PLAZACORP ANNOUNCES YEAR END RESULTS AND $120 MILLION INCREASE IN VALUE OF ASSETS RESULTING FROM ADOPTION OF IFRS
Apr 4, 2011
FREDERICTON, April 4 /CNW/ - Plazacorp Retail Properties Ltd. (TSXV:PLZ) today announced its results for the year ended December 31, 2010 along with a $120 million increase in the valuation of its income producing properties, properties under development and surplus lands (collectively "investment properties") and equity-accounted investments at January 1, 2010, in accordance with its transition to International Financial Reporting Standards ("IFRS").
Plazacorp reported funds from operations ("FFO") of $13.1 million for the year ended December 31, 2010, compared to $13.4 million for the year ended December 31, 2009. FFO per share was $0.264 for the year ended December 31, 2010 ($0.264 per share diluted) compared to $0.279 per share for the year ended December 31, 2009 ($0.263 per share diluted). Although Plazacorp experienced an increase in net property operating income for the year, the increase was offset by an increase in administrative expenses, a decrease in investment income and increased interest expense.
Michael Zakuta, Plazacorp's President and CEO said, "We are pleased with the results for the year ended December 31, 2010. Upon transition to IFRS and the resulting fair value increase of Plazacorp's assets, our gross book value will better recognize the significant value creation that has been realized on behalf of Plazacorp's shareholders.
Plazacorp's summary of FFO for the three and twelve months ended December 31, 2010, compared to the three and twelve months ended December 31, 2009 is presented below:
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3 Months 3 Months 12 Months 12 Months
Ended Ended Ended Ended
December December December December
31, 31, 31, 31,
(000's - except per share 2010 2009 2010 2009
amounts and debt coverage (un- (un-
ratios) audited) audited)
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Total revenues $ 13,220 $ 13,233 $ 52,643 $ 49,784
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Income before other
comprehensive loss $ 1,325 $ 1,304 $ 2,561 $ 3,840
Add (deduct):
(Gain) loss on disposal of
income producing properties
and surplus lands (117) 8 (133) (665)
Gain on disposal of
discontinued operation (777) - (777) -
Income tax expense (97) (754) 653 89
Income tax expense -
discontinued operation 2 8 25 23
Amortization 2,670 2,834 10,549 10,274
Amortization - discontinued
operation 1 4 11 14
Non-controlling interests 114 202 476 651
Interest costs 4,362 4,174 17,187 14,566
Interest costs - discontinued
operation 7 8 32 34
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Earnings before interest,
taxes, depreciation and
amortization (EBITDA) 7,490 7,788 30,584 28,826
Add (deduct):
Interest costs (4,369) (4,182) (17,219) (14,600)
Current income tax expense (10) - (42) (44)
Non-cash debenture interest 60 48 238 72
Non-controlling interest
adjustment to FFO (217) (459) (999) (1,319)
Equity accounting adjustment
to FFO 142 139 533 515
Corporate amortization (4) (4) (17) (18)
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Basic FFO 3,092 3,330 13,078 13,432
Interest on dilutive
convertible debentures
before income tax - 211 - 211
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Diluted FFO $ 3,092 $ 3,541 $ 13,078 $ 13,643
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Basic Weighted Average
Shares Outstanding 49,835 48,651 49,540 48,132
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Diluted Shares Outstanding 49,841 52,488 49,544 51,935
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Basic FFO per share $ 0.062 $ 0.068 $ 0.264 $ 0.279
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Diluted FFO per share $ 0.062 $ 0.067 $ 0.264 $ 0.263
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Earnings before interest,
taxes, depreciation and
amortization $ 7,490 $ 7,788 $ 30,584 $ 28,826
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Interest costs $ 4,369 $ 4,182 $ 17,219 $ 14,600
Periodic mortgage principal
repayments 856 816 3,322 3,018
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Total debt service $ 5,225 $ 4,998 $ 20,541 $ 17,618
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Debt coverage ratios
Interest coverage ratio 1.7 times 1.9 times 1.8 times 2.0 times
Debt service coverage ratio 1.4 times 1.6 times 1.5 times 1.6 times
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As required by the Canadian Accounting Standards Board (AcSB), Plazacorp will adopt IFRS in place of current Canadian generally accepted accounting principles ("GAAP") for interim and annual periods beginning on and after January 1, 2011, with comparative information for the previous fiscal years. Plazacorp's first reporting period under IFRS will commence with its interim financial statements for the three months ended March 31, 2011.
Plazacorp has adopted the fair value model under IFRS to value its investment properties (including those investment properties included within equity-accounted investments), with the initial increase in fair value on the transition date (January 1, 2010) being recorded in shareholders' equity and subsequent changes in fair value being recorded in the consolidated statements of comprehensive income.
The fair value of Plazacorp's investment properties and equity-accounted investments for its opening balance sheet at January 1, 2010 will increase by approximately $120 million over the historical cost amounts as currently reported under Canadian GAAP. Approximately $103 million of the increase relates to investment properties and approximately $17 million of the increase relates to equity-accounted investments. At January 1, 2010, the fair value of investment properties will be approximately $375 million, while the fair value of equity-accounted investments will be approximately $24 million. These amounts do not include any portfolio premium. The fair value of investment properties was determined using a weighted average capitalization rate of 8.2%.
Further details of Plazacorp's results and its transition to IFRS can be found in its Management's Discussion and Analysis included in its annual report for the year ended December 31, 2010. A copy of Plazacorp's annual report can be found on the Corporation's web site at www.plaza.ca or on SEDAR at www.sedar.com.
Plazacorp Retail Properties Ltd. is an owner of shopping malls and strip plazas throughout Atlantic Canada, Quebec and Ontario. Plazacorp owns interests in 108 properties comprising 4.9 million square feet of retail real estate.
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.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
For further information: visit our website at www.plaza.ca; Or contact: Floriana Cipollone, Chief Financial Officer, (416) 848-4583; Kim Sharpe, Director of Business Development, (506) 451-1826