FREDERICTON, NB, Feb. 26, 2025 /CNW/ - Plaza Retail REIT (TSX: PLZ.UN) ("Plaza" or the "REIT") today announced its financial results for the quarter and year ended December 31, 2024.
"Our 2024 results reflect record same-asset NOI growth and lease renewal spreads, and excellent occupancy rates" said Jason Parravano, President & CEO. "In addition, we have improved the quality and resilience of our portfolio with the completion of development projects and sale of non-core assets. Our portfolio, dominated by open-air essential needs and value retail properties, is well-positioned to withstand heightened macroeconomic uncertainty, and we are excited about the opportunities for our business."
Summary of Selected IFRS Financial Results
(CAD$000s, except percentages)
Three
Months
Ended
December
31, 2024
Three
Months
Ended
December
31, 2023
$
Change
%
Change
Twelve
Months
Ended
December
31, 2024
Twelve
Months
Ended
December
31, 2023
$ Change
% Change
Revenues
$30,623
$28,962
$1,661
5.7 %
$121,280
$114,064
$7,216
6.3 %
Net operating income (NOI)(1)
$18,926
$17,436
$1,490
8.5 %
$75,019
$70,354
$4,665
6.6 %
Net change in fair value of investment properties
$1,847
($9,497)
$11,344
-
($10,377)
($19,969)
$9,592
-
Profit and total comprehensive income
$8,473
($3,779)
$12,252
-
$25,485
$20,312
$5,173
-
(1)
This is a non-GAAP financial measure. Refer to the Non-GAAP Financial Measures defined here and in Part I and VII of the Management's Discussion and Analysis ("MD&A") ending December 31, 2024 for more information on each non-GAAP financial measure.
Quarterly Highlights
NOI was $18.9 million, up $1.5 million or 8.5% from the same period in 2023. The increase in NOI is due to an increase in revenue from leasing and rent escalations over the same period in the prior year, and the completion of the repositioning of certain properties, offset by a decrease in NOI from properties sold.
Profit and total comprehensive income for the current quarter was $8.5 million compared to a $3.8 million loss in the same period in the prior year. The increase was mainly due to the change in fair value of investment properties, with a $1.8 million increase in the current quarter compared to a $9.5 million decrease recorded in the same quarter in the prior year. Profit and total comprehensive income was also impacted by an increase in administrative costs of $2.6 million from reorganization costs including severance settlements and vesting of restricted units on severance totaling $2.1 million, and the write-off of greenfield development projects, in the current and prior year, which will not be pursued totaling $578 thousand. Excluding the impact of the settlement costs and greenfield development deals, administrative expenses would have been consistent with the same period in the prior year. Profit was also impacted by the NOI increase noted above, changes in non-cash fair value adjustments relating to interest rate swaps, the Class B exchangeable LP units, convertible debentures, and non-consolidated investments.
Year-To-Date Highlights
NOI was $75.0 million, up $4.7 million or 6.6% from the same period in 2023. The increase in NOI is due to an increase in revenue from leasing and rent escalations over the same period in the prior year, and the completion of the repositioning of certain properties, offset by a decrease in NOI from properties sold.
Profit and total comprehensive income for the current year to date was $25.5 million compared to $20.3 million in the same period in the prior year. The increase was mainly due to the change in fair value of investment properties, with a $10.4 million decrease recorded in the current year compared to a $20.0 million decrease recorded in the same period in the prior year. Profit and total comprehensive income was also impacted by the NOI increase offset by the reorganization costs noted above. Profit was also impacted by changes in non-cash fair value adjustments relating to interest rate swaps, the Class B exchangeable LP units, convertible debentures and non-consolidated investments.
Summary of Selected Non-IFRS Financial Results
(CAD$000s, except percentages, units repurchased and per unit amounts)
Three
Months
Ended
December
31, 2024
Three
Months
Ended
December
31, 2023
$ Change
% Change
Twelve
Months
Ended
December
31, 2024
Twelve
Months
Ended
December
31, 2023
$ Change
% Change
FFO(1)
$8,514
$10,062
($1,548)
(15.4 %)
$40,462
$41,520
($1,058)
(2.5 %)
FFO per unit(1)
$0.076
$0.090
($0.014)
(15.6 %)
$0.363
$0.379
($0.016)
(4.2 %)
FFO payout ratio(1)
91.7 %
77.6 %
n/a
18.2 %
77.2 %
74.2 %
n/a
4.0 %
AFFO(1)
$5,992
$6,573
($581)
(8.8 %)
$31,865
$31,933
($68)
(0.2 %)
AFFO per unit(1)
$0.054
$0.059
($0.005)
(8.5 %)
$0.286
$0.292
($0.006)
(2.1 %)
AFFO payout ratio(1)
130.3 %
118.8 %
n/a
9.7 %
98.0 %
96.5 %
n/a
1.6 %
Same-asset NOI(1)
$17,945
$17,127
$818
4.8 %
$71,758
$69,420
$2,338
3.4 %
Normal course issuer bid – units repurchased
-
6,205
n/a
n/a
4,920
27,657
n/a
n/a
Committed occupancy – including non-consolidated investments(2)
97.6 %
97.0 %
n/a
0.6 %
Same-asset committed occupancy(3)
97.0 %
96.6 %
n/a
0.4 %
-
(1) This is a non-GAAP financial measure. Refer to the Non-GAAP Financial Measures defined here and in Part I and VII of the MD&A ending December 31, 2024 for more information on each non-GAAP financial measure.
(2) Excludes properties under development.
(3) Same-asset committed occupancy excludes properties under development and non-consolidated investments.
Quarterly Highlights
FFO & AFFO: For the three months ended December 31, 2024, FFO on a dollar basis decreased $1.5 million or 15.4% and 15.6% on a per unit basis, compared with the same period in the prior year. FFO was impacted by higher NOI from same-asset, developments, and properties transferred to income producing, offset by a decrease in NOI from property dispositions, higher administrative expenses due to the reorganization costs noted above, and higher finance costs. AFFO decreased $581 thousand or 8.8%, and 8.5% on a per unit basis, compared to the same period in the prior year. AFFO was impacted mainly due to the changes in FFO noted above, as well as a decrease in leasing costs and maintenance capital expenditures. Excluding the reorganization costs noted above, FFO for the three months ending would have been $11,210 or $0.10 per unit, representing an 11% increase in per unit performance over the same period in the prior year. Excluding the reorganization costs, including the write-off of greenfield development projects in the current and prior year, AFFO would have been $8,688 or $0.078 per unit, representing a 31% increase in per unit performance over the same period in the prior year.
Same-asset NOI increased by $818 thousand or 4.8% due to revenue from leasing and rent escalations over the same period in the prior year, along with the completion of the repositioning of certain properties.
Year-To-Date Highlights
FFO & AFFO: For the twelve months ended December 31, 2024, FFO on a dollar basis decreased $1.1 million or 2.5%. and 4.2% on a per unit basis, compared to the same period in the prior year. FFO was impacted by higher NOI from same-asset, developments, and properties transferred to income producing, offset by a decrease in NOI from property dispositions, higher administrative expenses due to reorganization costs noted above, and higher finance costs. AFFO on a dollar basis decreased $68 thousand or 0.2% and 2.1% on a per unit basis, compared to the same period in the prior year mainly due to the changes in FFO noted above, as well as lower leasing costs. FFO and AFFO per unit were also impacted by the issue of 8.548 million trust units in March 2023. Excluding the reorganization costs noted above, FFO for the twelve months ending would have been $43,157 or $0.387 per unit, representing a 2% increase in per unit performance over the same period in the prior year. Excluding the reorganization costs, AFFO would have been $34,560 or $0.31 per unit, representing a 6% increase in per unit performance over the same period in the prior year.
Same-asset NOI increased by $2.3 million or 3.4% due to lease-up and rent escalations, along with the completion of the repositioning of certain properties, and lower operating expenses.
Non-GAAP Financial Measures
This press release contains certain non-GAAP 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 a standardized meaning prescribed by IFRS Accounting Standards 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 Accounting Standards. For further explanation of non-GAAP measures and their usefulness in assessing Plaza's performance, please refer to the section "Basis of Presentation" in Part I and the section "Explanation of Non-GAAP Measures" in Part VII of the REIT's Management's Discussion and Analysis as at December 31, 2024, which can be found on Plaza's website at www.plaza.ca and on SEDAR+ at www.sedarplus.ca.
The following tables reconcile the non-GAAP measures FFO, AFFO, and NOI to the most comparable IFRS measures.
Funds from Operations (FFO) and Adjusted Funds from Operations (AFFO)
Plaza's summary of FFO and AFFO for the three and twelve months ended December 31, 2024, compared to the three and twelve months ended December 31, 2023, is presented below:
(000s – except per unit amounts and percentage data, unaudited)
3 Months
Ended
December
31, 2024
3 Months
Ended
December
31, 2023
Change
over
Prior
Period
12 Months
Ended
December
31, 2024
12 Months
Ended
December
31, 2023
Change
over
Prior
Period
Profit and total comprehensive income for the period attributable to unitholders
$ 8,183
$ (3,822)
$ 25,045
$ 20,187
Incremental leasing costs included in administrative expenses(7)
353
316
1,601
1,372
Amortization of debenture issuance costs(8)
(19)
(18)
(73)
(141)
Distributions on Class B exchangeable LP units included in finance costs – operations
81
81
324
326
Deferred income taxes
1,655
192
1,752
73
Right-of-use land lease principal repayments
(207)
(203)
(818)
(804)
Fair value adjustment to restricted and deferred units
(213)
32
(79)
(351)
Fair value adjustment to investment properties
(1,847)
9,497
10,377
19,969
Fair value adjustment to investments(9)
(348)
(1,323)
(1,748)
(1,202)
Fair value adjustment to Class B exchangeable LP units
(405)
81
(162)
(936)
Fair value adjustment to convertible debentures
-
441
279
(217)
Fair value adjustment to interest rate swaps
(222)
3,418
1,515
1,404
Fair value adjustment to right-of-use land lease assets
207
203
818
804
Impairment of notes receivable – fair value component
976
1,024
976
1,024
Equity accounting adjustment(10)
70
137
440
79
Non-controlling interest adjustment(6)
250
6
215
(67)
FFO(1)
$ 8,514
$ 10,062
($1,548)
$ 40,462
$ 41,520
($1,058)
FFO change over prior period - %
(15.4 %)
(2.5 %)
FFO(1)
$ 8,514
$ 10,062
$ 40,462
$ 41,520
Non-cash revenue – straight-line rent(5)
(137)
(33)
(524)
(60)
Leasing costs – existing properties(2) (5) (11)
(1,624)
(1,965)
(5,576)
(7,138)
Maintenance capital expenditures – existing properties(12)
(812)
(1,518)
(2,590)
(2,419)
Non-controlling interest adjustment(6)
51
27
93
30
AFFO(1)
$ 5,992
$ 6,573
($ 581)
$ 31,865
$ 31,933
($ 68)
AFFO change over prior period - %
(8.8 %)
(0.2 %)
Weighted average units outstanding – basic(1)(3)
111,555
111,527
111,535
109,485
FFO per unit – basic(1)
$ 0.076
$ 0.090
(15.6 %)
$ 0.363
$ 0.379
(4.2 %)
AFFO per unit – basic(1)
$ 0.054
$ 0.059
(8.5 %)
$ 0.286
$ 0.292
(2.1 %)
Gross distribution to unitholders(1)(4)
$ 7,809
$ 7,806
$ 31,226
$ 30,826
FFO payout ratio – basic(1)
91.7 %
77.6 %
77.2 %
74.2 %
AFFO payout ratio – basic(1)
130.3 %
118.8 %
98.0 %
96.5 %
FFO(1)
$ 8,514
$ 10,062
$ 40,462
$ 41,520
Interest on dilutive convertible debentures
180
180
715
715
FFO – diluted(1)
$ 8,694
$ 10,242
($1,548)
$ 41,177
$ 42,235
($1,058)
Diluted weighted average units outstanding(1)(3)
114,086
114,058
114,065
112,015
AFFO(1)
$ 5,992
$ 6,573
$ 31,865
$ 31,933
Interest on dilutive convertible debentures
-
-
715
715
AFFO – diluted(1)
$ 5,992
$ 6,573
($ 581)
$ 32,580
$ 32,648
($ 68)
Diluted weighted average units outstanding(1)(3)
111,555
111,527
114,065
112,015
FFO per unit – diluted(1)
$ 0.076
$ 0.090
(15.6 %)
$ 0.361
$ 0.377
(4.2 %)
AFFO per unit – diluted(1)
$ 0.054
$ 0.059
(8.5 %)
$ 0.286
$ 0.291
(1.7 %)
(1)
This is a non-GAAP financial measure. Refer to "Non-GAAP Financial Measures" in Part I and "Explanation of Non-GAAP Financial Measures" in Part VII of this MD&A for more information.
(2)
Based on actuals.
(3)
Includes Class B exchangeable LP units.
(4)
Includes distributions on Class B exchangeable LP units.
(5)
Includes proportionate share of revenue and expenditures at equity-accounted investments.
(6)
The non-controlling interest ("NCI") adjustment, includes adjustments required to translate the profit and total comprehensive income attributable to NCI of $290 thousand and $440 thousand for the three and twelve months ending December 31, 2024, respectively (December 31, 2023 –$43 thousand and $125 thousand, respectively) to FFO and AFFO for the NCI.
(7)
Incremental leasing costs included in administrative expenses include leasing costs of salaried leasing staff directly attributed to signed leases that would otherwise be capitalized if incurred from external sources. These costs are excluded from FFO in accordance with RealPAC's definition of FFO.
(8)
Amortization of debenture issuance costs is deducted on a straight-line basis over the remaining term of the related convertible debentures, in accordance with RealPAC.
(9)
Fair value adjustment to investments relate to the unrealized change in fair value of equity accounted entities which are excluded from FFO in accordance with RealPAC's definition of FFO.
(10)
Equity accounting adjustment for interest rate swaps includes the change in non-cash fair value adjustments relating to interest rate swaps held by equity accounted entities, which are excluded from FFO in accordance with RealPAC's definition of FFO.
(11)
Leasing costs – existing properties include internal and external leasing costs except to the extent that leasing costs relate to development projects, in accordance with RealPAC's definition of AFFO. See the Gross Capital Additions Including Leasing Fees note on page 28 of this MD&A.
(12)
Maintenance capital expenditures – existing properties include expenditures related to sustaining and maintaining existing space, in accordance with RealPAC's definition of AFFO. See the Gross Capital Additions Including Leasing Fees note on page 28 of this MD&A.
Net Property Operating Income (NOI) and Same-Asset Net Property Operating Income (Same-Asset NOI)
(000s)
3 Months
Ended
December 31,
2024
(unaudited)
3 Months
Ended
December 31,
2023
(unaudited)
12 Months
Ended
December 31,
2024
(unaudited)
12 Months
Ended
December 31,
2023
(unaudited)
Same-asset NOI(1)
$ 17,945
$ 17,127
$ 71,758
$ 69,420
Developments and redevelopments transferred to income producing in 2023 & 2024 ($7.4 million annual stabilized NOI)
1,549
684
5,328
2,578
NOI from properties currently under development and redevelopment ($372 thousand annual stabilized NOI)
9
274
57
38
Straight-line rent
137
17
524
60
Administrative expenses charged to NOI
(888)
(939)
(3,850)
(3,768)
Lease termination revenue
29
-
231
-
Properties disposed
165
334
1,032
2,017
Other
(20)
(61)
(61)
9
Total NOI(1)
$ 18,926
$ 17,436
$ 75,019
$ 70,354
Percentage increase over prior period
8.5 %
6.6 %
(1)
This is a non-GAAP financial measure. Refer to "Non-GAAP Financial Measures" in Part I and "Explanation of Non-GAAP Financial Measures" in Part VII of this MD&A for more information.
Cautionary Statements Regarding Forward-looking Information
This press release contains forward-looking statements relating to Plaza's operations, prospects, outlook, condition and the environment in which it operates, including with respect to Plaza's outlook or expectations regarding the future of its business, continuation of strong retailer demand and the impact of lower interest rates on Plaza's overall success through the remainder of the year and into 2025. 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, implied or projected by forward-looking statements contained in this press release, including but not limited to changes in economic, retail, capital market, or debt market conditions, including recessions and changes in, or the extent of changes in, interest rates and the rate of inflation; changes to applicable duties, tariffs and trade laws; supply chain constraints; competitive real estate conditions; and others described in Plaza's Annual Information Form for the year ended December 31, 2023 and Management's Discussion and Analysis for the three and twelve months ended December 31, 2024 which can be obtained on the REIT's website at www.plaza.ca or on SEDAR+ at www.sedarplus.ca. 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 progress continues on Plaza's development and redevelopment program, the strength of Plaza's tenant base, that tenant demand for space continues, that Plaza is able to lease or re-lease space at anticipated rents and that interest rates continue to decline. Although 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.
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 can be found on the REIT's website at www.plaza.ca or on SEDAR+ at www.sedarplus.ca.
Conference Call
Jason Parravano, President and CEO and Jim Drake, CFO, will host a conference call for the investment community on Thursday, February 27, 2025 at 10:00 a.m. EST. The call-in numbers for participants are 1-416-945-7677 (local Toronto) or 1-888-699-1199 (toll free, within North America).
A replay of the call will be available until March 6, 2025. To access the replay, dial 1-289-819-1450 (local Toronto) or 1-888-660-6345 (Passcode: 67910#). 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, 2024 includes interests in 212 properties totaling approximately 8.8 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 with a focus on the essential needs, value and convenience market segments. For more information, please visit www.plaza.ca.
