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 $99 million KEYreit acquisition bridge facility. We expect to improve our financial results for the balance of 2014 and continue to grow our business."
Plaza's summary of FFO is presented below:
| 3 Months
| 3 Months
|(000s - except per unit amounts)||(unaudited)||(unaudited)|
|Profit for the period attributable to unitholders||$ 65,377||$ 8,287|
|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|
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.
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SOURCE: Plaza Retail REIT
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Floriana Cipollone, Chief Financial Officer (416) 848-4583 or Kim Sharpe, Director of Business Development at (506) 460-8261