Plaza Retail REIT Announces its Third Quarter 2019 Results

FREDERICTON, Nov. 5, 2019 /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, 2019.

Michael Zakuta, President and CEO said, "We demonstrated strong growth in the 3^rd quarter as we begin to witness the contribution from a number of development and redevelopment projects that were launched over the last two years. In addition, we continued our major refinancing program where we are rolling mortgages at historically low rates.  All of this activity will contribute to the growth of our FFO per unit."

Financial Results Summary
(CAD$000s, except percentages, per unit amounts and coverage ratios)	Three Months Ended September 30, 2019		Three Months Ended September 30, 2018		Change	Nine Months Ended September 30, 2019		Nine Months Ended September 30, 2018		Change
FFO ^1	$	10,126	$	9,382	+7.9%	$	31,802	$	26,082	+21.9%
FFO per unit	$	0.098	$	0.090	+8.9%	$	0.306	$	0.252	+21.4%
FFO payout ratio		71.5%		77.4%	-7.6%		68.5%		83.3%	-17.8%
AFFO ^1	$	8,673	$	8,125	+6.7%	$	28,280	$	22,838	+23.8%
AFFO per unit	$	0.084	$	0.078	+7.7%	$	0.272	$	0.221	+23.1%
AFFO payout ratio		83.5%		89.4%	-6.6%		77.0%		95.1%	-19.0%
Profit and total comprehensive income	$	10,076	$	6,983	+44.3%	$	43,320	$	11,144	288.7%
Total NOI	$	18,015	$	16,699	+7.9%	$	55,942	$	48,184	+16.1%
Same-asset NOI ^1	$	16,356	$	16,301	+0.3%	$	47,307	$	47,234	+0.2%
Committed occupancy							96.5%		95.9%	+0.6%
Same-asset committed occupancy							96.3%		96.1%	+0.2%
Normal course issuer bid – units repurchased		243		-	-		584		-	-

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

Quarterly Highlights

• FFO & AFFO: For the three months ended September 30, 2019, funds from operations ("FFO") per unit increased by 8.9% compared to the prior year, affected by growth in NOI from developments, redevelopments and acquisitions as well as growth in other income from development and leasing fees earned on co-owned properties. These were partly offset by: (i) the impact of the vacancies caused by lease buyout transactions; (ii) property sales; and (iii) an increase in administrative expenses. Adjusted funds from operations ("AFFO") per unit was 7.7% higher than the prior year, further impacted by lower leasing costs offset by higher maintenance capital expenditures.
• Profit and total comprehensive income for the current quarter was $10.1 million compared to $7.0 million in the prior year. The increase was mainly due to an increase in the fair value of investment properties mainly due to the decrease in capitalization rates in the quarter.
• NOI was $18.0 million, up 7.9% from the same period in 2018, largely due to reclassification of land lease expense out of NOI as a result of new accounting rules in effect January 1, 2019, as well as growth from developments/redevelopments and acquisitions.
• Same-asset NOI slightly increased.

Year-To-Date Highlights

• FFO & AFFO: For the nine months ended September 30, 2019, FFO per unit was 21.4% higher than the prior year and AFFO per unit was 23.1% higher than the prior year. The increase was mainly due to lease buyout revenues, primarily from two significant lease buyout transactions along with growth in NOI from developments, redevelopments and acquisitions, as well as: (i) a decrease in NOI due to property sales; (ii) growth in other income from development and leasing fees earned from co-owned properties; and (iii) an increase in administrative expenses as a result of non-recurring costs. AFFO was further impacted by higher maintenance capital expenditures compared to the prior year.
• Profit and total comprehensive income year-to-date was $43.3 million compared to $11.1 million in the prior year. The increase was mainly due to an increase in the fair value of investment properties over the prior year due to the decrease in capitalization rates.
• NOI was $55.9 million, up 16.1% from the same period in 2018, mainly due to the lease buyout revenues noted above, classification of land lease expense out of NOI as a result of new accounting rules in effect January 1, 2019, growth from developments/redevelopments and acquisitions, partly offset by property sales.
• Same-asset NOI slightly increased.

Excluding the impact of lease buyouts, non-recurring administrative costs, any loan defeasance and early mortgage discharge fees from the current and prior period:

• FFO per unit for the quarter would have been almost 15.2% higher than the prior year, while AFFO per unit for the quarter would have been 15.1% higher than the prior year.
• Same-asset NOI for the quarter would have increased by 2.1%.
• Year-to-date FFO per unit would have been 5.6% higher than the prior year, while year-to-date AFFO per unit would have been 6.0% higher over the prior year.
• Year-to-date same-asset NOI would have increased by 1.6%.

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 Jim Drake, CFO, will host a conference call for the investment community on Thursday, November 7, 2019 at 2:00 p.m. EST. The call-in numbers for participants are 647-427-7450 or 888-231-8191. 

A replay of the call will be available until November 14, 2019. To access the replay, dial 416-849-0833 or 855-859-2056 (Passcode: 8489504). 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, 2019 includes interests in 275 properties totaling approximately 8.5 million square feet across Canada and additional lands held for development. Plaza's properties include a mix of open-air centres, 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 that do not relate to historical facts.  An example of a forward-looking statement in this press release is that we anticipate the development, redevelopment and financing activities described will contribute to the growth of FFO per unit.  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 the forward-looking statements contained in this press release, including but not limited to general economic and market factors and those described in Plaza's Annual Information Form for the year ended December 31, 2018 and Management's Discussion and Analysis for the period ended September 30, 2019 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 new projects will come on-line as anticipated and that our refinancing program will continue at low interest rates as anticipated.  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.  All forward-looking statements speak only as of the date of this press release and 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

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

Related Links

www.plaza.ca