FREDERICTON, NB, Nov. 9, 2021 /CNW/ - Plaza Retail REIT (TSX: PLZ.UN) ("Plaza" or the "REIT") today announced its financial results for the three and nine months ended September 30, 2021.
"We are very pleased with our solid performance," said Michael Zakuta, President and CEO. "Our portfolio of open-air centres focused on essential needs retail continues to perform well. Leasing activity and rent collection are back to pre-pandemic levels. We are progressing with a number of development projects, and are continuing to pursue additional development and redevelopment opportunities across our geography."
| Summary of Selected IFRS Financial Results |
| (CAD$000s, except percentages) | Three Months Ended Sept 30, 2021 | Three Months Ended Sept 30, 2020 | $ Change | % Change | Nine Months Ended Sept 30, 2021 | Nine Months Ended Sept 30, 2020 | $ Change | % Change |
| | | | | | | | | |
| Property rental revenue | $26,597 | $25,960 | $637 | 2.5% | $83,249 | $80,063 | $3,186 | 4.0% |
| | | | | | | | | |
| Net operating income (NOI) | $18,079 | $17,631 | $448 | 2.5% | $54,591 | $50,613 | $3,978 | 7.9% |
| | | | | | | | | |
| Net change in fair value of investment properties | $16,010 | ($549) | $16,559 | -- | $28,391 | ($49,060) | $77,451 | -- |
| | | | | | | | | |
| Profit (loss) and total comprehensive income (loss) | $27,908 | $9,185 | $18,723 | -- | $59,754 | ($24,212) | $83,966 | -- |
| | | | | | | | | |
Quarterly Highlights
- NOI was $18.1 million, up $448 thousand (2.5%) from the same period in 2020, primarily as a result of growth in NOI from acquisitions and developments, and lower operating expenses.
- Profit and total comprehensive income for the current quarter was $27.9 million compared to $9.2 million in the prior year. The increase was mainly due to an increase in the fair value of investment properties recorded in Q3 2021 as a result of a decrease in the weighted average capitalization rate in the current quarter and appraisals obtained, compared to a decrease in fair value of investment properties recorded in Q3 2020.
Year-To-Date Highlights
- NOI was $54.6 million, up $4.0 million (7.9%) from the same period in 2020, primarily as a result of growth in NOI from acquisitions and developments, lower operating expenses including lower bad debt expense, and lease buyout revenues.
- Profit and total comprehensive income for the current year was $59.8 million compared to a loss of $24.2 million in the prior year. The increase was mainly due to an increase in the fair value of investment properties recorded in the current year as a result of a decrease in the weighted average capitalization rate and appraisals obtained, compared to a decrease in fair value of investment properties recorded in the prior year.
| Summary of Selected Non-IFRS Financial Results(1) |
| (CAD$000s, except percentages, units repurchased and per unit amounts) | Three Months Ended Sept 30, 2021 | Three Months Ended Sept 30, 2020 | $ Change | % Change | Nine Months Ended Sept 30, 2021 | Nine Months Ended Sept 30, 2020 | $ Change | % Change |
| | | | | | | | | |
| FFO | $11,324 | $9,386 | $1,938 | 20.6% | $33,932 | $26,441 | $7,491 | 28.3% |
| FFO per unit | $0.110 | $0.091 | $0.019 | 20.9% | $0.329 | $0.257 | $0.072 | 28.0% |
| FFO payout ratio | 63.6% | 76.8% | n/a | (17.2%) | 63.7% | 81.8% | n/a | (22.1%) |
| | | | | | | | | |
| AFFO | $9,446 | $8,387 | $1,059 | 12.6% | $29,280 | $23,167 | $5,054 | 26.4% |
| AFFO per unit | $0.092 | $0.081 | $0.011 | 13.6% | $0.284 | $0.225 | $0.059 | 26.2% |
| AFFO payout ratio | 76.3% | 85.9% | n/a | (11.2%) | 73.9% | 93.4% | n/a | (20.9%) |
| | | | | | | | | |
| Same-asset NOI | $17,758 | $17,165 | $593 | 3.5% | $50,860 | $49,807 | $1,053 | 2.1% |
| | | | | | | | | |
| Normal course issuer bid – units repurchased | 7,550 | 8,400 | n/a | n/a | 22,150 | 388,097 | n/a | n/a |
| | | | | | | | | |
| Committed occupancy – including non-consolidated investments(2) | | | | | 96.2% | 95.8% | n/a | 0.4% |
| Same-asset committed occupancy(3) | | | | | 96.2% | 95.6% | n/a | 0.6% |
| | | | | | | | | |
| (1) | Refer to "Non-IFRS Financial Measures" below for further explanations. |
| (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 September 30, 2021, FFO per unit increased by $0.019 (20.9%) compared to the prior year. FFO was impacted by an increase in NOI from same assets and acquisitions/developments, a decrease in administrative costs due to lower salary expenses and lower travel costs, a decrease in finance costs mainly due to lower mortgage interest, partially offset by a decrease in NOI from property disposals. AFFO per unit was $0.011 (13.6%) higher than the prior year due to the changes in FFO noted above along with higher leasing costs in 2021.
- Same-asset NOI increased by $593 thousand (3.5%) mainly due to higher revenue in the current quarter.
Excluding the impact of COVID-related bad debt expense and write-offs, lease buyouts and insurance proceeds:
- FFO and AFFO per unit for the quarter would have been 11% higher than the prior year.
- Same-asset NOI for the quarter would have been consistent with the prior year. This measure still includes certain other impacts of the COVID-19 pandemic on NOI, such as its impact on occupancy and the timing of re-leasing space in the current year.
Year-To-Date Highlights
- FFO & AFFO: For the nine months ended September 30, 2021, FFO per unit increased by $0.072 (28.0%) compared to the prior year. FFO was impacted by an increase in NOI from same assets, acquisitions/developments, lower operating expenses including bad debt, a decrease in administrative costs due to lower salary expenses and lower travel costs, a decrease in finance costs mainly due to lower mortgage interest, and lease buyout revenue in the current year, partially offset by a decrease in NOI from property disposals. AFFO per unit was $0.059 (26.2%) higher than the prior year due to the changes in FFO noted above, partially offset by higher leasing costs and maintenance capital expenditures in 2021. In 2020, leasing costs and maintenance capital expenditures were lower due to the pandemic, as leasing activity was curtailed and elective capital expenditures were deferred. Leasing costs and maintenance capital expenditures in 2021 are higher due to additional leasing activity and completion of previously deferred elective capital expenditures.
- Same-asset NOI increased by $1.1 million (2.1%) mainly due to lower operating expenses, driven by lower bad debt expense in the current year, as well as write-offs under the CECRA program in 2020.
Excluding the impact of COVID-related bad debt expense and write-offs, lease buyouts and insurance proceeds:
- FFO per unit for the year would have been 8% higher than the prior year, while AFFO per unit for the year would have been 1% higher than the prior year.
- Same-asset NOI for the year would have been 1% lower than the prior year. This measure still includes certain other impacts of the COVID-19 pandemic on NOI, such as its impact on occupancy and the timing of re-leasing space in the current year.
COVID-19 Update
Plaza's focus on essential needs and value retail, as well as our presence in primary and strong secondary markets in Ontario, Quebec and Atlantic Canada, has served us well. Plaza's portfolio is currently fully-open.
Rent collections have improved significantly since Q2 2020, and rent deferrals and abatements have decreased substantially, as follows:
| | Q3 2021 | | Q2 2021 | | Q1 2021 | | Q4 2020 | | Q3 2020 | | Q2 2020 |
| Gross rent collected from tenants | 99.4% | | 99.0% | | 99.1% | | 99.4% | | 95.3% | | 89.9% |
| CECRA – Federal and Quebec Government contribution | - | | - | | - | | - | | 2.9% | | 4.0% |
| Total collections including government contributions under CECRA | 99.4% | | 99.0% | | 99.1% | | 99.4% | | 98.2% | | 93.9% |
| | | | | | | | | | | | |
| CECRA – 25% Landlord write-off | - | | - | | - | | - | | 1.0% | | 1.5% |
| Rent abated | - | | 0.5% | | 0.2% | | 0.2% | | 0.4% | | 2.6% |
| Rent deferred with a definitive repayment schedule | 0.2% | | 0.4% | | 0.4% | | - | | 0.2% | | 0.8% |
| Remaining tenant accounts receivable(1) | 0.4% | | 0.1% | | 0.3% | | 0.4% | | 0.2% | | 1.2% |
| Totals | 100.0% | | 100.0% | | 100.0% | | 100.0% | | 100.0% | | 100.0% |
| (1) | Remaining tenant accounts receivable excludes allowance for doubtful accounts. |
For deferred rent that was to be repaid during 2021 year-to-date, Plaza collected 98.8% of same.
Although the operating environment has improved significantly, and continues to improve, the uncertainty of subsequent waves of the COVID-19 pandemic may again impact Plaza's business and its tenants.