Plaza Retail REIT Announces First Quarter 2020 Results - May 7, 2020

Plaza Retail REIT Announces First Quarter 2020 Results

May 7, 2020

FREDERICTON, May 7, 2020 /CNW/ - Plaza Retail REIT (TSX: PLZ.UN) ("Plaza" or the "REIT") today announced its financial results for the three months ended March 31, 2020.

"We are pleased with the results of the current quarter. Plaza is benefiting from our strong development performance in 2019 where 228,000 square feet was completed and 115,000 square feet was acquired. Our portfolio is dominated by national and essential needs tenants. Open-air properties, which represent 93% of our base rents, continue to perform well.  Although COVID-19 did not have a material impact on our Q1 results, beginning in mid-March, many of our tenants and communities were impacted. Plaza is addressing the challenges created by the pandemic, and is working closely with its tenants to support their businesses, while protecting our liquidity and financial position." said Michael Zakuta, President and CEO.

Funds from operations ("FFO") per unit and adjusted funds from operations ("AFFO") per unit for Q1 2020 increased by 13.9% and 12.1%, respectively, when compared to Q1 2019, excluding lease buyouts from the current and prior year. Plaza completed two significant lease buyout transactions in Q1 2019 with tenants who vacated their premises early. This resulted in increased rental revenue, net operating income ("NOI"), FFO and AFFO in Q1 2019. Including lease buyouts, FFO per unit and AFFO per unit for Q1 2020, as reported, decreased by 31.3% and 35.9%, respectively, when compared to Q1 2019. 

       


Financial Results Summary

 

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

Three Months
Ended

March 31, 2020

Three Months
Ended

March 31, 2019

Change

Selected IFRS Measures








Property rental revenue

$27,322

$31,747

-13.9%





Net operating income

$16,888

$21,478

-21.4%





Net change in fair value of investment properties

$(19,872)

$6,629

-399.8%





Profit (loss) and total comprehensive income (loss)

$(2,098)

$16,290

-112.9%





Normal course issuer bid – units repurchased

359,697

-

n/a





Selected Non-IFRS Measures1








FFO

$9,136

$13,260

-31.1%

FFO per unit

$0.088

$0.128

-31.3%

FFO payout ratio

79.1%

54.9%

+44.1%





AFFO

$7,734

$12,134

-36.3%

AFFO per unit

$0.075

$0.117

-35.9%

AFFO payout ratio

93.4%

60.0%

+55.7%





Same-asset NOI 

$16,580

$16,420

+1.0%





Committed occupancy – including non-consolidated investments2

96.4%

96.5%

-0.1%

Same-asset committed occupancy2

96.1%

96.4%

-0.3%





1

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

2

Excludes properties under development.  Same-asset committed occupancy excludes properties under development and non-consolidated investments.

 

Quarterly Highlights

  • NOI was $16.9 million, down 21.4% from the same period in 2019, primarily as a result of lease buyout revenues in the prior year, partly offset by growth in NOI from acquisitions, developments, and new leasing in same-asset properties.
  • Loss and total comprehensive loss for the current quarter was $2.1 million compared to a profit and total comprehensive income of $16.3 million in the prior year. The decline was mainly due to a $19.9 million loss in fair value of investment properties as a result of adjusted valuation parameters. The weighted average capitalization rate increased to 7.21% at March 31, 2020 from 7.15% at March 31, 2019, primarily due to higher capitalization rates applied to Plaza's three enclosed malls.
  • FFO & AFFO: For the three months ended March 31, 2020, FFO per unit decreased by 31.3% compared to the prior year, affected by lease buyout revenues in the prior year, which were partly offset by growth in NOI from acquisitions and developments, growth in same-asset NOI due to new leasing, a decrease in administrative costs and an increase in share of profit of associates. AFFO per unit was 35.9% lower than the prior year due to the changes in FFO noted above.
  • Same-asset NOI increased by 1.0%.

Excluding the impact of the lease buyouts from the current and prior period:

  • FFO per unit for the quarter would have been 13.9% higher than the prior year, while AFFO per unit for the quarter would have been 12.1% higher than the prior year.
  • Same-asset NOI for the quarter would have increased by 1.9%.

COVID-19 Update
Late in the quarter and subsequently, the outbreak of COVID-19 has resulted in numerous measures to combat the spread of the coronavirus. These measures, including physical distancing, retail closures and travel restrictions, have resulted in material disruption to businesses, and have had a material impact on the economy, including equity and capital markets.  The full extent and duration of COVID-19 is uncertain at this time. Plaza is withdrawing its outlook for 2020 contained in its' Management Discussion and Analysis for the year ended December 31, 2019.

To April 30, Plaza collected 72% of April's gross rent, on a consolidated basis. Plaza will continue taking proactive measures to collect rents from tenants expected to have the financial resources to fulfill their obligations. To support those that are more vulnerable, Plaza has implemented a rent deferral program. Local, small businesses that demonstrate a need for assistance may qualify to defer a portion or all of their rent for the months of April and May, with an agreement to repay the amount over a specified period, interest-free. To April 30, Plaza entered into rent deferral agreements for $0.6 million of April's rent, representing 7.5% of its total April gross rent on a consolidated basis. Plaza is actively monitoring the availability and anticipated effect of government relief programs that may be applicable, and participating in such programs where beneficial to the Trust and its tenants. 

Plaza has sufficient liquidity, including cash on hand and undrawn credit facilities, to meet its current obligations and working capital requirements. Plaza currently has approximately $55 million of long-term mortgage maturities remaining in 2020, the vast majority of which are in Q3 and Q4, and all are expected to be refinanced in due course. Existing development projects and planning work on new developments is proceeding, but may be delayed. New acquisitions and new developments that are not committed have been deferred, thereby reducing near term capital commitments. 

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 Friday, May 8, 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 May 15, 2020. To access the replay, dial 416-849-0833 or 855-859-2056 (Passcode: 2770997). 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, 2020 includes interests in 272 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. 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, the impacts of COVID-19 described above, and those described in Plaza's Annual Information Form for the year ended December 31, 2019 and Management's Discussion and Analysis for the quarter ended March 31, 2020 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