Plaza Retail REIT Announces First Quarter 2025 Results

FREDERICTON, NB, May 7, 2025 /CNW/ - Plaza Retail REIT (TSX: PLZ.UN) ("Plaza" or the "REIT") today announced its financial results for the quarter ended March 31, 2025.

"We started the year with strong momentum, taking our ownership stake in Tacoma Plaza, a grocery and pharmacy anchored strip, from 50% to 100%" said Jason Parravano, President & CEO. "Conversion of approximately 40,000 square feet of space into grocery retail is also underway, unlocking about $1 million (~$600 thousand at our share) in incremental NOI once complete. We have also signed a new grocery store deal and are gearing up to break ground on excess land at one of our properties, which will add another ~$700 thousand in incremental NOI upon delivery, of which we have a 50% interest. These wins are a direct result of our focused, three-pillar strategy: optimize, intensify, and consolidate — and we are just getting started."

Summary of Selected IFRS Financial Results
(CAD$000s, except percentages)					Three Months  Ended March 31, 2025	Three Months Ended March 31, 2024	$  Change	% Change
Revenues					$31,137	$29,571	$1,566	5.3 %
Net operating income (NOI)^(1)					$18,344	$18,052	$292	1.6 %
Net change in fair value of investment properties					$2,136	($1,312)	$3,448	-
Profit and total comprehensive income					$9,319	$9,456	($137)	(1.4 %)

(1)	This is a non-GAAP financial measure.  Refer to the Non-GAAP Financial Measures defined here and in Part I and VII of the Management's Discussion and Analysis ("MD&A") ending March 31, 2025 for more information on each non-GAAP financial measure.

Quarterly Highlights

• NOI was $18.3 million, up $292 thousand or 1.6% from the same period in 2024. The increase is due to an increase in revenue from leasing and rent escalations over the same period in the prior year, partially offset by increased operating expenses, particularly snow removal given heavier snowfall compared to the prior year.
• Profit and total comprehensive income for the current quarter was $9.3 million compared to $9.5 million in the same period in the prior year. Profit and total comprehensive income was impacted by a decrease in the share of profit of associates of $918 thousand over the prior year, mainly relating to the non-cash fair value adjustment of the underlying properties in the current year, and the change in fair value of investment properties, with a $2.1 million increase recorded in the current quarter compared to a $1.3 million decrease recorded in the same quarter in the prior year. The fair value change year over year was mainly due to a decrease in capitalization rates. Profit and comprehensive income was also impacted by changes in non-cash fair value adjustments relating to interest rate swaps, the Class B exchangeable LP units, and convertible debentures.

Summary of Selected Non-IFRS Financial Results
(CAD$000s, except percentages, units repurchased and per unit amounts)	Three Months Ended March 31, 2025	Three Months Ended March 31, 2024	$ Change	% Change
FFO^(1)	$9,763	$9,916	($153)	(1.5 %)
FFO per unit^(1)	$0.088	$0.089	($0.001)	(1.1 %)
FFO payout ratio^(1)	80.0 %	78.7 %	n/a	1.7 %
AFFO^(1)	$8,289	$7,309	$980	13.4 %
AFFO per unit^(1)	$0.074	$0.066	$0.008	12.1 %
AFFO payout ratio^(1)	94.2 %	106.8 %	n/a	(11.8 %)
Same-asset NOI^(1)	$18,369	$18,090	$279	1.5 %
Normal course issuer bid – units repurchased	-	4,920	n/a	n/a
Committed occupancy – including non-consolidated investments^(2)	97.6 %	97.1 %	n/a	0.5 %
Same-asset committed occupancy^(3)	97.1 %	96.6 %	n/a	0.5 %

⁽¹⁾ This is a non-GAAP financial measure.  Refer to the Non-GAAP Financial Measures defined here and in Part I and VII of the MD&A ending March 31, 2025 for more information on each non-GAAP financial measure.

⁽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 March 31, 2025, FFO decreased $153 thousand or 1.5% on a dollar basis and 1.1% on a per unit basis, compared with the same period in the prior year. FFO decreased due to higher administrative expenses due to reorganization costs, and higher finance costs, offset in part by higher NOI from same-asset, acquisitions, developments and properties transferred to income producing. FFO was also impacted by higher operating expenses in the current quarter, particularly snow removal, and properties sold in 2024 where the capital generated has not yet been fully deployed. AFFO increased $980 thousand or 13.4% on a dollar basis and 12.1% on a per unit basis, compared to the same period in the prior year. AFFO was impacted by the changes in FFO noted above, as well as lower leasing costs and maintenance capital expenditures. Excluding the impact of the reorganization costs incurred in the current quarter, FFO per unit would have been consistent with the prior year, and AFFO per unit would have been 15.1% higher.
• Same-asset NOI increased by $279 thousand or 1.5% due to revenue from leasing and rent escalations over the same period in the prior year, partially offset by increased operating expenses, particularly snow removal given heavier snowfall compared to the prior year.

Non-GAAP Financial Measures

This press release contains certain non-GAAP 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 a standardized meaning prescribed by IFRS Accounting Standards 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 Accounting Standards. For further explanation of non-GAAP measures and their usefulness in assessing Plaza's performance, please refer to the section "Basis of Presentation" in Part I and the section "Explanation of Non-GAAP Measures" in Part VII of the REIT's Management's Discussion and Analysis as at March 31, 2025, which can be found on Plaza's website at www.plaza.ca and on SEDAR+ at www.sedarplus.ca.

The following tables reconcile the non-GAAP measures FFO, AFFO, and NOI to the most comparable IFRS measures.

Funds from Operations (FFO) and Adjusted Funds from Operations (AFFO)

Plaza's summary of FFO and AFFO for the three ended March 31, 2025, compared to the three ended March 31, 2024 is presented below:

(000s – except per unit amounts and percentage data, unaudited)	3 Months Ended March 31, 2025	3 Months Ended March 31, 2024	Change over Prior Period
Profit and total comprehensive income for the period attributable to unitholders	$    9,301	$    9,404
Incremental leasing costs included in administrative expenses^(7)	280	326
Amortization of debenture issuance costs^(8)	(18)	(18)
Distributions on Class B exchangeable LP units included in finance costs – operations	81	81
Deferred income taxes	(66)	100
Right-of-use land lease principal repayments	(217)	(203)
Fair value adjustment to restricted and deferred units	139	(30)
Fair value adjustment to investment properties	(2,136)	1,312
Fair value adjustment to investments^(9)	786	(197)
Fair value adjustment to Class B exchangeable LP units	266	(69)
Fair value adjustment to convertible debentures	169	(75)
Fair value adjustment to interest rate swaps	856	(974)
Fair value adjustment to right-of-use land lease assets	217	203
Equity accounting adjustment^(10)	139	56
Non-controlling interest adjustment^(6)	(34)	-
FFO^(1)	$    9,763	$    9,916	$     (153)
FFO change over prior period - %			(1.5 %)
FFO^(1)	$    9,763	$    9,916
Non-cash revenue – straight-line rent^(5)	(94)	(43)
Leasing costs – existing properties^(2) (5) (11)	(1,266)	(1,623)
Maintenance capital expenditures – existing properties^(12)	(167)	(946)
Non-controlling interest adjustment^(6)	53	5
AFFO^(1)	$    8,289	$   7,309	$       980
AFFO change over prior period - %			13.4 %
Weighted average units outstanding – basic^(1)(3)	111,575	111,521
FFO per unit – basic^(1)	$    0.088	$    0.089	(1.1 %)
AFFO per unit – basic^(1)	$    0.074	$    0.066	12.1 %
Gross distribution to unitholders^(1)(4)	$    7,809	$    7,805
FFO payout ratio – basic^(1)	80.0 %	78.7 %
AFFO payout ratio – basic^(1)	94.2 %	106.8 %
FFO^(1)	$    9,763	$    9,916
Interest on dilutive convertible debentures	176	178
FFO – diluted^(1)	$   9,939	$  10,094	$     (155)
Diluted weighted average units outstanding^(1)(3)	114,105	114,052
AFFO^(1)	$    8,289	$    7,309
Interest on dilutive convertible debentures	176	-
AFFO – diluted^(1)	$    8,465	$    7,309	$    1,156
Diluted weighted average units outstanding^(1)(3)	114,105	111,521
FFO per unit – diluted^(1)	$    0.087	$    0.089	(2.2 %)
AFFO per unit – diluted^(1)	$    0.074	$    0.066	12.1 %

^(1)	This is a non-GAAP financial measure.  Refer to "Non-GAAP Financial Measures" in Part I and "Explanation of Non-GAAP Financial Measures" in Part VII of the MD&A for more information.
^(2)	Based on actuals.
^(3)	Includes Class B exchangeable LP units.
^(4)	Includes distributions on Class B exchangeable LP units.
^(5)	Includes proportionate share of revenue and expenditures at equity-accounted investments.
^(6)	The non-controlling interest ("NCI") adjustment includes adjustments required to translate the profit and total comprehensive income attributable to NCI of $18 thousand for the three months ending March 31, 2025 (March 31, 2024 –$52 thousand) to FFO and AFFO for the NCI.
^(7)	Incremental leasing costs included in administrative expenses include leasing costs of salaried leasing staff directly attributed to signed leases that would otherwise be capitalized if incurred from external sources.  These costs are excluded from FFO in accordance with REALPAC's definition of FFO.
^(8)	Amortization of debenture issuance costs is deducted on a straight-line basis over the remaining term of the related convertible debentures, in accordance with REALPAC.
^(9)	Fair value adjustment to investments relate to the unrealized change in fair value of equity accounted entities which are excluded from FFO in accordance with REALPAC's definition of FFO.
^(10)	Equity accounting adjustment for interest rate swaps includes the change in non-cash fair value adjustments relating to interest rate swaps held by equity accounted entities, which are excluded from FFO in accordance with REALPAC's definition of FFO.
^(11)	Leasing costs – existing properties include internal and external leasing costs except to the extent that leasing costs relate to development projects, in accordance with REALPAC's definition of AFFO.  See the Gross Capital Additions Including Leasing Fees note on page 26 of the MD&A.
^(12)	Maintenance capital expenditures – existing properties include expenditures related to sustaining and maintaining existing space, in accordance with REALPAC's definition of AFFO.  See the Gross Capital Additions Including Leasing Fees note on page 26 of the MD&A.

Net Property Operating Income (NOI) and Same-Asset Net Property Operating Income (Same-Asset NOI)

(000s)	3 Months Ended March 31,  2025 (unaudited)	3 Months Ended March 31,  2024 (unaudited)
Same-asset NOI^(1)	$    18,369	$    18,090
Acquisitions, developments and redevelopments transferred to income producing in 2024 & 2025 ($3.6 million annual stabilized NOI)	1,044	239
NOI from properties currently under development and redevelopment ($435 thousand annual stabilized NOI)	-	56
Straight-line rent	94	43
Administrative expenses charged to NOI	(1,096)	(960)
Lease termination revenue	4	30
Properties disposed	1	435
Other	(72)	119
Total NOI^(1)	$    18,344	$    18,052
Percentage increase over prior period		1.6 %

(1)	This is a non-GAAP financial measure.  Refer to "Non-GAAP Financial Measures" in Part I and "Explanation of Non-GAAP Financial Measures" in Part VII of the MD&A for more information.

Cautionary Statements Regarding Forward-looking Information

This press release contains forward-looking statements relating to Plaza's operations, prospects, outlook, condition and the environment in which it operates, including with respect to Plaza's outlook or expectations regarding the future of its business, continuation of strong retailer demand and the impact of lower interest rates on Plaza's overall success through the remainder of the year.  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, implied or projected by forward-looking statements contained in this press release, including but not limited to changes in economic, retail, capital market, or debt market conditions, including recessions and changes in, or the extent of changes in, interest rates and the rate of inflation; changes to applicable duties, tariffs and trade laws; supply chain constraints; competitive real estate conditions; and others described in Plaza's Annual Information Form for the year ended December 31, 2024 and Management's Discussion and Analysis for the three ended March 31, 2025 which can be obtained on the REIT's website at www.plaza.ca or on SEDAR+ at www.sedarplus.ca. 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 progress continues on Plaza's development and redevelopment program, the strength of Plaza's tenant base, that tenant demand for space continues, that Plaza is able to lease or re-lease space at anticipated rents and that interest rates continue to decline.  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.

Further Information

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 can be found on the REIT's website at www.plaza.ca or on SEDAR+ at www.sedarplus.ca. 

Conference Call

Jason Parravano, President and CEO and Jim Drake, CFO, will host a conference call for the investment community on May 8, 2025, at 10:00 a.m. EDT. The call-in numbers for participants are 1-416-945-7677 (local Toronto) or 1-888-699-1199 (toll free, within North America).

A replay of the call will be available until May 15, 2025. To access the replay, dial 1-289-819-1450 (local Toronto) or 1-888-660-6345 (Passcode: 75044#). The audio replay will also be available for download on the REIT's website for 90 days following the conference call.

About Plaza

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 March 31, 2025, includes interests in 211 properties totaling approximately 8.9 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 with a focus on the essential needs, value and convenience market segments. For more information, please visit www.plaza.ca.

SOURCE Plaza Retail REIT

For further information: Jim Drake, Chief Financial Officer, Plaza Retail REIT, Tel: [phone]; Jason Parravano, President and Chief Executive Officer, Plaza Retail REIT, Tel: [phone]