due to reorganization costs noted above, and higher
finance costs. AFFO on a dollar basis decreased $68 thousand or 0.2% and 2.1% on a per unit
basis, compared to the same period in the prior year mainly due to
the changes in FFO noted above, as well as lower leasing costs. FFO
and AFFO per unit were also impacted by the issue of 8.548 million
trust units in March 2023. Excluding
the reorganization costs noted above, FFO for the twelve months
ending would have been $43,157 or
$0.387 per unit, representing a 2%
increase in per unit performance over the same period in the prior
year. Excluding the reorganization costs, AFFO would have been
$34,560 or $0.31 per unit, representing a 6% increase in per
unit performance over the same period in the prior year.
- Same-asset NOI increased by $2.3
million or 3.4% 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 December 31, 2024, which can be found on Plaza's
website at www.plaza.ca and on SEDAR+ at www.sedarplus.ca.
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, 2024, compared to
the three and twelve months ended December
31, 2023, is presented below:
|
(000s – except per
unit amounts and percentage data, unaudited)
|
3
Months
Ended
December
31,
2024
|
3 Months
Ended
December
31, 2023
|
Change
over
Prior
Period
|
12
Months
Ended
December
31,
2024
|
12 Months
Ended
December
31, 2023
|
Change
over
Prior
Period
|
|
Profit and total
comprehensive income for the period attributable to
unitholders
|
$
8,183
|
$
(3,822)
|
|
$
25,045
|
$
20,187
|
|
|
Incremental leasing
costs included in administrative expenses(7)
|
353
|
316
|
|
1,601
|
1,372
|
|
|
Amortization of
debenture issuance costs(8)
|
(19)
|
(18)
|
|
(73)
|
(141)
|
|
|
Distributions on Class
B exchangeable LP units included in finance costs –
operations
|
81
|
81
|
|
324
|
326
|
|
|
Deferred income
taxes
|
1,655
|
192
|
|
1,752
|
73
|
|
|
Right-of-use land lease
principal repayments
|
(207)
|
(203)
|
|
(818)
|
(804)
|
|
|
Fair value adjustment
to restricted and deferred units
|
(213)
|
32
|
|
(79)
|
(351)
|
|
|
Fair value adjustment
to investment properties
|
(1,847)
|
9,497
|
|
10,377
|
19,969
|
|
|
Fair value adjustment
to investments(9)
|
(348)
|
(1,323)
|
|
(1,748)
|
(1,202)
|
|
|
Fair value adjustment
to Class B exchangeable LP units
|
(405)
|
81
|
|
(162)
|
(936)
|
|
|
Fair value adjustment
to convertible debentures
|
-
|
441
|
|
279
|
(217)
|
|
|
Fair value adjustment
to interest rate swaps
|
(222)
|
3,418
|
|
1,515
|
1,404
|
|
|
Fair value adjustment
to right-of-use land lease assets
|
207
|
203
|
|
818
|
804
|
|
|
Impairment of notes
receivable – fair value component
|
976
|
1,024
|
|
976
|
1,024
|
|
|
Equity accounting
adjustment(10)
|
70
|
137
|
|
440
|
79
|
|
|
Non-controlling
interest adjustment(6)
|
250
|
6
|
|
215
|
(67)
|
|
|
FFO(1)
|
$
8,514
|
$ 10,062
|
($1,548)
|
$
40,462
|
$
41,520
|
($1,058)
|
|
FFO change over
prior period - %
|
|
|
(15.4 %)
|
|
|
(2.5 %)
|
|
|
|
|
|
|
|
|
FFO(1)
|
$
8,514
|
$ 10,062
|
|
$
40,462
|
$
41,520
|
|
|
Non-cash revenue –
straight-line rent(5)
|
(137)
|
(33)
|
|
(524)
|
(60)
|
|
|
Leasing costs –
existing properties(2) (5) (11)
|
(1,624)
|
(1,965)
|
|
(5,576)
|
(7,138)
|
|
|
Maintenance capital
expenditures – existing properties(12)
|
(812)
|
(1,518)
|
|
(2,590)
|
(2,419)
|
|
|
Non-controlling
interest adjustment(6)
|
51
|
27
|
|
93
|
30
|
|
|
AFFO(1)
|
$
5,992
|
$
6,573
|
($ 581)
|
$
31,865
|
$
31,933
|
($ 68)
|
|
AFFO change over
prior period - %
|
|
|
(8.8 %)
|
|
|
(0.2 %)
|
|
|
|
|
|
|
|
|
Weighted average units
outstanding – basic(1)(3)
|
111,555
|
111,527
|
|
111,535
|
109,485
|
|
|
FFO per unit –
basic(1)
|
$
0.076
|
$
0.090
|
(15.6 %)
|
$
0.363
|
$
0.379
|
(4.2 %)
|
|
AFFO per unit –
basic(1)
|
$
0.054
|
$
0.059
|
(8.5 %)
|
$
0.286
|
$
0.292
|
(2.1 %)
|
|
|
|
|
|
|
|
|
Gross distribution to
unitholders(1)(4)
|
$
7,809
|
$
7,806
|
|
$
31,226
|
$
30,826
|
|
|
FFO payout ratio –
basic(1)
|
91.7 %
|
77.6 %
|
|
77.2 %
|
74.2 %
|
|
|
AFFO payout ratio –
basic(1)
|
130.3 %
|
118.8 %
|
|
98.0 %
|
96.5 %
|
|
|
|
|
|
|
|
|
|
FFO(1)
|
$
8,514
|
$ 10,062
|
|
$
40,462
|
$
41,520
|
|
|
Interest on dilutive
convertible debentures
|
180
|
180
|
|
715
|
715
|
|
|
FFO –
diluted(1)
|
$
8,694
|
$ 10,242
|
($1,548)
|
$
41,177
|
$
42,235
|
($1,058)
|
|
Diluted weighted
average units outstanding(1)(3)
|
114,086
|
114,058
|
|
114,065
|
112,015
|
|
|
|
|
|
|
|
|
|
AFFO(1)
|
$
5,992
|
$
6,573
|
|
$
31,865
|
$
31,933
|
|
|
Interest on dilutive
convertible debentures
|
-
|
-
|
|
715
|
715
|
|
|
AFFO –
diluted(1)
|
$
5,992
|
$
6,573
|
($ 581)
|
$
32,580
|
$
32,648
|
($ 68)
|
|
Diluted weighted
average units outstanding(1)(3)
|
111,555
|
111,527
|
|
114,065
|
112,015
|
|
|
|
|
|
|
|
|
|
FFO per unit –
diluted(1)
|
$
0.076
|
$
0.090
|
(15.6 %)
|
$
0.361
|
$
0.377
|
(4.2 %)
|
|
AFFO per unit –
diluted(1)
|
$
0.054
|
$
0.059
|
(8.5 %)
|
$
0.286
|
$
0.291
|
(1.7 %)
|
|
|
|
|
|
|
|
|
|
(1)
|
This is a non-GAAP
financial measure. Refer to "Non-GAAP Financial Measures" in
Part I and "Explanation of Non-GAAP Financial Measures" in Part VII
of this MD&A for more information.
|
|
(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 $290 thousand and $440 thousand for the three and twelve
months ending December 31, 2024, respectively (December 31, 2023
–$43 thousand and $125 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
28 of this 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 28 of this
MD&A.
|
Net Property Operating Income (NOI) and Same-Asset Net
Property Operating Income (Same-Asset NOI)
|
(000s)
|
3
Months
Ended
December
31,
2024
(unaudited)
|
3 Months
Ended
December 31,
2023
(unaudited)
|
12
Months
Ended
December
31,
2024
(unaudited)
|
12 Months
Ended
December 31,
2023
(unaudited)
|
|
Same-asset
NOI(1)
|
$
17,945
|
$
17,127
|
$
71,758
|
$
69,420
|
|
Developments and
redevelopments transferred to income producing in 2023 & 2024
($7.4 million annual stabilized NOI)
|
1,549
|
684
|
5,328
|
2,578
|
|
NOI from properties
currently under development and redevelopment ($372 thousand annual
stabilized NOI)
|
9
|
274
|
57
|
38
|
|
Straight-line
rent
|
137
|
17
|
524
|
60
|
|
Administrative expenses
charged to NOI
|
(888)
|
(939)
|
(3,850)
|
(3,768)
|
|
Lease termination
revenue
|
29
|
-
|
231
|
-
|
|
Properties
disposed
|
165
|
334
|
1,032
|
2,017
|
|
Other
|
(20)
|
(61)
|
(61)
|
9
|
|
Total
NOI(1)
|
$
18,926
|
$
17,436
|
$
75,019
|
$
70,354
|
|
Percentage increase
over prior period
|
8.5 %
|
|
6.6 %
|
|
|
(1)
|
This is a non-GAAP
financial measure. Refer to "Non-GAAP Financial Measures" in
Part I and "Explanation of Non-GAAP Financial Measures" in Part VII
of this MD&A for more information.
|
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;
changes to applicable duties, tariffs and trade laws; 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 twelve months ended
December 31, 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.sedarplus.ca.
Conference Call
Jason Parravano, President and
CEO and Jim Drake, CFO, will
host a conference call for the investment community on Thursday, February 27, 2025 at 10:00 a.m.
EST. The call-in numbers for participants are 1-416-945-7677 (local
Toronto) or 1-888-699-1199 (toll
free, within North America).
A replay of the call will be available until March 6, 2025.
To access the replay, dial 1-289-819-1450 (local Toronto) or 1-888-660-6345 (Passcode: 67910#).
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, 2024 includes interests in 212 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
