Plaza Retail REIT Announces its First Quarter 2018 Results

FREDERICTON, May 10, 2018 /CNW/ - Plaza Retail REIT (TSX: PLZ.UN) ("Plaza" or the "REIT") today announced its results for the three months ended March 31, 2018.

Michael Zakuta, President and CEO said, "Plaza continues to be opportunistic and add value through development. Our pipeline of deals is solid and will contribute to our growth as projects come on-line in late 2018 and 2019. Our tenant base of value and necessity retailers continues to perform well."

Financial Results Summary
(CAD$000s, except percentages, per unit amounts and coverage ratios)	Three Months Ended Mar 31, 2018	Three Months Ended Mar 31, 2017	Change
FFO ^1	$8,182	$8,253	-0.9%
FFO per unit	$0.079	$0.081	-2.5%
FFO payout ratio	88.1%	83.7%	+5.3%
AFFO ^1	$7,434	$7,772	-4.3%
AFFO per unit	$0.072	$0.076	-5.3%
AFFO payout ratio	97.0%	88.9%	+9.1%
Profit (loss) and total comprehensive income (loss)	$(3,166)	$279	-1,234.8%
Total property rental revenue	$25,966	$25,340	+2.5%
Total property operating expenses	$10,606	$10,027	+5.8%
Total NOI	$15,360	$15,313	+0.3%
Same-asset rental revenue	$22,731	$22,764	-0.1%
Same-asset operating expenses	$8,224	$8,053	+2.1%
Same-asset NOI ^1	$14,507	$14,711	-1.4%
Committed occupancy	95.1%	96.2%	-1.1%
Same-asset committed occupancy	95.0%	96.3%	-1.3%
Distributions per unit	$0.07	$0.0675	+3.7%
Total distributions to unitholders	$7,210	$6,906	+4.4%
Interest coverage ratio	2.22 x	2.28 x	-2.6%
Debt coverage ratio	1.58 x	1.61 x	-1.9%
Debt to gross assets (excluding converts)	49.4%	48.4%	+2.1%
Debt to gross assets (including converts)	54.3%	52.2%	+4.0%
IFRS capitalization rate (for valuing investment properties)	7.03%	7.03%	- %

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

Quarter over Quarter Financial Highlights

• For the three months ended March 31, 2018, funds from operations ("FFO") per unit decreased to $0.079, down 2.5% from $0.081 for the same period in 2017 and adjusted funds from operations ("AFFO") per unit was $0.072, down 5.3% for the same period in 2017. Positively impacting FFO and AFFO per unit were (i) growth in net property operating income from developments/redevelopments/acquisitions (net of property dispositions), and (ii) higher other income due to an increase in development and leasing fees earned from co-owned properties. These were more than offset by (i) a decrease in same-asset net property operating income partly due to vacancies from two lease buyouts completed in 2017, and (ii) higher interest expense mainly due to timing of the issue of the Series E convertible debentures versus the redemption of the Series D convertible debentures, as well as early mortgage discharge fees paid. AFFO per unit was further impacted by higher maintenance capital expenditures and leasing costs relating to new tenancies. Excluding the non-recurring one month overlap of interest on the convertible debentures, the impact of the 2017 lease buyouts and the early mortgage discharge fees paid, FFO per unit would have been $0.084, up 3.7% from the prior year and AFFO per unit would have been $0.077, up 1.3% from the prior year;
• Profit (loss) and total comprehensive income (loss) for the current quarter was a loss of $3.2 million compared to a profit of $279 thousand in the prior year. Profits were largely impacted by: (i) debenture issuance costs of $2.1 million for the Series E convertible debentures, which are fully expensed for accounting purposes; and (ii) a decrease in share of profit of associates from equity accounted investments of $2.1 million mainly relating to the non-cash fair value adjustment to the underlying investment properties and a fair value loss on the disposal of land at an underlying investment property;
• Net property operating income ("NOI") was $15.4 million, up 0.3% from $15.3 million in the same period in 2017. Growth from developments/redevelopments and acquisitions were partly offset by sales of properties and a decrease in same-asset NOI; and
• Same-asset NOI was $14.5 million compared to $14.7 million for the same period in 2017, down 1.4%, mainly due to $150 thousand bad debt expense recorded in the quarter due to a tenant going into creditor protection, as well as vacancies from two lease buyouts concluded in 2017 which negatively impact same-asset NOI by $180 thousand and vacancies at the enclosed malls. These were partly offset by new lease up and contractual rent increases in the portfolio.

Leasing and Occupancy

• Same-asset committed occupancy and total committed occupancy were 95.0% and 95.1%, respectively, at March 31, 2018, compared to 96.3% and 96.2%, respectively, at March 31, 2017. The two significant lease buyouts completed in 2017 negatively impacted occupancy, as well as vacancies at the enclosed malls.

Further Information
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 Floriana Cipollone, CFO, will host a conference call for the investment community on Friday, May 11, 2018 at 2:00 p.m. ET (3:00 p.m. AT). The call-in numbers for participants are 647-427-7450 or 888-231-8191.  

A replay of the call will be available until Friday, May 18, 2018. To access the replay, dial 416-849-0833 or 855-859-2056 (Passcode: 6194928). 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, 2018 includes interests in 297 properties totaling approximately 8.1 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 90% 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.

Forward Looking Information
This news release contains forward looking statements relating to our operations and the environment in which we operate.  An example of a forward looking statement in this press release is that Plaza's deal pipeline will contribute to growth as anticipated.  Forward looking 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.  Although the forward looking statements contained in this press release are 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 such forward looking statements.  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 projects will come on-line within the timeframes anticipated.  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 for forward-looking information disclosed in prior disclosures which, in light of intervening events, requires further explanation to avoid being misleading.  More detailed information about risks and uncertainties that could affect Plaza is described in Plaza's Annual Information Form for the year ended December 31, 2017 and Management's Discussion and Analysis for the period ended March 31, 2018 which can be obtained on SEDAR at www.sedar.com.

The TSX does not accept responsibility for the adequacy or accuracy of this release.

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

http://www.plaza.ca