KEYreit acquisition contributes to solid 2nd quarter 2013 results for Plazacorp

FREDERICTON, NB, Aug. 12, 2013 /CNW/ - Plazacorp Retail Properties Ltd. (TSX: PLZ) ("Plazacorp" or the "Company") today announced its results for the quarter ended June 30, 2013.

For the six months ended June 30, 2013, Plazacorp reported funds from operations ("FFO") of $8.9 million, an increase of 12.3% over the same period in the prior year.  FFO per share was $0.132 for the six months ended June 30, 2013 ($0.132 per share diluted) compared to $0.131 per share for the six months ended June 30, 2012 ($0.131 per share diluted). FFO was positively impacted by growth in total net property operating income and same-asset net property operating income as well as net property operating income from the acquisition of KEYreit, which was completed during the quarter.  These were partly offset by:  (i) an increase in administrative expenses, some of which are one-time in nature (relating to the integration of KEYreit and the Company's REIT conversion); and (ii) an increase in finance costs related to the acquisition of KEYreit.  Excluding the one-time administrative expenses of $270 thousand, FFO per share would have been $0.136, compared to $0.131 per share for the prior year.

Plazacorp reported FFO of $4.8 million for the three months ended June 30, 2013, an increase of 18.5% over the same period in the prior year.  FFO per share was $0.069 for the quarter ended June 30, 2013 ($0.069 per share diluted) compared to $0.067 per share for the quarter ended June 30, 2012 ($0.067 per share diluted).  Excluding the one-time administrative expenses, FFO per share would have been $0.073, compared to $0.067 per share for the prior year.

The Company recorded a loss for the six months ended June 30, 2013 of $3.4 million compared to a profit of $31.7 million recorded for the same period in the prior year. Profit was mainly impacted by the same factors affecting FFO, as well as:  (i) non-cash fair value adjustments on investment properties and investments (net of deferred taxes) mainly as a result of the write off of capitalized transaction costs, as well as a smaller change in capitalization rates; and (ii) one-time transaction-related costs recorded on the acquisition of KEYreit for the termination of the KEYreit asset and property management agreements as well as severance.

On July 2, 2013, the Company graduated its listing from the TSX Venture Exchange to the TSX.

During the quarter, the Company received a positive ruling from Canada Revenue Agency in respect of converting from a mutual fund corporation to a REIT structure on a tax-deferred basis.  Completion of this conversion is planned to occur at the end of the year.

Michael Zakuta, Plazacorp's President and CEO said, "We are pleased with our accomplishments during the quarter, which are reflected in the financial results.  The Company continues to execute on its strategy of creating value for our shareholders.  The acquisition of KEYreit is one such strategy.  We are excited to have graduated to the TSX and are looking forward to finally completing our conversion to a REIT, which has been in process for over two years now."

Plazacorp's summary of FFO is presented below:

(000s - except per share amounts and debt coverage ratios)		3 Months Ended June 30, 2013 (unaudited)			3 Months Ended June 30, 2012 (unaudited)			6 Months Ended June 30, 2013 (unaudited)			6 Months Ended June 30, 2012 (unaudited)
Profit (loss) for the period attributable to shareholders		$	(12,119)		$	15,855		$	(3,832)		$	30,047
Add (deduct):
Gain on disposal of surplus land			-			-			-			(8)
Transaction-related costs on acquisition of KEYreit			9,061			-			9,061			-
Deferred income taxes			(1,159)			4,846			2,018			9,290
Refundable tax on disposals of investment properties			(410)			-			(410)			-
Fair value adjustment to investment properties			10,966			(14,643)			4,451			(27,139)
Fair value adjustment to investments			44			(3,248)			(1,238)			(5,723)
Fair value adjustment to convertible debentures			(1,518)			258			(1,868)			179
Equity accounting adjustment			-			99			747			(11)
Non-controlling interest adjustment			(33)			910			(76)			1,250
Basic FFO		$	4,832		$	4,077		$	8,853		$	7,885
Interest on dilutive convertible debentures			-			-			-			-
Diluted FFO		$	4,832		$	4,077		$	8,853		$	7,885
Basic Weighted Average Shares Outstanding			69,819			60,449			66,940			60,196
Diluted Weighted Average Shares Outstanding			69,819			60,449			66,940			60,196
Basic and diluted FFO per share		$	0.069		$	0.067		$	0.132		$	0.131
Debt coverage ratios
Interest coverage ratio			1.8 times			2.1 times			1.9 times			2.1 times
Debt service coverage ratio			1.5 times			1.7 times			1.6 times			1.7 times

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

Plazacorp is a leading retail property owner and developer, particularly in Eastern Canada. Plazacorp has an entrepreneurial focus with strong "value-add" capabilities. Plazacorp's current portfolio includes interests in 346 properties totaling approximately 6.4 million square feet across Canada and additional lands held for development. Plazacorp's properties include a mix of strip plazas, stand-alone small box retail outlets and enclosed shopping centres, anchored by approximately 90% national tenants. Total assets have reached almost $1 billion. Plazacorp is fully internalized, therefore providing shareholders directly with the synergies that come with an internalized management structure. Plazacorp has proven its strong "value-add" capabilities to develop, redevelop and acquire retail real estate throughout Canada. Plazacorp has a strong track record of generating growth in distributions, having increased its distributions at least once every year in the last 10 years.

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 nor its Regulation Services Provider (as that term is defined in policies of the TSX) accepts responsibility for the adequacy or accuracy of this release.

 

 

SOURCE Plazacorp Retail Properties Ltd.