Plaza Retail REIT Announces First Quarter 2021 Results

·8 min read

FREDERICTON, NB, May 6, 2021 /CNW/ - Plaza Retail REIT (TSX: PLZ.UN) ("Plaza" or the "REIT") today announced its financial results for the three months ended March 31, 2021.

"While we continue to address the ongoing pandemic, we are very pleased with the resiliency of our portfolio and our Q1 2021 financial performance as Plaza continues to grow its FFO and AFFO per unit. Our geographically diverse portfolio of open-air centres focused on essential needs retail performs well. We look forward to continuing to grow our per unit results as we take advantage of new development and redevelopment opportunities that we are starting to see across our geography." said Michael Zakuta, President and CEO.

Summary of Selected IFRS Financial Results


(CAD$000s, except percentages and per units repurchased)




Three Months Ended

March 31, 2021

Three Months Ended

March 31, 2020

$ Change

% Change









Property rental revenue




$26,708

$27,322

($614)

(2.2%)









Net operating income (NOI)




$16,308

$16,888

($580)

(3.4%)









Net change in fair value of investment properties




$3,098

($19,872)

$22,970

n/a









Profit (loss) and total comprehensive income (loss)




$12,224

($2,098)

$14,322

n/a









Quarterly Highlights

  • NOI was $16.3 million, down $580 thousand (3.4%) from the same period in 2020, primarily as a result of bad debt expense, and positively impacted by growth in NOI from acquisitions and developments.

  • Profit and total comprehensive income for the current quarter was $12.2 million compared to a loss of $2.1 million in the prior year. The increase was mainly due to an increase in the fair value of investment properties as a result of a decrease in the weighted average capitalization rate in the current quarter and appraisals obtained, as well as other non-cash fair value movements.

Summary of Selected Non-IFRS Financial Results(1)

(CAD$000s, except percentages and per unit amounts)

Three Months
Ended

March 31, 2021

Three Months
Ended

March 31, 2020

$
Change

%
Change






FFO

$9,554

$9,136

$418

4.6%

FFO per unit

$0.093

$0.088

$0.005

5.7%

FFO payout ratio

75.4%

79.1%

n/a

(4.7%)






AFFO

$8,676

$7,734

$942

12.2%

AFFO per unit

$0.084

$0.075

$0.009

12.0%

AFFO payout ratio

83.1%

93.4%

n/a

(11.0%)






Same-asset NOI

$16,293

$16,765

($472)

(2.8%)






Normal course issuer bid – units repurchased

7,850

349,897

n/a

n/a






Committed occupancy – including non-consolidated investments(2)

95.8%

96.4%

n/a

(0.6%)

Same-asset committed occupancy(3)

95.4%

96.2%

n/a

(0.8%)






(1) Refer to "Non-IFRS Financial Measures" below for further explanations.

(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, 2021, FFO per unit increased by $0.005 (5.7%) compared to the prior year, impacted by lower operating expenses, 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, an increase in NOI from acquisitions and developments, partially offset by an increase in bad debt expense. AFFO per unit was $0.009 (12.0%) higher than the prior year due to the changes in FFO noted above along with lower leasing costs offset by higher maintenance capital expenditures.

  • Same-asset NOI decreased by $472 thousand (2.8%) due to an increase in bad debt expense, partially offset by lower operating expenses.

Excluding the impact of the lease buyouts, insurance proceeds, and COVID-related bad debt expense:

  • FFO per unit for the quarter would have been 6.0% higher than the prior year, while AFFO per unit for the quarter would have been 13.6% higher than the prior year.

  • Same-asset NOI for the quarter would have been 0.6% lower than the prior year.

COVID-19 Update

Plaza's focus on essential needs and value retail, as well as our presence in strong secondary markets in Ontario, Quebec and Atlantic Canada, has served us well. Approximately 93% of Plaza's portfolio is currently open, with certain tenants subject to capacity limits and/or offering curb-side pick-up only, and restaurants in certain jurisdictions offering take-out and/or delivery only.

To mitigate the impacts from COVID-19, the Trust continues to prudently manage its capital, including proactively managing costs to reduce operating, general and administrative expenses, and deferring elective capital expenditures. Plaza also continues to actively monitor the availability and anticipated effect of government relief programs that may be applicable, and participating in such programs where beneficial to the Trust and its tenants.

Rent collections have improved significantly since Q2 2020, and rent deferrals and abatements have decreased substantially, as follows:


Q1 2021


Q4 2020


Q3 2020


Q2 2020

Gross rent collected from tenants

98.6%


99.2%


95.1%


85.9%

CECRA – Federal and Quebec Government contribution



-


2.9%


4.0%

Total collections including government contributions under CECRA

98.6%


99.2%


98.0%


89.9%









CECRA – 25% Landlord write-off

-


-


1.0%


1.5%

Rent abated

0.1%


0.1%


0.4%


2.6%

Rent deferred with a definitive repayment schedule

0.7%


-


0.5%


2.9%

Remaining tenant accounts receivable(1)

0.6%


0.7%


0.1%


3.1%

Totals

100.0%


100.0%


100.0%


100.0%

(1)

Remaining accounts receivable excludes allowance for doubtful accounts.

For deferred rent that required repayment in Q1 2021, Plaza collected 96.7% of same.

Although the fair value of its properties reflects its best estimates as at March 31, 2021, Plaza is continuing to review its future NOI and cash flow projections. Depending on the duration and full impacts of COVID-19, certain aspects of Plaza's operations could be affected, including rental and occupancy rates, demand for retail space, capitalization rates, and the resulting value of Plaza's properties. The full extent and duration of the COVID-19 pandemic, including the resulting impacts on Plaza's business and its tenants, remains uncertain at this time.

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 have been filed on SEDAR and can be viewed at www.sedar.com or on the REIT's website at www.plaza.ca.

Conference Call

Michael Zakuta, President and CEO, and Jim Drake, CFO, will host a conference call for the investment community on Friday, May 7, 2021 at 10:00 a.m. EDT. The call-in numbers for participants are 647-427-7450 or 888-231-8191.

A replay of the call will be available until May 14, 2021. To access the replay, dial 416-849-0833 or 855-859-2056 (Passcode: 1851928). 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, 2021 includes interests in 266 properties totaling approximately 8.6 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.

Non-IFRS Financial Measures

This press release contains certain non-IFRS 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 any 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. Please refer to the REIT's Management's Discussion and Analysis for a reconciliation of these non-IFRS measures to standardized IFRS measures.

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, including those relating to Plaza's business outlook and, more particularly, Plaza's ability to continue to grow per unit results. 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 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 quarter ended March 31, 2021 which can be obtained 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, that leasing activity will continue to improve and that term debt financing will remain available at low rates and, 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.

SOURCE Plaza Retail REIT

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