Plaza Retail REIT Announces its First Quarter 2019 Results

FREDERICTON, May 9, 2019 /CNW/ - Plaza Retail REIT (TSX: PLZ.UN) ("Plaza" or the "REIT") today announced its financial results for the three months ended March 31, 2019.

Michael Zakuta, President and CEO said, "We continue to differentiate ourselves through the active management of our assets.  During the quarter, we concluded two significant lease buyout transactions, we initiated a major refinancing program, and continued to sell fully-matured properties at values significantly above our IFRS values."

Financial Results Summary
(CAD$000s, except percentages, per unit amounts and coverage ratios)	Three Months Ended March 31, 2019	Three Months Ended March 31, 2018	Change
FFO ^1	$13,260	$8,182	+62.1%
FFO per unit	$0.128	$0.079	+62.0%
FFO payout ratio	54.9%	88.1%	-37.7%
AFFO ^1	$12,134	$7,434	+63.2%
AFFO per unit	$0.117	$0.072	+62.5%
AFFO payout ratio	60.0%	97.0%	-38.1%
Profit and total comprehensive income	$16,290	$(3,166)	N/A
Total property rental revenue	$31,747	$25,966	+22.3%
Total property operating expenses	$10,269	$10,606	-3.2%
Total NOI	$21,478	$15,360	+39.8%
Same-asset rental revenue	$23,331	$22,966	+1.6%
Same-asset operating expenses	$7,867	$7,611	+3.4%
Same-asset NOI ^1	$15,464	$15,355	+0.7%
Committed occupancy	96.3%	95.1%	+1.3%
Same-asset committed occupancy	96.2%	95.1%	+1.2%
Distributions per unit	$0.07	$0.07	-
Total distributions to unitholders	$7,277	$7,210	+0.9%
Interest coverage ratio	3.06x	2.22x	+37.8%
Debt coverage ratio	2.19x	1.58x	+38.6%
Debt to gross assets (excluding converts)	51.8%	49.4%	+4.9%
Debt to gross assets (including converts)	56.4%	54.3%	+3.9%
IFRS capitalization rate (for valuing investment properties)	7.15%	7.03%	+1.7%

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

Three Months Ended March 31, 2019 Financial Highlights

• For the three months ended March 31, 2019, funds from operations ("FFO") would have been largely consistent with the prior year excluding the effect of lease buyouts and other similar items from the current and prior year.  On a per unit basis, FFO would have been marginally lower by 1.8% due to continued issuance of units under Plaza's distribution reinvestment plan (which was suspended in November 2018).  Notwithstanding a decrease in net property operating income ("NOI") of $344 thousand due to property sales, NOI grew by $390 thousand from developments/redevelopments and acquisitions as well as organically from same-asset NOI.  On an overall basis, FFO per unit was 62.0% higher than the prior year and adjusted funds from operations ("AFFO") per unit was 62.5% higher than the prior year.  The increase was mainly due to the impact of $5.5 million of lease buyout revenues recorded in the quarter, primarily from two significant lease buyout transactions.  AFFO was further impacted by higher leasing costs in the current quarter compared to the same period in the prior year due to timing. 
• Profit and total comprehensive income for the current quarter was $16.3 million compared to a loss of $3.2 million in the prior year.  The increase was mainly due to the lease buyout revenues recorded, as well as an increase in the fair value of investment properties of $6.6 million as compared to a fair value decrease of $5.5 million in the prior year.  The fair value increase was mainly due to the decrease in capitalization rates in the quarter, largely stemming from higher values on a number of appraisals received on properties during the quarter.
• NOI was $21.5 million, up 39.8% from $15.4 million in the same period in 2018, mainly due to the lease buyout revenues noted above. Growth from developments/redevelopments and acquisitions added $1.6 million to NOI, compared to $1.3 million in the prior year.
• Same-asset NOI was $15.5 million, up 0.7% from the prior year at $15.4 million, mainly due to new lease up and rent increases in the portfolio.
• Effective September 28, 2018, Plaza instituted a normal course issuer bid ("NCIB") and on March 1, 2019, Plaza entered into an automatic securities repurchase plan with its designated broker in order to facilitate purchases of units under the NCIB.  At March 31, 2019, 95,865 units have been repurchased, 80,465 of which have been settled and cancelled.

Leasing and Occupancy

• Same-asset committed occupancy and total committed occupancy were 96.2% and 96.3%, respectively, at March 31, 2019, compared to 95.1% and 95.1%, respectively, at March 31, 2018. 

Further Information
Information appearing in this news 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 Condensed Interim 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 Floriana Cipollone, CFO, will host a conference call for the investment community on Friday, May 10, 2019 at 10:00 a.m. ET. The call-in numbers for participants are 647-427-7450 or 888-231-8191.  

A replay of the call will be available until May 17, 2019. To access the replay, dial 416-849-0833 or 855-859-2056 (Passcode: 2770117). 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, 2019 includes interests in 285 properties totaling approximately 8.2 million square feet across Canada and additional lands held for development. Plaza's properties include a mix of strip plazas, stand-alone small box retail outlets and enclosed shopping centres, anchored by approximately 91% 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 news release contains forward-looking statements relating to our operations and the environment in which we operate, which are based on management's expectations, estimates, forecasts and projections.  These statements are not future guarantees of future performance and involve risks and uncertainties that are difficult to control or predict.  Therefore, actual outcomes and results may differ materially from those expressed in or implied by these forward-looking statements.  Readers, therefore, should not place undue reliance on any such forward-looking statements.  Further, a forward-looking statement speaks only as of the date on which such statement is made.  We undertake no obligation to publicly update any such statement, to reflect new information or the occurrence of future events or circumstances, except as required by law. 

SOURCE Plaza Retail REIT

Floriana Cipollone, Chief Financial Officer, Plaza Retail REIT, Tel: [phone]; Kim Sharpe, Director of Business Development, Plaza Retail REIT, Tel: [phone]

Related Links

www.plaza.ca