FREDERICTON, May 8, 2013 /CNW/ - Plazacorp Retail Properties Ltd. (TSXV: PLZ) ("Plazacorp" or the "Company") today announced its results for the quarter ended March 31, 2013.
For the quarter ended March 31, 2013, Plazacorp reported funds from operations ("FFO") of $4.0 million, an increase of 5.6% over the same period in the prior year. FFO per share was $0.063 for the quarter ended March 31, 2013 ($0.063 per share diluted) compared to $0.064 per share for the quarter ended March 31, 2012 ($0.064 per share diluted). FFO was positively impacted by growth in total net property operating income and same-asset net property operating income as well as an increase in the Company's joint ownership position in one of Plazacorp's properties coupled with improved results at that property. These were partly offset by: (i) an increase in administrative expenses affected by Restricted Share Units issued in late December 2012 under the Company's Restricted Share Unit plan; and (ii) an increase in one-time refundable current income tax expense. Excluding the impact of the one-time refundable current income tax expense, FFO was $4.2 million or $0.066 per share.
Profit for the quarter ended March 31, 2013 was $8.5 million compared to $14.7 million recorded for the prior year. Profit was mainly impacted by non-cash fair value adjustments on investment properties and investments as a result of decreases in capitalization rates, net of deferred taxes on those amounts, as well as the same factors described above affecting FFO.
During the quarter, the Company launched a friendly takeover of KEYreit (TSX: KRE.UN) and on April 4, 2013, the Company announced that it entered into a definitive agreement with KEYreit to increase its offer to acquire 100% of the units of KEYreit. KEYreit unitholders will have the option to tender their Units for either $8.35 per unit in cash, subject to a maximum aggregate cash amount of approximately $62.1 million, representing approximately 50% of the consideration, 1.7041 shares of the Company, or any combination thereof, subject to proration. This revised offer is valued at approximately $124 million. As part of the transaction, the asset management and property management agreement with JBM Properties Inc. (a company owned by John Bitove, CEO of KEYreit) will be terminated. Based on synergies to be realized due to the Company's internalized management team, the acquisition is estimated to be accretive to adjusted funds from operations. As well, KEYreit's properties are compatible with those of Plazacorp and the integration of those properties will enhance the pro forma geographic diversification of Plazacorp.
During the quarter, Plazacorp also received a positive ruling from Canada Revenue Agency in respect of converting from a mutual fund corporation to a real estate investment trust on a tax-deferred basis. Completion of this conversion will occur later this year and will be subject to shareholder approval.
Michael Zakuta, Plazacorp's President and CEO said, "We are pleased with the financial results for the quarter. The company has continued to execute on its strategy of creating value for our shareholders as evidenced by the growth in FFO. We are also looking forward to completing the acquisition of KEYreit and thereby growing our asset base, as well as completing our conversion to a REIT, which has been in process for over two years now. We believe that 2013 will be a significant year for Plazacorp."
Plazacorp's summary of FFO is presented below:
|(000s - except per share amounts and debt coverage ratios)|| 3 Months
| 3 Months
|Profit for the period attributable to shareholders||$||8,287||$||14,192|
|Gain on disposal of surplus land||-||(8)|
|Deferred income tax expense||3,177||4,444|
|Fair value adjustment to investment properties||(6,515)||(12,496)|
|Fair value adjustment to investments||(1,282)||(2,475)|
|Fair value adjustment to convertible debentures||(350)||(79)|
|Equity accounting adjustment||747||(110)|
|Non-controlling interest adjustment||(43)||340|
|Interest on dilutive convertible debentures||-||-|
|Basic Weighted Average Shares Outstanding||64,029||59,942|
|Diluted Weighted Average Shares Outstanding||64,029||59,942|
|Basic and diluted FFO per share||$||0.063||$||0.064|
|Debt coverage ratios|
|Interest coverage ratio||2.2 times||2.0 times|
|Debt service coverage ratio||1.7 times||1.6 times|
Plazacorp Retail Properties Ltd. is an owner of shopping malls and strip plazas throughout Atlantic Canada, Quebec and Ontario. Plazacorp owns interests in 119 properties comprising 5.2 million square feet of retail real estate.
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 Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
SOURCE: PLAZACORP RETAIL PROPERTIES LTD.
For further information:
For more information on Plazacorp, visit our website at
Floriana Cipollone, Chief Financial Officer (416) 848-4583 or Kim Sharpe, Director of Business Development at (506) 460-8261