Post by
incomedreamer11 on Nov 11, 2021 7:18pm
CIBC comments on results
Our Conclusion The outlook for Plaza is bright, given strong leasing activity from value, essential, and QSR-based tenants. The development pipeline, which is focused on intensification and redevelopment of open-air centres, has also grown from solid tenant demand and higher availability of redevelopment opportunities. Modest development headwinds in the form of volatile construction pricing and delivery delays are weighing down yield expectations, though development yields remain at a wide spread vs. stabilized assets. The fair-value gain in the quarter further affirms the appeal of Plaza’s essential-retail based assets. Our 2023E FFO implies a growth rate of ~3%, in a post-pandemic operating environment. We maintain our Neutral rating and our $4.75 price target.
Key Points Q3/21 Beat: FFO per unit was $0.11, ahead of our estimate and consensus of $0.09. FFO/unit growth of +18% from last year was driven by +3.5% SPNOI growth, investments, and lower operating and finance costs. By region, the largest contributors to SPNOI growth were New Brunswick (+6.8%), PEI (+10.6%) and Ontario (+5.1%). However, excluding COVID-19- related items such as bad debt expenses and write-offs, FFO/unit would have been ~11% higher than last year while SPNOI would have been flat from last year.
COVID-19 Update: In Q3, PLZ collected 99.4% of rents with 0.2% subject to deferral agreements and the remainder to be collected. Year to date, the REIT has collected ~98.8% of scheduled deferred rent. Presently, the REIT’s entire portfolio is fully open and operating.
Transactions: PLZ sold quick-service restaurant assets totaling ~$9.6MM across markets in Ontario including the GTA, as well as in Port Hawkesbury, NS and Gatineau, QC. At Q3, the REIT had six land assemblies under purchase agreement, which could support the development of ~320k sf of retail space upon completion.
Balance Sheet: Debt to total assets was 52.5% (57.5% including converts) and a sequential decline compared to 53.6% (58.7% including converts) last quarter. The REIT’s weighted average interest rate on mortgages declined modestly to 3.86% from last quarter driven by favourable re-financings. At Q3, the REIT’s liquidity position remained solid with ~$8.4MM in cash and ~$49MM in undrawn facilities. During and subsequent to Q3, the REIT repurchased ~10.3k units and we expect PLZ to continue opportunistically repurchasing units provided they trade at a discount to NAV