Plaza Retail REIT Announces Second Quarter 2025 Results
FREDERICTON, NB, Aug. 7, 2025 /CNW/ - Plaza Retail REIT (TSX: PLZ.UN) ("Plaza" or the "REIT") today announced its financial results for the three and six months ended June 30, 2025.
"The first half of 2025 has demonstrated how our operating performance remains resilient. We are executing grocery anchored optimizations and intensifications, while consolidating ownership positions to drive accretive embedded growth within the existing portfolio," said Jason Parravano, President and Chief Executive Officer of the Trust.
"We began some exciting projects this quarter. We are in the process of converting roughly 30,000 square feet of space at the Village Shopping Center in St John's, Newfoundland to a No Frills. This will convert the center to a grocery anchored property, which will enhance value and liquidity for the asset. In addition, we have begun the construction of a 28,000 square foot No Frills store at one of our existing plazas in Brockville Ontario. We will also soon be converting 30,000 square feet of space for another dominant retailer at the same property. We made progress on another No Frills conversion at Spring Park Plaza in Charlottetown, PEI, converting a 10,000 square foot space to a small format No Frills. We also have a number of other property enhancements underway throughout our portfolio."
"Through disciplined execution, we also increased our ownership in 3 Ontario Shoppers Drug Mart properties from 25% to 100% at the beginning of June. During the quarter, we were able achieve a 5.3% increase in per unit FFO, drive same-property NOI growth of 1.5%, achieved blended leasing spreads of 14.8% year-to-date, and increased our committed occupancy to 98%. Our negotiated weighted average renewal rates over the term for our open-air centres was 23.8% and our occupancy rate for the same category was just shy of 99%. I am extremely proud of the progress we have made so far this year."
Summary of Selected IFRS Financial Results | ||||||||
(CAD$000s, except percentages) | Three Months Ended June 30, | Three Months Ended June 30, | $ Change | % Change | Six Ended June 30, | Six Ended June 30, | $ Change | % Change |
Revenues | $31,791 | $30,672 | $1,119 | 3.6 % | $62,928 | $60,243 | $2,685 | 4.5 % |
Net operating income (NOI)(1) | $19,098 | $18,390 | $708 | 3.8 % | $37,442 | $36,442 | $1,000 | 2.7 % |
Net change in fair value of investment properties | $1,279 | ($7,316) | $8,595 | - | $3,415 | ($8,628) | $12,043 | -- |
Profit and total comprehensive income | $12,653 | $2,437 | $10,216 | 419.2 % | $21,972 | $11,893 | $10,079 | 84.7 % |
(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 June 30, 2025 for more information on each non-GAAP financial measure. |
Quarterly Highlights
- NOI was $19.1 million, up $708 thousand or 3.8% 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 higher operating expenses, particularly roof and asphalt repairs and maintenance during the current period.
- Profit and total comprehensive income for the current quarter was $12.7 million compared to $2.4 million in the same period in the prior year. Profit and total comprehensive income was primarily impacted by the change in fair value of investment properties, with a $1.3 million increase recorded in the current quarter compared to a $7.3 million decrease recorded in the same quarter in the prior year. The fair value change year over year was mainly due to increased stabilized NOI from optimization of existing properties and the acquisition of the remaining interest in three properties in Ontario. Profit and total comprehensive income was also impacted by an increase in the share of profit of associates of $1.4 million over the prior year, mainly relating to the non-cash fair value adjustment of the underlying properties in the current year. 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.
Year-To-Date Highlights
- NOI was $37.4 million, up $1.0 million or 2.7% 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 higher operating expenses, particularly snow removal in the first quarter of 2025 given heavier snowfall compared to the prior year, and roof and asphalt repairs and maintenance during the current period.
- Profit and total comprehensive income for the current period was $22.0 million compared to $11.9 million in the same period in the prior year. Profit and total comprehensive income was primarily impacted by the change in fair value of investment properties, with a $3.4 million increase recorded in the current period compared to a $8.6 million decrease recorded in the prior year. The fair value change year over year was mainly due to increased stabilized NOI from optimization of existing properties and the acquisition of the remaining interest in three properties in Ontario. Profit and total comprehensive income was also impacted by an increase in the share of profit of associates of $522 thousand over the prior year, mainly relating to the non-cash fair value adjustment of the underlying properties in the current year. 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 | Three Months Ended June 30, | Three Months Ended June 30, | $ Change | % Change | Six Ended June 30, | Six Ended June 30, | $ Change | % Change |
FFO(1) | $11,187 | $10,627 | $560 | 5.3 % | $20,950 | $20,543 | $407 | 2.0 % |
FFO per unit(1) | $0.100 | $0.095 | $0.005 | 5.3 % | $0.188 | $0.184 | $0.004 | 2.2 % |
FFO payout ratio(1) | 69.8 % | 73.5 % | n/a | (5.0 %) | 74.6 % | 76.0 % | n/a | (1.8 %) |
AFFO(1) | $7,511 | $8,924 | ($1,413) | (15.8 %) | $15,800 | $16,233 | ($433) | (2.7 %) |
AFFO per unit(1) | $0.067 | $0.080 | ($0.013) | (16.3 %) | $0.142 | $0.146 | ($0.004) | (2.7 %) |
AFFO payout ratio(1) | 104.0 % | 87.5 % | n/a | 18.9 % | 98.9 % | 96.2 % | n/a | 2.8 % |
Same-asset NOI(1) | $18,696 | $18,428 | $268 | 1.5 % | $36,958 | $ 36,413 | $545 | 1.5 % |
Normal course issuer bid – units repurchased | - | - | n/a | n/a | - | 4,920 | n/a | n/a |
Committed occupancy – including non-consolidated investments(2) | 98.0 % | 97.6 % | n/a | 0.4 % | ||||
Same-asset committed occupancy(3) | 97.6 % | 97.2 % | n/a |
0.4 % | ||||
(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 MD&A ending June 30, 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 June 30, 2025, FFO increased $560 thousand or 5.3% on a dollar and on a per unit basis, compared with the same quarter in the prior year. FFO increased due to higher NOI from same-asset, acquisitions, developments and properties transferred to income producing. FFO was also impacted by properties sold in 2024 where the capital generated was recently deployed. AFFO decreased $1.4 million or 15.8% on a dollar basis and 16.3% on a per unit basis, compared to the same quarter in the prior year. AFFO was impacted by the changes in FFO noted above, higher leasing costs related to optimization of existing assets, as well as higher maintenance capital expenditures in the current period.
- Same-asset NOI increased by $268 thousand or 1.5% due to an increase in revenue from rent escalations and renewals, partially offset by higher operating expenses, particularly roof and asphalt repairs and maintenance during the current period. Same asset NOI was also impacted by $218 thousand of bad debt in the current quarter related to two tenant closures.
Year-To-Date Highlights
- FFO & AFFO: For the six months ended June 30, 2025, FFO increased $407 thousand or 2.0% on a dollar basis and 2.2% on a per unit basis, compared with the same period in the prior year. FFO increased due to higher NOI from same-asset, acquisitions, developments and properties transferred to income producing. FFO was also impacted by properties sold in 2024 where the capital generated from those sales was recently deployed. In addition, FFO was impacted from an increase in finance costs-operations, and reorganization costs incurred in the first quarter of 2025. AFFO decreased $433 thousand or 2.7% on both a dollar and 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 higher leasing costs in the current year, reflecting efforts to attract higher-quality tenants and drive optimizations at existing properties, supporting improved rental spreads.
- Same-asset NOI increased by $545 thousand or 1.5% due to an increase in revenue from rent escalations and renewals, partially offset by higher operating expenses in the current period as noted above, as well as higher snow removal in the first quarter of 2025. Same asset NOI was also impacted by $218 thousand of bad debt as noted above.
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 June 30, 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 and six months ended June 30, 2025, compared to the three and six months ended June 30, 2024 is presented below:
(000s – except per unit amounts and percentage data, unaudited) | 3 Months | 3 Months | Change | 6 Months June 30, | 6 Months June 30, | Change | ||
Profit and total comprehensive income for the period | $ 12,596 | $ 2,385 | $ 21,897 | $ 11,789 | ||||
Incremental leasing costs included in administrative expenses(7) | 550 | 539 | 830 | 865 | ||||
Amortization of debenture issuance costs(8) | (18) | (18) | (36) | (36) | ||||
Distributions on Class B exchangeable LP units included in finance | 81 | 81 | 162 | 162 | ||||
Deferred income taxes | (9) | 96 | (75) | 196 | ||||
Right-of-use land lease principal repayments | (215) | (203) | (432) | (406) | ||||
Fair value adjustment to restricted and deferred units | 84 | (116) | 223 | (146) | ||||
Fair value adjustment to investment properties | (1,279) | 7,316 | (3,415) | 8,628 | ||||
Fair value adjustment to investments(9) | (845) | 257 | (59) | 60 | ||||
Fair value adjustment to Class B exchangeable LP units | 162 | (232) | 428 | (301) | ||||
Fair value adjustment to convertible debentures | 56 | (72) | 225 | (147) | ||||
Fair value adjustment to interest rate swaps | (69) | 345 | 787 | (629) | ||||
Fair value adjustment to right-of-use land lease assets | 215 | 203 | 432 | 406 | ||||
Equity accounting adjustment(10) | (123) | 50 | 16 | 106 | ||||
Non-controlling interest adjustment(6) | 1 | (4) | (33) | (4) | ||||
FFO(1) | $ 11,187 | $ 10,627 | $ 560 | $ 20,950 | $ 20,543 | $ 407 | ||
FFO change over prior period - % | 5.3 % | 2.0 % | ||||||
FFO(1) | $ 11,187 | $ 10,627 | $ 20,950 | $ 20,543 | ||||
Non-cash revenue – straight-line rent(5) | (65) | (174) | (159) | (217) | ||||
Leasing costs – existing properties(2) (5) (11) | (2,470) | (1,308) | (3,736) | (2,931) | ||||
Maintenance capital expenditures – existing properties(12) | (1,160) | (229) | (1,327) | (1,175) | ||||
Non-controlling interest adjustment(6) | 19 | 8 | 72 | 13 | ||||
AFFO(1) | $ 7,511 | $ 8,924 | $ (1,413) | $ 15,800 | $ 16,233 | $ (433) | ||
AFFO change over prior period - % | (15.8 %) | (2.7 %) | ||||||
Weighted average units outstanding – basic(1)(3) | 111,584 | 111,526 | 111,577 | 111,523 | ||||
FFO per unit – basic(1) | $ 0.100 | $ 0.095 | 5.3 % | $ 0.188 | $ 0.184 | 2.2 % | ||
AFFO per unit – basic(1) | $ 0.067 | $ 0.080 | (16.3 %) | $ 0.142 | $ 0.146 | (2.7 %) | ||
Gross distribution to unitholders(1)(4) | $ 7,810 | $ 7,806 | $ 15,619 | $ 15,611 | ||||
FFO payout ratio – basic(1) | 69.8 % | 73.5 % | 74.6 % | 76.0 % | ||||
AFFO payout ratio – basic(1) | 104.0 % | 87.5 % | 98.9 % | 96.2 % | ||||
FFO(1) | $ 11,187 | $ 10,627 | $ 20,950 | $ 20,543 | ||||
Interest on dilutive convertible debentures | 178 | 179 | 355 | 357 | ||||
FFO – diluted(1) | $ 11,365 | $ 10,806 | $ 559 | $ 21,305 | $ 20,900 | $ 405 | ||
Diluted weighted average units outstanding(1)(3) | 114,114 | 114,056 | 114,107 | 114,054 | ||||
AFFO(1) | $ 7,511 | $ 8,924 | $ 15,800 | $ 16,233 | ||||
Interest on dilutive convertible debentures | - | 179 | 355 | 357 | ||||
AFFO – diluted(1) | $ 7,511 | $ 9,103 | $ (1,592) | $ 16,155 | $ 16,590 | $ (435) | ||
Diluted weighted average units outstanding(1)(3) | 114,114 | 114,056 | 114,107 | 114,054 | ||||
FFO per unit – diluted(1) | $ 0.100 | $ 0.095 | 5.3 % | $ 0.187 | $ 0.183 | 2.2 % | ||
AFFO per unit – diluted(1) | $ 0.067 | $ 0.080 | (16.3 %) | $ 0.142 | $ 0.145 | (2.1 %) | ||
(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 $57 thousand and $75 thousand for the three and six months ending June 30, 2025 (June 30, 2024 –$52 thousand and $104 thousand, respectively) 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 27 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 27 of the MD&A. |
Net Property Operating Income (NOI) and Same-Asset Net Property Operating Income (Same-Asset NOI)
(000s) | 3 Months Ended June 30, 2025 (unaudited) | 3 Months Ended June 30, 2024 (unaudited) | 6 Months Ended June 30, 2025 (unaudited) | 6 Months Ended June 30, 2024 (unaudited) | ||
Same-asset NOI(1) | $ 18,696 | $ 18,428 | $ 36,958 | $ 36,413 | ||
Acquisitions, developments and redevelopments transferred to income | 1,335 | 502 | 2,379 | 742 | ||
NOI from properties currently under development and redevelopment | 4 | 48 | 4 | 104 | ||
Straight-line rent | 65 | 174 | 159 | 218 | ||
Administrative expenses charged to NOI | (1,235) | (1,116) | (2,330) | (2,076) | ||
Lease termination revenue | 163 | 3 | 167 | 33 | ||
Properties disposed | 100 | 414 | 217 | 963 | ||
Other | (30) | (63) | (112) | 45 | ||
Total NOI(1) | $ 19,098 | $ 18,390 | $ 37,442 | $ 36,442 | ||
Percentage increase over prior period | 3.8 % | 2.7 % | ||||
(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, outlook, condition and the environment in which it operates, including with respect to Plaza's outlook or expectations regarding its ongoing and future operating performance optimization and intensification activities, and other projects. 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 and six months ended June 30, 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 optimizations, intensifications and other projects , that tenant demand for space continues, and that Plaza is able to lease or re-lease space at anticipated rents. 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 August 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 August 15, 2025. To access the replay, dial 1-289-819-1450 (local Toronto) or 1-888-660-6345 (Passcode: 99079#). 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 June 30, 2025, includes interests in 205 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
