Plaza Retail REIT Announces Strong 2019 Year End Results - Feb 25, 2020

Plaza Retail REIT Announces Strong 2019 Year End Results

Feb 25, 2020

FREDERICTON, Feb. 25, 2020 /CNW/ - Plaza Retail REIT (TSX: PLZ.UN) ("Plaza" or the "REIT") today announced its financial results for the three months and year ended December 31, 2019.

While retail head winds continue, committed occupancy has remained strong at 96.3%, and Plaza has had one of its best years.  Excluding lease buyouts and other similar items, annual FFO per unit and annual AFFO per unit increased by 7.8% and 6.8%, respectively.  FFO per unit, as reported, increased by 19.3% in 2019 over the prior year and annual AFFO per unit, as reported, increased by 20.1%.  Growth in FFO and AFFO has resulted in more conservative payout ratios which have decreased by 16.3% and 16.8%, respectively, over the prior year. 

Plaza's portfolio continues to be dominated by national tenants, representing 90.7% of base rents, with a focus on value and necessity-based retail. 

"We continue to demonstrate strong growth," said Michael Zakuta, President and CEO. "Plaza has experienced growth by recycling capital from re-financings at historically low rates, disposing of non-core assets, and re-investing those proceeds in higher-yielding opportunities. We are well positioned to continue driving value for our unitholders and I am extremely confident about the year ahead." 

   


Financial Results Summary

 

(CAD$000s, except percentages, per unit
amounts and coverage ratios)

Three
Months
Ended
December
31, 2019

Three
Months
Ended
December
31, 2018

Change

Twelve
Months
Ended

December
31, 2019

Twelve
Months
Ended

December
31, 2018

Change

FFO 1

$9,204

$8,182

+12.5%

$41,006

$34,264

+19.7%

FFO per unit

$0.089

$0.079

+12.7%

$0.395

$0.331

+19.3%

FFO payout ratio

78.6%

89.0%

-11.7%

70.8%

84.6%

-16.3%








AFFO 1

$8,186

$7,466

+9.6%

$36,466

$30,304

+20.3%

AFFO per unit

$0.079

$0.072

+9.7%

$0.352

$0.293

+20.1%

AFFO payout ratio

88.4%

97.5%

-9.3%

79.6%

95.7%

-16.8%








Profit and total comprehensive income

$8,017

$1,068

+650.7%

$51,337

$12,212

+320.4%








Total NOI

$16,785

$15,740

+6.6%

$72,727

$63,924

+13.8%








Same-asset NOI 1

$15,569

$15,506

+0.4%

$62,839

$62,728

+0.2%








Committed occupancy




96.3%

96.2%

+0.1%

Same-asset committed occupancy




96.1%

96.0%

+0.1%








Normal course issuer bid – units repurchased

137,400

-

-

721,689

-

-

 

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

 

Quarterly Highlights

  • FFO & AFFO: For the three months ended December 31, 2019, funds from operations ("FFO") per unit increased by 12.7% compared to the prior year, affected by growth in NOI from developments, lease buyout revenues, as well as growth in other income from development and leasing fees earned on co-owned properties.  These were partly offset by the impact of the vacancies caused by lease buyout transactions and from property sales.  Adjusted funds from operations ("AFFO") per unit was 9.7% higher than the prior year due to the increase in FFO above, offset by higher leasing costs and maintenance capital expenditures. 
  • Profit and total comprehensive income for the current quarter was $8.0 million compared to $1.1 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 $16.8 million, up 6.6% from the same period in 2018, primarily as a result of lease buyout revenues and reclassification of land lease expense as a result of new accounting rules in effect January 1, 2019.
  • Same-asset NOI increased by 0.4%.    

Excluding the impact of lease buyouts, additional 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 14.7% higher than the prior year, while AFFO per unit for the quarter would have been 12.0% higher than the prior year.
  • Same-asset NOI for the quarter would have increased by 2.6%.

Year-To-Date Highlights

  • FFO & AFFO: For the twelve months ended December 31, 2019, FFO per unit was 19.3% higher than the prior year and AFFO per unit was 20.1% higher than the prior year.  The increase was mainly due to lease buyout revenues, 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; (iii) the impact of vacancies from the lease buyout transactions; and (iv) additional administrative expenses.  AFFO was further impacted by higher maintenance capital expenditures compared to the prior year. 
  • Profit and total comprehensive income year-to-date was $51.3 million compared to $12.2 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, largely stemming from higher values on a number of appraisals received on properties during the year.
  • NOI was $72.7 million, up 13.8% from the same period in 2018, mainly due to the lease buyout revenues  and reclassification of land lease expense as noted above and growth from developments/redevelopments and acquisitions, partly offset by property sales.
  • Same-asset NOI increased by 0.2%. 

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

  • Annual FFO per unit would have been 7.8% higher than the prior year, while annual AFFO per unit would have been 6.8% higher over the prior year.
  • Annual same-asset NOI would have increased by 1.8%.

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 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, February 27, 2020 at 10:00 a.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 March 5, 2020. To access the replay, dial 416-849-0833 or 855-859-2056 (Passcode: 7313279). 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 December 31, 2019 includes interests in 274 properties totaling approximately 8.4 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.  

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 press release contains forward-looking statements relating to our operations and the environment in which we operate which can be identified by the use of forward-looking words, expressions or phrases that do not relate to historical facts. An example of a forward-looking statement implied in this press release is that the capital recycling activities described will contribute to future growth. 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 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 year ended December 31, 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 that Plaza's refinancing program will continue at low interest rates. Although forward-looking statements 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 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. 

SOURCE Plaza Retail REIT

For further information: Jim Drake, Chief Financial Officer, Plaza Retail REIT, Tel: 902.483.4064; Kim Sharpe, Director of Business Development, Plaza Retail REIT, Tel: 506.476.4855