Plaza Retail REIT announces its 12th consecutive annual distribution increase and solid 3rd quarter results - Nov 10, 2014

Plaza Retail REIT announces its 12th consecutive annual distribution increase and solid 3rd quarter results

Nov 10, 2014

FREDERICTON, Nov. 10, 2014 /CNW/ - Plaza Retail REIT (TSX:PLZ.UN) ("Plaza") today announced that its Board of Trustees has approved the 2015 annual distribution increase to $0.25 per share, representing a 4.2% increase from the prior year.  Plaza also announced its results for the quarter ended September 30, 2014.

The increased distribution will be effective for the regularly scheduled monthly distribution payment dates for 2015 beginning with the January distribution, payable February 16, in the amount of 2.0833 cents per unit at each payment date, subject to Board approval at that time.

Plaza reported funds from operations ("FFO") of $8.2 million for the three months ended September 30, 2014, an increase of 46.4% over the same period in the prior year.  FFO per unit was $0.089 for the quarter ended September 30, 2014 ($0.089 per unit diluted) compared to $0.072 per unit for the quarter ended September 30, 2013 ($0.072 per unit diluted), an increase of 23.6% over the prior year.  FFO was positively impacted by an increase in same-asset net property operating income ("NOI"), incremental NOI from new developments/acquisitions, a decrease in financing costs mainly due to lower interest on the KEYreit bridge facility which was repaid in May 2014 as well as interest savings on early refinancings of mortgages, and an increase in other income due to development fees earned in the quarter.  Partly offsetting the increase in FFO was a reduction in NOI from KEYreit mainly due to the sale of properties and fees paid to discharge and refinance mortgages early. 

For the nine months ended September 30, 2014, Plaza reported FFO of $20.5 million, an increase of 41.4% over the same period in the prior year.  FFO per unit was $0.224 for the nine months ended September 30, 2014 ($0.224 per unit diluted) compared to $0.204 per unit for the nine months ended September 30, 2013 ($0.204 per unit diluted), an increase of 9.8%.  Although the results for the year-to-date increased over the prior year, the results were impacted by:  (i) one-time fees and costs relating to the REIT conversion; (ii) fees paid to discharge and refinance mortgages early as Plaza looked to take advantage of the favourable debt markets this year; and (iii) lower same-asset NOI due to a property tax settlement and the unusually harsh winter experienced this year.  Excluding the fees paid to discharge and refinance mortgages early and the one-time costs relating to the REIT conversion, FFO per unit would have been $0.236, an 11.3% increase over the prior year.  Excluding the unusual NOI variances, FFO per unit would have been $0.239, a 12.7% increase over the prior year.

Michael Zakuta, President and CEO said, "The distribution increase represents the twelfth annual increase since we began paying distributions in 2003. We have more than tripled our distribution over the last 12 years; as our initial 8 cents per unit distribution has grown to 25 cents per unit. We are one of only two REITs in Canada to have such a track record of distribution increases and it confirms our ability to grow the business and deliver results to our unitholders.  We are also very pleased with the financial results for the quarter.  We are starting to see the impact of our substantial refinancing program, our growth from our development pipeline and our KEYreit value extraction initiatives.  We have early refinanced many of our 2015, 2016 and 2017 debt maturities, in order to take advantage of the robust debt markets that currently exist.  By the end of the year, we expect to secure or refinance over $170 million in mortgage loans and convertible debentures (at Plaza's ownership percentage), generating approximately $1.4 million in annual cash flow savings or approximately $0.015 per unit.  The growth in FFO continues to confirm our business strategy that is based on creating value for our unitholders by developing high quality retail projects leased to national retailers and financing these projects with long term fixed rate financing for terms of ten years or more."

Overall Plaza recorded income of $9.9 million for the three months ended September 30, 2014 compared to $1.7 million, for the same period in the prior year.  For the nine months ended September 30, 2014, Plaza recorded profit of $71.2 million compared to a loss of $1.7 million for the same period in the prior year.  Year-to-date profit was mainly impacted by: (i) the recording of a non-cash deferred income tax recovery of $59.8 million to reflect the flow-through tax status of Plaza as a REIT (whereby taxes are now only recorded for Plaza's taxable corporate subsidiaries); (ii) the increase in FFO mentioned previously; (iii) larger non-cash fair value losses recorded on investment properties and investments mainly as a result of an increase in capitalization rates; and (iv) a non-cash fair value loss on convertible debentures.


Plaza's summary of FFO is presented below:

 







3 Months

Ended

September 30,

 2014

3 Months

Ended

September 30,

 2013

9 Months

Ended

September 30,

 2014

9 Months

Ended

September 30,

2013

(000s – except per unit amounts)

(unaudited)

(unaudited)

(unaudited)

(unaudited)






Profit (loss) for the period attributable to unitholders/shareholders

$     9,521

$  1,445

$   70,258

$ (2,387)

Add (deduct):





Transaction related costs on acquisition of KEYreit

-

-

-

9,061

Deferred income taxes

(201)

2,203

(59,836)

4,221

Refundable tax on disposals of investment properties

-

(216)

-

(626)

Fair value adjustment to investment properties

(716)

1,561

8,149

6,012

Fair value adjustment to investments

(182)

301

795

(937)

Fair value adjustment to convertible debentures

(310)

506

775

(1,362)

Equity accounting adjustment

(11)

(173)

72

574

Non-controlling interest adjustment

116

(15)

247

(91)

Basic and diluted FFO

$     8,217

$    5,612

$   20,460

$  14,465

Basic Weighted Average Units Outstanding

92,397

78,219

91,304

70,741

Diluted Weighted Average Units Outstanding

92,397

78,219

91,304

70,741

Basic and diluted FFO per unit

$     0.089

$    0.072

$     0.224

$   0.204

 

A copy of Plaza's quarterly report can be found on Plaza's web site at www.plaza.ca or on SEDAR at www.sedar.com.

Plaza is an open-ended real estate investment trust and is a leading retail property owner and developer, particularly in Eastern Canada.  Plaza's current portfolio includes interests in 312 properties totaling approximately 6.7 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.

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 our 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 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 for forward-looking information disclosed in prior disclosures which, in light of intervening events, requires further explanation to avoid being misleading.

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

 

SOURCE Plaza Retail REIT

For further information: on Plaza Retail REIT, visit our website at www.plaza.ca or contact: Floriana Cipollone, Chief Financial Officer (416) 848-4583 or Kim Sharpe, Director of Business Development at (506) 460-8261