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Plaza Retail REIT Announces Third Quarter 2021 Results

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FREDERICTON, NB, Nov. 9, 2021 /CNW/ - Plaza Retail REIT (TSX: PLZ.UN) ("Plaza" or the "REIT") today announced its financial results for the three and nine months ended September 30, 2021.

"We are very pleased with our solid performance," said Michael Zakuta, President and CEO. "Our portfolio of open-air centres focused on essential needs retail continues to perform well. Leasing activity and rent collection are back to pre-pandemic levels. We are progressing with a number of development projects, and are continuing to pursue additional development and redevelopment opportunities across our geography."

Summary of Selected IFRS Financial Results

(CAD$000s, except percentages)

Three

Months

Ended

Sept 30,

2021

Three

Months

Ended

Sept 30,

2020

$

Change

%

Change

Nine

Months

Ended

Sept 30,

2021

Nine

Months

Ended

Sept 30,

2020

$

Change

%

Change










Property rental revenue

$26,597

$25,960

$637

2.5%

$83,249

$80,063

$3,186

4.0%










Net operating income (NOI)

$18,079

$17,631

$448

2.5%

$54,591

$50,613

$3,978

7.9%










Net change in fair value of investment

properties

$16,010

($549)

$16,559

--

$28,391

($49,060)

$77,451

--










Profit (loss) and total comprehensive

income (loss)

$27,908

$9,185

$18,723

--

$59,754

($24,212)

$83,966

--










Quarterly Highlights

  • NOI was $18.1 million, up $448 thousand (2.5%) from the same period in 2020, primarily as a result of growth in NOI from acquisitions and developments, and lower operating expenses.

  • Profit and total comprehensive income for the current quarter was $27.9 million compared to $9.2 million in the prior year. The increase was mainly due to an increase in the fair value of investment properties recorded in Q3 2021 as a result of a decrease in the weighted average capitalization rate in the current quarter and appraisals obtained, compared to a decrease in fair value of investment properties recorded in Q3 2020.

Year-To-Date Highlights

  • NOI was $54.6 million, up $4.0 million (7.9%) from the same period in 2020, primarily as a result of growth in NOI from acquisitions and developments, lower operating expenses including lower bad debt expense, and lease buyout revenues.

  • Profit and total comprehensive income for the current year was $59.8 million compared to a loss of $24.2 million in the prior year. The increase was mainly due to an increase in the fair value of investment properties recorded in the current year as a result of a decrease in the weighted average capitalization rate 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

Sept 30,

2021

Three

Months

Ended

Sept 30,

2020

$

Change

%

Change

Nine

Months

Ended

Sept 30,

2021

Nine

Months

Ended

Sept 30,

2020

$

Change

%

Change










FFO

$11,324

$9,386

$1,938

20.6%

$33,932

$26,441

$7,491

28.3%

FFO per unit

$0.110

$0.091

$0.019

20.9%

$0.329

$0.257

$0.072

28.0%

FFO payout ratio

63.6%

76.8%

n/a

(17.2%)

63.7%

81.8%

n/a

(22.1%)










AFFO

$9,446

$8,387

$1,059

12.6%

$29,280

$23,167

$5,054

26.4%

AFFO per unit

$0.092

$0.081

$0.011

13.6%

$0.284

$0.225

$0.059

26.2%

AFFO payout ratio

76.3%

85.9%

n/a

(11.2%)

73.9%

93.4%

n/a

(20.9%)










Same-asset NOI

$17,758

$17,165

$593

3.5%

$50,860

$49,807

$1,053

2.1%










Normal course issuer bid – units

repurchased

7,550

8,400

n/a

n/a

22,150

388,097

n/a

n/a










Committed occupancy – including

non-consolidated investments(2)





96.2%

95.8%

n/a

0.4%

Same-asset committed occupancy(3)





96.2%

95.6%

n/a

0.6%










(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 September 30, 2021, FFO per unit increased by $0.019 (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, partially offset by a decrease in NOI from property disposals. AFFO per unit was $0.011 (13.6%) higher than the prior year due to the changes in FFO noted above along with higher leasing costs in 2021.

  • Same-asset NOI increased by $593 thousand (3.5%) mainly due to higher revenue in the current quarter.

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 11% higher than the prior year.

  • Same-asset NOI for the quarter 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.

Year-To-Date Highlights

  • FFO & AFFO: For the nine months ended September 30, 2021, FFO per unit increased by $0.072 (28.0%) compared to the prior year. FFO was impacted by an increase in NOI from same assets, acquisitions/developments, lower operating expenses including bad debt, 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 $0.059 (26.2%) higher than the prior year due to the changes in FFO noted above, partially offset by higher leasing costs and maintenance capital expenditures in 2021. In 2020, leasing costs and maintenance capital expenditures were lower due to the pandemic, as leasing activity was curtailed and elective capital expenditures were deferred. Leasing costs and maintenance capital expenditures in 2021 are higher due to additional leasing activity and completion of previously deferred elective capital expenditures.

  • Same-asset NOI increased by $1.1 million (2.1%) mainly due to lower operating expenses, driven by lower bad debt expense in the current year, as well as write-offs under the CECRA program in 2020.

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 8% 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 1% lower 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 and value retail, as well as our presence in primary and strong secondary markets in Ontario, Quebec and Atlantic Canada, has served us well. Plaza's portfolio is currently fully-open.

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


Q3

2021


Q2

2021


Q1

2021


Q4

2020


Q3

2020


Q2

2020

Gross rent collected from tenants

99.4%


99.0%


99.1%


99.4%


95.3%


89.9%

CECRA – Federal and Quebec Government

contribution

-


-


-


-


2.9%


4.0%

Total collections including government contributions

under CECRA

99.4%


99.0%


99.1%


99.4%


98.2%


93.9%













CECRA – 25% Landlord write-off

-


-


-


-


1.0%


1.5%

Rent abated

-


0.5%


0.2%


0.2%


0.4%


2.6%

Rent deferred with a definitive repayment schedule

0.2%


0.4%


0.4%


-


0.2%


0.8%

Remaining tenant accounts receivable(1)

0.4%


0.1%


0.3%


0.4%


0.2%


1.2%

Totals

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 year-to-date, Plaza collected 98.8% of same.

Although the operating environment has improved significantly, and continues to improve, the uncertainty of subsequent waves of the COVID-19 pandemic may again impact Plaza's business and its tenants.

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 Thursday, November 11, 2021 at 1:30 p.m. EST. The call-in numbers for participants are 416-764-8659 (local Toronto) or 902-704-0254 (local Halifax) or 888-664-6392 (toll free, within North America).

A replay of the call will be available until November 18, 2021. To access the replay, dial 416-764-8677 (local Toronto) or 888-390-0541 (Passcode: 935803). 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 September 30, 2021 includes interests in 255 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 continued pursuit of development and redevelopment opportunities and its ability to continue to advance projects. 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 quarter ended September 30, 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 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.

SOURCE Plaza Retail REIT

Cision
Cision

View original content: http://www.newswire.ca/en/releases/archive/November2021/09/c2154.html

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