Plaza Retail REIT Announces 2020 Results
Feb 25, 2021
FREDERICTON, NB, Feb. 25, 2021 /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, 2020.
"Although 2020 was a challenging year for all, we are experiencing a solid improvement in our business as we collected 98.9% of rents in Q4. Our portfolio, which is dominated by essential needs and value retailers in open-air centres, continues to perform well." said Michael Zakuta, President and CEO. "Our business outlook is very positive as leasing activity continues to improve, with term debt financing available at historically low rates. We look forward to rebounding strongly in 2021 and beyond."
Summary of Selected GAAP Financial Results
(CAD$000s, except percentages and per units
Property rental revenue
Net operating income (NOI)
Net change in fair value of investment properties
Profit (loss) and total comprehensive income (loss)
- NOI was $18.1 million, up $1.4 million (8.1%) from the same period in 2019, primarily as a result of lower operating expenses and growth in NOI from acquisitions, developments, and new leasing in same-asset properties, offset by lost revenue due to lease buyouts.
- Profit and total comprehensive income for the current quarter was $9.3 million compared to $8.0 million in the prior year. The increase was mainly due to an increase in the fair value of investment properties of $3.2 million over the prior year as a result of a decrease in the weighted average capitalization rate, offset by a decrease in the share of profit of associates mainly relating to the non-cash fair value adjustment of the underlying properties.
- NOI was $68.8 million, down $4.0 million (5.5%) from the same period in 2019, primarily as a result of lease buyouts in 2019 and the lost revenue due to same, CECRA impacts, rent abatements and an increase in bad debt expense in the current year, offset by lower operating expenses and growth in NOI from acquisitions, developments, and new leasing in same-asset properties in the current year.
- Loss and total comprehensive loss for the year ended December 31, 2020 was $14.9 million compared to a profit and total comprehensive income of $51.3 million for the same period in the prior year. The decline was mainly due to a $46.9 million unfavourable change in the fair value of investment properties in 2020, as a result of an increase in the weighted average capitalization rate and more conservative assumptions for underwritten NOI and re-leasing costs, compared to an $18.7 million increase in the fair value of investment properties in 2019.
Summary of Selected Non-GAAP Financial Results
(CAD$000s, except percentages and per unit
FFO per unit
FFO payout ratio
AFFO per unit
AFFO payout ratio
Normal course issuer bid – units repurchased
Committed occupancy – including non-consolidated investments2
Same-asset committed occupancy2
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.
- FFO & AFFO: For the three months ended December 31, 2020, FFO per unit increased by $0.013 (14.6%) compared to the prior year, impacted by an increase in same-asset NOI due to lower operating expenses offset by lost revenue due to lease buyouts during 2019 and rent abatements in the current year, a decrease in administrative costs due to lower salary expenses in the current year as a result of the Canadian Emergency Wage Subsidy and overall lower salary expenses, an increase in NOI from acquisitions and properties transferred to IPP in 2019 and 2020, partially offset by an increase in finance costs. AFFO per unit was $0.013 (16.5%) higher than the prior year due to the changes in FFO noted above along with lower leasing costs in the current quarter offset by higher maintenance capital expenditures.
- Same-asset NOI increased by $283 thousand (1.7%) due to lower operating expenses in the current year partially offset by rent abatements in the current year and lost revenue due to lease buyouts during 2019.
Excluding the effect of the lease buyouts and severance settlements from the current and prior period, and excluding COVID-related impacts from the current year:
- FFO per unit for the quarter would have been 4.1% higher than the prior year, while AFFO per unit for the quarter would have been 3.9% higher than the prior year.
- Same-asset NOI for the quarter would have been 1.1% higher.
- FFO & AFFO: For the twelve months ended December 31, 2020, FFO per unit decreased by $0.036 (9.1%) compared to the prior year, affected by lease buyout revenues in the prior year, a decrease in same-asset NOI mainly due to bad debt expense and a decrease in other income, which were partly offset by lower operating expenses in the current year, growth in NOI from acquisitions and developments, a decrease in administrative costs and a decrease in finance costs. AFFO per unit was $0.036 (10.2%) lower than the prior year due to the changes in FFO noted above, along with lower leasing costs.
- Same-asset NOI decreased by $899 thousand (1.4%) due to lost revenue due to lease buyouts in 2019, CECRA impacts, rent abatements and an increase in bad debt expense. These were partially offset by new lease up and rent increases in the portfolio along with lower operating expenses in the current year.
Excluding the impact of the lease buyouts and severance settlements from the current and prior period, and excluding COVID-related impacts from the current year:
- FFO per unit for the twelve months would have been 6.3% higher than the prior year, and AFFO per unit for the twelve months would have been 10.0% higher than the prior year.
- Same-asset NOI for the twelve months ended December 31, 2020 would have been 1.8% higher.
While the duration and longer-term impact of COVID-19 remains uncertain, Plaza's focus on essential needs and value retail, as well as our presence in strong secondary markets in Ontario, Quebec and Atlantic Canada, has served us well. Approximately 96% of Plaza's portfolio is now open, with restaurants in certain jurisdictions offering take-out and/or delivery only, and non-essential retail tenants in certain jurisdictions offering curb-side pick-up only.
Regardless, to continue to mitigate the impacts from COVID-19, the Trust is prudently managing its capital, proactively managing costs to reduce operating, general and administrative expenses, and deferring elective capital expenditures. Plaza also continues to actively monitor 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.
Rent collections have improved significantly since Q2 2020, and rent deferrals and abatements have decreased substantially, as follows:
Gross rent collected from tenants
CECRA – Federal and Quebec Government contribution
Total: Collections including Federal and Quebec Government CECRA
CECRA – 25% Landlord write-off
Rent deferred with a definitive repayment schedule
Remaining tenant accounts receivable(1)
Remaining accounts receivable excludes allowance for doubtful accounts.
For deferred rent that required repayment in Q4 2020, Plaza collected 95.4% of same. For deferred rent that required repayment in January 2021, to date, Plaza has collected 95.3% of same.
Although the fair value of its properties reflects its best estimates as at December 31, 2020, Plaza is continuing to review its future NOI and cash flow projections. Depending on the duration and full impacts of COVID-19, certain aspects of Plaza's operations could be affected, including rental and occupancy rates, demand for retail space, capitalization rates, and the resulting value of Plaza's properties. The full extent and duration of the COVID-19 pandemic, including the resulting impacts on Plaza's business and its tenants, remains uncertain at this time.
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.
Michael Zakuta, President and CEO, and Jim Drake, CFO, will host a conference call for the investment community on Friday, February 26, 2021 at 2:00 p.m. EDT. 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, 2021. To access the replay, dial 416-849-0833 or 855-859-2056 (Passcode: 2277116). The audio replay will also be available for download on the REIT's website for 90 days following the conference call.
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, 2020 includes interests in 268 properties totaling approximately 8.6 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 Plaza's operations, strategy, condition and the environment in which it operates, including those relating to Plaza's business outlook. 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, 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 December 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 leasing activity will continue to improve and that term debt financing will remain available at low rates and, 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.
SOURCE Plaza Retail REIT
For further information: Jim Drake, Chief Financial Officer, Plaza Retail REIT, Tel: 902.483.4064; Michael Zakuta, President & Chief Executive Officer, Plaza Retail REIT, Tel: 514-457-7007