Canada NewsWire
FREDERICTON, NB, Nov. 10, 2022
FREDERICTON, NB, Nov. 10, 2022 /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, 2022.
"Demand from tenants in the essential needs, value and convenience categories is very robust, and we are seeing the results in our historically high committed occupancy", said Michael Zakuta, President and CEO. "This demand has also allowed us to continue to improve the quality of our portfolio by leasing to resilient tenants with sustainable offerings. Despite the challenges of inflation, higher interest rates and construction delays, our business is strong and our outlook positive."
Summary of Selected IFRS Financial Results | ||||||||
(CAD$000s, except percentages) | Three Months Ended September 30, 2022 | Three Months Ended September 30, 2021 | $ Change | % Change | Nine Months Ended September 30, 2022 | Nine Months Ended September 30, 2021 | $ Change | % Change |
Revenues | $27,609 | $26,597 | $1,012 | 3.8 % | $83,267 | $83,249 | $18 | 0.2 % |
Net operating income (NOI)(1) | $18,156 | $18,079 | $77 | 0.4 % | $52,991 | $54,591 | ($1,600) | (2.9 %) |
Net change in fair value of investment properties | ($4,235) | $16,010 | ($20,245) | - | $1,803 | $28,391 | ($26,588) | -- |
Profit and total comprehensive income | $7,236 | $27,908 | ($20,672) | - | $40,036 | $59,754 | ($19,718) | -- |
(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 September 30, 2022 for more information on each non-GAAP financial measure. |
Quarterly Highlights
Year-To-Date Highlights
Summary of Selected Non-IFRS Financial Results | ||||||||
(CAD$000s, except percentages, units repurchased and per unit amounts) | Three September 30, 2022 | Three September 30, 2021 | $ Change | % Change | Nine Months Ended September 30, 2022 | Nine Months Ended September 30, 2021 | $ Change | % Change |
FFO(1) | $10,731 | $11,324 | ($593) | (5.2 %) | $31,151 | $33,932 | ($2,781) | (8.2 %) |
FFO per unit(1) | $0.104 | $0.110 | ($0.006) | (5.5 %) | $0.302 | $0.329 | ($0.027) | (8.2 %) |
FFO payout ratio(1) | 67.2 % | 63.6 % | n/a | 5.7 % | 69.4 % | 63.7 % | n/a | 8.9 % |
AFFO(1) | $8,278 | $9,446 | ($1,168) | (12.4 %) | $25,660 | $29,280 | ($3,620) | (12.4 %) |
AFFO per unit(1) | $0.080 | $0.092 | ($0.012) | (13.0 %) | $0.249 | $0.284 | ($0.035) | (12.3 %) |
AFFO payout ratio(1) | 87.1 % | 76.3 % | n/a | 14.1 % | 84.3 % | 73.9 % | n/a | 14.1 % |
Same-asset NOI(1) | $17,957 | $18,102 | $145 | (0.8 %) | $52,597 | $51,856 | $741 | 1.4 % |
Normal course issuer bid – units repurchased | 7,437 | 7,550 | n/a | n/a | 12,537 | 22,150 | n/a | n/a |
Committed occupancy – including non-consolidated investments(2) | 97.2 % | 96.2 % | n/a | 1.0 % | ||||
Same-asset committed occupancy(3) | 97.0 % | 96.2 % | n/a | 0.8 % | ||||
(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 September 30, 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. |
Quarterly Highlights
Year-To-Date Highlights
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 VII of the REIT's Management's Discussion and Analysis as at September 30, 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 and nine months ended September 30, 2022, compared to the three and nine months ended September 30, 2021 is presented below:
(000s – except per unit amounts and percentage data, unaudited) | 3 Months | 3 Months | Change over | 9 Months | 9 Months | Change over |
Profit and total comprehensive income for the period attributable to unitholders | $7,151 | $27,756 | $39,737 | $58,880 | ||
Incremental leasing costs included in administrative expenses(7) | 335 | 322 | 1,206 | 1,072 | ||
Debenture issuance costs | - | 24 | - | 370 | ||
Amortization of debenture issuance costs(8) | (121) | (118) | (362) | (339) | ||
Distributions on Class B exchangeable LP units included in finance costs | 83 | 83 | 250 | 250 | ||
Deferred income taxes | (619) | (73) | 42 | (29) | ||
Land lease principal repayments | (195) | (190) | (583) | (567) | ||
Fair value adjustment to restricted and deferred units | (88) | (25) | (246) | 214 | ||
Fair value adjustment to investment properties | 4,235 | (16,010) | (1,803) | (28,391) | ||
Fair value adjustment to investments(9) | 413 | (133) | (1,144) | 56 | ||
Fair value adjustment to Class B exchangeable LP units | (322) | (119) | (953) | 1,060 | ||
Fair value adjustment to convertible debentures | (237) | (31) | (960) | 2,833 | ||
Fair value adjustment to interest rate swaps | (41) | (361) | (4,266) | (2,436) | ||
Fair value adjustment to right-of-use land lease assets | 195 | 190 | 583 | 567 | ||
Equity accounting adjustment(10) | (29) | (28) | (329) | (183) | ||
Non-controlling interest adjustment(6) | (29) | 37 | (21) | 575 | ||
FFO(1) | $10,731 | $11,324 | (593) | $31,151 | $33,932 | (2,781) |
FFO change over prior period - % | (5.2 %) | (8.2 %) | ||||
FFO(1) | $10,731 | $11,324 | $31,151 | $33,932 | ||
Non-cash revenue – straight-line rent(5) | (15) | 31 | 119 | 206 | ||
Leasing costs – existing properties(2) (5)(11) | (1,687) | (1,325) | (4,538) | (3,599) | ||
Maintenance capital expenditures – existing properties(2) (5)(12) | (790) | (589) | (1,150) | (1,319) | ||
Non-controlling interest adjustment(6) | 39 | 5 | 78 | 60 | ||
AFFO(1) | 8,278 | 9,446 | (1,168) | 25,660 | 29,280 | (3,620) |
AFFO change over prior period - % | (12.4 %) | (12.4 %) | ||||
Weighted average units outstanding - basic(3) | 103,000 | 102,980 | 103,003 | 102,986 | ||
FFO per unit - basic(1) | $ 0.104 | $ 0.110 | (5.5 %) | $ 0.302 | $ 0.329 | (8.2 %) |
AFFO per unit - basic(1) | $ 0.080 | $ 0.092 | (13.0 %) | $ 0.249 | $ 0.284 | (12.3 %) |
Gross distributions to unitholders(4) | $ 7,209 | $ 7,207 | $ 21,628 | $ 21,624 | ||
FFO payout ratio - basic(1) | 67.2 % | 63.6 % | 69.4 % | 63.7 % | ||
AFFO payout ratio - basic(1) | 87.1 % | 76.3 % | 84.3 % | 73.9 % | ||
FFO(1) | $ 10,731 | $ 11,324 | $ 31,151 | $ 33,932 | ||
Interest on dilutive convertible debentures | 788 | 788 | 2,337 | 2,337 | ||
FFO - diluted(1) | $ 11,519 | $ 12,112 | (593) | $ 33,488 | $ 36,269 | (2,781) |
Diluted weighted average units outstanding(3) | 113,893 | 113,874 | 113,896 | 113,880 | ||
AFFO(1) | $ 8,278 | $ 9,446 | $ 25,660 | $ 29,280 | ||
Interest on dilutive convertible debentures | 788 | 788 | 2,337 | 2,337 | ||
AFFO - diluted(1) | $ 9,066 | $ 10,234 | (1,168) | $ 27,997 | $ 31,617 | (3,620) |
Diluted weighted average units outstanding(3) | 113,893 | 113,874 | 113,896 | 113,880 | ||
FFO per unit - diluted(1) | $ 0.101 | $ 0.106 | (4.7 %) | $ 0.294 | $ 0.318 | (7.5 %) |
AFFO per unit - diluted(1) | $ 0.080 | $ 0.090 | (11.1 %) | $ 0.246 | $ 0.278 | (11.5 %) |
(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 REIT's MD&A ending September 30, 2022 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 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 (loss) attributable to NCI of $85 thousand and $299 thousand for the three and nine months ending September 30, 2022, respectively (September 30, 2021 - $152 thousand and $874 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 29 of the 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 29 of the MD&A. |
Net Property Operating Income (NOI) and Same-Asset Net Property Operating Income (Same-Asset NOI)
(000s) | 3 Months Ended September 30, 2022 (unaudited) | 3 Months Ended September 30, 2021 (unaudited) | 9 Months Ended September 30, 2022 (unaudited) | 9 Months Ended September 30, 2021 | |
Same-asset NOI(1) | $ 17,957 | $ 18,102 | $ 52,597 | $ 51,856 | |
Developments and redevelopments transferred to income producing in 2021 & 2022 ($2.0 million stabilized NOI) | 513 | 340 | 1,459 | 671 | |
NOI from acquisitions, properties currently under development and redevelopment ($4.9 million stabilized NOI) | 448 | 274 | 1,408 | 1,002 | |
Straight-line rent | 16 | (31) | (116) | (206) | |
Administrative expenses charged to NOI | (806) | (733) | (2,539) | (2,276) | |
Lease termination revenue | 12 | - | 117 | 3,098 | |
Properties disposed | 16 | 127 | 65 | 446 | |
Total NOI(1) | $ 18,156 | $ 18,079 | $ 52,991 | $ 54,591 | |
(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 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, outlook, 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, implied projected by forward-looking statements contained in this press release, including but not limited to any unforeseen impacts from new or renewed pandemic conditions and impacts on the business, operations and financial condition of the REIT, its tenants and the economy in general; 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; supply chain constraints; competitive real estate conditions; and others described in Plaza's Annual Information Form for the year ended December 31, 2021 and Management's Discussion and Analysis for the nine months ended September 30, 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 the strength and resiliency of Plaza's tenant base and that tenant demand for space 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, November 11, 2022 at 1:30 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 November 18, 2022. To access the replay, dial 1-416-764-8677 (local Toronto) or 1-888-390-0541 (Passcode: 721972). 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, 2022 includes interests in 253 properties totaling approximately 8.9 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
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