Plaza Retail REIT announces 1st quarter results and full repayment of its KEYreit acquisition bridge facility

FREDERICTON, May 8, 2014 /CNW/ - Plaza Retail REIT (TSX: PLZ.UN) ("Plaza") today announced the repayment of its $99 million bridge facility that it had obtained in May 2013 in order to purchase KEYreit.  As well, Plaza today announced its results for the quarter ended March 31, 2014.

For the quarter ended March 31, 2014, Plaza reported funds from operations ("FFO") of $5.2 million, an increase of 30.4% over the same period in the prior year.  FFO per unit was $0.059 for the quarter ended March 31, 2014 ($0.059 per unit diluted) compared to $0.063 per unit for the quarter ended March 31, 2013 ($0.063 per unit diluted).  The decline in FFO per unit was mainly driven by: (i) a decrease in same-asset net property operating income ("NOI") mainly due to the very harsh winter conditions this year as well as a property tax settlement; (ii) an increase in administrative expenses, nearly half of which are one-time in nature (relating to the REIT conversion); and (iii) one-time taxes paid on behalf of unitholders for the REIT conversion.  Excluding the one-time expenses and tax relating to the REIT conversion, FFO per unit would have been $0.064, or a 1.6% increase over the prior year and excluding the unusual NOI variances, FFO per unit would have been $0.067, or a 6.3% increase over the prior year.

Overall, Plaza recorded a profit for the quarter ended March 31, 2014 of $65.6 million compared to a profit of $8.5 million for the same period in the prior year.  Profit was mainly impacted by: (i) the recording of a deferred income tax recovery of $59.7 million, to reflect the flow-through tax status of Plaza as a REIT (whereby taxes are now only recorded for Plaza's taxable corporate subsidiaries); (ii) the increase in FFO; (iii) a decline in the non-cash fair value adjustment to investment properties mainly as a result of an increase in capitalization rates; and (iv) a non-cash fair value loss on convertible debentures.

Michael Zakuta, President and CEO said, "This is our first quarter as a REIT and the one-time costs associated with our REIT conversion are now largely behind us.  We are very pleased to have fully repaid our $99 million KEYreit acquisition bridge facility.  We expect to improve our financial results for the balance of 2014 and continue to grow our business."

Plaza's summary of FFO is presented below:

         
      3 Months
Ended
March 31,
2014
3 Months
Ended
March 31,
2013
(000s - except per unit amounts)     (unaudited) (unaudited)
         
Profit for the period attributable to unitholders     $  65,377 $ 8,287
Add (deduct):        
Deferred income taxes     (59,699) 3,177
Fair value adjustment to investment properties     (1,353) (6,515)
Fair value adjustment to investments     91 (1,282)
Fair value adjustment to convertible debentures     772 (350)
Equity accounting adjustment     59 747
Non-controlling interest adjustment     (3) (43)
Basic FFO     $  5,244 $   4,021
Interest on dilutive convertible debentures     - -
Diluted FFO     $  5,244 $   4,021
Basic Weighted Average Units Outstanding     89,281 64,029
Diluted Weighted Average Units Outstanding     89,281 64,029
Basic and diluted FFO per unit     $  0.059 $   0.063

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

Plaza Retail REIT is a leading retail property owner and developer, particularly in Eastern Canada. Plaza has an entrepreneurial focus with strong "value-add" capabilities. Plaza's current portfolio includes interests in 332 properties totaling approximately 6.6 million square feet across Canada and additional lands held for development. Plaza'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. Plaza is fully internalized, therefore providing unitholders directly with the synergies that come with an internalized management structure. Plaza has proven its strong "value-add" capabilities to develop, redevelop and acquire retail real estate throughout Canada. Plaza has a strong track record of generating growth in distributions, having increased its distributions at least once every year in the last 11 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: Plaza Retail REIT

For further information:

on Plaza Retail REIT, visit our website at
www.plaza.ca
Or contact:
Floriana Cipollone, Chief Financial Officer (416) 848-4583 or Kim Sharpe, Director of Business Development at (506) 460-8261


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